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Mitre 10 NZ CEO’s shock resignation

Mitre 10 NZ Chief Executive Officer, Chris Wilesmith, has resigned and will be returning to Australia after just over a year in the role.

The shock resignation of the co-op’s Chief Executive Officer was recently announced by Mitre 10 New Zealand Chairman, Martin Dippie who said that, “Chris is resigning from his role to return home to Australia on a permanent basis.”

“While the role was always an Auckland-based one, he has been commuting between Auckland and Coffs Harbour on a regular basis due to family commitments. The recent disruption of the borders closing due to the COVID-19 pandemic has made this travel very challenging. Despite the need to quarantine on both sides of the Tasman, Chris has remained highly effective and committed to his leadership role,” Mr Dippie said.

Image source: www.nzherald.co.nz

While it seems a vaccine will not be available for quite some time, and Australian and New Zealand borders will remain tightly controlled for the foreseeable future, travelling between countries was no longer sustainable for Mr Wilesmith and he has made the difficult decision to resign.

“Chris’ strong leadership during the initial lockdown and in subsequent months allowed the business to operate at very high levels, despite the restrictions and challenges we have faced. The Board has been delighted with his impact on the business,” Mr Dippie said.

Mitre 10 NZ has already begun the search for a new Chief Executive Officer via executive search partner Egon Zehnder.

COVID-19 brings consumers back to their Aussie roots

While it seems COVID-19 has developed a very pro-Australian sentiment in the retail marketplace over the last few months, the pandemic has also brought enormous levels of consumer engagement with the Australian Made logo as well. This engagement is particularly evident across social media platforms with the Campaign already recording a 300 per cent increase in engagement across its social media platforms, according to Australian Made Campaign Chief Executive Officer, Ben Lazzaro.

As the largest online product directory of genuine Australian Made products, the australianmade.com.au website has also doubled in traffic during the pandemic, while the Australian Made Campaign has also received a dramatic increase in calls and emails from consumers asking where they can find certain products or how they can support Aussie manufacturers. This certainly shows a growing need in the community for Australians to support local businesses, Mr Lazzaro said.

“While support for Australian Made products remains, obviously we want consumers to follow through on their purchasing intention. This comes down to a number of factors, particularly with people in lockdown, and is also why online shopping has become very important. Not only because they can purchase Aussie products online, but they can also find all the information they need about the product beforehand,” Mr Lazzaro said.

Mr Lazzaro also believes that the renewed consumer enthusiasm for supporting locally made products is not “a flash in the pan”.

“The pandemic has been seriously impactful across a number of fronts and it is the shock of something like COVID-19 that jolts people into action and support Australian Made, which is what we believe is happening at the moment. We have to remember too that local manufacturing was also thrown in the spotlight due to COVID-19. It was our manufacturers that re-tooled overnight and pivoted their businesses so they could make the emergency medical equipment and personal protection equipment that Australians needed during this time. Australian manufacturers had an opportunity to really demonstrate that we can make just about anything here, and we need the infrastructure to do that,” Mr Lazzaro said.

Australia has long had an overreliance on imported products, and Mr Lazzaro said the pandemic was a wakeup call for many Australians to address this imbalance.

“We are always going to need a mix of local and imported products. I think the pandemic has also demonstrated that this balance was too far skewed towards a reliance on imported products. This is why we will see a different manufacturing landscape moving forward,” he said.

Recent increased activity to Australian Made directories is also being attributed to consumers wanting to identify genuine Australian Made products, including every product that is licensed to carry the Australian Made logo. 

“Our day to day activity here is ensuring that the logo is used only in accordance with the rules, which contributes to the integrity of the brand as well as the products that carry it. Promotion of the Australian Made logo is also key. This is why we always drive traffic to our website and our social media platforms to deliver extra value to those brands that use the Australian Made logo,” he said.

“At the moment we have over 250,000 consumers hitting our website per month. We have also had huge increases in engagement on our social media platforms.”

“Additionally we have a Facebook group which is designed specifically just for manufacturers so we can link manufacturers with other manufacturers who might be seeking Australian components for their products. This is a closed group with entry only for licensees of the Australian Made Campaign, where they can conduct business,” Mr Lazzaro said.

While the growing preference for Australian Made products is evident, there still is a lack of imported products in some segments, so companies are being forced to look for materials locally and dig a little harder than usual. Hopefully this is a new habit that manufacturers will adopt full time, Mr Lazzaro said.

