HBT’s Melbourne Conference powers ‘True Independence’
HBT’s (Hardware & Building Traders) National Conference began with an air of excitement and enthusiasm as over 300 stores, up 50 stores on last year, collaborated at the Melbourne Convention and Exhibition Centre for three days of workshops, trade show and the newly programed awards night.
‘Powering True Independence’ was the appropriate theme of HBT’s 2019 conference, with Chief Executive Officer, Greg Benstead saying the theme was a reminder of how HBT intends to truly power up the independent businesses that make up HBT.
Mr Benstead immediately welcomed new attendees to the conference, during his opening address, as well as the 170 suppliers in attendance, totalling 1075 registered suppliers and members, in a record turnout.
However, it was not only HBT’s national conference presenting record numbers. HBT’s membership has also grown substantially over the past year, now up eight per cent on last year. This is a particularly impressive achievement considering the apparent slowing of the Australian building industry in recent months, according to Mr Benstead.
As he took to the stage on the first day of the conference, Mr Benstead proudly reiterated that HBT’s values have remained unchanged since the group’s foundation in 1997, and include all deals remaining transparent and for the benefit of members.
“Our strategy for HBT over the last 22 years has been very consistent, and has been about lower buying prices, growing rebates, everything at member option and, from a supplier’s perspective – we need to build volume. However, we also need to ask what the strategy will be for members and suppliers in 10 year’s time, to make sure we remain relevant moving forward,” Mr Benstead said.
With HBT’s membership currently sitting at 409 hardware and building stores, 34 H Hardware branded stores, 193 ITT (Industrial and Tool Traders) stores and seven paint stores, HBT’s current strategy of remaining transparent, and to the total benefit of the member, is obviously working well. This is also considering 15,450 accounts currently operate through HBT, a number that continues to grow.
After reiterating HBT’s current achievements, Mr Benstead also addressed a recent concern raised by a small number of members during HBT’s state meetings, which were particularly designed as a replacement of HBT’s yearly state conference, usually held in October. The tactic to hold more intimate style meetings on a state-by-state basis is working well, with member concerns – one being whether the group will become more corporate – raised on occasion and also allowing Mr Benstead to respond during his opening address.
“Some members have communicated the idea that the HBT group may become more corporate, but there is nothing further from the truth. The group will stay true to its values and also stay true to HBT’s mission statement of ‘giving members and suppliers the tools to survive and thrive because family businesses make communities stronger’.”
“Our mission statement was the basis of HBT when it started 22 years ago. Nothing has changed and it never will. This mission continues to drive our membership exceptionally well because we are true to this. We currently have 746 members, which is an eight per cent membership growth in 12 months. But the most important thing to us is to make sure you, the member, is also growing, which can be achieved by delivering more services and certainly more rebates,” Mr Benstead said.
Time to evolve
While Mr Benstead reiterated the importance of remaining true to HBT’s values and mission statement, he also reinforced the importance of moving with the times to meet the current market.
“What are the drivers of market change and what do we need to do to be constantly vigilant? One is competition (including exclusive products to Bunnings), as well as a changing supplier base and consumers changing as well. Bunnings is reducing costs more and more. This is evident with less, highly educated available staff in-store, due to on-going corporate pressure to reduce costs. There are also more and more independent hardware groups becoming more corporate. These groups are changing along with the suppliers,” he said.
“The reduction in brands by Bunnings is definitely putting suppliers under pressure. Masters changed the landscape too and many suppliers are still scrambling after that change, including Australian suppliers competing against imports. Everyone is fighting for a piece of the pie. Suppliers need to make money because if they don’t, they cannot reinvest in innovation, new product development, marketing and merchandising.”
“While the supplier base is changing, so to is the consumer, with online sales growing six times faster than retail sales. The reality is the hardware industry is a $21 billion business in Australia and last year $305 million was made out of true, clean online sales, which is 0.14 per cent of our business. Therefore, it is not significant – yet. But we do need to be mindful of it,” Mr Benstead said.
The hardware consumer is also changing, according to Mr Benstead, who reminded members that in the next five to 20 years, the millennial would become homeowners for the first time.
“A millennial’s understanding of how they see hardware is very different to how we see it traditionally. ‘Click ‘n Collect’ is most likely to become very big, while millennials also love installation services because they do not know how to build anything. They also need to know what a design looks like at completion. There is no point selling a millennial a host of ingredients because they are not likely to know what to do.”
“You need to know your customers better than your competitors and create something unique and memorable. Deliver an experience, not just a sale. Customers today are spoilt and we need to deliver what they are seeking. It is about service, experience and exceeding expectations. You have to do something exceptional to have people recommend you,” Mr Benstead said.
Standing the test of time
To evolve as a business, it is important to also consistently deliver lower prices and more rebates, according to Mr Benstead, who said this might be achieved by increasing volume to the supplier.
