Hardware Australia 2019

by | Oct 3, 2019


Time for independents to unite

Adelaide once again played host to some of the nation’s top hardware and trade influencers at the IHG Expo from February 18 to 20.

As the largest event of its kind in the Australian independent hardware sector, and the third Expo to be held since the formation of IHG, the Expo did not disappoint with 85 per cent of the group’s store volume in attendance and over 220 suppliers, representing all DIY and trade categories.

The pertinent theme of ‘Uniting Independents’ echoed throughout the three-day program with a buoyant energy and comradery evident amongst members, suppliers and IHG staff. The event proved to be a powerful platform to push for unity within the sector and support independent businesses in an increasingly competitive market. 

The business sessions were both inspiring and informative, providing audience members with a global and local perspective on changing consumer dynamics within the home improvement market and avenues for growth. 

IHG Chief Executive Officer, Mark Laidlaw and IHG General Manager of Merchandise, Annette Welsh, outlined the company’s plan to pursue opportunities that will support and sustain independent members, including further investment in digital, and ‘whole of house’ solutions that leverage the existing IHG network and trade relationships. 

Remaining ‘consumer driven’ in all decision-making was an underlying message throughout the business session, with speakers talking to the tools  and strategies that respond to market trends and can help offset headwinds in the building cycle downturn.

Ideas and innovation flowed through to the Expo show floor with an impressive showcase of new concepts and product technologies, while evening functions once again reflected the unified culture that has developed within the IHG network. Networking events included welcome drinks at Adelaide Oval and an outdoor-seated ‘Independence dinner’ on the lawns of Pinky Flat on Adelaide’s River Torrens.

Global perspective 

Special guest at the IHG business session was global industry expert, Steve Collinge, who boasts a long and varied career in the European and South African home improvement markets. He provides news, analysis and intelligence to all the main industry players through his UK firm, Insight Retail Group. 

His in-depth knowledge on retail trends formed the basis of his presentation, talking on what he believes the future holds for home improvement and garden retailing, and the areas likely to reshape the global market in the years to come.

Using numerous retail case studies and insights, he offered his perspective on what the ‘winners’ in home improvement retailing are doing right and what the ‘losers’ are doing wrong, the critical importance of embracing the digital transformation of retail and the “new breed of retailers set to reshape how we all shop”. 

His market outlook struck a chord with the 1800-strong audience.

“Irrespective of what you see from an economic perspective, the home improvement and garden market is going to continue to grow. People want help, they want to buy these products and pressure is going to continue to build on the Big Box,” Mr Collinge said. 

“Millennials will impact on this market and a new breed of retailers will be coming along. But if you really understand what your customers want, you focus on them first of all and understand them, and use digital to get to them first of all, and help them in the process, then you will be a winner,” he said.

Uniting independents

IHG Chief Executive Officer, Mark Laidlaw used the opportunity to reinforce his message on independents coming together, comments that he has made on several occasions previously.  

“It is time to unite. We have spent too much time fighting each other amongst the brands. It does not matter whether you are Home, Mitre 10, Thrifty or True Value, the thing that unites us is that we are all independents. IHG will invest in the brand, store development, digital, warehouses and people. We will also reach out to those other independent groups, such as HBT and Natbuild. It is not about coming under our brands, but it is about getting together,” he said. 

“Collectively we are a large force. There is a great opportunity for all independents to unite and become a genuine alternative to the Big Box for Australian shoppers,” he said.

Mr Laidlaw admitted that initially it was challenging to unite the four brands, when the IHG journey began three years ago, but in this time HTH stores particularly had put their faith and trust in the group and now understood IHG’s strategy to build successful independents. 

“While this growing trust is important, so too is IHG’s strategy to remain consumer driven. The consumer is to remain at the heart of all of our decision making, particularly through the use of the ‘Sapphire’ program, which is an investment vehicle that ensures stores remain shopper-friendly, while range, signage and staff all deliver a positive shopper experience.”

“The second part of IHG’s strategy is to ramp up our digital and analytics strategy. To do this we do need to build our scan data and encourage more members onto our loyalty program so we have data that helps us better understand what the shopper wants and then talk to suppliers about what we need,” Mr Laidlaw said.

