Industry Insights 2020

While 2020 is a year many small business owners would rather forget, hardware retailers are heading out of this year relatively unscathed, with some segments of the hardware industry achieving record sales during the pandemic. In this special edition of Industry Insights, discover not only what industry leaders achieved this year, but the important lessons they have learned along the way.

HBT CEO, Greg Benstead 

Managing COVID restrictions throughout 2020 was not only about sharing the correct information with HBT members initially, but also remaining grateful that the hardware industry was an essential service during this time, HBT Chief Executive Officer Greg Benstead said recently.

“The good news that has come out of this year is that we are an essential service industry that has done very, very well during this time. On top of this, we have also shared lots of information to our members so they could serve their customers in a COVID safe environment, including delivering to the car park and organising contactless deliveries. I think because a lot of our businesses are around 70 per cent trade, it made things easier because trades were happy to work with us in a contact free environment,” Mr Benstead said.

“We also discovered that sales growth within the industry was quite significant, particularly when DIYers began taking on lots of home improvements during lockdowns. Not only did our trade business continue to grow strongly, but we also gained additional retail business. Although DIYers were buying smaller items, there was more traffic going through the stores than ever. This again presented challenges to the stores because they often had to shop for the customer in those early days and then hand deliver. The sales certainly made everyone feel more positive, while still feeling for those industries that were suffering during this time,” he said.

Incredibly, HBT’s sales are now tracking 45 to 50 per cent up in the quarter from July to September, according to Mr Benstead.

“Sales continue to hold up strongly, according to our suppliers, with good growth still expected in this December period. However, we are not planning for this growth to continue. I feel that in the second quarter of next year we might actually see some decline to normality which will look as a negative, but is probably normal. The government is clearly spending money to make sure the economy continues to fire, so you just never know.”

“Customers also continue to shop locally within the retail business because they are not driving too far. A lot of people did not want to go to the Big Boxes during COVID, so we have picked up a lot of new business out of that. The biggest lesson for us is if we serve those customers well, they will continue to come back. What a great opportunity it is to showcase how good it is to go to an independent that can look after their customers so well. Hopefully we will hold onto some of that next year when normality returns,” he said.

HBT has also implemented a new catalogue program as part of its marketing strategy heading into 2021, giving members an opportunity to create a personalised catalogue for their store at no cost.

“When our customers get in the car to go to the local shops, we want them to have their local hardware store top of mind and shop at their local independent. I think a lot of our little guys also marketed their services well, to the local community during the restrictions, when they implemented their ‘Click & Collect’ services. While online retail is great, you also want customers in-store because the average transaction will always be higher when they visit the store in person,” he said.

HBT’s membership also continues to grow, according to Mr Benstead, who said HBT’s member numbers totaled 856 at the time of writing, up by 95 stores in the last 12 months.

“Most of this membership growth comes from word-of-mouth as our marketing is minimal. Stores primarily contact us to see if they can buy better and that is exactly what we are here for – to try and help independents. Store numbers were also boosted when the Murray Goulburn Group came on board as part of the group as they are expanding their range to have more hardware items in their rural stores,” he said.

HBT also conducted its virtual conference online recently, with Mr Benstead saying he still has high hopes the group will hold its National Conference on the Gold Coast in June 2021.

“I believe there are three ways the 2021 conference will happen. The first is the virus will take hold again and we will not be able to do anything. The second is we will conduct the conference knowing COVID is present somewhere, but everyone just gets on with life while doing the right thing and staying safe. The third, best case, scenario is the world is totally back to normal,” he said.

“I think our biggest challenge when conducting business next year will be sourcing stock. Right now, we have many issues with stock due to a combination of factors, including port strikes. As much as they are saying things are back to normal, things are not back to normal. We are also seeing issues with the China trade war which is causing some grief. The US has also gone very well in hardware this year but this also means the quantity of product they order out of Asia and China is a lot of higher. A lot of those guys are not supplying orders at the rates that they should be.”

“Supply shortages means people are also prepared to pay more for a product. This also means we may see price rises coming from wholesalers because it might be the only way they can get product – if they are prepared to pay more for it. We are already starting to see some gaps in timber, and this is also evident in power tools and fasteners. Good retailers and wholesalers stocked up and some of the purchase data growth we are seeing is from stock piling. Finding stock in the New Year will be an issue and we are advising members to look at their ranges and carry a month’s more worth of stock, or more if they need to.”

“HBT has also found that when suppliers run out of stock of a certain product, it risks buyers moving to another supplier. Then a domino effect occurs because you find secondary and third tier suppliers are suddenly seeing good growth coming through their business. They then order up accordingly which sees triple the orders being placed from the suppliers,” Mr Benstead said.

