As part of this special 130th anniversary edition, the Australian Hardware Journal conducted exclusive interviews with six industry leaders, who gave perspectives on their businesses currently and an insight into 2016.
Bunnings Director of Merchandising & Store Development, Clive Duncan
The Bunnings team recently congratulated the Australian Hardware Journal for 130 years of successful publishing, noting that it was a great achievement. Bunnings has seen many changes and developments to the industry since the magazine launched, according to Bunnings Director of Merchandising and Store Development, Clive Duncan.
“One of the biggest and most influential changes has been the transition from ‘hardware’, to ‘home improvement’ and then ‘home improvement and outdoor living’, evolving the entire landscape and allowing us to think and act differently. During this time we have seen many different formats and players grow and enter the dynamic market we are a part of,” Mr Duncan said.
“Bunnings sees continued opportunities for expansion in Australia. Prospects for extended brand reach across both physical and digital platforms are extremely positive, and we expect to see this develop further and faster in years to come,” he said.
Category development has been a key focus for us in all areas, according to Mr Duncan, who said this is something Bunnings is always looking to build on.
“Changes to customer behaviour challenge us to constantly evolve and continue to provide the widest range of home improvement and outdoor living products. We see a positive outlook for the years ahead across all parts of the home improvement and outdoor living industry,” he said.
“We look forward to working with the team at Australian Hardware Journal and wish them success for the future,” Mr Duncan said.
Hardware and Building Traders (HBT) Group Manager, Tim Starkey
Looking back over the last 12 months, HBT Group manager, Tim Starkey said 2015 has been an extraordinary year for HBT, with growth and development achieved in a number of different areas.
“At the time of this interview our membership numbers are up a net 13.3 per cent since the 1st of January. That is net after store closures etc. while business transacted through the group is currently growing at about 20 per cent per annum,” Mr Starkey said.
“Industrial & Tool Traders is our membership group for specialists in welding, fasteners, industrial supplies and tools and we now have 129 members. This makes us easily the largest group by member numbers in this part of the market, and is something we are very pleased about given the short time frame in which that has been achieved,” he said.
When discussing the outlook for the construction and building markets in the new year, Mr Starkey agreed trade business in NSW remains very strong and he sees this continuing through Christmas and into next year.
“Other markets such as southern Queensland, parts of Victoria and Perth have also picked up,” he said.
New initiatives for 2016
Mr Starkey said 2015 has seen both internal and external activity, with HBT opening a small office facility in Melbourne and recruiting several executives to new senior roles.
“This extra human resource is enabling new initiatives to be pursued. We have just completed our first in store trade promotion in which nearly 130 of our members participated. Given the success and positive feedback we’ve received, from this promotion, we anticipate 2016 will see a program of three similar promotions designed to generate additional transactions and increase average sale values,” he said.
New member services
Additional member services have also been added, and improved communications through social media tools utilised, according to Mr Starkey.
“Our new collated buy program appears to be generating good support, as is the new monthly promotional program. Further initiatives by way of member services are also set to be unveiled in the new year.”
“Our alliance with ARC Marketplace has seen a number of members (particularly tool specialists) avail themselves of the bespoke catalogue offered to participants,” he said.
Another ongoing project is the review and revamp of the service offers, such as fuel, banking and the like, made available to members
Defining HBT’s culture
When discussing HBT’s culture and what makes it unique, Mr Starkey said that HBT has the simplest business model in the industry.
“Our business model is simple because it is transparent. Our members are fully informed regarding trading terms and rebate payments etc. We also have integrity – in that we consistently act with the best interests of our members at the forefront,” he said.
At the moment, Mr Starkey said he sees growth in HBT’s membership and business volumes continuing.
“With an ever more dynamic and evolving market for hardware and building products, we appear to be ‘in the right place at the right time’ and increasingly HBT is seen as the only real alternative for retailers who do not wish to sign on for a full franchise model,” he said.
Mr Starkey concluded the interview on a very positive note, saying “life’s fun. This industry is fun. Bring it on!”
“HBT has enjoyed a relationship of mutual support with AHJ for about 15 years now and it has worked wonderfully well for us. As our ‘journal of record’ your reporting and coverage are much appreciated by our members. Congratulations on reaching this milestone,” he concluded.
Paint Place Group CEO, Mark Sutton
Although there was a tough start to the year, 2015 has concluded with a light shining, Paint Place Group CEO Mark Sutton said recently when discussing the group’s growth.
“Under tough trading conditions, we were able to maintain our retail marketing and develop our buying project, especially into automotive products, while we also began to deliver on our Design Bar colour project. We also carefully managed our spending to maximise outcomes for the members,” Mr Sutton said.
Exciting project ahead
“One of the most exciting projects, more recently, has been the launch of our Design Bar colour concept, specifically designed to place our members at the forefront of colour in the market. This is a fantastic colour hub that is the result of members, group office and our supplier partners, including Valspar, PPG and Haymes, all working together,” Mr Sutton said.