Currently across all IHG brands there are over 900,000 customers aligned to a loyalty program. 

When it comes to culture, Mr Laidlaw pointed out the importance of IHG retaining a small company mindset by remaining nimble, flexible and maintaining “our entrepreneurial spirit.”

IHG today

As the second biggest player in the market IHG now has a network of 690 stores including 313 Mitre 10s, 198 HTH stores, 172 convenience stores under the True Value and Thrifty Link brands, as well as seven Hardings plumbing and appliance stores.

When speaking on store numbers and the state of the market, Mr Laidlaw referred to a chart comparison on the evolving state of the hardware industry in Australia over the last nine years.

“All the players are here, the Big Boxes, the trade-focused suppliers and specialists, and in the middle is this amazing fragmented market of players. This is how it looked between 2010 and 2016. From 2016, you then see the shift and where consolidation started to happen. We have made a good start with a lot of those independent businesses now having joined us, but there is still a way to go and plenty of opportunities to unite,” he said.

“At some stage the Natbuilds, HBTs, Bowens and Dahlsens all need to get together and unite to stop that big green bowling ball from getting any bigger. Over the next two years we believe the consolidation will now start to occur amongst the trade suppliers and specialist groups,” Mr Laidlaw said.

He also put some context to reducing independent store numbers over the last few years.

“We have had a 28 per cent decline in store numbers since 2010, but mainly in small stores, and we expect this trend will continue as the market gets tougher, and lack of succession planning impacts the smaller format retailer.” Mr Laidlaw said.

“The big box has forced a lot of these closures, but Home and Mitre 10 have remained strong with a combined 10 per cent reduction in numbers.”

“Remember, that in this same time period, Bunnings has increased 38 per cent, increasing in both big and small format stores, but they have not moved on trade. They actually have less trade centres today than they had eight years ago,” he said.

Mr Laidlaw pointed to the increasing scale of the group in the past eight years, doubling revenue to $2.1 billion on a wholesale basis.

He went on to highlight the ‘correction’ expected within the building market over the next 12 months. 

“We believe our business is quite well balanced in the segments that we operate in. Currently we are 35 per cent DIY, 30 per cent in the renovations and alterations segments and 30 per cent in the detached housing, while only five per cent in the multi dwelling segment, which is the area which will be affected the most in the next few years,” he said.

Investing in independents 

When discussing the status of IHG’s ‘Sapphire’ transformation program, Mr Laidlaw said 56 ‘Sapphire’ stores are now completed in three formats, with an acceleration of the ‘Sapphire’ roll out expected to see over 200 stores completed by 2022.

When discussing paint ups for stores wishing to move to Mitre 10, but not necessarily undertake the ‘Sapphire’ program, Mr Laidlaw reminded members that as long as a store is at a ‘four/five’ paint brush standard (with five being the highest standard), scan data is provided, and members agree to the loyalty program, then IHG will invest in painting up stores. 

A pipeline of stores are ready to re-brand to Mitre 10 over the next 12 months which will shift the network sales split to well over 70 per cent under the Mitre 10 banner, he said. 

Eleven stores have now been converted to the ‘Sapphire Trade Only’ format that, according to Mr Laidlaw, presents a true trade model to the builder across all key trade deliverables. 

“Our ‘Sapphire’ trade format focuses on developing relationships with the tradie through every relevant touch points, including the trade rep, trade desk, driver, accounts and store owner.” “What will set us apart in this space will be the use of tradie technology, including ‘Track Tracker’ and a ‘Trade+ Pass’ recognition program, for tradies to use in any of our stores around the country, as well as ‘Tradies Online’. The digital trade space is an exciting area we are working on with our members,” he said.

“Belmont Timber in Geelong will be the next Trade Centre launched under this model when it completes the transformation to the trademark blue and white colours in the next few months”, he added. 

Two powerful video testimonials on Hume & Iser Mitre 10 in Bendigo, Victoria, and the Maas family in the regional town of Goulburn, New South Wales, rounded out the executive presentation. Store owners spoke from the heart on the investment by IHG in independent businesses and their future plans for growth. 

