Change Merchants

Barry and Keith Fagg have probably lost count of the number of times their business has changed shape over the past 157 years. The fourth generation family members to have worked at the Mitre 10 store in South Geelong (Keith’s son, Mark, is the fifth generation to work in the family business) are ensuring that the Fagg legacy will live on for some time yet after they invested some $7.5 million moving trading operations from two buildings on the same site into a single 13,500m2 version fronting the Barwon River.

“This project is a significant milestone for the business as it represents a major step forward and improvement,” says Keith. “We have taken the opportunity to upgrade virtually everything we do, as well as the equipment – shop fittings, POS counters, security, etc.”

The Faggs run their business knowing that to merely keep it ticking over is a recipe for failure. Twenty years ago, they realised that it is essential to constantly reinvest and reinvent their offer to the public, especially once the big box retailers entered the fray and took large chunks out of the traditional hardware store owner’s market share.

To that end, Barry and Keith realised that their main business in South Geelong – a Fagg’s also operates out of North Geelong, and the brothers bought the Wallington Mitre 10 on the Bellarine Peninsula in May this year – as successful as it was, needed to change.

“It was a split business,” says Keith. ”Tradies coming into the timber business wouldn’t necessarily go across to the hardware store because they were separate.” Barry and Keith Fagg decided to upgrade the facility. Three years of planning went into the site redevelopment, which involved merging the hardware business that fronted Moorabool Street with the trade and garden side of things that operated from a detached premises fronting Barwon Terrace. The two were separated by a road that the Faggs negotiated to buy off the local council, as well as a car park that still exists.

The redevelopment commenced in June 2010, with architects Peter O’Reilly & Associates drawing up the design and building works contracted to Lyons Constructions. The hardware building was rented out to kitchen and bathroom specialists, E & S Trading, and the rear building expanded out and back to accommodate the hardware business relocation. An extension to the timber warehouse added 3,300m2 of space and a streamlined logistics/goods handling area was also added at the rear of the building. The logistics shed is all under cover and uses a single drive-through entrance and separate exit. In the old design, there were three delivery points.

Administrative offices were shifted from the old building to a swanky mezzanine layout that ate into the redevelopment budget, but with the aim of bringing staff members together to foster a stronger team ethic. The area, which almost runs the length of the building, includes staff facilities and training rooms, as well as management offices. By May this year, the paint department had relocated from the old building to the new one, with other categories gradually moving across over a seven-week period until every category was trading side by side.

“We didn’t lose one minute of trading,” boasts Keith. The end result was that all of Fagg’s hardware, garden, timber & building materials operations at South Geelong are now under one roof. Chairman of the Fagg Bros. Board, Bert Fagg, officially opened the complex on September 7. A third generation member of the Fagg family, Bert worked for the business for 67 years until his retirement in 1999. He is now aged 95. A Grand Opening Sale took place on the September 17-18 weekend, with 1,800 customers attending.

How does it compare?

Walk into the store now and it appears much bigger than you’d expect from the car park. The entrances to most of the bigger ‘warehouse’ hardware stores are located along the longer walls, with aisles stretching further to the left and right than back. At Fagg’s the opposite applies, with the store extending further back than across. But that’s not the main difference.

“The beauty about the current design is that it’s all across one level. The old building used to have a lift in it for customers to get to the higher level, where most of the business was,” says Keith. “Our new complex makes it very easy for customers to access all parts of our business. It is a true ‘one stop’ centre. Everything we have done is geared to serving our customers better.”

With the timber trading side of the business located in a separate building previously, there wasn’t much crossover. Tradesmen would collect their timber then leave. Potential hardware customers were alienated. Now the two – hardware and timber/building materials – are adjacent but under the one roof, with a trade account desk located near the trade warehouse exit but inside the retail outlet. A newly expanded home finishing section was also added, with extensive door and flooring displays.