“While there will always be a sector of the community that will buy purely on price, what we believe will happen is that we will see a larger portion of the community take a bit more consideration in their purchasing decisions and start to look at value more closely, rather than just at price. The perception that buying Australian Made is often a more expensive choice is not always the case with Australian Made products often on par with imported products. This is when consumers should look at the value of the purchase, particularly from a standard and safety point of view, which is also becoming very important.”

The Australian Made Campaign’s research has also discovered a growing trend from the younger generation who not only want to know if a product is ethically produced, but aspects of sustainability as well.

“When you look at products that are ethical and sustainable, these are all attributes you can associate with Australian Made products. Saying something is Australian Made may not necessarily land with the demographic of those aged in their 20s and 30s. However, if you tell these customers that a product is ethically and sustainably produced, their ears will prick up. So, it is also about changing the language around how we express the Australianness of a product,” Mr Lazzaro said.

“Local employment is also in just about every article you read at the moment and around 84 per cent of Aussie consumers now associate the Australian Made logo with jobs. It would be unusual if anyone in June 2020 did not have exposure to someone that had either lost a job or had their hours reduced as a result of this COVID-19 situation so I think ensuring our family and friends are employed is already becoming more relevant for people when they make those purchasing decisions,” he said.

Australian Made compliance

Applications for businesses to use the Australian Made logo has also risen by an incredible 400 per cent, according to Mr Lazzaro who said businesses now want to tell everyone their products are Australian Made.  

“The most effective way to do this is by using the Australian Made logo because they know this is the logo that 99 per cent of consumers recognise and 88 per cent trust. We are finding that businesses are certainly looking to leverage this very pro-Australian sentiment that is in the market place at the moment.”

“The majority of manufacturers understand that there are compliance requirements expected to make the Australian Made claim. Our compliance team helps them through this process to ensure products that meet the criteria are the only ones that end up carrying the Australian Made logo,” Mr Lazzaro said.

The growth in applications and consumer interest in Australian Made products is also being attributed to the current Australian Made marketing campaign, titled, ‘It has never been more important to buy Australian than right now’.

“We are a not for profit organisation but we have managed to get a campaign away worth more than $500k across TV, outdoor, radio, digital, online, social nationwide. We will use the campaign to try and hit as many Aussies as possible. Obviously, it is a campaign that a lot of people can get behind and we are seeing the evidence of this at the moment,” he said.

The Australian Made Campaign has recorded a 300 per cent increase in engagement across its social media platforms, according to Australian Made Campaign Chief Executive Officer, Ben Lazzaro.

Although the Australian Made Campaign does not have access to a lot of retail data, there has been an influx of building related products that have come on board in recent times, according to Mr Lazzaro.

“The Australian Made logo may be used across all 34 classes of goods, so this includes everything that is sold in Australia including an industrial tanker to a jar of vitamins. It is very diverse and the compliance team have to become subject matter experts very quickly. The hardware, building and renovation sectors are also very strong at the moment and we have definitely seen and uplift there,” he said.

Wesfarmers CEO criticises Vic’s lockdown

Bunnings Chief Executive Officer, Michael Schneider, along with Wesfarmer’s Chief Executive Officer, Rob Scoot, have both slammed the Victorian government’s extended COVID-19 lockdown. Mr Schneider accused Victorian Premier Daniel Andrews of a lack of consultation, that will not only lead to a huge cost economically in Victoria, but to the entire nation.

Mr Schneider recently told The Australian that all retailers were being treated as a homogenous group that had the same-sized stores, formats and operations, when in reality they were not the same at all.

Mr Schneider said that the industry consultation lauded by Premier Andrews felt “one sided” and that despite volumes of information supplied to government ministers, it seemed their views were not taken on board.

“We have provided considerable quantities of information to both Minister (Martin) Pakula and Minister (Martin) Foley demonstrating our credentials for a safe opening, and we put the safety and welfare of our team and customers at number one. The final piece for me is disappointment at the fact that despite the Australian Retailers Association and a number of other industry bodies, as well as large and small retailers saying to the government the retail sector is not a ‘one size fits all’ model, we have been treated in a ‘one size fits all’ way.”

The October retail quarter, which could now be ruined by the Victorian government’s recovery plan, was crucial for planning and ordering Christmas products, according to Mr Schneider, and now could be greatly disrupted.

In Victoria alone, the Wesfarmers owned Bunnings employs more than 12,000 people in Victoria and services 150,000 tradesmen. Wesfarmers’ businesses, also include Kmart, Target and Officeworks, which are all mostly closed in Victoria, with Bunnings open only for tradies, according to an Australian Business review report.

Mr Schneider said there was also a practical aspect to the Victorian government’s plan to slowly open up the economy, including allowing retail to open its doors — especially, for example, when storms extensively damage metropolitan Melbourne, like it did a few weeks ago.