From HBT’s perspective, the additional accounts that have been opened up this year also indicate that members have not been able to source stock from Supplier A and needed to open an account with Supplier B, until Supplier A gets stock again, Mr Benstead said. Hopefully members will find a way to work through this challenge throughout 2021, or as long as COVID restrictions remain in place, he said.

When summing up 2020, Mr Benstead said as much as the group has loved the sales this year, he looks forward to HBT’s National Conference mid-year, as well as some normality in 2021.

IHG CEO, Annette Welsh 

Safety, supply and cashflow were just some of IHG’s (Independent Hardware Group’s) most prominent strategies implemented by members and head office throughout 2020. IHG Chief Executive Officer, Annette Welsh said her focus has remained on three key priorities for the group throughout 2020, including the safety of its people and customers, continuity of supply and support for its members, and cash flow protection measures to support the long-term viability of the group.

“Taking learnings from various lockdown stages, we developed a set ‘playbook’ to support our members with COVID safe plans and safety processes to keep themselves and their communities safe. This allows members to lean on the support and resources of IHG/Metcash to help them navigate the volume of information coming from Federal and State Government. The team at IHG disseminated this into easy to determine actions required to ensure members could continue to focus on serving customers,” Ms Welsh said.

Most importantly, we all set our minds to seeing the opportunities rather than the challenges throughout 2020, according to Ms Welsh. 

“Collectively the IHG team have responded to the demand both from an inventory and business operations point of view to assist all members throughout 2020. Some of IHG’s tactics included weekly communication to members and rapid IT support to enable IHG support teams to work remotely from home, increased stock purchases very early on for lines coming out of China, while our category teams focused on replacement lines. IHG also ensured cohesiveness of marketing and operations to give stores all the collateral they required to trade safely, while technology like – QR codes – were developed for stores in Stage Four, as well as the rapid deployment of ‘Click & Deliver’ and central ‘Pick & Pack’ for Stage Four lockdown in Melbourne,” she said.

“Our National Advisory Council meetings were also moved to monthly, with rapid and decisive decisions made to support all members throughout an unpredictable year, while we also implemented the regular use of video meetings to keep up face-to-face contact with our members, particularly in metropolitan Melbourne throughout Stage Four. IHG also worked closely with suppliers to negate any effect or restricted distribution from the Victorian distribution centre and ramped up our Queensland distribution centre to compensate,” Ms Welsh said.

With some market indications now showing an upwards trend of families moving from Melbourne and Sydney city areas to more regional towns, Ms Welsh said IHG is well placed regionally, right across the country.

“We have stores that are rich in heritage and relationships, so we are confident we will respond well to a tree-change trend. Stores are strong in both trade and DIY, and well supported in technology which will allow them to work with national companies, but deliver locally. City fringe regions have already witnessed growth in real estate markets and are taking it in their stride. We are confident that our members will continue to see a good pipeline of construction and home improvement over the coming 12 months,” she said.

On reflection 2020 has delivered some great outcomes for IHG, particularly when looking back on what was forecasted earlier in the year, Ms Welsh said.

“Just some of these positive outcomes included treating the year as an opportunity, not as a challenge and celebrating agility, responsiveness and service throughout the group. We also continued to communicate, listen, act and adjust the right approach to ensure we offered the right support and guidance for our members throughout an unpredictable year. We continued to invest in the time and the wellbeing of members, staff and suppliers, as well as reinvest in the growth of our brands and business to support the greater network,” Ms Welsh said.

“Some of the key highlights of 2020 for me included customers rediscovering their local hardware store in droves. It is our job to now help our members keep these new customers ‘sticky’ to our brands so that growth continues. Our members are positive about the future and the opportunities for more growth. Our members are also continuing to benefit from a sales uplift across DIY channels and trade sales remain steady compared to predictions.”

“Throughout this time, the IHG support team were responsive and able to change quickly to support our members, particularly when it comes to store standards, consumer-led ranges, system integration, brand strategy, new and exciting promotions, as well as our digital and trade growth, staff learning opportunities and a best-practice supply chain. I believe that all of these initiatives are helping put our members in a very fortunate and strong position to deliver the ‘Best Store in Town’ promise. 

“Our Sapphire Program has continued despite all the border challenges, with well over 100 stores now completing the store transformation program. And amidst a surge in demand for online, we have continued to see great growth in digital functionality and sales for our members,” she said.

With Sapphire store and brand conversions continuing throughout COVID, Ms Welsh said the hard work and passion from its members to lift store standards and become a destination for local customers has been a key feature throughout 2020. 

“Our members, particularly in fire and drought-affected regions, have gone from strength-to-strength despite the challenges, and our members are leveraging the power of the group to drive positive business outcomes. We are very grateful for the support and leadership of our key supplier partners who have worked closely with us to secure our share of stock for the network. While DIFOT continues to be a challenge for some SKUs, it is great to see so many Australians embracing home projects,” Ms Welsh said.