“The only way a supplier will get you a better deal is if you give them more volume. It is all about growing the category, by marketing the products and making sure more customers are buying them now more than ever before.”
“HBT has assisted in this process by aligning the right buying teams with the right categories. Our buying teams now understand the suppliers and the categories really well, so we could make the right decisions,” Mr Benstead.
This is also particularly evident with the significant expansion of HBT’s buying team over the last eight months, with five new team members now based in Melbourne including:
Jody Vella – General Manager of Buying.
Kevin Marshall – National Business Manager for Hardware.
Mark Sampson – National Business Manager for ITT.
Peter Hurley – National Business Manager for Timber.
Valentyna (Val) Skyba – Buying Team Support
HBT’s new buying team was specifically set up to regularly deal with suppliers and source an understanding of the marketplace.
After establishing the new buying team, HBT then went on to create new steering groups, particularly within the ‘Hardware’, ‘ITT’ and ‘Timber & Building Supplies’ sectors, according to Mr Benstead.
“The new steering groups consist of members who conduct discussions in regards to suppliers within the market. The steering groups then conduct a category review to ensure they have the best suppliers on board to continually grow the business, so HBT ends up with preferred suppliers who deliver on sales growth, rebates, promotions and field support.”
“Ultimately it is about independence and you have the options. What your store looks like is your decision, as well as the products you range and the price you run. It is your call. What suppliers you use is also your decision, but we have strong recommendations on which suppliers are on-board to help us,” he said.
Mr Benstead also presented several new initiatives to members specifically designed to assist with businesses development, including HBT’s monthly promotional program. HBT’s new member portal was also launched during Mr Benstead’s presentation, which has “critical information, in an updated, user-friendly environment.”
In closing, Mr Benstead said he was proud of HBT’s evolvement over the last 20 years.
“When HBT started, we needed to get volume to achieve economies of scale. The membership increased and diversified from just a hardware focus into many areas, and as more suppliers came on board, we leapt to fill categories we had holes in.”
“As the industry landscape continues to change, I believe we will run towards 2020 with optimism because we have so much going for us. If we continue to evolve in the way that we are, it will great for everyone. If we support the group, we can work together for success. That is how we started, and this conference is about getting back to our roots and using the power of this group to achieve success,” he said.
Buying strategy for 2020
HBT’s General Manager of Buying, Jody Vella, also took to the stage on the first day of the conference, reminding members that as they are exposed to new ideas and information, to think about how they can implement new ideas into their businesses upon their return.
Mr Vella officially introduced members to the relatively new HBT buying team, pointing out that the team had a real passion for driving the business, not only from a buying perspective, but from a supplier’s perspective as well. He also reiterated how critical it is for members to support the suppliers who support HBT.
“When you look at our competitors, Bunnings continues to invest in exclusive brands, including British Paints and Ryobi, and talk to suppliers about gaining exclusivity of brands. This means there is less money for suppliers to invest into NPD, category innovation, marketing or promotional spend. Less money for us but more money for Bunnings. They are suffering of late and that is new territory for them. This also means they are really putting the squeeze on suppliers for more margin and increased trading terms,” Mr Vella said.
“Our strategy moving forward is for the HBT buying team to source collaborative relationships based on effective and open partnerships. We will conduct negotiations in an open and transparent manner. Over the last six months Mark, Kevin, Pete and I have met with over 120 suppliers. We pride ourselves on being open and easy to deal with. We want to lower costs and give more back,” he said.
Mr Vella also reiterated to delegates that true independence translates into members not being dictated to, being coerced or forced, but rather about giving members the tools and ability to drive their own business and continue success.
“It is very important to support suppliers who support HBT. It is important because these suppliers see the value in HBT and in you, and they understand your importance. Every time a supplier offers you a deal that bypasses the group, they are out to divide and conquer HBT. Do not allow them to divide and conquer us. With 747 members we are a formidable force and we have the power to support the right suppliers that do not erode our ability to drive better deals and pricing. It all comes down to strength in numbers. Promotional programs will allow you to differentiate your offer and improve margins,” he said.
“Remember the importance of evolving your business. If your business is the same as it was three years ago, then you need to look at how to evolve it. As the overall market tightens, the ability to differentiate your product offer from that of your competitor is crucial and will ensure your business will prosper in these difficult times.”
“You have a real weapon in your stores and that comes in the way of your staff members. Empower them. Make someone a champion for new product or category innovation. Innovate and differentiate. Our competitors are doing this all the time and so must we,” Mr Vella said.
Business improvement and marketplace adaption
HBT’s General Manager, Mike LoRicco, also spoke on what he has had to do during his 41 years in the industry, to be successful, including adapting to change, investigating what is happening in the marketplace and adjusting accordingly. Mr LoRicco also spoke about member on-boarding, utilising on-line communication channels such as Facebook and the HBT member portal, as well as business development.