“We understand that if the desire for the government is for people to spend more time at home, having easy access to products is useful in supporting the community. When the big wind storms hit Melbourne recently, houses lost power and buildings were damaged. Our stores were overwhelmed with customers wanting to be able to come in and get urgent supplies to get things to get their homes (fixed) which they couldn’t do because they have to buy the product online and it has to go through the online process.’’

Wesfarmers Chief Executive Officer, Rob Scott, also criticised the claim by the Victorian government that it would consult widely and intensely with the business community as it developed its pathway to drag Melbourne out of onerous stage four restrictions that have seen all non-essential retailers forced to shut.

“I worry that this latest ­announcement creates more ­uncertainty and hardship, and will inflict a greater personal and economic cost, not just to the people of Melbourne but the whole of Australia,’’ Mr Scott said.

“In Victoria alone, Wesfarmers businesses employ around 30,000 team members and we have not had any meaningful engagement with the government around retail operations and nor any feedback as to whether our retail network presents any risks to the community. To develop a better plan would require the Victorian government to engage in genuine consultation, to listen and learn about industries that are outside their expertise, including how businesses have evolved to be COVID-safe.”

“We will do a better job solving this Victorian problem if we work on it together across business and government — as is happening in NSW, Western Australia and elsewhere,” he said.

Mr Scott said the extended lockdown in Victoria would have an “enormous, incalculable and growing toll personally for many people, financially and on their emotional wellbeing, and also for the economy”.

He said the health challenge was clear and must be taken seriously, as it was in other states, and while Wesfarmers would survive, he feared other businesses would not.

Image: Daria Nipot / Shutterstock.com

“The diversity and financial strength of Wesfarmers will enable us to get through the Victorian lockdown but many other businesses may not. Hopefully our advocacy will also help other businesses reopen in a COVID-safe way. Our primary focus will be on our teams and customers and how our divisions can support them, as best they can, through this personal and economic catastrophe. We know that our team members do not deserve this.”

Mr Scott said the government’s plans would increase uncertainty for Wesfarmers’ customers and suppliers.

“The government has introduced new thresholds (with a daily average of less than five new cases state-wide over 14 days) as a precondition to reopening. It will be impractical for many retailers to plan for and trade through such uncertainty at what is normally the busiest time of the retail year,” Mr Scott said.

Workers ‘fly the flag’ to address suicide in construction

Thousands of construction workers across Australia are flying flags on major projects today to highlight the suicide crisis facing the industry and promote efforts to save lives by looking out for workmates.

Each year, 190 Australian construction workers take their lives — six times the number killed by workplace accidents — with the industry’s blokey culture and transient nature often making it difficult to ask for help.

Fly the Flag Day, run as part of World Suicide Prevention Day, is organised by the MATES in Construction program in partnership with building companies, unions, employer groups, and mental health organisations.

The MATES in Construction program builds on-site networks of support, with more than 20,000 volunteers already undergoing training to help them identify people at risk of suicide, offer them appropriate support, and connect them with specialist assistance.

MATES in Construction NSW Chief Executive Officer, Brad Parker said the program was an industry-driven response to the suicide crisis in the sector, which sees one worker take their life every two days.

“Young construction workers are more than twice as likely to die from suicide than other young men. Job insecurity, high work demands, financial stress, relationship breakdowns, and mental health challenges all put workers at risk, while the transient nature of our industry can make it hard to build strong support networks,” Mr Parker said.

“The traditional blokey culture, where people do not discuss emotions and feelings with workmates, can also pose a challenge to people getting the help they need. Fly the Flag Day is about shining a spotlight on the problem, breaking down the stigma of asking for help, and highlighting the efforts of thousands of volunteers on projects across the country to save lives.”

“The MATES in Construction program has already built a network of more than 20,000 volunteers who have undergone industry-specific training that helps them identify workmates who might be at risk and know how to offer them the support they need. COVID-19 has made these efforts more important than ever this year, with many workers facing greater social isolation, uncertainty, and financial hardship as a result of the pandemic,” he said.

 MATES in Construction is an industry-led approach helping workers on the ground support their mates to get the help they need. Construction, energy and mining workers can call the MATES 24/7 helpline anytime on: 1300 642 11

Porters opens third trade centre in growth corridor

The Porters Group has continued to grow and evolve with the opening of its new Porters Mitre 10 Trade Centre at Rural View in the heart of the Northern Beaches, Mackay, Queensland on August 31.

Porters Mitre 10 Northern Beaches Trade Centre is a standalone, trade focused store that was built specifically to fill a gap in the group’s network, in a growth corridor, and is expected to provide a convenient offer to local builders, tradesmen, handymen and serious DIY customers.

