Paint Place Group of Stores set to ‘DRIVE’ their businesses
The first day of the Paint Place Group of Stores 2017 Conference, held at the Royal Pines Resort on the Gold Coast from March 28-31, was an eventful one after it was lashed with 500 millilitres of rain thanks to the aftermath of Cyclone Debbie. Despite the wild weather and some stores severely damaged in the storms, it seems the climate was reflective of the storm Paint Place stores had weathered in 2016, according to Paint Place Group of Stores Chairman Mishy Hetenyi.
During his opening address to members, Mr Hetenyi said he was glad to see the back of 2016 and the drop in retail sales that went with it.
“The failure of Masters, which many so called experts said would never happen, proves just how tough it was in the DIY and retail market. Many members also felt a significant drop in retail, with trade dominating sales, when previously there was a healthy mix.”
“As store owners, every per cent of commission can either make or break us and it is disappointing that manufacturers’ rebates are now not only going to builders, but to painters as well. All in all, this means we have to change the way we do things.” he said.
With trade now dominating most stores, more funds now need to be assigned to capture, and secure, the trade market, according to Mr Hetenyi.
“As no rebates are currently acquired from trade sales on manufacturers’ paper work, we must find other means to fund the marketing needed, which in the past has come from retail sales. It just goes to show how important supporting our preferred suppliers and our own warehouse is important for future survival,” he said.
Mr Hetenyi also said that a message from a couple of years ago still echoes in his mind and the message was to “grow, change or die”.
“There is no doubt our businesses, and membership, have to grow but I feel that the only way to achieve this is to change the way we do things. As Albert Einstein once said, doing the same thing over and over again and expecting different results is the definition of insanity,” he said.
“This has never been more appropriate now, to this group’s future. I feel that the current team we have at group office, led confidently by Mark Sutton, and with the guidance of our board, we will not only continue to exist, but prosper so the next generation of paint specialist stores will come through,” Mr Hetenyi said.
As Paint Place Group of Stores Chief Executive Officer, Mark Sutton, addressed members at the 29th national conference, he reiterated the theme of the conference for this year, ‘Drive’, aimed at reminding members that they need to get in the driver’s seat of their business, have the drive
to make the courageous decisions, so that they can drive their own destiny.
This motivation to remain proactive within their businesses is more important than ever, according to Mr Sutton, who said 2016 was far from easy.
“It was a tough year on many fronts, with trade booming in most markets and also going backwards in others, as the national shift away from the commodity boom bit hard. Trade growth was also a double edge sword, with plunging prices to painters creating more work for less margin, as the cost did not dip with that pricing. Retail was also stagnant, with only a glimmer of light at the back end of the year. The demise of Masters gave us all a study in strategic failure, some lessons to which we should all listen to well,” he said.
Mr Sutton also reminded members of the importance of servicing customers in a market that members could compete in. Th is includes utilising national private label brands in balance and listening to what customers are telling members – not just focus on one part of the business or a competitor of that business.
“We have accelerated the transition of our retail marketing direction, with the clear pivot towards integrated digital marketing. Th is new marketing mix is achieving better results in member sales activity that we have seen in some time. The market has changed and we need to be advertising where our customers are looking, and supporting them with services they need,” he said.
“However, on top of this marketing change, the model to make margin has also changed. Here is startling statistics for everyone here in regards to the market we are in. Bunnings retail market share is at 31 per cent, with the hardware sector enjoying a 6.8 per cent annual growth.”
“Where have we been in that growth? Sure trade has grown in some areas but it isn’t grasping the profitable growth that has been happening around us. We changed our traditional catalogue focus, and we also developed other tools to drive the business,” Mr Sutton said.
Just one of the many keys that may be utilised by the group moving forward include programs such as the ‘Find a Painter Program’, which helps close the loop on that crucial business for members, both in retail and trade, according to Mr Sutton.
