ABS Housing Statistics to Nov 2014
ABS Statistics for housing market Nov 2014
Housing affordability
NAB housing forecasts
Click to visit the HBT website for more information
Commentary on Australia's housing market tends to be difficult to follow, as the same numbers are analysed differently by various sectors.

It is possible to find forecasts for 2015 that predict a collapse in prices, others that predict an interest rate cut in April 2015 that will see the market surge ahead, and still others that predict a range of problems: the exit of overseas investors, falling rental yields, decreases in affordability.

One of the deeply concerning, though essentially unstated, relations some analysts tend to make is that strongly growing house prices can somehow counterbalance the core problem with the Australian housing market, which is abnormally high prices caused by various forms of supply constraint.

Looking at the HNN graph based on Australian Bureau of Statistics figures up to November 2014, the portrait that emerges is certainly not one of runaway growth, but neither is it one of collapse.

The rate of increase in supply (yellow line) shows a moderating arc. The flow of capital into the market, indicating demand, shows ongoing growth, though at a slowing rate. Housing approvals (the grey line) which indicates predictive demand, continues to grow, but at a slower rate in 2014 than 2013.

Far from presaging either a collapsing or runaway housing market, this seems to indicate that the housing market is actually in good accord with the underlying economy.

From the home improvement perspective, construction and renovation will likely continue through the first half of 2015 at levels similar to those during the second half of 2014.
Rotary hammer gets WORX treatment
The H3 Rotary Hammer from WORX has been upgraded
PowerShare technology has been integrated in the H3
The previous 12v H3 model has been enhanced with additional features
SpotOn is your source for laser levels and other tools
The H3 Rotary Hammer from WORX has been upgraded after being a staple in the range for a long time.

This tool now incorporates PowerShare technology which has an interchangeable battery system, allowing users to expand their 20v cordless range without the need to purchase more batteries and chargers.

The 20v range includes a huge variety of drills, saws, blowers, trimmers, hedge clippers and multi-tools.

The 20v Lithium Ion battery is 40% lighter than other batteries, while still providing constant power, extended runtimes, a longer lifespan and a non-existent self-discharge when not in use.

Like the previous models, the new H3 is a 3 in 1 combo drill, driver and rotary hammer, which is still the most lightweight hammer drill on the market weighing just 1.1kgs.

Unlike most hammer drills which have small gears to create vibration, the H3 has a powerful inbuilt pneumatic piston which pounds the cement surface as operators drilling. It can make this once tedious task seem effortless.

The H3 is also compatible with all standard drill and drive bits thanks to the supplied keyless chuck and bit holder.

The ergonomically designed handle has been built with ease of use in mind. This enables the user to operate the H3 combo drill with one hand. A high powered LED light has been integrated into the body of the H3 to make drilling easy, even in dark or enclosed areas.
HNN Index for 23 January 2015
HNN Index for 23 January 2015
Half year results for GUD
Jacksonville says hello to Ian McLeod
Click to visit the HBT website for more information
The HNN Index recovered from its losses in the previous index period. It rose by 26.08 points to close at 982.88. The underlying ASX 200 index also rose, reaching 5501.8, which in index adjusted terms is 1023.6 points.

Stocks that performed well included Westfield, Super Retail Group, Stockland Corp and James Hardie Industries. UGL fell sharply over the week.
Boral to sell hardwood timber business

Boral has appointed corporate adviser Gresham to help it sell its hardwood timber business. With few prospective buyers, it is expected to sell for less than its $100 million book value.
GUD Holdings
GUD half-year report shows profit of $17.28 million

GUD Holdings, which controls the Sunbeam brand, came out of the first half of 2014/15 with a profit of $17.28 million, 261% up on the same period a year ago. However, after extraordinary items are removed, the profit gain is a still good 16%. Performance across its divisions was uneven. The company's managing director, Jonathan Ling, sees a recent deal made with US company Jarden as being key to its growth.
ABC Online
Leighton Holdings
Hong Kong Shatin to Central Link

Leighton Asia in association with China State Construction Engineering will construct an underground rail link in Hong Kong. The Hatin to Central Link is a cut and cover tunnel project that is worth A$929 million.
Global Rail News
Change in shareholding

Allan Gray Australia,a fund management company and the largest shareholder in Metcash, increased its holdings from 79,736,092 to 89,508,963 as of 21 January 2015. This brings it total share of Metcash up from 8.59% to 9.64%. This is the third transaction of this kind made by Allan Gray. Prior to 9 December 2014 the company held 6.3% of Metcash.
Super Retail Group
Petrol prices give a boost

Super Retail shares rose by 11.28% during the index period. This is seen as being in part a reaction to lower petrol prices, which could help boost its automotive accessories business.
Former Coles boss moves to Bi-Lo in US

Florida-based supermarket company Bi-Lo Holdings has hired Ian McLeod away from his job developing international operations at Wesfarmers. Mr McLeod will become Bi-Lo's president and CEO effective 2 March 2015. Bi-Lo operates 801 supermarkets in eight Southeastern states and had US$7.7 billion in revenue in the first nine months of 2013. That makes it roughly one-third the size of Coles.
Jacksonville Daily Record
Big-box retailers quest for growth in 2015
Adobe predictions for Christmas 2014 mobile
The combination: app that scans barcodes
Nielsen numbers on mobile used in purchase decision
Give to Amnesty International
While 2014 ended up being an OK year for many home improvement retailers, including Bunnings, Mitre 10, the majority of independents, and even Masters, 2015 seems to offer fewer prospects for growth, and 2016 is unlikely to be much better.