“In the coming months, we also plan to drive our T-Card trade account system to the next level, while also continuing to develop our private label programs – offering value to our customers and margin to our members. This is continuing our strategy of developing diverse services for Paint Place members, which is particularly necessary in the contemporary market,” he said.
Current market growth
Growth is being hampered by consumer confidence fluctuations and retractions of bank lending, according to Mr Sutton, who said while many projects are approved, they are yet to turn a sod.
“I welcome the national conversation around infrastructure development, as small business will benefit from a focus in this area. Our aim is to concentrate on the customers in front of us, ensuring our members are best supported to take on their local markets. In saying this, there has definitely been an increase in trading activity over the past few months, better than 2014, so long may that continue,” Mr Sutton said.
“Looking into the future we aim to be the independent channel captain. The Paint Place Group has engaged in a review of its systems, with a new governance charter, share structure and benchmarking program to come into play. These are designed specifically to provide more transparency, support and rewards to members. We want to reward members for backing the group and its programs.”
“It is time for everyone to work more closely together so we will ensure members reap the reward of this through more margin, new category opportunities and support. We want to help members achieve their goals and build a stronger Paint Place,” he said.
Paint Place Group culture
Paint Place has a ‘family environment’ that our members feel passionate about, according to Mr Sutton.
“Members are dedicated specialists as well and it is exciting to see them embrace new group initiatives including, the Design Bar plus, buying programs, and our private label core range. The group is unique in the Australian landscape as it is a members group, run for members. Even with the coming changes, we are determined to retain this character. It is the reason our group and members have been so successful.”
“The market is changing and has changed irretrievably. Standing still and gazing back into the past will not sustain the future. It won’t change the status quo and it won’t create a strong specialist channel. We are challenging our members and the market with a change program to last us another 27 years and beyond. We’re confident in the strategy and in the future,” he said.
“It is important that there is a voice for our industry, providing news and opportunities for new ways of business or new sales. Happy Birthday! Maybe one day we can get to 130 years old too!” Mr Sutton said.
Mitre 10 CEO, Mark Laidlaw
Mitre 10 CEO Mark Laidlaw said 2015 was a significant year for Mitre 10 after hitting $1 billion in wholesale sales.
“This is a target that we (the executive team) set for ourselves five years ago. The business has moved from $700 million wholesale turnover back then, which is an annual growth rate of seven per cent,” according to Mr Laidlaw.
Initiatives for the next 12 months
“Our newest initiative is the introduction of the Independent Store of the Future – ‘Sapphire’. We have now completed five retrofits and are very pleased with the results. Across the five stores, we have averaged a 15 per cent increase per store. Some features of the ‘Sapphire’ format are: moving the paint counter to the front, a new power tools layout, core ranging in key categories, and trade drive-thru and timber undercover,” he said.
According to Mr Laidlaw there are further initiatives to aid Mitre 10 members in 2016.
“This is to assist our store owners to reduce their CODB. This will primarily occur with improvements in technology (such as scan data and benchmarking). Scan data allows us to understand what shoppers are buying. This then allows the stores to carry the correct range and reduce inventory and working capital costs,” Mr Laidlaw said.
Mitre 10 benchmarking compares a group of like stores and determines best practise in areas such as: labour costs and expenses, margin improvement programs, and ranging best-sellers.
Building market in 2016
When commenting on growth in the housing market, Mr Laidlaw said Mitre 10 listens to the numbers from the Housing Industry Association (HIA).
“We have recently had Harley Dale (Chief Economist, HIA) present to the Mitre 10 group and the data he put forward confirmed that last year was a record year for the number of housing starts,” Mr Laidlaw said.
“It was around 230,000 new housing starts last year. That is the highest it’s ever been, because the average is about 150,000. It is forecast that the next 12 months is going to be another big number. This suits our members with fifty per cent of our business in trade,” he said.
Brand and culture
When commenting on brand awareness this year, Mr Laidlaw also said that the ‘Mighty Helpful’ campaign and exposure with The Block has been excellent for Mitre 10, as it has created brand awareness amongst a new and younger audience.
“We have been associated with Scott Cam and The Block for five years now and Scott has become a valued member of the Mitre 10 family. We hope this continues into the future. Our culture at Mitre 10 is unique because we are helping the small business owners (store owners of Mitre 10) to survive up against the big boxes of Bunnings and Masters,” he said.
“There is definitely a place for a well-organised and professional wholesaler in the Australian hardware market and we believe that Mitre 10 is the rightful place for independents to buy hardware.”
“Our staff must be passionate about helping independents and recognise that our store owners are actually risking their family homes to own a small business. So the phrase ‘Mighty Helpful’ applies to everyone from our staff in the field to our merchandising and finance teams in head office. The best way I could describe our culture is to say that at Mitre 10 we believe independence is worth fighting for,” Mr Laidlaw said.
“I certainly want to congratulate the Australian Hardware Journal on reaching 130 years. After the Metcash acquisition the new Mitre 10 team only just became associated with you in the last four to five years, and our association over the last two years has been very positive. We hope that keeps going in the future,” Mr Laidlaw said.