“We are also thrilled to welcome to the family the Total Tools group. The interests and values of IHG and Total Tools are closely aligned and we are incredibly excited about the potential this unlocks for consumers, employees, store owners and business partners as we bring our two companies closer together. While continuing to operate as separate entities, we are working together across our portfolio of brands on opportunities that generate long-term growth and value for the independent sector,” she said.

Looking towards IHG’s 2021 Expo, Ms Welsh said the National Expo will move online, using an interactive and easy-to-navigate platform that allows all members to customise the Expo experience. 

“While the format is new, consider it the same Expo you know and love, just re-imagined online. Like always, the Expo will be about bringing our network of independent operators and suppliers together to learn, connect and explore opportunities. The main days will take place from February 22 to 26, however members and suppliers will have the flexibility to use the platform 24/7, and access content on-demand until the end of March. And best of all, a virtual Expo opens up opportunities for more staff to experience the event with free and unlimited registration for all,” Ms Welsh said.

When touching on the building and construction market, Ms Welsh said the industry has remained buoyant, despite challenges for volume builders at various times.

“Government stimulus incentives appear to have a positive affect in most markets with project pipelines giving us more confidence for the months ahead. Looking into 2021, we do expect the market to soften, but are encouraged that there will still be growth in many areas.”

“Should pockets of the virus re-emerge, the stores are well equipped with collateral and technology to respond to serving their customers in a safe fashion. DIY and the love of home is something we expect to continue and will be supported by IHG through digital initiatives, Sapphire and stores that are all now better equipped to deal with growth,” Ms Welsh said.

CSS Group MD, Jeff Wellard

2020 was destined to be an ‘unpredictably, different year for everyone’ considering the start we had as a nation, CSS Group (Construction Supply Specialists) Managing Director, Jeff Wellard said recently. 

“Not only did 2020 begin with catastrophic bushfires, but the on-going drought continued to severely impact farming communities. This was followed by flooding rains. The fact is though, none of us had any idea about the ‘new super threat’ that was coming at us and how our lives would be impacted on both a domestic and global scale,” Mr Wellard said.

“Many of the business strategies we worked so long and hard to plan out, and were ready to implement, were simply swept aside when COVID entered the country. It eventually permeated everything we did, in both our professional and private lives. The business world was initially thrown into an uncertain chaos and our personal freedoms were subjected to emotional and very confronting ‘different’ realities.”

“The harsh reality for the CSS Group was the simple fact that our very tactile culture, which is developed around regularly being with and supporting members, as well as bringing members and suppliers together in a spirit of partnership and co-operation, was facing its greatest challenge. Trade day support, conferencing, training assistance, regular site visits and other physical interactions, which have been a mainstay of the group, had to be abandoned for a while and new strategies and technologies were introduced to fill the void,” he said.

One of the most important reasons retailers join buying groups is to find a sense of belonging, and to be part of a team, according to Mr Wellard who said it was also important to members to be part of a ‘pack’ that, for the most part, wants to head in the one direction and help each other along the way. 

“If there is one major lesson we have learned over the past eight months, is that working together, sharing experiences, communicating regularly, using more digital systems, having confidence in each other and utilising each other’s unique gifts and talents, has been instrumental in sharing the load, releasing the pressure build up and helping members see the way forward.”

“Obviously, in a diverse business that crosses various industry segments and has a wide spread of operational locations as well as commercial sized members, you need to look for systems, strategies, plans and sales and marketing campaigns that suit the needs of the many and that is exactly what we did. We stayed in touch regularly. We listened to what our members and supplier partners had to say and then shared that information where appropriate. We took decisive action and we got on with the job,” Mr Wellard said.

Throughout the year, a priority for CSS was the safety and well-being of its staff, members, suppliers and work colleagues, while also remaining mindful of the imperative need to keep business going, Mr Wellard said.

“Every member set up COVID safe policies and procedures that followed government regulations and also streamlined operations to ensure customers were looked after throughout the crisis. Having a membership of independently owned and operated, industrial supply houses that covered the ‘critical’ market segments – including construction, mining, industrial manufacturing and infrastructure – our members stayed open to provide customers with vital products and services to keep key industries operating and the economy ticking over.”

“The results throughout have been surprisingly good right across the country and can be attributed to solid action taken by both State and Federal Governments, the hard work and diligence of business owners and staff, as well as dedication and support from all of our listed supplier partners,” Mr Wellard said.

Despite all of the challenges, when looking at the year in retrospect, Mr Wellard said the CSS Group fared much better than what was expected when COVID first introduced itself. The initial fear of a ‘total system collapse’ was offset by some clear thinking by all of its professional, independent business owners and their willingness to modify, alter and adjust systems and policies to meet the ‘new norms’ that were being introduced, he said.

“It was important to understand that these ‘new norms’ affected different areas of the country in varying degrees and we worked with our members on a ‘horses for courses’ approach.”