There are complex economic reasons for this, ranging from a probable bump in interest rates (HNN believes it will be in May or June 2015) that will suppress some building activity, to persistent high unemployment, resulting partly from low commodity prices.

Added to this will be the prospective winding down of Australia's vehicle manufacturing industry. This will have practical, job-related effects, as well as being a psychological blow.

What is expected is something of a "background" growth rate for each of the next two years that will hover around 5% to 6%.

While many independent retailers might be happy with that, it's not enough to please investors in Wesfarmers and Woolworths, and will especially not satisfy the investment analysts.

Both CitiBank's Craig Woolford and Bank of America Merryl Lynch's David Errington have predicted tough times ahead for the two companies.

The Woolworths and Wesfarmers (Coles) supermarket businesses are expected to suffer the most. With low-cost, low margin operations such as Aldi continuing to eat away at their market share, they have to choose one of two directions.

They can cut prices to retain marketshare, thereby reducing their margins, or they can maintain current prices, retaining high margins, but losing marketshare.

The pressure this will put on overall company earnings will flow through to home improvement operations as well. Wesfarmers' Bunnings needs to bring in a growth margin that will justify its expenditure on its huge store build-out over the past five years.

Similarly Woolworths' Masters Home Improvement needs to hit profitability by 2018, or find itself deemed something of a failure.
Australia not alone

The Australian situation is one that is echoed in the US. To quote from a recent Motley Fool article:
Coming off a stellar performance in 2014, in which the stock produced total returns of more than 30%, Home Depot has investors wondering whether the home improvement giant can produce similar success in 2015.
The big question that Home Depot faces is whether it can continue to squeeze even more profits from its revenue growth. The home improvement giant isn't likely to produce sales growth of more than 4% to 5% in 2015, but investors want to see continued earnings gains that are closer to 20%. To accomplish this, Home Depot will have to keep moving forward with initiatives like streamlining its e-commerce portal to maximise customer engagement and increase store traffic.
By giving customers of all skill levels the exact help they need to succeed with their home improvement goals, Home Depot could make itself the stand-out stock in the industry and further cement its leadership position in home-related retail.
Home Depot in 2015: What Investors Must Watch For
Finding growth

The Motley Fool quote rather firmly hints at where the investment community expects Home Depot and other retailers to find a source of growth. When it comes to "giving customers of all skill levels the exact help they need to succeed with their home improvement goals" there really is only one path to take: technology, and specifically mobile-bases technologies.

While in the past companies like Home Depot have done well with "big data" analytics, that type of customer profiling, even with the very best systems, will always remain somewhat limited.

It comes down to not much more than looking at two associated data items: the purchase of an item and its immediate context in terms of time of day and the items purchased with it.

Looking only at data that records purchases against a timeline is very one-dimensional. It is a view of customer behaviour that highlights elements such as sales, marketing, checkout and assistance -- all of which are retailer to customer actions.

What mobile technology interactions can provide is more nuanced and useful views. These could include wish lists, deferred and cancelled purchases, the delight of discovery, as well as disappointment over a missing product and regret over an unsatisfactory purchase.

One way of looking at this is to see that older transaction data oriented systems stop short at the point the sale is made. Newer, more holistic systems go beyond the moment of the sale, and attempt a more complete understanding of the customer.
A familiar road

It is interesting to note that customer data analytics, as we know them today, were entirely accidental. They grew out of the adoption of barcoding systems.

The first commercial retail barcoding system was finalised in 1974. Adoption for the first six years was very slow, with only 200 supermarkets in the US equipped with a barcode system by 1977. By 1984, however, fully 33% of supermarkets had a scanning system in place.

Though it seems obvious to us today, it was the Pepsi company under the leadership of John Sculley (who later became CEO of Apple, Inc.) that worked out they could use the data generated by barcodes to see how customers used their products. Mr Sculley helped Pepsi move to buying purchase data from its retailers so as to form a better picture of buyer behaviour.

One of Pepsi's initial discoveries was that sales increased when they ran promotional competitions. However, the biggest increase came before the competitions actually began.