The Northern Beaches store is the third trade centre developed within the Porters Group, with another popular trade centre located in Mackay directly across the road from the Porters Mackay City store, as well as the Whitsunday Trade Centre in Cannonvale.

The new trade store was formally known as Porters Northern Beaches but closed in 2015 after the business was no longer sustainable due to a drop in building approvals in the local area, after the mining boom.

This has now all changed with several new housing developments located just a five-minute drive from the new store. This is when the Porters team redesigned the store as a prestigious Mitre 10 Sapphire Trade standalone store to service local builders. The store was also re-built so local tradies were no longer required to drive 25 minutes to the Porters Mitre 10 Trade Centre in Mackay, while also providing a convenient drive through service for local tradies to pick up and go.

Porters Group Chief Executive Officer, Travis Cunnane, said the team was very excited to open the new Porters Mitre 10 Northern Beaches Trade Centre at Rural View.

“We know this new addition to our group will assist us to further support our customers. We

The Porters Group recently opened its new Porters Mitre 10 Trade Centre at Rural View in the heart of the Northern Beaches, Mackay, Queensland on August 31.

look forward to connecting with our customers to expand and grow our Northern Beaches Trade Centre offering. Being able to service our customers’ needs is our number one priority. This new store will assist us in doing so, we are excited to see what the future holds,” Mr Cunnane said.

Local response so far has been outstanding, with local builders already showing their support for the new store as many prefer to conduct business with a local retailer, particularly one that now provides a whole of house offering in a convenient easy location.

Boasting an extensive range of both trade and retail product lines, Porters Mitre 10 Northern Beaches Trade Centre is expected to service many building projects conducted in the area for many years to come.

Wesfarmers profit falls, despite Bunnings boom

It is clear that Bunnings remains Wesfarmer’s stand out performer, after the Big Box reported a total store sales growth of 14.7 per cent, with store-on-store sales increasing by the same percentage, according to Wesfarmer’s end of financial year results released today. Bunnings also delivered a strong second half with a store-on-store sales growth of 25.8 per cent, as customers spent more time working and undertaking projects at home, according to the results. 

Wesfarmers also acquired Catch and benefitted from the massive shift to online shopping by consumers throughout the pandemic, while its Officeworks business benefitted as consumers set up home offices during lockdown.

Despite the increase in sales on-line and in-store, Bunnings Managing Director, Mike Schneider, said there was no doubt the second half of the year has been challenging.

“COVID-19 has also presented our team with some significant challenges and I would like to thank all of them for their incredible hard work and their commitment to keeping themselves, each other and our customers safe,” he said. 

The results also showed Target continuing to drag after Wesfarmers posted a 69.2 per cent fall in full-year profit to $1.697 billion, according to The Australian.

The Wesfarmers result was also hit by more than $800 million in impairments and restructuring charges flowing from weaker divisions, according to The Australian, with post-tax significant items from continuing operations of $461 million recorded for the year comprising of $83 million in post-tax restructuring costs and provisions in Kmart Group, post-tax non-cash impairments of $437 million in Target and $298 million in Industrial and Safety.

When commenting on today’s results, Wesfarmers Chief Executive Rob Scott remained focussed on the Bunnings and Officeworks businesses, which he said rapidly adapted to the changing needs of their customers.

“The result in chemicals, energy and fertilisers also reflected a continued solid performance, while the performance of Industrial and Safety was below expectations and included a $310 million pre-tax impairment as a result of the deterioration in the outlook for customer demand in some segments and uncertainty around future economic conditions,” Mr Scott said in The Australian.

“Total online sales across the group, including the Catch marketplace, increased to $2.1 billion. This reflects the significant investment in digital capabilities over recent years, as well as the continued change in customer preferences towards online shopping,” he said.

While Bunnings’ operating revenue increased by 13.9 per cent to $14.999 billion and earnings increased 13.9 per cent to $1.85 billion, earnings at Kmart and Target fell 23.5 per cent to $410 million. Officeworks’ earnings rose 13.8 per cent to $197 million, Wesfarmers’ industrial safety operations saw earnings dive by 53.5 per cent to $39 million, according to The Australian.

Revenue for fiscal 2020 rose 10.5 per cent to $30.846 billion. The Wesfarmers accounts showing a statutory profit of $1.697 billion which was down sharply compared to 2019 because the profit that year of $5.51 billion included $3.57 billion relating to the demerger of Coles and the divestment of other businesses, according to The Australian.