Know your customer

With “consumer driven” being referenced throughout the presentations, IHG General Manager of Merchandise, Annette Welsh said this approach is “the overarching statement to which everything we do applies. When we start to build our strategy under the five key pillars, we ask ourselves: does it grow the basket sizes of customers coming into our member’s stores today? Will it attract new customers to our group? Can it be delivered simply, effectively and at a low cost to our members to ensure the highest return on business investment?”

To do this, she added, “we must understand who our consumer really is and what drives them to shop with us.” Ms Welsh spoke to the balanced exposure across the main customer types of small to medium builders, renovations/alterations and additions and DIY renovators all being at the heart of IHG’s consumer driven strategy.

While knowing your customer intimately is crucial to building strategies that grow member sales, Ms Welsh said that technology continues to change the rules and therefore IHG’s strategies are evolving to meet these changing dynamics. 

“The consumer’s demands are rapidly changing. It has become the ‘I want it now’ consumer who expects access to shopping 24 hours a day. They want to receive their orders fast. It should be seamless, anytime, anywhere, on any device. They are not waiting for us to open our front doors,” she said.

Digital, data and analytics

With consumers now so digitally engaged, IHG is helping members keep up with the continuing pace of technology, according to Ms Welsh.

“There is so much work happening in our digital, data and analytics space, at great pace. This is investment on our members’ behalf to support our consumer-driven strategy. Every member and supplier is encouraged to embrace the opportunities in digital so they do not get left behind,” she said.

An online ‘Click ‘n Collect’ platform is now operating for all Mitre 10, Home Timber & Hardware, Thrifty-Link and True Value Hardware members, with thousands of new products added to the e-commerce site in the last twelve months and ‘buy now, pay later’ options opening up the group’s exposure to new customers, Ms Welsh said.

“The biggest growth from ‘Click ‘n Collect’ is from the younger generation and female users with up to 500 stores a month receiving an online order. Mitre 10 has already been named as Australia’s fastest growing e-commerce presence of any major brand,” she said.

Online sales for IHG stores have quadrupled in the last 12 months and we have an aspiration to expand this five-fold in the next few years, said Ms Welsh.

“We have to continue to be nimble in our digital activity and move fast, because technology and customer expectations are rapidly changing. But we are first to market here and we are developing the right tools, investing through scan data so we can personalise the product offer to the customer and, hopefully, make those consumers as loyal as possible to our brands.”

“The customer’s expectations are clear: they want us to be seamless, personalised, and interact with them under their rules. IHG aims to continually provide members with the right solutions, whether they be technical, product or investments in your stores, to enable you to keep up with this pace of change and continually be the ‘Best Store in Town’,” she said.

Whole of House solutions

With IHG’s sales mix now heavily weighted to trade (65 per cent of total sales), and its diversified exposure to construction segments, Ms Welsh spoke on the significant opportunity for IHG to grow its share of the $17 billion trade market through a ‘Whole of House’ approach. This includes focusing on growth catagories not historically sourced through IHG across the five key stages of a house build. 

“Foundations, Frame & Truss, Lock Up, Fix and Fit Out – we firmly believe we have the tools to grow our share of supply from 34 per cent, to supplying over 70 per cent of any house build in Australia. This will undoubtedly help us become the preferred channel to the trades,” Ms Welsh said.

She pointed to plans already underway to ramp up alliances with key trade players, including leveraging the collective timber volume via frame and truss suppliers and new steel framing opportunities, pre-fabrication sales, a single channel of supply for plasterboard and insulation installation, as well as kitchens, bathrooms and appliance fit-outs through Hardings.

“The biggest opportunity lies in the ‘Fix and Fit Out’ stages of a build, which is great news because this area has a better margin, higher profit return than perhaps the earlier stage of the build. All 690 locations have the opportunity to unite, grow our strength in trade by using the big Trade Centres we have and leveraging off the ‘hub and spoke’ model that we have started to build. We need to unite and help each other, to make sure we bring the best value to every builder every time, through your relationships,” she said.