They worked out it was the enhance display of product in stores that really created the sales, not the competitions themselves. The company moved from competitions to promoting more prominent display of its product at retailers.
Mobile applications

When we speak of mobile, we mean the development of mobile apps that provide an interface between the customer and the retailer. Some of the functions included in a complete app would be as follows:
  • Basic e-commerce, enabling purchase and delivery options.
  • Shopping lists for specific activities, including wish-lists.
  • Access to reviews, and the ability to post reviews.
  • Product location on a store-by-store basis.
  • Means of accessing deeper levels of information about products, through scanning bar or QR codes.
  • Loyalty rewards, and special deals offered based on established purchasing cycles.
  • Location aware capability, built on iBeacons or other technologies, that enable the app to pop-up "prompts" when the customer enters areas of a store. Prompts can include a reminder about products on lists and coupons.
  • Simple project management.
  • Complete purchase record for the customer.
  • Customer-to-customer awareness tools. It can enable "friends" to know customer is in the store.
  • Expertise badges. Awarded to customers with demonstrated expertise through completing a task. If enabled, it will provide advice to others.

  • That is a partial list. If you understand the basics of operating such a system, it is evident a very advanced back end system will be required. It will also be evident just how much information you would have about any customer after they had interacted with this system for a year or two years.
    Adoption of mobile in Australian retail

    In terms of a timeline, we could say with some certainty that mobile will have been fully adopted by 2024. The rate of adoption from now until 2019 is far less easy to predict.

    While pressure from the investment community will continue to grow over the next two calendar years, it's unlikely that either Bunnings or Masters will become wholeheartedly involved in mobile during this period.

    Both remain committed to investing heavily in their physical store infrastructure and the logistics which enables these stores.

    At the outside, they may become involved in the technology by Christmas 2016. It is more likely that first developments will occur in 2017.

    There are two other areas where introduction of mobile will be more likely. The first would be through one of the more nimble home improvement buying groups.

    With a more limited range of products on sale, and high sensitivity to both price and margin, the advantages offered by mobile could be considerable, and well worth the risk.

    The second would be through product-specific trade retailers. For example, the trade paint retailers that are controlled by companies such as DuluxGroup and Valspar through its Wattyl brand. Well-developed apps which combined some aspects of project management with their store account details could provide a winning competitive advantage.

    It is very easy to dismiss the proposal of patterns such as this one. It helps a little to recall how easily other advances in retail have been dismissed.

    Going back to barcodes and their adoption through the late 1970s and 1980s, the principal objection retailers had was that they were so expensive to implement. Something like 75% of a store's stock had to be laboriously added to the barcode system for it to be effective. The expense at a time when everything computer-related was large and costly was considerable.

    What was totally unexpected was just how much retailers benefitted from the system. Having never had the kind of inventory control that barcode systems gave them, retailers had never even imagined what they could do with it.

    In the 1980s most retail operations which installed barcode technology found that within a month of installing the new systems, sales revenue would start to grow at 10% to 12% on an annualised rate. Along with an up to 2% drop in operating costs, this meant that the net return on investment in the systems ended up being over 40%.

    From our perspective today, contrasting primitive hand-entry systems with barcodes, and fortnightly stocktaking with the daily numbers available now, these numbers are not so surprising.

    To really understand what the effect of mobile technologies could be, it might help to imagine looking back on how retail operates today from the potential perspective of 2020.

    Until next time,


    You can contact me directly via email or Twitter @HNN_Australia

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    Big box update
    Bunnnings' investment in Ipswich (QLD) is worth around $131 million
    HNN Sources
    The Bunnings store in Batemans Bay (NSW) is scheduled to open in mid-2015
    Cricketer Brett Lee was guest of honour when Bunnings opened its Marsden Park warehouse
    Click to visit the ITW website for move information
    Bunnings $131 million investment in Ipswich (QLD); the Batemans Bay Bunnings Warehouse is scheduled to open in mid-2015; and Bunnings Marsden Park has held its official opening with cricketer Brett Lee.
    Ipswich gets Bunnings' support

    Bunnnings has made a major investment in the future of Ipswich (QLD) worth $131 million. It has just opened a new store at West Ipswich and before the year is out the big box retailer will have two more warehouses operational in the city. Work started late last year on a Bunnings store in Bundamba and now construction is underway on a $38 million store at a site next to the Orion Shopping Centre at Springfield Central. Chief operating officer Peter Davis told The Queensland Times the Springfield store would be 16,000sqm. It will also include an indoor playground, cafe as well as parking for more than 300 cars.

    Each new Bunnings store brings with it job opportunities for district residents, with the three new stores combined expected to produce around 500 positions. The construction phase of the project will also generate jobs with more than 270 workers required.
    Batemans Bay store for mid-2015

    The $27 million Bunnings store in Batemans Bay (NSW) is on track to open in mid-2015. Chief operating officer Peter Davis told the Batemans Bay Post: "Construction is progressing well with the building's footings in place. Wall panels, structural steel and roofing are expected to be installed soon." The new, larger warehouse, on the western side of the Princes Highway, will replace the existing Batemans Bay store, and Davis said that all staff at the current store would transfer to the new premises. It will be approximately four times the size.

    More than 75 new jobs are expected to be created following the opening of the warehouse, taking the staff number to over 110. The warehouse will have an approximate total store size of 11,500sqm.
    Brett Lee opens Bunnings

    Australian cricket star Brett Lee was the guest of honour when Bunnings opened its Marsden Park warehouse in NSW recently. Complex manager Brett Taylor and Bunnings managing director John Gillam joined Lee in opening the new facility.