HBT re-schedules conference to virtual event

HBT (Hardware & Building Traders) is set to debut its 2020 virtual conference in October, after the group was forced to cancel its national ‘Vision for success’ conference initially scheduled on the Gold Coast in May, due to COVID-19 restrictions on public gatherings.

With over 1000 suppliers and members usually in attendance at the national conference, HBT will now hold three separate events to ensure suppliers and members enjoy the full benefits of a face-to-face trade show, which is usually one of HBT’s most anticipated events. 

HBT’s virtual ‘Industrial and Tools’ event is scheduled for Wednesday, October 14, while its ‘Hardware’ event and ‘Timber’ events are scheduled for Wednesday, October 21.

Each of the three events will also include live sessions hosted by HBT Chief Executive Officer, Greg Benstead and the relevant buying manager for each event, with a focus on pre-recorded segments from suppliers.

Preferred suppliers have been offered a variety of options for their pre-recorded presentations by HBT that best showcases their products and offers.

AHJ will include the full conference coverage in the November edition, including presentations, show specials and new products launched during the virtual conference.

Specialist tool growth expected for Bunnings as it tackles the pandemic

Bunnings Group Managing Director, Michael Schneider recently spoke with AHJ not only about the Big Box’s plans to continually evolve into the specialist tool market, but also the key values the business will remain firmly focused on as it works through COVID-19. 

AHJ – What are some of the challenges COVID-19 has presented in-store so far and what was your strategy in implementing the changes?

MS – For anyone who is in business, no matter what the industry, there is usually a play book for how you deal with something, including recessions, depressions etc. So, if you cannot work this out yourself, there is always a consultant you can hire to help you through. A pandemic, from a risk management point of view, is seen as a black swan event. You cannot plan for it because you do not know what is going to happen.

We have stayed focussed on four key elements during this time – the first being the safety and well being of our team. The second is making sure we stay in stock. The home improvement, hardware and nursery industry are essential to the community and we have strongly advocated this. We are less interested about which brand is doing what and more about keeping the stock there. 

The third piece is if people have projects to do at home, this not only keeps people active but gives them a bit of a feel-good effect. I am personally very passionate about mental health, particularly when the community is facing such a challenge.

The final part is the role we play in the domestic eco-system. This system includes businesses, such as the nurseries growing plants for us, the timber mills milling timber for builder’s yards, and thousands of reps that rely on our business, on Mitre 10 and Home and all the others to be open because it is keeping people in work. We have also implemented a range of measures in-store including the Perspex screens and sanitising stations which has meant other businesses that we would not normally deal with, have engaged with us.

I received a lovely note from a chap who reached out to us to make hand sanitizing stations. Using his business during this time has meant that he has kept 50 of his employees in work. This is a good outcome for the economy and industry. It does not matter if you have a M10 or a Bunnings, or a Home, if we can pull together to keep people working, that is the mind set we need to have. 

AHJ – Is Bunnings seeing a higher demand for Australian Made products during COVID-19?  

MS – We have not seen a new demand that is material. The challenge we find is that when you ask customers if they prefer to buy Australian Made over an imported product, no matter where it has come from in the world, overwhelmingly the customer says yes. The next question we ask is if the customer would pay more for an Aussie Made product than a product from anywhere else in the world and the answer is no. They shop accordingly. People will buy Australian Made but when unemployment is rising and there is uncertainty in the economy, there is a flight to value. One of the challenges is, product that is made locally is often more expensive than the overseas product. 

In saying this the vast majority of our green life is grown here, a big chunk of our timber comes from Australia and obviously we have been jousting a bit with Vic Forests recently on issues of sustainably logged timber. We certainly do not source from just one region in the world as we have been getting product from the Middle East, Europe, the US, Asia and New Zealand. There is certainly no lack of willingness to arrange more Australian Made product when it is available but we are driven by what our customers want to buy, which is often shopping to the value proposition of the product. The ongoing need from Australian manufacturing is to make sure that quality and price are there so the customer can make that choice.

AHJ – What is the update on Vic Forests and will Bunnings re-instate supply?

MS – We have advised Vic Forests, and our suppliers, that due to the court ruling that was handed down, we are unable to purchase timber that is coming from those areas. We are working with those suppliers to work through product that they had already logged, helping them find other customers or other sources of timber. Vic Forests and the mills have indicated that they will appeal but this has not been lodged yet.

If this appeal is upheld and the lower court ruling is overturned, and there is PEFSC status on the timber, then we will re-purchase from there. But because the courts made that decision it means it is in breach of our Global Timber Sourcing Policy. This is very sensitive, which is why we will either help them source new timber feedstock or new customers, or work with anyone that does lose their jobs. 