Looking ahead, Mr Wellard said there is a general, developing confidence and air of expectation throughout the industry currently and going into 2021. 

“We expect to see continued strong activity within the building and its allied industries and some much-needed development of local manufacturing across the country.  Rural areas are expected to be buoyant on the back of improved weather conditions for the first time in a while, and mining is also reported as staying strong,” he said.

“Small business operators in our industry segment have proven to be tough minded, robust, and lateral thinking entrepreneurs and we all look forward to the challenges of business in 2021 and beyond. We are all redefining our operations, adding the necessary digital and e-commerce systems to make business operations easy to manage and honing our service and support packages to industry best practice readiness. There is still a strong belief that personal interaction and providing first class, face-to-face service, advice and support will continue to be a major aspect of the value add that professional end users require.” 

“Having said all that, much will depend on putting controls in place to contain the spread of hot spot outbreaks, that state borders will stay open, the ‘much touted’ vaccine comes on line and we have strong, direction and governance taking us forward,” Mr Wellard said.

While CSS has always been a tactile group and its culture is based on personal interactions and involvement, Mr Wellard said the group is extremely keen to program a Member’s Meeting and Supplier’s Market Day, with face-to-face meetings and functions, but CSS will wait for specific and irrefutable information regarding the ‘all clear’ before moving forward on this. 

“2021 will require everyone to be ready to take advantage of opportunities by being nimble, agile and above all else, prepared and level-headed when it comes to decision making,” he said.

Bunnings Group MD, Michael Schneider

Bunnings Group Managing Director, Michael Schneider, said the pandemic has challenged all of us to rethink how we serve our customers. While there is no playbook for this type of event, businesses have had to learn as they go and find new ways to support their team members, customers and suppliers during this time, he said.

“Keeping our team members, customers and suppliers safe was always our first priority. We continuously learned from global and local best practice and closely consulted with governments on the latest health advice to adapt our operations. That enabled us to put in place incredibly comprehensive protocols for hygiene and cleaning during COVID across our whole store network, to help keep everyone safe,” he said.

Mr Schneider noted that the metropolitan Melbourne lockdown was particularly challenging, however in the months leading up to this, Bunnings had already made a number of changes to its store operations across Australia, including fast-tracking its online offer and introducing a fully transactional website offering both ‘Click & Collect’ and ‘Click & Deliver’ services. This put us in a solid position to continue serving our customers when our stores closed to retail customers, he said.

“‘Drive & Collect’ became a cornerstone of our COVID response because it offered customers a safe and contactless option to access the products they need by picking up their order from a Bunnings car park. Customers selected a convenient time to collect their order and on arrival, park in a nominated bay. Our team then loaded their items into the boot of their cars,” he said.

“It has proven to be really popular even as restrictions have eased, with many customers now choosing it as a preferred way to shop with us. Our team really are our greatest strength and we have been really conscious of their welfare throughout COVID. Mental health and resilience support has always been a part of how we look after the team and we have really stepped up this focus.”

“We have hosted livestreams with experts, shared personal stories, live-streamed sessions to all our team, with Hugh van Cuylenberg from the Resilience Project and Graeme Cowan for R U Ok Day. We have run a series of competitions and challenges that have helped to build camaraderie amongst the team but also kept them connected,” Mr Schneider said.

When discussing some of the major achievements that have evolved from 2020, Mr Schneider said COVID has highlighted the importance of looking after the team and keeping up communications. 

“Our internal channel, Workplace, has allowed us to keep our team up to date, in almost real time, with actions required in response to government restrictions. It has also allowed us to receive instantaneous feedback, host live streams on a number of topics with experts. By creating meaningful ways to interact, we have been able to listen, learn and engage the team which has served to deepen engagement,” he said.

“The agility our team has shown and what they have been able to achieve in accelerating the digital offer is unprecedented, which has encouraged us to think more about how we accelerate innovation to deliver more choice, value and convenience for customers.”

“In terms of flexibility within the workplace and connecting with interstate and international colleagues – significant improvements in technology coupled with a pretty open-minded approach to flexible work has made a big difference to what has been a challenging way to work. Going forward this will help drive greater flexibility in all aspects of our business and reduce costs in areas such as travel and accommodation,” Mr Schneider said.

Obviously merchandising companies servicing Bunnings throughout the pandemic faced their own challenges, however Mr Schneider said maintaining strong relationships with more than 1,100 of the best Australian, New Zealand and international suppliers from the outset of the pandemic, enabled Bunnings to keep its shelves stocked. 

“We stepped up our communications with our suppliers to help share best practice, explain how we were adapting our business and the steps we were taking to keep their teams safe when they visited our stores, which was really important to them and us,” he said.

“As government restrictions on travel were put in place, we had to pause supplier visits in-store which also meant that we had to shift from in-store demonstrations and training to virtual training and the use of our Workplace internal social media channel.”