    Taylor said team members will be involved in the local community. He told the Daily Telegraph: "Team members have supported a number of community groups already, working together to assist in local projects, including enhancing the central grotto at Mt Druitt Palliative Care Centre, planting a memorial rose garden at St Elizabeth Home Aged Care Facility and rejuvenating garden beds and planting citrus trees at Marsden Park Public School..."

    Bunnings Warehouse Marsden Park joins 70 other smaller format and trade centres in NSW.
    Acquisitions and cost savings for PPG
    Earnings fell but revenues increased for PPG in the fourth quarter
    Its titanium dioxide (TiO2) facility in China is scheduled to begin production in Q2 2015
    PPG Industries' Comex acquisition should add around US$1 billion to its sales
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    PPG reported fourth quarter earnings fell 67% from the previous year's quarter to US$83 million. This compares to US$254 million in the fourth quarter of 2013.

    But the company also generated US$3.71 billion in revenue during the quarter, topping analysts' US$3.59 billion estimates for the period.

    For fiscal year 2014, the company reported net income of US$2.1 billion compared to net income of US$3.2 billion in 2013.

    However full-year net sales for the company were US$15.4 billion, up 8% year-over-year.

    Although revenues surpassed expectations, profit slid because of hefty debt refinancing charges.

    Going forward, PPG Industries remains committed to using cash on opportunities that will deliver earnings. The company sees growth to remain mixed (depending on the region) in 2015 with North America and Asia continuing to grow at levels that are in tandem with 2014.

    During the quarter, its business in the Asia-Pacific region grew 5%, the highest growth rate of the year.

    Healthy momentum across automotive OEM, automotive refinish and aerospace markets and continued demand recovery in Europe are expected to support its results moving ahead. The company's cost containment measures through its restructuring program should also help earnings.

    It is also taking steps to grow its business inorganically by making a number of acquisitions. The acquisition of Akzo Nobel's North American architectural coatings business has reinforced its branded paint product offerings in the North American architectural paint market. The company has already achieved its targeted annual synergies from the buyout.

    In addition, the recent buyout of Mexico's leading paint company Consorcio Comex for US$2.3 billion represents a significant move by PPG as it will boost its foothold in Mexico and Central America by offering a major architectural coatings portfolio.

    PPG Industries expects the acquisition to add around US$1 billion to its sales in 2015 and be accretive to its earnings.

    It spent US$2.5 billion on acquisitions last year. PPG expects to deploy US$1.5 billion to US$2.5 billion of cash this year and 2016 combined on acquisitions and share buybacks.

    The company has a strong record of returning cash to shareholders through dividends and share buybacks. It returned over US$1.1 billion to its shareholders in the form of dividend and share repurchases in 2014.
    Titanium dioxide capacity

    PPG's titanium dioxide (TiO2) manufacturing and research facility built in partnership with Chinese firm, Henan Billions Chemical Co. is scheduled to begin production in the second quarter 2015.

    The 366,000sqm plant in China is expected to produce up to 100,000 metric tons of TiO2 per year, and has capabilities to expand capacity. PPG intends to use TiO2 manufactured at the new facility in the production of paints and other coatings.

    Asked during its recent earnings call about the plant, chief operating officer Micahel McGarry said the Chinese TiO2 facility is coming along and will be online within a year or so. He also said the current market for TiO2 is oversupplied, resulting in price declines but PPG is working to further reduce its reliance on TiO2 in its products

    The Chinese production facility should help to guarantee TiO2 prices in the future, when the prices reaches as upswing.
    Earnings growth for Briggs & Stratton
    Briggs & Stratton reported second quarter revenue increased 6.6%
    Security Filings
    Todd J. Teske, chairman, president and chief executive officer
    The company's acquisition of Allmand Bros. closed in August 2014
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    Briggs & Stratton Corporation, the world's largest producer of gasoline engines for outdoor power equipment, reported second quarter revenue that increased 6.6% to US$444.3 million and net income that jumped from US$2.3 million to US$11.9 million, year over year.

    The increase in revenue was largely attributed to a favourable mix of engines sold, higher sales of pressure washers, snow throwers and commercial lawn and garden equipment in North America, and the results of the Allmand acquisition, which closed in August of this fiscal year.

    The company's ongoing restructuring program has helped reduce costs and improve its bottom line.