Considering we still bring some product through those mills, some of the impact on the mills will be nothing, or as little as 10 per cent on one of the larger ones. Understandably this is a sensitive issue given there has been bushfires and Gippsland has its own set of challenges through COVID-19. We did not make this decision lightly. We worked with Vic Forests for years to help them work FSC status on their timber but when a court makes its ruling, our hands are tied. 

AHJ – Bunnings is currently implementing a strong campaign in its trade space. What are Bunnings’ plans for trade throughout 2020 and beyond?

MS – Our aspiration is to continually invest in growing our trade business over the next decade, with trade now 35 per cent of our revenue.

Inside Bunnings trade – anything that is branded under Bunnings – we have three key customer groups including the general trade, the small to medium builder and the B2B piece for procurement. As a secondary strategy we are looking at categories where we have got very low share in the true trade space. We understand plumbers and electricians shop with us for lots of products but often not the core plumbing and electrical products. Mechanics and trades that use industrial tools are the same.

Last year we made an offer to Adelaide Tools in South Australia, with the acquisition completed this year. We are learning a lot from the family who ran the business for five decades. When the time is right, we will scale this business out of South Australia into other markets in Australia and possibly New Zealand. We think about other categories the same way. Whether it’s plumbing, electrical or hard surfaces, these are areas which are a lot of interest to us because we can help these businesses to grow and bring more competition into those specialist segments. What we do not want to do is fold them in and make them a part of Bunnings, so they will remain stand-alone businesses into the future.

AHJ – How well have tradies received the new Bunnings’ PowerPass App and do you expect it will grow in popularity?

MS – Usage numbers are up to 700,000 on the PowerPass App, with about 150,000 using the app as it allows users to check out on their devices, rather than go through the registers. This has been a great way to reduce contact in-store during COVID-19 and we will announce a few more enhancements for the PowerPass app in early October during our strategy day. 

AHJ – Will Bunnings stores or its online space receive automatic access to specialist brands or products that are currently available at Adelaide tools?

MS – Bunnings’ specialist brands strategy is to let those brands play in the specialist space. We understand the decisions that TTI and others have made. We have a fantastic relationship with TTI, AEG and Ryobi, but we see this as a specialist category. There are brands like Makita and DeWalt that do cross over but equally, like Festool, there is a limited range in Bunnings which is really for the serious DIY. However, the offering in Adelaide Tools is quite expansive. STIHL made the decision to withdraw from Adelaide Tools which was their choice, but I feel we have a couple of other industrial power tool brands that will better suit our offer than STIHL. If brands want to engage in the specialist area, they are free to approach us to do that. But we do want to keep them distinctly different.

AHJ – Do the suppliers that offer brand or product exclusivity to Bunnings come to this decision themselves? 

MS – Each supplier decides the strategy that they want to go to market with and they make their decision accordingly. For example, you will find Dulux in every hardware store nationally, whether it is Bunnings or the independents. 

Milwaukee is another good example of this. Over the years we have been very open with TTI and we would have been happy to have Milwaukee in Bunnings but they made a choice to sell it through the specialist players. I do not think the retailer brand gets anywhere near as much say over these things as the supplier brands. The challenge going forward will be what it is that you are doing with your business to make a supplier want to sell through you, rather than simply go to market. There are a number of global brands like Kärcher and Bosch, that could easily go to market, direct to customers, or they may end up going to customers by selling through formats. 

Australia has some of the strictest competition laws in the world. Everyone is very mindful of doing things that are very transparent, which really does put the decision making with the supplier.

AHJ – There is a concern Bunnings Trade Shows can take up a lot of time and resources, not leaving suppliers much time to deal with independents. Is it compulsory for suppliers to attend all shows? 

MS – Shows run for 48 hours and often they tie in with our team member Product Expos as well. The trade really likes them because they like to see the new innovations. It is in the supplier’s best interest to be there. Suppliers will get revenue out of those trade shows. If I was running a supplier business, I would increase my resourcing for that period of time with extra teams to help me through an expo so I did not let other customers down. We have had a lot of positive feedback from suppliers and our trade team, as well as our competitors who snuck in and had a look around as well. It is good to see people are interested with what is going on in the industry. 

AHJ – With over 70 small format stores throughout the network, will your small store campaign continue?

MS – We try to introduce the right sized stores for the community we go into. If you take metropolitan Melbourne, most of our stores are warehouses with a small store in Brunswick. We went into Brunswick knowing we have got a big warehouse coming, so that store will close when the warehouse opens. We wanted to get in and do some community work in that North Western community so people got used to having Bunnings around and understand how we contribute to the community. 

