Tait joins Danks

Tait joins Danks

Store Name:
Tait Home Timber and Hardware

Group managers:
Gary and Graeme Hayes

Buying group:
John Danks & Son

What happens when a respected, long-established, trade-focused hardware store is acquired by Danks? In the case of Tait Home Timber and Hardware, great things.

The story of Tait Home Timber and Hardware in Melbourne, which was acquired as a company store by Danks in November 2011, could serve as an illustration of what is set to be a growing trend. This isn’t the story of a retail operation that “failed” and was then acquired in some kind of “fire-sale” circumstances.

It is the story instead of businesspeople who made a series of sound business decisions, decisions that were responsive, in the main, to the path the business should take to gaining and taking advantage of its maximum value in the marketplace. What makes Tait particularly interesting is that it is a business primarily focused on tradesmen, contractors and builders. “This has been pretty consistent over the past 35 years,” Gary Hayes says, noting that the non-professional customer segment had grown only as high as 23 per cent in the years since DIY and self-renovations became popular, up from 15 per cent in the prior years.

The stores’ stocklists are therefore weighted in favour of the professional building contractor. The stock consists of a full range of sheet, cladding, decking, and structural timber products, for both internal and external use. The stores are also known for their extensive range of timber flooring options, with over 1600 square metres of Australian hardwoods, and US and European oak products for decks and polished floorboards on display. Tait Home Timber and Hardware also supplies non-timber building materials such as concrete and plasterboard sheeting, roofing, insulation, and door frames.

Hayes says the team is strict on what goes in to the lineup. Other smaller departments feature general hardware, including paint, hand and power tools, work wear and safety equipment, electrical connection accessories, and basic plumbing supplies. However, the focus remains almost exclusively on the timber, with staff trained to appreciate and understand the subtle differences between products and grades. The approach, according to Gary Hayes is: “We sell timber, timber, timber… and then a little bit of hardware.”

History in timber

The business owes its origins to the market forces in Melbourne’s real estate market. The timber yard that would form the basis for the business in the (now) inner-city suburb of Tooronga was established in 1905 in response to a building boom in that area. In 1969 the hardware business was acquired by the Hayes family, with its current managers, brothers Gary and Graeme Hayes, coming onboard in 1974. At that time the store was branded as a Mitre 10 operation.

Later it was branded as “Pro Timber and Hardware”. Along the way, the operation added a second location, in the south-eastern Melbourne suburb of Somerville. In the midst of these changes, one of the constants in the business’s operations has been a strong relationship with the John Danks & Son buying group, according to Gary Hayes. The two stores are quite different. The Tooronga store is a 9,290 square metre operation situated on 0.81 hectares. Gary Hayes describes the region in which is located as the “money belt” of Melbourne. The local government area of Stonnington provides the best demographic guide to the region. It features a low unemployment rate of under three per cent, an average wage of over $65,000 per annum, and a workforce which is 50 per cent managerial/professional. Housing is tilted more towards single-residencies on smaller blocks of land, with some areas of medium- and high-density dwellings.

Somerville is in the Mornington Peninsula Shire to the south of Melbourne. The Tait store located there occupies 1.6 hectares. The region has an unemployment rate of close to 3.5 per cent, average annual income of around $42,000 per annum, and only 30 per cent of residents are in managerial/professional occupations. Somerville grew to become a significant residential area in the 1980s and 1990s, but has seen growth fall sharply since 2005. Whereas the Tooronga store operates in an established region where renovations and extensions are the most common form of building, Somerville relies much more on new home builds. As Gary Hayes puts it, the region now has “more and more contractors scrambling for less and less work.”

Loyalty, staff, services

What mitigates somewhat against these less than ideal conditions is what Gary Hayes describes as a “pretty loyal customer base” utilising both stores. That is neither accident nor “good luck” but has been carefully nurtured by the Hayes family over the past 35 years. There are two key aspects to gaining loyalty: the staff the company hires, and the services it offers to customers. “We have a lot of mature staff who have been with us for lots of years,” Gary Hayes says. “We’re always looking for good people.” They tend to come from the industry itself, with a significant number of former trade professionals dispensing service and products in both the Tooronga and Somerville locations.

Hayes urges his staff to begin building relationships with customers from the first opportunity, and to “over-service” them at each interaction. He wants customers to be greeted and served within just a few moments of entering the store. “There should be no more than 30 seconds without service,” he says.

The services Tait offers are somewhat legendary among their customers. As Mark Burrowes general manager – Home Timber & Hardware Group for Danks mentioned in a recent interview, Tait will work hard to get supplies onto a builder’s site in the event of an emergency. Getting good service from staff starts with providing a community for the staff. Among other camaraderie-building programmes, Tait supplies a simple lunch daily, which, besides helping morale also keeps staff on site during the busiest periods, and ensures the back-of-house areas are remain clean.

Market changes

As is often the case, of course, positioning that is very advantageous in one market can easily turn out to be less helpful in a different market. It’s noteworthy that Gary Hayes admits his initial reaction to entry of the Bunning’s big box stores into the market was slightly dismissive. “I remember thinking: ‘how’s this going to work’,” he says. “Yes – there’s a market for it, but there’s still a real market for good [construction industry] specialists.” While that statement is true, it has also proven to be the case that in recent times the construction industry specialist market has declined sharply, while the DIY-related areas have maintained revenue levels or even continued to grow.

Arguably, it is precisely this dynamism which is one of the prime forces behind consolidation in the Australian retail hardware industry. Faced with a declining market, businesses have two main choices to make: diversification of product line or — paradoxically — growth. Increased size in a declining market can enable a business to capture a dominant role.

Given this, it has made very good business sense for Tait to allow itself to be acquired by Danks. As mentioned previously, the two businesses have had a longstanding relationship. Burrowes says Danks is also very committed to maintaining the culture and operations of stores it does acquire, and benefitting from the new talent it brings on board. As well as being general manager of The Tait Home Timber and Hardware Group, Gary Hayes now has a trade development role with the wider Danks business. The new ownership structure has not altered the behind-the-scenes atmosphere at the Tait Home Timber & Hardware Group. “Danks have fully embraced the staff and the culture,” Gary Hayes says. Under the new ownership the group is reinvesting, even as times get tougher. Rather than lay off staff, the business is gearing up for better times. It is redeveloping its site, and also focusing on further enhancing the level of customer service throughout the business.

“We’ve been a Danks customer for 30 years,” Gary Hayes says, noting that the group’s warehousing facilities were exactly what a business like Tait’s required. Since the buyout, Hayes says Tait’s has leveraged on Danks’ tested occupational health and safety resources and product development expertise.

Burrowes is quick to point out he sees the acquisition of hardware retailers as an essential step in building a resilient “hybrid” network, and believes that these moves will actually benefit the stores that remain independent in the network. As Burrowes put it in a statement to the Hardware Journal: “In all of our company-stores to date, we’ve kept the same staff, and the management team remain the same so that the richness of the service and advice that your local hardware store is known for, continues in our company-owned stores.

“It’s about maintaining the passion and spirit of the independent retailer in our network. Customers are looking for some market leadership and new initiatives, and that’s exactly what we can offer in our hybrid model.” Speaking directly to the Tait acquisition, Burrowes says “A transition to a company-owned store does not spell the end of a family-run business, it gives the opportunity to grow the store to the next level. Tait’s is a prime example of the positives that been generated from this transition.”