    Pre-tax restructuring cost estimates for fiscal 2015 remain unchanged at US$30 million to US$37 million. Total annual cost savings as a result of these actions are anticipated to be approximately US$15 million to US$20 million with approximately US$5 million to US$7 million expected to be realised in fiscal 2015 and the remainder realised in fiscal 2016. Todd J. Teske, chairman, president and chief executive officer said:
    Looking forward to the upcoming US lawn & garden season, we have gained additional placement of our engines on lawn and garden products as compared to our placement last year. We continue to expect modest industry growth in the upcoming season.
    Further, we are again introducing several new products...including the industry's only engine that doesn't require an oil change. All of this together sets us up for continued improvement for the last six months of our fiscal year.
    However, we expect our OEM customers will ramp up their seasonal production later than last year in response to higher channel inventories of residential lawn and garden equipment causing our quarterly results to shift between quarters.
    Interesting links
    Rebates for pink batts insulation are back in South Australia
    HNN Sources
    Brilliant Lighting's new line decorative pendants is inspired by Nordic design
    Home Depot partners with Georgia Tech University to create a research centre for retail innovations
    Click to visit the HBT website for more information
    Government rebates for insulation approved for SA; Scandinavian inspired products from Australian supplier Brilliant Lighting; WA's Wesbeam is slowly turning its fortunes around; Home Depot partners with Georgia Tech University for a retail research centre; and a patent has been given to ITW for a product function it has invented. More stories below.

    For further information, simply click on the images provided.
    Local News
    Pink batt rebates back in SA

    South Australia's Residential Energy Efficiency Scheme has extended its eligible no-cost or low-cost activities to include retrofitting insulation, as well as the purchase and installation of energy-efficient air-conditioning and water heaters. Rebranded as the Retailer Energy Efficiency Scheme, it provides a rebate of about $1000 for the retrofitting of insulation for an average 200sqm home.
    Rebates for insulation have returned in SA
    Scandi-designed lighting pendants

    Local LED lighting company Brilliant Lighting has a new line decorative pendants inspired by the simplicity of Nordic design. It features a pared back aesthetic and is made to be very affordable. Available exclusively through Bunnings, the contemporary designs include the Gian floor lamp and the big, bold, industrial style Hugo pendant.
    The Hugo pendant is part of Brilliant Lighting's Nordic range
    Slow turnaround for Wesbeam

    WA-based engineered wood products group Wesbeam Holdings claims a "180-degree" turnaround in market conditions is set to improve its bottom line, after it posted another annual loss. The company revealed an $8.1 million loss on sales of $68. 6 million for the 2013-14 financial year. That was a slight improvement on the $12 million loss on $57 million in sales in 2012-13.
    WA's Wesbeam Holdings is on the turnaround path
    International News
    Home Depot investing in retail tech

    Home Depot's efforts to advance tech innovation in retail will be getting a boost from the company's latest initiative. The big box chain has partnered with Georgia Tech University to create a research centre, focused on nurturing young talent in areas such as virtual reality, 3D printing and 3D scanning. The Home Depot Technology Center will allow the company to work with more than 40 start-up companies housed at Georgia Tech.
    Home Depot has partnered with Georgia Tech University to create a cutting-edge research centre
    Patent issued for ITW

    A product patent has been issued for Illinois Tool Works Inc. that "relates generally to fastener driving tools (tools or nailers) employing magazines feeding fasteners to a nosepiece for receiving a driving force", according a statement from its inventors. The product function has industrial applications.
    A patent has been issued for Illinois Tool Works
    Titan range available from Chicago

    Chicago Pneumatic has added bolting tools from Titan Technologies to its product portfolio. The Titan range includes hydraulic torque wrenches, pumps and accessories for the oil and gas, petrochemical, wind energy, power generation, mining and construction industries. Titan's network of specialised distributors will allow Chicago Pneumatic to enter different markets.
    Titan Technologies products are now part of Chicago Pneumatic's offering
    Storage solution from Rockler

    Rockler Woodworking and Hardware has expanded its line of shop storage products to include three new additions: the 18-inch Shop Stand Apron, Joinery Tool Bag and Zipper Pouch 3-Pack. Each product has its own specialised use. They are constructed with rugged hardware and durable polyester weave material made to withstand the rigours of shop use.
    The Joinery Tool Bag is a new addition to the Rockler range
    NRHA helps US independents

    The North American Retail Hardware Association (NRHA) will be offering a new suite of benefits to retailers, as a result of its acquisition of Vendor2Member. Vendor2Member is the independent hardware industry's largest product sourcing directory and allows retailers to quickly source non-warehoused products directly from their primary wholesaler/distributor's vendors while passing all billing through each respective wholesaler.
    The NRHA has acquired Vendor2Member, a large product-sourcing directory for indies
    Wolseley seeks exit from France

    British plumbing giant Wolseley wants to sell its French building materials unit. The London-listed firm, which is the world's biggest distributor of plumbing and heating products, said it was part of its ongoing restructuring. Wosleley operates in France under the Reseau Pro, Panofrance and Silverwood brands.
    Wolseley plans to sell its French building materials unit
    bauMax closes Hungary stores

    Austrian home improvement centre operator bauMax AG has announced its exit from Hungary. The decision, which follows "due consideration", was made due to difficult economic conditions, the company said in a statement. The 14 stores to be closed in Hungary could be taken over by Austrian furniture company, XXXLutz.
    Austrian home improvement retailer bauMax is exiting Hungary
    The multitool as a bracelet
    The Tread multitool from Leatherman is made like a fashion-forward bracelet
    A Swiss quartz movement watch will be available in the second half of 2015
    The Tread is made with slotted fasteners and can be fully customised for each user
    Click to view details of the SpotOn golf ball competition
    Leatherman's Tread multitool is made from stainless steel and looks like a fashion-forward yet manly bracelet. But on closer inspection, users will find hex holes, screwdriver tips, a cutting hook, a carbide glass breaker and the all-important bottle opener.