In about 24 to 36 months’ time we will have a new warehouse in Northland in Preston on Bell Street and the Northland Warehouse and the Fairfield small format will close. Quite often we use them tactically to take pressure off bigger stores. In our regional markets, where the town has been too small for a big warehouse, we open a smaller store there. As the populations grow, we review those and expand them or close them and open a bigger store.

AHJ – Bunnings is well known for retaining its staff and an older generation of staff as well. Is this due to culture, excellent working conditions, pay or a combination of all?

MS – This is something we think about a lot and we do our best to create a really good working environment. Some of this comes from culture, benefits, as well as things such as bonus payments for our team while working throughout the pandemic. Our enterprise agreement pays about $150 million a year above the retail award so our team are some of the highest paid retail members in the industry. We also invest heavily in training.

With over 48,000 people working at Bunnings and through things like our internal Facebook, we engage with our team and continually answer enquiries. They are our priority and it pays dividends in the quality of the people that work for Bunnings.

We do not stand a lot on ceremony and we do not see ourselves as a big corporate, but instead as a business focussed on the community and on our team. It is a challenge because it is a very competitive market – it is not just us. There are some out-standing retailers including Mitre 10’s, Home Hardware’s, Reece and Beacon. We understand the competitive landscape and we play a part in improving the industry but we also want to make sure there is strong competition so at the end of the day, it is the customers who are the winners.

Builders call for new community builder grants

Master Builders is calling on the Federal Government to fund a new initiative, CommunityBuilder grants, in the October Federal Budget to activate the construction of community and non-for-profit facilities, in its Pre-Budget Budget Submission released today.    

“We are calling for the Federal Government to adapt the highly effective HomeBuilder scheme model to do for the commercial construction sector what they done for the housing sector,” Master Builders Australia Chief Executive Officer, Denita Wawn, said. 

“Commercial construction activity will suffer a major fall of more than 17 per cent in 2020/21 according our latest forecasts. This will put under the viability of thousands of SME commercial construction businesses and the jobs of the thousands of tradies they employ, unless the Government steps in with measures such as CommunityBuilder.”

“We propose that CommunityBuilder would involve the Federal Government providing applicants from the not-for-profit and community sector with grants to fund 25 per cent of the construction, up to a capped amount for example $5 million, for facilities such as community centres, toilet blocks, libraries and training centres,” she said.   

Grant recipients could supplement CommunityBuilder grants with state and local government grants, according to Ms Wawn, but they would need to come up with the rest of the funds.

“Our modelling shows that an investment of $3.8 billion in CommunityBuilder would return a $6.8 billion boost to GDP and create 13,000 new jobs,” she said.  

“Our industry has more businesses on JobKeeper than any other sector of the economy and Master Builders is gravely concerned about their continuing viability and the livelihoods of the people they employ. That is why we are calling on the government to include funding of our the CommunityBuilder grants proposal in the October budget. As the sector with the third largest economic multiplier effect in the economy, commercial construction is vital to building a bridge to economic recovery and saving jobs,” Ms Wawn said. 

Master Builder’s message to the government is clear – talk of supporting small businesses through the crisis and creating jobs will be for nothing if there is not a pipeline of work, another spokesperson said today.

“As the Reserve Bank Government told the Parliament last week, ‘fiscal spending will get people back to work’ and the Government should heed our call to implement stimulus measures that will supplement demand. Cranes in the sky and utes on building sites are cited by some as indicators of economic growth. You will not see too many of either unless the government steps in and adopts measures such as those called for by Master Builders,” the spokesperson said.

In the Australian economy there is no industry with a bigger economic multiplier effect than building and construction, as there is no larger provider of full-time jobs and no other industry with as many small businesses, that is why we are seeking stimulus measures across the entirety of the residential, commercial, and civil construction sectors, Master Builders recently reported.

Master Builders Australia Chief Executive Officer, Denita Wawn.

Master Builders also announced that it would like to see the government deliver measures that will line up with its top five budget priorities including rebuilding Australia by:

  1. Investment in building and construction that gives back to the economy.
  2. Supporting business performance.
  3. Supporting people in the building and construction industry workforce.
  4. Improving procurement, planning and regulation.
  5. Appointing a Minister for Housing and Construction.

Underpinning the top five Master Builders also announced proposed fiscal and policy measures targeted to kickstart building and construction activity including:

  • A 12-month extension of HomeBuilder.
  • Establish a CommunityBuilder grants scheme based on the highly effective HomeBuilder model to activate the construction of smaller community/not-for-profit facilities.
  • Significantly reduce depreciation rates of capital works for investors in both residential and commercial property.
  • Facilitate through new procurement models an increase institutional investment in social infrastructure including social housing and ensure that smaller and local businesses can tender to deliver government funded projects.