Bracing for change
Mr Sutton pointed out that data shows that the independent channel share has also dropped to 15 per cent, with market share at 17 per cent last year and 18 per cent in 2015.
“The warning signs are there. Do we pretend we are just in a low part of the cycle or do we accept the new market position? No. We are in a new market that is forcing us to change. Are the changes we are making enough? Do we really live the ‘painting made easy’ motto in our stores and how can we do this as an organisation,” he asked.
“Here are a few key questions we have got to ask ourselves. The first one, and it is the key one, how do we find more margin? We cannot afford to ignore margin opportunities anymore. Th is could be through trade and retail, plus specialty finishes, automotive, marine and industrial. And there are a host of selections here on display with our supplier partners that we need to be supplying,” he said.
Mr Sutton also pointed out the importance of embracing and supporting programs, such as ‘Find a Painter’, ‘T Card’, ‘Yes Club’ and ‘Trade club’ and ensuring there are more services to support their customers.
“It is also very important to support group marketing activities. Especially as we transition to heavier digital marketing aimed at driving customers in-store. A great example is the recent chalk paint promotion. We ended up getting great results because those members took a chance on it. They had customers coming in that they had never seen before.”
“We need to fight for our share and you need to participate to give us the best return. Those retail customers who engage with our stores through these promotions, can be key to driving our wider sales and programs in many markets,” he said.
Benchmarking for future business
Buying and benchmarking are other important strategies to maintain future business, according to Mr Sutton, who said if the members can get behind promotions, bulk buys, private labels and warehouse, the group can leverage more benefits for members.
“These system developments are all driven by members, for members. Why? Because they position us as a specialist and with the promise that we do make ‘painting made easy’. When you participate in store report bench marking and digital systems, remember that information is power.”
“This support from group office is crucial moving forward. We are also continuing to work on our IT systems, with the trial process currently underway to deliver more information on benchmarking on group business, to make stronger business decisions that can directly affect everyone’s margin. But you need to be involved to get the results,” Mr Sutton said.
The critical focus for the group moving forward is to build a sustainable and profitable model; a model that embraces reseller and trade depot programs across the business categories, according to Mr Sutton.
“We can build more margin by supporting the initiatives in the terms negotiated, but only together can we maximise the benefits. Then we have something to leverage. From a group office perspective this renewed focus on supporting members across their businesses is also key. We need to maintain our desire to work with the members on the entire challenge of running independent paint centres,” he said.
“This could be through marketing and warehouse systems, benchmarking ports and IT systems, but we need you to participate to maintain the best outcomes for you. The more we support you, the more we can put back into the decisions we make as a group and the better the outcomes. We must work with members to develop clear and simple systems that work.”
“Let’s capture the market on what our customers need, through supporting the systems you have already got access to. As a group, do we have the courage to make a decision and support it and do we have the courage to take control of our business? Fear of change is a powerful thing. Nelson Mandela, one of the great leaders of our time had this to say about fear. ‘I learned that courage was not the absence of fear but the triumph over it. The brave man is not he who does not feel afraid, but he who conquers that fear,” he said.
Mr Sutton reassured members that the group office was also changing for the better.
“I am often asked what keeps me awake at night and it is the future of our members – the future of the family behind those stores. It is for this reason that we need to leverage the collective, not accept the individual status quo. It is also coming to the realisation that if we act together, then the collective gain strength and we all benefit. We are coming to a time where we have to decide on whether to leverage our strengths and display the courage to back ourselves,” he said.
Taking control of the future
Mr Sutton also pointed out that the group needed to develop a model that works for all and that the group had to answer the questions in that model together and deliver a more sustainable trade business, service systems and competitiveness and diversification of member’s business offering.
Consumer interest in renovation programs remains strong, according to Paint Place Marketing Manager Georgia Downes.
“DIY home improvement projects remain heavily supported by hardware outlets. Bunnings continues to expand its existing network, lifting its market share, while Metcash is also becoming a strong source as well. Outsourcing is also continuing to grow which is why we need to continue to look at our model and see how we can capture these trends and changes,” Ms Downes said.