    The idea for the Tread stemmed from an incident Leatherman president Ben Rivera experienced at Disneyland. Security wouldn't allow him inside with his Skeletool multitool, so he had to trek it back to his hotel room or risk losing it forever. He said: !I knew there had to be another way to carry my tools with me that would be accepted by security.

    The Tread is made with slotted fasteners and can be customised by swapping out or removing links. The user can rearrange links, add or remove tools, or just adjust the bracelet's size for comfort down to one quarter of an inch.

    Users will have to take it off to use it, but will not have to disassemble it. They just choose their tool and use the rest of the bracelet like a handle.

    The Tread as a basic bracelet version is due out in April or May this year.

    According to Wired magazine, it is an interesting departure for the company, and an industry first: a serious multi-tool that can be worn on the wrist. Each link on the band includes two to three functional tools, for a total of 25 usable features.

    The wristband is constructed of metal-injected molded 17-4 stainless steel. The tools may be tiny, but they're not going to snap or bend under stress.

    There will also be an optional Swiss quartz movement watch available in the second half of 2015.
    Apartments driving housing growth
    Sales of multi-units intensified in both October and November 2014
    The Australian
    The increasing trend for apartments is set to continue, according to the HIA
    The HIA's latest report shows sales of new homes increased by 2.2%
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    The Housing Industry Association's (HIA) latest report shows sales of new homes increased by 2.2%, seasonally adjusted in November, following a 3% rise in October.

    The figures were boosted by sales of multi-units, which intensified in both October and November to reach their highest level since September 2003.

    The growth in apartments is contrasted by the fall in detached house sales, which dipped by 1.5% in the same period.

    HIA chief economist Harley Dale said that while the increasing trend for apartments is set to continue, detached houses were not displaying the same pattern as multi-dwelling units. He said:
    Renewed upward momentum in the multi-unit segment drove growth in overall new home sales in late 2014, a trend unlikely to be reversed when the December result comes through.

    While the momentum was evident in both detached house and multi-unit construction in 2013 and 2014, it has recently been concentrated in apartments. As the trend is set to persist into 2015, Dale said a focus on housing policy reform would greatly assist in rebalancing the table.
    Providing a further burst of growth in detached house construction...would at the same time provide productivity gains for the broader Australian economy. That should be a policy no-brainer.

    Queensland led the country in sales of detached homes, seeing a 16% rise in November, while in Western Australia sales dropped 10.6% and NSW fell by 5.6%.
    Deloitte's Global Powers of Retailing 2015
    Deloitte global retail report
    Tractor Supply successful rural home improvement
    Analysis of H&M brand
    Click to visit the HBT website for more information
    Deloitte's Global Powers of Retailing report released in mid-January 2015 does not contain any startling revelations. It confirms that 2015 is likely to be an averagely "OK" year for retail in much of the world, including Australia.

    The major trend it points to is the potential for yet more international retailers to enter the Australian market. These moves will be driven by a need for expansion, and attracted both by Australia's established and viable markets, and the declining exchange rate of the Australian dollar versus the US dollar.

    The report points to the possibility of new entrants in the supermarket sector, in particular Schwarz Unternehmens Treuhand KG, which operates the Lidl brand in Europe. The Deloitte report suggests that any such entry, which would be at the lower-price end of the market, would likely take several years to establish itself to a competitive level.

    The report also mentions Ashley Furniture, a US-based firm which is the largest furniture retailer in the world. It has recently commenced operations in Australia, with a store opening in Adelaide, South Australia.
    Ashley Furniture catalogue
    Retail trends

    The Deloitte report identifies five key retail trends it sees as being important in 2015: Travel, Mobile, Faster retailing, Experience and Innovation.

    The trend that would have most application to home improvement retail would be mobile device based retailing. The importance of this channel was also stressed at the recent National Retailers' Federation event in the USA. As Paul Coby, the IT director for UK retailer John Lewis commented in Retail Week:
    There were umpteen implementations of iBeacons, big data, security, mobile apps to do everything and screens, scanners and tablets galore a sort of Toys R Us for retailers. It convinced me more than ever that to succeed in a retail world that is changing faster than ever, you must really know yourself as a company what you stand for and of course of supreme importance to know what your customers do and don t want from you. Then you can start to pick and choose what new technologies, tools and apps you might want to implement in the real world. It would be a fatal mistake to start with the technology.
    Retail Week

    Mr Coby's comment really goes straight to the heart of the matter: technologies such as mobile are useful for expressing the overall retail intent of a company, but they don't actually create that intent in the first place.