While strong sales were evident throughout most hardware segments during the pandemic, Mr Schneider said this was due to plenty of Australians reconnecting with their homes in 2020. For many, the extra time at home has really rekindled their love of DIY, he said.

“Through the year we saw strong sales growth across both consumer and commercial segments. With Australians spending more time in their backyards we have also seen strong interest in green life and gardening tools, along with landscaping materials including timber, fixings, paving and décor, like screening. There has also been a strong demand for painting (interior and exterior), hand and power tools to support all the projects around the home and storage and organisation products,” he said.

Although the DIY segment performed particularly well during this time, Mr Schneider said the building and construction industries are also now showing signs of recovery, especially with restrictions lifting in Victoria, however there is still a long way to go, he said.

“Through our trade customer network, we have seen a resurgence in residential detached housing and we have also seen strong growth in alterations, additions and renovations as people have been looking to invest in creating better living spaces or building new homes,” he said.

“But at the same time, there are some obvious challenges that remain, especially when it comes to the construction of high-rise, multi-unit developments as migration numbers are set to fall. Extended government support for the industry will be crucial, and we will continue to do everything we can to support our trade customers, offering things like extended credit offers and increased trading hours,” Mr Schneider said.

Bunnings will also continue to review its store network throughout the new year, by looking for opportunities to improve existing sites and serve new communities in metro and regional areas. 

“In August of this year, we opened our new Palmerston Warehouse in Darwin to provide locals with a wider range of home and lifestyle products. It is also home to local icon, Big Kev the dinosaur, who was given a new home on the site near the outdoor nursery. We also opened a new store in Kembla Grange, Wollongong, which replaced our 20-year old Warrawong store. Other recent store openings have included the opening of our new Bennetts Green Warehouse as a replacement for Belmont, and a new smaller format store in Northam Western Australia,” he said. 

Regional areas will also continue to be of interest, according to Mr Schneider, and we will have our eye on this as we evolve the products and services we offer, he said.

“One of the things that has emerged out of COVID is a widespread appreciation that working from home is a real option. This is prompting some people to re-think where they live and how they could enjoy a greater quality of life by moving to the coast or the country where their dollar might go further. That is an exciting opportunity for our regions and something we will have our eye on as we evolve the products and service we offer. We are part of lots of regional communities and continuing to serve these communities is incredibly important to us.”

“We recently opened new stores in Nowra and Young (NSW) to replace existing smaller sites. And in December we are opening a new store in Albany, WA. We also expect our new Pimpama Warehouse in Queensland to be open before the end of the year,” he said.

When discussing which areas of the Australian hardware industry is expected to boom over the next 12 months, Mr Schneider did point out that the industry is still in an uncertain environment, even though the future looks positive.

“We know from the experience in Victoria and South Australia how quickly things can change, but as states re-open and move towards a COVID-normal, and travel restrictions begin to ease, this can only be good for businesses large and small, as well as the wider economy.”

“With travel still likely off the cards to many international destinations and Australians continuing to combine work from home with work in the office, we expect to see interest in home improvement and home projects continue into 2021. Creating great spaces in the home to entertain and work will continue to be a focus, and we think many Australians will also look at creating areas in the home that enhance their wellbeing,” Mr Schneider said.

Looking towards 2021, including future Expos, Mr Schneider said Bunnings is still working through what Expos will look like in the year ahead, including overcoming the challenges in scheduling these in the current environment. 

“The safety of our team, suppliers and customers is paramount and we are currently exploring all options, including virtual events, to ensure we are staying connected with our team, suppliers and trade customers,” he said.

Heading into 2021, consumer demand for DIY and home projects have continued, with Mr Schneider saying Bunnings has seen an increased interest in turning the backyard into an entertainment space, with strong demand for outdoor furniture, BBQs and outdoor lighting to give the home a festive look and feel.

Bunnings FY21 strategy will also be based on delivering a policy of lowest prices, widest range and best service for its customers, according to Mr Schneider, as well as making a positive difference in local communities and building the best team. 

“We will remain focused on investing in future growth, broadening commercial markets, expanding digital capabilities and strengthening our offer throughout 2021,” he said.

CPS GM, Stephen Wren 

Central Purchasing Services (CPS) General Manager Stephen Wren said that while each business in Australia has its own story of how the events of 2020 have challenged them, these stories, when re-told in future years, will tell of how quickly Australian small business owners all became better decision makers and risk managers. 

“For our two core businesses, CPS and TradeSmart, staff retention and wellbeing became our priority when the seriousness of the situation began to unfold in February.  That is not to say that we did not have significant concerns for our members, our suppliers, our families and friends, but from a pure business perspective the risk drove home the message that no staff means no business,” Mr Wren said.