Mr Benstead, Mr LoRicco and Mr Vella then took to the stage together, to finish off day one of the conference and present on the year ahead. The trio also touched on market place predictions based on analysis from key suppliers, to allow members to think about strategies on growth for the upcoming 12 months.
Highlighting some of the expected growth areas, Mr Vella said HBT management interviewed suppliers on where they thought future growth areas would be.
“There has been strong growth in the flooring product ranges and there are forecasts for growth in flooring and façade product ranges. Although, we do expect a softening in cement and plaster board sales there will be future growth from new product development. Insulation has also flattened with growth expected in the acoustic range.”
“Paint has also been flat due to declines in the commercial and new housing sector with growth expected in the renovation sector. Timber is also softening through new home builds, with some growth expected in cladding and decking products. Abrasives remain flat with growth areas expected in industrial products, while fasteners are also flat with some growth expected from infrastructure projects. Power tool accessories are also flat however growth is expected to return by the end of the year. Garden tools showed a slight growth but declines are expected due to drought,” Mr Vella said.
In regards to dwelling starts, ACT and NSW are showing growth, with NSW showing many new homes still going through the pipeline, according to Mr Benstead.
“The boom seems to be over but we are at record highs, so yes it is slowing down but it certainly is not disastrous. When growing a business in a slow economy some of things you need to be doing is to find categories that you are not in,” Mr Benstead said.
“A key consideration is to also ask yourself what you can sell that you do not currently sell. This is also why HBT set up six speed dating sessions with each member on the first day of the trade show, to ensure members attempt to talk to someone they do not usually deal with and most likely discover they stock a product they might require,” he said.
Several members of HBT’s buying team also spoke to members during the conference with ITT Business Manager, Mark Sampson, presenting ITT’s strategy and category reviews and member support, while reiterating the importance of ITT members rallying together to create supplier deals that reap the rewards.
DIY/Hardware Business Manager, Kevin Marshall also spoke on HBT’s hardware strategy plan, promotions and how member support will continue throughout the year. Mr Marshall reminded members to continually look for opportunities within categories including paint, Father’s Day and seasonal opportunities in the garden category.
Timber Business Manager, Peter Hurley also spoke on the largest category in HBT, timber, with the top five HBT suppliers being timber suppliers. Mr Hurley not only spoke on HBT’s timber strategy plan but also reiterated the need for members to prevent dealing directly with suppliers, as he could not see how the group would ever achieve its full potential while this is still occurring.
Regular AHJ contributor, business strategist and consumer behaviour analyst, Barry Urquhart, also took to the HBT stage, on the first day of the conference, to share his insights into the future of Australian hardware and how hardware independents may be impacted.
“While there are still many wonderful opportunities in the Australian hardware sector, the reality is retail business is changing rapidly and today has a three year life expectancy, with new product life expectancy being just 18 months. Make what you are doing today obsolete because if you do not, your competitors, your substitutes and the digital disrupting elements will do that for you. Many consumers today believe that retailers do not understand them and do not care – that is confronting. So what can you do to maintain a competitive advantage?” he asked.
“After talking with several members of the HBT group there were two important factors that almost have become a mantra in the group – price, and margin squeeze. However, this is a myth. Price is not the most important thing out of the market place. Price has traditionally been the fourth most important thing for consumers. We need to also talk about perception, presentations, price, productivity, personality and profitability.”
“Perception is to battle for the mind of the consumer or what comes to mind for the consumer first. Are you trying to win the hearts and minds of people? It is not about discounting. It is about being relevant, being pertinent, and of having ambience that is always very exciting. Presentation is also so very important, whether it is at point of purchase or on your website. Remember 63 to 68 per cent of people who are intending to buy, now go on-line and analyse data, determine what they want to buy and then make the contact. Online communication is now non-negotiable because convenience has transformed into accessibility,” Mr Urquhart said.
Mr Urquhart also touched on the importance of communicating effectively, including actively listening to the needs of local tradies.
“If you are dealing with tradies they will verbalise price, but what they really want is value because it is incredibly important. Value to the tradie is about productivity and could mean something like not having to leave the building site to go and get the merchandise. They can phone you or ‘Click ‘n Collect’ so it is ready for them. These are all the things independents need to start recognising within their business. Online opens the door of opportunity. In-store personal customer services closes the sale,” he said.
“The road ahead for HBT is about building your own road. Stop pause and reflect – you can be whatever you wish to be. It is better to be different, than it is to be better. Focus on the difference. Innovate and create. Determine what it is about your business that no one in your captive area can say. What are you famous for and start to build a story and a message? We have a great story to tell at HBT and it is going to work out on value because we have Click ‘n Collect, social media, and some people in this room have up to five vehicles for delivery. Every one today is a ‘now’ consumer, including tradies, so you need to say ‘come on in, we have it and we will get it to you on time’. That is what you are marketing – the productivity.”