“Keys to future success includes having the ability to be competitive. We need to know what the competition are doing and we need to have the strategy to fight back as well as also having the ability to change the market to make sure we have a strong business model,” she said.
Just some of the keys to success outlined by Ms Downes during her presentation included: adopting new technology, gaining access to a skilled workforce, buying power, diversifi cation, maintaining specialty line products and proximity to key markets including deliveries, affective product and service promotion.
“Remember that over 60 per cent of social media users read online reviews before they make a purchase decision. Consumers know how to research and we need to make sure we are there when they are searching for paint. Around 84 per cent of consumers search for paint businesses on their mobile; which is exactly why members have to embrace their listing on Google Maps, on store locator on Google Maps, so it is easy for our customers to find us and look us up. We need to make sure that we present ourselves well on that digital platform,” Ms Downes said.
Ms Downes also highlighted particular keys to success, during her presentation to members, which included the:
1. Ability to be competitive
2. Ability to change with the market
3. Having a good reputation
4. Having a loyal customer base
5. Ability to quickly adopt new technology
6. Access to a skilled work force
7. Buying power
8. Ability to control stock on hand
9. Sale of goods currently favoured by the market
10. Proximity to key markets
11. Effective product and service promotion
Business booster luncheon
The full morning of presentations was proceeded by the Business Booster Luncheon, led by Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, who highlighted how the decision makers in government need to starunderstanding the importance of family business and the contribution they make to the Australian economy.
“Our job is to cover businesses with less than 100 employees or businesses with a revenue less than $5 million. This covers 98 per cent of Australian businesses, with 97 per cent of Australian businesses having a turnover of less than $2 million. There is an awful lot of Australian businesses who are in this small business space, but they employ nearly five million Australians,” she said.
“Small to medium sized business and family enterprises matter a lot to this country. They employ the majority of Australia and this is also where the growth is. Australia is the only country in the world that has now had 26 years of consecutive growth and we just passed the Netherlands who had 25.5 years of consecutive growth, so we are right at the top of the tree. And as a small business person, I know it sometimes doesn’t feel like that, but business in Australia has been pretty solid for a long, long time now.”
“My office is set up to ensure small to medium sized businesses have a voice to the government of the day. The legislation gives me the power to both advocate and assist, and give advice to the ministers of the day about issues surrounding the small to medium sized business space. We comment on government proposals and we are there to provide support for you if you have a problem with a big business or government like the ATO,” Ms Carnell said.
AHJ will provide details of some of the issues Australian small business faces, addressed by Ms Carnell, in the June edition of Behind the Counter.
Valspar Gala Dinner – ‘Fast Lane’ theme
During the Valspar sponsored dinner, not only were there several annual awards given away on the night to several lucky store owners, but the 2017 Paint Place Ute draw winner was also announced, with the ute won by Paul, Veronique and Cameron Sacco of Killarney Vale Paint Place. Alex Hetenyi of Paint Place Philip also won the chance to pick a prize of either a new Holden Barina, out of 249 envelopes or $250,000, contained in one envelope. He successfully took home the Holden Barina! Paint Place CEO, Mark Sutton, then went on to acknowledge the great work that members are performing in a difficult market. The Paint Place awards were announced with members being recognised for a range of categories.
One of the founding Paint Place members, Brett Dalman, from Paint Place Ipswich presented the annual awards to the following winners…
New Look Volume
In equal first place, from South Australia, Paint Place Gawler and from Victoria, Paint Place Warragul New Look Growth
Paint Place Sandgate
Joint winners Paint Place Merrylands and
Paint Place North Rockhampton
Paint Place Cranbourne
Graham Potter –Paint Place Strathpine
Justin Dasczyk, Paint Place Yamba
Founders Membership Award 2016
Paint Place Wangaratta
Most Improved Place 2017
Paint Place Gladstone