    That is somewhat the problem with this and other retail analysts' reports: there is a tendency to think that retail can respond to the numbers the way that manufacturing, mining and agriculture might.
    The Q ratio

    One of the more interesting parts of the report is that which details what Deloitte refers to as "the Q ratio". This is a measure derived by dividing the a publicly traded company's market capitalisation by the value of its tangible assets. In theory, this yields and indication of how much the company's intangible assets are valued. Any value greater than 1.0 indicates participation by intangible assets.

    Interestingly enough, home improvement retail tends to have a generally high Q ratio. Of the top 250 worldwide retailers that Deloitte examined, the US-based Tractor Supply Company proved to have the second-highest ratio, coming in at 5.176, trailing behind only the fast fashion retailer H & M Hennes & Mauritz AB of Sweden, which had a Q ratio of 6.465.

    Overall, home improvement had a Q ratio of 1.696, coming third behind electronics with 2.392 and Apparel/Footwear with 1.727.

    Deloitte describes the importance of the Q ratio like this:
    In today s world, the global business environment is characterized by intense competition combined with downward pressure on retail prices, slow growth in major developed markets such as Europe, slower growth in emerging markets than in recent years, volatile input prices combined with consumer resistance to higher retail prices, excess store capacity in many developed markets, and a continued shift toward online retailing in which consumers often perceive everything to be a commodity. What this means is that, in order for retailers to prosper, they must distinguish themselves from competitors in order to have pricing power that leads to higher margins. This means having strong brand identity, offering consumers a superior shopping experience, and being clearly differentiated from competitors. The latter can entail unique merchandise offerings including private brands, unique store formats and designs, and superior customer experience. If a publicly traded retailer has these characteristics, the financial markets are likely to reward such a retailer. That is where the Q ratio comes in.

    If there is any message contained in this report, it is that even though 2015 will be a period of only modest growth, it will also be a time of increased competition.

    That competition will, for the most part, be driven more by brand awareness and brand perception that it has been in the past. Retail numbers on the ground remain important, of course, but brand development can leverage them.

    Mobile technologies can aid the interaction between brand awareness and on-the-ground retail experience. The difficulty is to work out how mobile can be shaped to enhance the brand, and not distract from it.
    HNN Index for 16 January 2015
    HNN Index 16 January 2015
    The Komatsu 960E-1: a piece of cake to drive
    James Hardie suffers some heavy losses.
    Click to visit the HBT website for more information
    So much for the "Santa Claus rally". During the index week of 12 January 2015 to 16 January 2015 the HNN Index fell by 26.05 points to 956.8 points, a fall of 2.7%. It tracked the underlying ASX 200 index, which fell from 5466 points to 5299 points, a loss of 3%.

    Harvey Norman Holdings was the only stock which performed exceptionally well, up 5.5% for the index week. The company itself confessed it did not know why its share price climbed.

    A number of other companies performed poorly. The worst performers were James Hardie Industries and Bluescope Steel, which both declined by over 9%. There has been speculation that declining oil prices could slow US housing construction in areas which depend on oil for their economy.

    CSR, BWP Trust, UGL, Downer EDI, Westfield and Leighton Holdings all fell by between 5% and 6%.

    Many of these changes were no doubt due to macro economic factors related to global economic shifts, and a depressing week when violence flared again in European capital cities.

    Overall economic forecasts for Australia would seem to be benign, if mild, with the decline in fuel prices expected to be offset by an increase in interest rates later in 2015.
    Downer EDI
    CFMEU drug defence not supported

    An unfair dismissal complaint against Downer EDI has been dismissed by Australia s Fair Work Commission. The lawsuit sought to argue the dismissal of a female worker who drove 580-tonne trucks at the Boggabri open-cut coalmine in northeastern NSW was unfair. The worker had been tested for drugs prior to commencing her shift, and was found to have levels of methyl amphetamine (aka meth or ice ) in her blood that were four times the detectable minimum. The Construction Forestry Mining and Energy Union (CFMEU) represented her. The CFMEU did not dispute the drug test, but declared the presence of the drug would not have affected her work performance.

    Commissioner Ian Cunningham ruled in part:
    It was highly regrettable to observe during the hearing that an organisation, which apparently conducts campaigns which strongly advocate safety in the workplace, could contemplate a proposition which, in effect, would countenance a person driving a 580-tonne truck whilst having methyl amphetamine in their body at a level four times the reportable cut-off figure.
    The Australian
    Safety At Work Blog
    Harvey Norman Holdings
    ASX queries share price leap

    Harvey Norman has received a formal query from the Australian Stock Exchange (ASX) regarding the rapid rise in its share price. This follows a 10% increase in the share price between 6 January 2015 and 14 January 2015. According to the managing director of Harvey Norman, Gerry Harvey, the company responded to the query by declaring it was not aware of any factors which would have created the sudden increase.
    Appliance Retailer
    $10 million Coles fine a bit light?