 

Baby Boomers continue to drive home renovations

Median spend for home renovation projects stabilised at $20,000 in 2019, according to the annual ​Houzz & Home Australia survey​ of more than 4,500 Australian respondents. At the higher end of the market, ten percent of homeowners spent $150,000 or more on their home renovations. Nearly half of homeowners reported a renovating project in 2019, (48 percent), tackling nearly three interior rooms on average. When the study was fielded in early 2020, planned activity for the year remained consistent with the previous year, however, the impact of the coronavirus pandemic on planned renovation activity remains to be seen. 

Baby Boomers (ages 55-74) accounted for nearly half of renovating homeowners in 2019 (45 percent), an increase from 2018 (40 percent). Gen Xers and Millennials follow in renovation activity with nearly 39 percent and 14 percent of home renovators, respectively. Gen Xers and Baby Boomers reported the highest median renovation spend in 2019 at ​$20,000 and $18,500​, each.

Millennials followed, with a median spend of​ ​$12,000. Kitchens commanded the highest median spend at​ ​$15,000, a decline from previous years, followed by master bathrooms (​$13,000) and guest bathrooms ($10,000), which both experienced increases in median spend compared with the previous year. 

Houzz Senior Economist Marine Sargsyan said, “following significant growth in home renovation activity over the past few years, we are seeing the market settle somewhat in terms of activity.”

 “That said, project scope and spend have remained stable and we’re seeing Baby Boomers continue to bring consistency to the market as they pursue projects that will allow them to age in place,” she said.

More than half of renovating Baby Boomers do not have plans to move out of their homes within the next decade (​53 percent​). Baby Boomers and Gen Xers were motivated to pursue a home renovation project because they’ve wanted to do it all along and finally had the time (39 and 30 percent, respectively) and financial means (42 and 39 percent, respectively). The biggest motivation for Millennials was to customise a recently purchased home (38 percent). 

COVID-19 impacts home improvement

The Houzz & Home survey was fielded prior to the declaration of the coronavirus pandemic, between February and March, 2020. At that time, nearly half of homeowners planned to continue or start renovations this year (48 percent), and nearly one-third of homeowners planned to make repairs (29 percent). 

“Subsequent surveys* have shown that four in five homeowners who were in the midst of a project at the start of the pandemic were able to continue with renovations. That said, some homeowners have opted to delay certain elective renovations due to implications related to social contact, labour and material availability and personal discretionary spending,” Ms Sargsyan said.

“Deferred maintenance will accrue during this period, setting the stage for a renewed burst of activity following the pandemic.”

Planning takes time

Preparing for a renovation in 2019 took homeowners longer than it did to actually renovate, on average. While construction took between 2.4 and 5.7 months on average for different types of projects, the planning phase took roughly twice as long. Kitchens require lengthy planning, averaging 11.1 months, compared with bathrooms (9.2 months). Surprisingly, entry, foyer or mudrooms, which typically command a smaller square footage, took nearly eight months on average to plan.

Homeowners look to professionals for help

Nearly nine in 10 homeowners hired a home professional for renovation projects in 2019 (89 percent). Baby Boomers and Gen Xers were most likely to hire a pro for their project (89 percent, each), followed closely by Millennials (88 percent) who experienced a five-percentage point growth in pro hiring compared to the previous year. Electricians and plumbers were the most common renovation professionals hired by renovating homeowners (60 and 45 percent, respectively). 

Home offices get to work

While kitchens, living rooms, bathrooms and laundries continue to be the most popular rooms to renovate (23, 20, 17 and 17 per cent, respectively), home offices were added or upgraded by more than one in ten homeowners in 2019 (11 per cent). Millennials were more likely to pursue a home office project (15 percent) than Baby Boomers (nine percent).

Projects funded by savings

Cash from savings was by far the most common form of home renovation payment (80 per cent). The next most common source of funding was credit cards (20 per cent), which was more commonly used by Gen Xers than the other generations. 

The Houzz & Home Survey

The annual Houzz & Home survey is the largest survey of residential renovating, building and decorating activity published. The survey covers a wide range of renovation projects in 2019, from interior renovations and additions to home systems, exterior upgrades and outdoor projects. Data gathered includes historical and planned spends, professional involvement, motivations and challenges behind building, renovation and decorating projects, as well as planned activities for 2020. The 2020 study includes more than 4,500 respondents in Australia alone, providing insights into the home improvement activity of the millions of users of the Houzz site and mobile apps.