While the group’s Perth office staff have adapted to what has become the new normal, with few restrictions and no spread for many months in Western Australia, this is a totally different scenario for the group’s Melbourne office, he said.

“It has now been nine months since a staff member walked through the door. Yet, in that time we have increased the volume of catalogue production by 45 per cent and innovated with ideas such as our first-to-market digital trade show and, like others, we have (almost) mastered Zoom,” Mr Wren said.

“Our key lesson as a business during this time has been adaptability. The same can be said for the bulk of our respective hardware and industrial members. The mantra of business has switched from ‘why would we change?’ to ‘why don’t we give that a try?’. Aside from showing outstanding resilience, our members have been busier than ever in finding new ways to communicate their value proposition to their target customers.”

“As a generalisation, members have strengthened their strategic thinking by focusing on what the core of their business is and being clear on where their target market is. Our marketing resources have been stretched to the limit in keeping pace with demand for customised solutions for stores,” he said.

While both of the group’s hardware and industrial channels continue to experience accelerating growth, at some point, the velocity must taper, according to Mr Wren, but for now, there is no sign of a shift. 

“Each month, sales records tumble. The increase in sales volume has spanned all states and all markets. As an organisation that has a high proportion of rural members, we believe that there has been a shift in country consumer sentiment. Tradespeople, households, and personal shoppers have equally driven up volumes across all departments. While there is no doubt that the economic stimulus has contributed, it is our belief that consumers are realising the value that local independent retailers bring to their community,” he said.

“The second uplift to our business has been the level of new members. Both CPS and TradeSmart have prospered from substantial green-field growth in the past five months, driven in part by stores looking for a bespoke offering, and bolstered by what we believe to be an awareness of our culture which is focused on the success of the member,” Mr Wren said.

The outlook for 2021 is that we will all continue to take on new challenges, according to Mr Wren, particularly while travel restrictions, in any form, are in place.

“As the northern hemisphere encounters increasing problems, we can expect on-going disruption. Remaining adaptive and responsive to the micro and macro influences will, in our minds, be the key to success for our business and that of our members,” Mr Wren said.

AIS GM, Stephen Wallace

When reflecting on the year that was, AIS (Australian Industrial Supplies) Group General Manager, Stephen Wallace, said 2020 has been a difficult year for everyone, particularly for those companies in Melbourne that have faced larger disruptions to their business than businesses in other parts of the country. 

“AIS runs a small office out in Keilor Park, near the Melbourne Airport, and we have been working from home as part of the Victorian state recommendations since March during the first lockdown. We returned in a limited capacity at the end of May, but then we shut down again in June. The virtual world has become a big open source for everyone and we have all had to move to that platform to keep our communication open with our supply community and members. We have taken some learning from it across a number of different areas of our business. I think we can utilize these platforms in the future to achieve better outcomes,” he said.

Positive sales in the industry demonstrated the same pattern of growth throughout the year, according to Mr Wallace. 

“February was not the best month for our business because there was so much COVID uncertainty and there was reluctance to spend money. However, we did have a fantastic March, before April and May became a bit slow due to further lockdowns and more COVID uncertainty. Since this time sales have been excellent and this is due to a lot of our members supporting infrastructure projects. The government has been keen on keeping those projects alive to keep the economy going and we play a big role in this. We also have a large amount of regional members who support the agricultural sector. This sector has been particularly strong for us as farmers are enjoying one of their best yields in some time,” Mr Wallace said.

“We remain in a very good position in our business and we certainly cannot complain about what is happening with our membership at the moment. I think there is generic business growth as a result of a number of different aspects and not all of it is COVID related. Some of it just comes back to members having more time to focus on their business and improve things internally, which has driven their growth,” he said.

Boasting 86 stores currently with 65 members, the majority of AIS stores are located in regional Australia, according to Mr Wallace. 

“Although we have some members in metropolitan Melbourne and they had to provide a COVID safe plan during lockdowns, we also found there was a lot of misinformation throughout the retail network during the second lockdown. One of the fundamental tools that was used to overcome this was the use of the communications platform we have with our members which allows members to talk freely amongst themselves. There were a lot of good ideas coming through during restrictions, including the best ways to manage staff coming in and out of the business,” he said.

“I think if you did not have a good digital communications platform with your members, this year would have proven to be very difficult. AIS have had this platform for some time and it worked seamlessly for members to raise ideas and implement them into the business.”

“All of our members have got such a huge wealth of knowledge across so many aspects of business, so you have to take on board all of their experience and band it together to achieve one outcome. This was particularly the case in Victoria where we had a couple of members who were at the forefront of providing support and information during the lockdown,” Mr Wallace said.

Sales growth was experienced across most sectors of the supply community throughout the year, according to Mr Wallace, who said most members experienced fantastic growth this year.