Expo showcase 

Following the Business Session, the IHG Expo took place over two days, with new ideas, innovation and trends a significant focus for the record 220 exhibitors.

New product releases, hands on demonstrations, interactive stands and enthusiastic staff were all on hand to ensure the showcase was a huge success. Exclusive deals and volume buys helped boost margin opportunities for members, with total sales for the Expo exceeding $21 million at the time of going to print. 

For the first time IHG presented a ‘Connected Home’ concept showcasing the latest smart home technologies and home security, with keen interest from members on how to execute this growing category in-store and diversify their business. A new homewares range was also showcased, as was a forward order program for the new season outdoor furniture range.  

All the key timber, building supplies and paint suppliers were front and centre inside the expo halls. Global garden powerhouse Stihl, exhibited for the first time and was said to be overwhelmed with the interest from members in the newly formed partnership with IHG. 

Bostik, Ox Group and Hurford Timber were recognised for their innovative exhibition investment, each winning a prestigious ‘Exhibitor of the Year Award’ for large, medium and small format booths respectively.

Awards of Excellence

Celebrating outstanding independents and support from the IHG supplier base, the final night saw various industry players recognised for unique achievements and success at the ‘Awards of Excellence’ dinner. 

Proceedings kicked off with a high-energy performance from well-known Australian band, ‘The Black Sorrows’ setting the scene for a jubilant atmosphere for the remainder of the evening.

Hosted by Mitre 10 ambassador, Scott Cam and Channel Nine presenter, Catriona Rowntree, the dinner was filled with passion, emotion and family pride as recipients took to the stage to deliver heart-felt speeches on their journeys.

Store awards

2018 STORE OF THE YEAR – CONVENIENCE FORMAT — Port Broughton Hardware, Port Broughton SA (Owners – Mark and Kaye Bellman)

This award recognises the best achievers in the True Value and Thrifty-Link convenience brands. Award-winning recipient, Mark Bellman, said he was very honoured to win the award, while also thanking the IHG South Australian team, his wife Kaye and staff. “I love my job and I love this industry,” he said.

2018 MITRE 10 STORE OF THE YEAR – SMALL FORMAT — Sunlite Mitre 10, York Street Sydney NSW (Owner – Steven Czeiger)

Steven Czeiger is no stranger to taking out top honours but was still very humble in accepting the award. Steven told the story of how he met an amazing woman selling seafood in a fish market six years ago and who had the best marketing and customer service skills he had ever come across. It took several years before Steven finally convinced Ching Ching to join the Sunlite Mitre 10 family. She began work at the York Street store, rapidly moving to store manager, and now looks after multiple store operations.  “We are a people business, more than a hardware business, which creates outstanding customer service that keeps our business thriving,” Steven said.

2018 HTH STORE OF THE YEAR – UNDER 1000m2 — Jurien Bay Hardware, Jurien Bay WA (Owners – Clinton and Lily Strugnell)

Although owners, Clinton and Lily, were not present to receive the award, IHG WA State Manager Hayley Quick said the owners had put a lot of work into the business over the last 12 months.

“You won’t find a more dedicated village member and group member to IHG who is always willing to share what he has learned and it is a privilege to receive the award on his behalf,” she said.

2018 MITRE 10 STORE OF THE YEAR – MEDIUM FORMAT — Kincumber Mitre 10, Kincumber NSW (Owners – Steve McCumstie and Peter Steele)

General Manager, Matt Maclure, spoke with pride on receiving his Store of the Year Award.

“We have a very special team at Kincumber along with a great culture. It is a very positive environment and the reason why there is such a good team is because of Steve and Peter, who are such great mentors,” he said.

2018 GARDEN CENTRE OF THE YEAR – McLaren Vale Mitre 10, McLaren Vale SA (Owners – Mark Loveday, Brian Lawrence and Linda Provis)

Upon receiving the award, owner Mark Loveday said, “When you get the Garden Centre right, it becomes such a drawcard to the business. To us it has opened up so many new opportunities as we have put in giftware and a few other things, but it works a treat.”