In closing, Mr Urquhart requested the audience ask themselves several important questions to further develop their businesses including: What are we going to continue doing? What have we done? What has made us where we are today? What are the compelling essential characteristics of our culture?
Law compliance in a politically correct world
iHR Australia Managing Director, Stephen Bell also presented to members, sharing his thoughts as a leading practitioner in human resource capability modelling, compliance to laws and how this relates to HBT members.
Mr Bell pointed out how we are also now living in a world of political correctness and because it is prevalent, there are systems of litigation that support it, which is why everyone needs be aware of it. Mr Bell went through a series of scenarios in cartoon format, alongside three HBT members, who assisted Mr Bell in breaking down the scenarios and discussing how a manager should react, instead of being aggressive or dismisive as predicted in the scenarios.
“Part of performance management needs to be a two way discussion. One of the most important parts of the discussion is you need to ask staff why their performance has not been achieved. Do not attack them. Listen and ask them what has happened in their life to make their performance drop.”
“There is a law out there currently which is really big and it is workplace bullying. The way you say things is so important because you cannot make it a verbal attack. We need to take the empathic road with staff who have complaints, not avoid complaints,” Mr Bell said.
Evolving in a diverse world
Human performance researcher and consultant, Dr Adam Fraser, also presented on day two of the conference, presenting on the best ways to adopt a high-performance culture and thrive.
“Some of the buzz words in business today is how the environment is evolving and changing and what disruption this is causing for businesses. We are re-thinking our models, including how we do what we do and the value we bring to our customers. We have to evolve and change. The landscape, our customers and technology is shifting so much, if we do not re-think and adapt our models, we are going to be left behind.”
Most people think disruption is a fast process, according to Dr Fraser, who said when a business is blindsided they often had no idea the change was coming.
“But it is not a fast process. There are always signs years before that disruption is going to happen. The problem is people in the marketplace ignore the signs. Ten years later we wake up and we are irrelevant or out of business and we blame the market or the competitors, but what is to blame is our ignorance and our inability to evolve.”
“Behaviours that often prevent a business from evolving is that their point of view was too narrow. The reason Sony missed the development of the iconic iPod is that everyone at Sony had the same opinions and barely spoke to each other. Small business owners need diversity and different points of view within their businesses. Collaborate with people who are different to you and talk to them about your business. Find someone who will challenge your business and help it evolve because they have a different point of view and different perspectives on their business,” he said.
Gala dinner and awards night
For the first time in HBT history, several store and supplier awards were presented during HBT’s Gala Dinner and Awards Night, held on the final night, also at the Melbourne Convention and Exhibition Centre.
Mr Benstead, Mr LoRicco and Mr Vella presented winners with their awards, who agreed all conference functions had been a great success, including the workshops, trade show, as well as supplier and member functions of an evening.
Proceedings were initiated with a Service Recognition Award, awarded to Laurie Peck. Upon receiving the award, Mr Peck said he was very honoured to be a part of the HBT family for such a long time.
“If you’re a member of HBT, you are part of a big family. This family has grown, so everyone here has made the right decision in their life to be a part of this group. Remember to talk more to your fellow members, and suppliers, get behind this group and support it. HBT will continue to grow and because of this, you will be very successful in your businesses.”
Supplier of the Year Awards were then presented to the following award winners:
Timber Supplier of the Year 2019
Hume Doors & Timber
Hardware Supplier of the Year 2019
ITT Supplier of the Year 2019
Overall Supplier of the Year 2019
Store of the Year Awards were then presented, with Mr Benstead highlighting criteria for the awards included being major supporters of HBT and HBT’s key suppliers, displaying well-presented stores, and remaining highly involved in-group functions. Runners up received a $1000 prize and $1000 marketing package, while regional winners received a $5000 prize, marketing package and inter-state function with all winners later on in the year.
Regional Runner up Store of the Year WA, SA & TAS
Bridge Building Supplies
Katanning H Hardware
Regional Store of the Year WA, SA & TAS
Regional Runner up Store of the Year QLD & NT
Collins Tools & Welding Supplies
Beau-View Trade Supplies
Regional Store of the Year QLD & NT
Tenterfield Building Supplies (NSW)
Regional Runner up Store of the Year NSW
Hendo’s Power Tool
Gerringong H Hardware
Regional Store of the Year NSW
Cooma H Hardware (NSW)
Regional Runner up Store of the Year VIC
Hallam Bearings Tools & Industrial Supplies
Regional Store of the Year VIC
Discount Trader (VIC)
National Store of the Year 2019
Mt Alexander H Hardware Timber & Building Supplies (VIC)
H Hardware Store of the Year 2019
DeMar H Hardware (VIC)