“We would have achieved more growth if the supply community had not experienced so many out of stock issues. When COVID hit globally, many of the AIS suppliers had trouble getting product into the country and maintaining the supply chain, particularly when they were experiencing a 25 to 40 per cent growth. Nobody was thinking in a COVID year they would achieve such large growth. So, planning stock levels has been difficult,” he said.

More recently AIS was also proud to host its first virtual conference this year, which Mr Wallace said was a huge accomplishment.

“It was massively successful for our business across so many different facets. We have learned so many things that we did not know initially when we went into the virtual world. We did a lot of research and we had a short time frame to deliver it, but the outcomes have been really fantastic,” he said.

“A primary focus for our conference was to drive purchases with our supply community and keep the connections with our supplier and member community. Last year we put through $3.2 million worth of purchases on the day. This was through the suppliers that were at the trade show held in Perth. We have done the same amount online in the virtual world this year, which exceeded our expectations.”

“Any group that has not gone forward with a conference has failed their membership. Independent groups like ourselves rely on connection with the supply community and rely on connection with their members. If you have not connected with your membership and the supplier community, then you have not done your job as a group. I believe our virtual conference exceeded expectations from the supplier community in terms of exposure, connections, as well as product representation,” Mr Wallace said.

For now, Mr Wallace said most members are continuing to achieve healthy sales, with no decline being experienced in any areas of business currently. We have continued to achieve record months of trading since June, he said.

“With all segments experiencing double digit growth there is not one area that I can say is outperforming because they are all doing really well at the moment. It is a great position to be in,” he said.

TradeTools Founder and Chairman, Greg Ford 

TradeTools Founder and Chairman, Greg Ford, said some of the most significant challenges experienced within the group during the COVID crisis were concerns around training up new staff, so they could take on the significant upturn in sales this year.

“One of the greatest lessons we have learned throughout 2020 is to never believe that things can’t radically change overnight. And also, never believe that just because this year was challenging, the next one will not be,” he said.

“While training up staff was a challenge this year, we also found that we were not prepared for a lack of stock to cover the unexpected sales increases. We always carry high stock levels but even we were caught out during the pandemic,” he said.

In regards to where sales were most significant this year, Mr Ford said cordless was the hardware segment that experienced the most significant sales, although every sector saw an increase throughout this time. 

“I do not believe we can expect a further boom in any particular areas in the near future, although new home building in Queensland is still quite strong. I think next year will be okay business wise as long as international tensions do not rise any further.”

“We also expect online shopping to weaken slightly as things return to normal. Most of our turnover increase however has been to trade customers. We expect the market to return to some sort of normality around March,” Mr Ford said.

Despite the upheaval of 2020, TradeTools has continued to grow and evolve its business with a new store opening in Cairns recently.

“Our turnover in Cairns has been spectacular. So much so that one of our major competitors has just closed their doors. We also plan to open a new store in Browns Plains in January, which will be our largest store to date,” he said.

Regional stores may also be set for a boom, according to Mr Ford, with those living in metropolitan areas now choosing to move to rural areas in the wake of the COVID crisis, as well as older generations moving away from the cities.

“This will also be the case as baby boomers continue to retire and move from the big cities. They are a huge demographic and are definitely on the move. I know this because I am one of them. I have just bought 145 acres in the country.”

“All regional areas are doing well, particularly Northern NSW and regional Queensland, which are both areas where TradeTools is particularly strong,” Mr Ford said.

Heading into 2021, Mr Ford said TradeTools’ future strategies include opening more stores, providing a better offer online and introducing a wider range of products.

“We will continue to primarily service the trade sector, but we are always happy to help the serious home user market wherever we can,” he said.

Inspirations Paint CEO, Robert Guy

While the paint industry was one of the winners when it comes to sales throughout 2020, Inspirations Paints Chief Executive Officer, Robert Guy said major paint manufacturers are continuing to increase control over their distribution networks, with increasing company store numbers and growing independent store numbers within manufacturer owned franchises.  The COVID situation has also given some manufacturers a catalyst to launch their own branded retail ecommerce sites, he said.

“In saying this, independent paint retailers now face a further challenge due to Bunnings’ active move into the trade segment, with its Taubmans partnership launched in October to target the professional painter market,” Mr Guy said.

Looking back over the last 12 months, it is incredible to think that just over a year ago customers could not buy a can of Dulux ‘Wash & Wear’ online and pick it up from their local hardware store or paint store, because eCommerce was not live for any national retailer, according to Mr Guy.

“In Q4 2019, InspirationsPaint.com.au went live with a full-service eCommerce offer. Previous to this, the restraint holding Inspirations Paint back had been ‘the Colour Quandary’. To do paint eCommerce properly you have to be able to choose the exact colour and have it tinted into the correct size, base and sheen level. Size and sheen are easy but base is where the challenge lies,” he said.