Total Tools CEO, Tim Cockayne
Total Tools CEO, Tim Cockayne recently announced that by the conclusion of the 2015 calendar year, the group will have opened an additional 12 Total Tools stores across Australia.
“Our goal remains to ensure that we can provide access to a Total Tools store for most professional trades people in Australia. Having opened stores within Western Australia and Darwin just this year, we are pleased we have been able to begin the journey into these key areas of the landscape,” Mr Cockayne said.
“The culture within the Total Tools business is very unique, and internally we are very proud of the culture that is built on working together for group success. Every new Total Tools franchisee is welcomed into the group, with a supporting hand provided at every juncture from existing franchisees. The business started 26 years ago as a small group of guys working together and helping each other, and the culture of providing a helping hand has continued throughout many years, and continues today,” he said.
Current state of the market
Whilst there is a pessimistic approach to the Australian economy from many economists, Total Tools expects to continually see growth in infrastructure, and this includes construction and building, according to Mr Cockayne.
“Most areas of Australia need continual and further investment into roads and housing to manage our growing population and we certainly expect the federal and state governments to do everything possible to push these issues forward. Whatever the landscape, we are confident that we can adapt our model sufficiently to maximise our customer offering at all times,” he said.
Looking into the new year, Mr Cockayne said Total Tools was never comfortable with its business model and the success of Total Tools is very much built on its continued drive and hunger for improvement.
“The customer within the retail landscape continues to change their behaviours and therefore we need to ensure that we are adapting our model to meet the requirements and demands of our customer. In 2016 we will continue to drive our new store model and expect to open 12 stores in the period. We will also be making further pushes into marketing areas within the social landscape, we will increase marketing spend and we are reviewing the internal livery of our stores amongst many other projects,” Mr Cockayne said.
“Further to this, we have increased resources exponentially across merchandise and marketing and expect to provide further improvements for both ourselves and our business partners in these areas.”
“Our short and long term goals are consistent in that we are focused on providing an improved offer for our customer and continuing to meet their demands. We are working on ways in which we can continually improve their experience, and this includes our focus on opening new stores in areas in which we believe there is a necessity,” he said
“It is a major achievement for any business to operate for 130 years, and the fact that the AHJ is still going strong is something that everyone involved should be proud of.”
“The print, communication and news industries have changed significantly over the past ten years, let alone what has occurred in the previous 120 years, so AHJ must have done an excellent job in re-identifying themselves throughout this period. Congratulations to everyone involved, and we look forward to another 130 years,” he said.
United Tools, CEO Stuart Clark
2015 has been a very successful year, according to United Tools CEO Stuart Clark, who said the group’s new strategic direction is currently evolving into actions which are already providing successful outcomes for the group and its suppliers.
“We have adjusted our offer to ensure that we provide even greater value to our members, regardless of the size of their business or position in their local markets,” Mr Clark said.
“We have also successfully launched a new business platform which will host many new and exciting initiatives in the immediate term and future. These changes will see our network of stores able to offer our supplying partners and customers value at an unprecedented level for our group,” he said.
Mr Clark said there are many new and exciting initiatives to be launched in 2016, which will provide a benefit to United Tools’ members, customers and suppliers.
“These initiatives reside in the marketing pillar of our strategic plan and will be bolstered by greater consistency with our instore offer across our network. Our strategic plan enables us to capitalise on many of the exciting opportunities that 21st century retailing provides,” he said.
“Working closely with our preferred suppliers is absolutely essential to our growth. All of our new initiatives have been created to support our single minded proposition of being the best tool specialist retailers in all of the markets in which we operate,” Mr Clark said.
Looking into the future….
In the near future, our suppliers and customers will see some great changes within our stores, according to Mr Clark who said “executing these changes is our focus for now and we remain absolutely committed to improving our offer to the people that matter the most to us all, our customers.”
When discussing growth in the construction and building markets in the next six months, Mr Clark said he believed there is a healthy level of buoyancy in the immediate term.
“Testimony to this belief is the fact that over recent times, the new dwelling approval rates have outpaced commencements,” he said.
United Tools’ culture
Sitting at the epicentre of the United Tools culture is the concept of engagement, according to Mr Clark, who said as the group is effectively owned by the membership, the level of engagement from its store owners is exceptionally high.
“This engagement allows us to truly partner with our stakeholders to ensure our offer remains as relevant as possible, whilst supporting the objectives of our individual members. The United Tools culture is somewhat unique as although there is a multitude of separate entities across our network, there is a very strong sense of ‘family’ that is extremely evident. I am often amazed at the willingness within our members for members to assist, aid and enable other members’ quest for success,” Mr Clark said.
“Fostering our culture is of extreme importance to myself and our board of directors. We understand, that a successful culture is not only a key contributor to our results, but can also be considered as a competitive advantage,” he said.
“I believe that AHJ is a great industry voice that is the source of reliable content. Like many in our industry, I am always sure to head online or read the latest edition as soon as it is released,” Mr Clark said.