Anthony Butz, the Garden Centre Manager, also said, “the business has travelled a long way since it was taken over a few months ago and the garden centre has improved immensely through passion, commitment, innovation and plant knowledge.”

2018 TRADE CENTRE OF THE YEAR — Provans Home Timber & Hardware, Clifton Hill VIC (Owners – Barry, Jarrod and Marnie Rosenberg)

This is the third time Provans has won a national trade award, and according to award recipient Barry Rosenberg it was even more special because it is not just a Home award, it was now a combined Home and Mitre 10 accolade. 

“How proud we are to win this award three times in a row. Thank you to all the suppliers,” he said.

2018 HTH STORE OF THE YEAR – OVER 1000m2 — TM&H Home Timber & Hardware, Moe VIC (Owners – Jeffrey Hitchens, James Hitchens and David Gorman)

Recipient, Jeff Hitchins said he felt very blessed to be working with his family and also thanked the Independent Hardware Group support staff for all of their encouragement.  

“I have trust in this group and if we stay together we will have the strength to fight the big green big box and have a good future,” he said.

2018 MITRE 10 STORE OF THE YEAR – LARGE FORMAT — Johnson Bros Mitre 10, Mona Vale NSW (Owners – Norm Hastings and Frank Benton)

Recipient, Ged Johnson, made a particular point of thanking IHG CEO Mark Laidlaw, “for having faith in us when we took over the new site and getting on board with us. Thank you to the state team and our BDM. Thank you for pushing us so hard to achieve the standards that are in our store and to our staff for working tirelessly in making the store it is today.”

“And lastly, we’d like to thank our father who opened his first hardware store 64 years ago. I’m sure Dad is looking down upon us now wishing he was here to celebrate this achievement.”

2018 VILLAGE OF THE YEAR — Western Planers, NSW

Individual awards

2018 PAUL MURPHY ‘MIGHTY HELPFUL’ SERVICE AWARD — Josh Pain, Margaret River Home Timber & Hardware, Margaret River WA

Famous for his outstanding customer service and regularly working many hours outside of his usual roster, recipient Josh Pain was described as wholeheartedly embracing the concept of family, village and tribe.

Josh said it was a real pleasure and honour to receive the award. 

“I am really proud to work for the people that I work for. They treat us like family and it really is a commendation to them for having helped me get where I am today,” Josh said. 

2018 BLUE BLOOD AWARD — Michele Vincent, State Sales & Marketing Officer, WA 

On receiving her award, Michele thanked Mr Laidlaw and the executive team for believing in her. She also thanked the WA stores within her village and promised to always assist them in being the ‘Best Store in Town’. 

2018 CEO RECOGNITION AWARD — Peter Williams, Williams Mitre 10, New Norfolk TAS

On receiving his award, Peter Williams said, “We are all on a journey together and fighting the good fight and doing it for the right reason. I would not be in the business if it were not for my family. It is so humbling to think what you do will be recognised.”

2018 HALL OF FAME — Vanderkolk family, Bayswater Mitre 10 VIC

Vanderkolk family representatives said they were honoured to be inducted into the 2018 Hall of Fame.

On receiving the award, recipient Mick Vanderkolk spoke on how his grandfather Bill established a joinery in Bayswater in the 1950s as a Dutch immigrant. 

“We still have a joinery in the yard today. Bill had two sons, Frank and Charlie, and when they were old enough they started selling timber and hardware. Frank bought out Charlie in the 1970s and Frank just kept growing and evolving the store. He brought in the garden supply business in the 80’s, moving to Mitre 10 in 1992 and then went onto buy a purpose built shop and six acres of land and kept putting money into the business. Frank has been a driving force for the business and remains a spiritual figurehead to this day, with a lot of family also working in the business today,” he said. 

Supplier Awards

2018 SUPPLIER OF THE YEAR – LIVING — Husqvarna Group

2018 SUPPLIER OF THE YEAR – FIX — Sutton Tools

2018 SUPPLIER OF THE YEAR – BUILD — Tilling Timber

2018 SUPPLIER OF THE YEAR – LOGISTICS — Followmont Transport


2018 EXHIBITOR OF THE YEAR – MEDIUM — Hurford Timber