“InspirationsPaint.com.au was the first eCommerce site to have selectable paint colours, with logic to automatically calculate the required base. The site launched in December 2019 with over 60,000 colours available online. This innovation was paired with an industry leading pick-up promise of being ‘tinted and ready in two hours nationwide’. Inspirations Paint is competing hard as a smaller player and we know that the customer experience shoppers are having on our site is superior.”

“The eCommerce website is a new customer option that we have created for our stores, giving access to those customers who prefer to shop online and would otherwise shop with another online retailer. Through a superior customer experience site, Inspirations Paint has managed to capture almost one third of online paint buyers from January to June this year, whereas a year ago Inspirations Paint only had three per cent of online paint purchasers. Our franchisees now process online orders within two hours every day, with 97 per cent fulfilment rate. To say it was strategically imperative to have eCommerce in place in late 2019 is an understatement,” Mr Guy said.

When discussing some of the greatest lessons learned throughout 2020, Mr Guy said the group realised that the importance of having a functional ‘Click & Collect’ and ‘Click & Deliver ‘platform was paramount and the group was fortunate enough to have the foundations in place by December 2019.

While ensuring an online presence was vital during this time, Mr Guy did say sales growth was incredible this year, with DIY sales of interior decorative paint growing 65 per cent since March 2020.  

“DIY sales of exterior paint grew more than 80 per cent, which is possibly an indication of the growing confidence of DIYers to take on more projects traditionally more likely to be left to the professional. Aerosol paint also saw growth of more than 80 per cent, possibly an indication of the trend in furniture ‘upcycling’.”

“A general trend in specialty style projects was also evidenced by DIYers purchasing aerosols, concrete, metal, industrial and timber coatings in strong numbers through the new website and in-store. With the exception of Melbourne, trade paint sales also grew in 2020 but not to the same extent as DIY,” he said.

In terms of like-for-like store trade sales for 2020, with the exception of Melbourne, all states had trade growth. New South Wales stores saw slight growth, with stronger growth in Queensland, South Australia, Western Australia and regional Victoria, according to Mr Guy  who said Melbourne saw a decline greater than 10 per cent due to the prolonged lock down but is showing signs of a strong recovery over the next few months.

Just some stores that showed particular innovation during the COVID crisis included Inspirations Paint in Griffith, which was one of the first stores to offer both a contactless and drive-through paint service way back in March. The Inspirations Paint group then adopted the idea and rolled it out to stores nationally in the early days of the pandemic.

“When the Burnie District Hospital lockdown occurred in northern Tasmania in April, Inspirations Paint Cooee and Devonport were forced to close their doors to retail customers. They reached out to all their customers via email, on hold message and front of store posters asking customers to place their orders on the ‘Click & Collect’ website and request delivery. They then implemented free, same-day delivery for orders before 11am and free next day delivery for other orders. Hundreds of orders went through the website for these two stores during the three-week lockdown. Franchisee, Glenn Ringrose, said he never would have thought he would offer a same-day home delivery service for retail customers; however, the pandemic has changed his mind on the issue,” Mr Guy said.

“By May 7, Inspirations Paint had upgraded its website to allow for ‘Click & Deliver’ orders. A new advertising campaign was launched to promote the two hour ‘Click & Collect’ promise nationally and the new ‘Next-Day Click & Deliver’ promise. No other paint specialist group had eCommerce functionality at all, let alone an offer with such speedy collection and delivery options,” he said.

Whilst Australian borders remain closed and international travel is suspended, Australian consumers will have more discretionary income to spend on home improvement, according to Mr Guy, who said the same principle applies to reduced entertainment options, which allow greater time and budget available to be spent on DIY and DIFM activities. 

“An increase in retail sales will continue until these travel and entertainment options open back up again. Similarly, some of this newly realised skill and satisfaction from undertaking DIY painting projects may extend the elevated sales levels through 2021.”

“We are likely to be living with the risks of managing COVID for 2021 and maybe beyond.  As we learned from 2020, we should expect uncertainty to continue in 2021. Any predictions of a longer-term outlook have to be uncertain due to factors around the future management of and treatments for COVID, removal of government schemes and impact on employment levels or extent of future government stimulus,” Mr Guy said.

Looking to 2021, Mr Guy said the 18th Inspirations Paint National Conference scheduled for May 2021 has been postponed, however in its place, smaller regional events will take place in the first half of the year, according to Mr Guy who said hopefully, the National Conference can still go ahead later in 2021.

In regards to business development throughout 2021, Mr Guy said Inspirations Paint will continue the eCommerce push and trial new omni-channel collection and delivery options for different types of customers. 

“The group will also commence the rollout of the CFX Store Upgrade Program which has been trialled in a few stores to date, with positive results. We will continue to grow our customer loyalty programs, which now have over 500,000 members. In particular, improve customer communications to be more personalised, useful and timely. Plus, fully automate this function, based on customer search and purchase behaviour,” Mr Guy said.