“The door centre is now exposed to both the timber and retail centres, whereas doors were previously only visible from the timber side of the business,” says Keith. “We haven’t done anything dramatic in terms of ranging; we’ve just tweaked it,” says Andrew Greenwood, Fagg’s operations manager and a 23-year veteran employee. “The test for us was whether trade customers would ‘wander’ the store, and they are. They’re happy filling up their trolley with washing powders and brooms then getting their fasteners and things. It’s more accessible now.”

Other features of the new store design include a larger kitchen display area stocking Imagine flat-pack kitchens, the Mitre 10 home brand made by Häfele. In the new building, the housewares department is located next to the paint section at the back, where more space has been allocated. Greenwood says they’re stocking the same housewares ranges, but more of them.

He admitted that paint and housewares were deliberately placed at the back of the store in the new design in order to entice customers to browse through the rest of the store. As part of the refit, the computer paint tinting and colour matching capacities were upgraded and Taubmans paints were deranged in place of Haymes.

“Better service and better margins,” Greenwood explained, adding that paint, garden and housewares were strong categories in the old design. “Housewares has dropped off a bit though because it used to be at the top of the stairs in the main building and because everyone had to go through it. Something has to go at the back. It’s in the right spot for the flow of products, but we’ll have to do something about that,” he says, looking towards what looks like an unfinished display area.

“Most of our paint is hidden in a room at the back,” he continues, “because they’re bases that need to be tinted and don’t need to be on display. That way, we can have more space for the paint accessories, where bigger margins are.” The tool section is now located right in the middle of the store, where staff members can keep an eye out for pilferers. The tools’ MDF display shelving is a hangover from the old store, which Greenwood says will be changed in favour of metal slatboards. They were also very conscious of placing the high-margin accessories directly opposite the tools.

At the front is one big point of sale area, whereas there were four separate areas in the old design. There’s also a post office outlet and a hire tool company located onsite. Outside, facing Barwon Terrace, the garden area was extended, with seedlings placed at the rear using the same rationale as paint and housewares – to draw traffic further in.

While the new hardware outlet rivals a Bunnings store in appearance and dimensions, even more impressive is the timber warehouse. “We sing in here on weekends because our competitors aren’t open then,” says Greenwood. “It’s mostly weekend warriors, whereas our competitors are mostly trade customers.” “While we don’t have a specific niche, we do specialise in fixing timbers and our timber machining capacity is unique in Geelong,” adds Keith. “We have a great staff group (220 people are employed across the three Fagg’s stores), with many long serving staff members – some over 20 years – who are very experienced in their respective fields. Our longest serving staff member is Geoff Priddle, our machining supervisor, who has been with us for 37 years.”

Priddle is one of three fulltime machinists who cut timber for tradesmen and DIYers, as well as for the neighbouring Barwon and Belmont timber yards and Torquay Mitre 10. Metal pigeonhole and cantilever timber racking systems were installed in place of the old timber ones, adding to the cost of the refit but improving flexibility and structural soundness.

“You can pick them up and move them around easier,” says Greenwood. An extra emphasis has also been placed on Fagg’s timber and building materials delivery service, with five truck drivers employed between the three stores to deliver to over 4,000 account holders.

“We regularly get builders who have been to Bunnings ring up because they can’t get anything quickly; it will take them a week. We offer same-day delivery if they ring up in the morning,” says Barry. “We have a loyalty program called the ‘Fagg’s Mighty Helpful Card’,” adds Keith. “This has been very successful, but we are looking at modifying and improving this. Over 10% of our overall sales are now to Mighty Helpful card holders.” Overhead, a symphonic storm water system has been installed on the roof to catch rainwater that is then funnelled towards the nursery area, which uses about 35,000 litres of water per month. That one section of the roof catches two million litres of water per annum, with three tanks set up to store a total of 180,000 litres of water and any excess flowing into the river.

With the redevelopment now complete and the Fagg’s more than happy with the result, it begs one question: what’s next? “Wallington was a strategic purchase, as the Bellarine Peninsula is growing and the store is well located,” says Keith. “We are planning some significant upgrades to this store, in conjunction with the property owner.” Ye Gods! When will they ever slow down?

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