    At least one group of lawyers has published a brief piece outlining why they think the Australian Competition and Consumer Commission's $10 million fine levied on Coles for its poor conduct towards suppliers was relatively light. Marque Lawyers claims it could easily have gone as high as $100 million.
    Marque Lawyers
    Cheap fuel brings logistics savings

    Most of the attention behind falling fuel prices has focused on a possible increase in retail sales due to consumers saving money on transportation costs. A second tier of benefits for companies will come from reduced logistics costs. This could benefit both Woolworths and Wesfarmers.
    Fairfax Media
    SiteReview: HomeDSGN and Interior Design magazine
    Park Avenue studio apartment in New York City
    Living room in family home outside Copenhagen
    Study in family home outside Copenhagen
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    Two very differing websites, but each has unique features that recommends it.

    HomeDSGN provides very good photography of interior design, with a strong slant towards European design, though US designs are also featured. While there is almost no text provided on the website, the pictures are so good it is really worth browsing through.
    Family Home Copenhagen
  • Living room
  • Living room
  • Study
  • Study
  • Bedroom
  • Bedroom
    Laidley Street Residence

    Located in one of the more posh areas of San Francisco, this is in many ways a modern house set into a neighbourhood of houses dating back to the early 20th Century.
  • Lounge
  • Lounge
  • View from dining area
  • View from the dining area
  • Up stairs to bedroom
  • Up stairs and into bedroom
  • Bedroom
  • Bedroom
    Interior Design magazine

    Somewhat at the opposite end of the spectrum to HomeDSGN is Interior Design, which is a B2B publication aimed at US interior designers. Largely a showcase for some of the USA s best designers, it also provides good information about trends in areas such as coverings and finishes.

    It provides decent written descriptions of the designs it profiles, which is helpful as they go into the details of the finishes and techniques used in the designs.

    On the down side, this is one of those sites where you have to work a bit to get to the content. The following are some examples from a range of articles
    Interior Design website
  • Ad agency waiting room constructed from shipping container
  • Shipping container in ad agency waiting room
  • New York City bathroom
  • Bathroom
  • New York City studio apartment on Park Avenue
  • Studio apartment
  • New York apartment. Barn doors separate guest room and study, make them into self-contained suite
  • Study, guest bedroom
  • Outdoor offices at Twitter in San Francisco
  • Twitter offices
    MagReview: Homes+ Jan/Feb 2015
    Homes+ magazine Jan/Feb 2015 issue
    Homes+ magazine Jan/Feb 2015 issue
    Some serious DIY in Homes+
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    When Homes+ manages to get its mix of editorial right, it can be a very good magazine, and this is one issue where it succeeds.
    DIY doers

    From a home improvement industry perspective, Homes+ is a very positive magazine. It encourages women to get involved in DIY on a fairly advanced level. Where most other magazines content themselves with pure craft projects, Homes+ provides projects that require pure DIY skills and include structural components. At the same time, it manages to maintain a craft element.

    The first article in this edition is a good example. It provides directions for five different projects involving a breadboard as the main component - Book-ends, key hanger, pet bowl stand, marble chopping board and mirror.

    More seasoned DIYers will no doubt raise their eyebrows a bit at this. A breadboard? But it is a very clever choice. A breadboard is not only a nice familiar object, but it gives the DIYer a good choice of shapes and finishes, without requiring any work.

    The editor has also obviously played very close attention to just how difficult each task is. The bookend project, for example, is very simple. The instructions are to saw the breadboard in half, then glue the parts together with Liquid Nails.
    A bread board made into a book-end

    Using Liquid Nails might not be the most secure fix, but it gets around the difficulties of splitting with nailing, or pre-drilling with screws.

    The project for the pet bowl stand could be more complex, as it requires a large round hole cut in the breadboard, but the editor has wisely suggested the DIYer have that hole made by a home improvement store. This reduces the task to just glueing feet on the board, again with Liquid Nails.
    A bread board made into a pet food holder
    More difficult DIY

    From this easy introduction, the magazine progresses to more advanced tasks. These include: a plant stand made from 30mm x 30mm pine struts; a simple coffee table; and a book rack.

    While still simple to do, they do get the DIYer involved with more complex, structural construction, and require the use of power tools - including, in the case of the coffee table, a circular saw.
    Coffee table
    Accessible home design

    One of the real delights of Homes+ is that it seeks out home designs where the prime ingredient is thoughtfulness and taste, rather than expensive "pieces", or fads.

    [Continues in Full Text]
    CES 2015: Wishful thing-ing
    Works with Nest products dominate CES smarthome offerings
    Guide to Apple HomeKit
    Whirlpool heatpump dryer
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    The January 2015 Consumer Electronics Show (CES) in Las Vegas was dominated by the so-called "Internet of Things" (IoT). In particular, the combination of the IoT with the "smart" or "connected" home was highlighted.

    As HNN has commented in the past, the whole smarthome development poses a number of puzzles for Australia's home improvement industry. In part that is a reflection of Australia's market dynamics (low number of early adopters, very high number of early mainstream adopters), but it is also a reflection of a general sense of confusion around this category.

    The reason it is worth engaging with this confusion is that there is little doubt that over the next five years the smarthome is going to develop into a major category for the home improvement industry. It is also likely to be highly additive in terms of overall industry revenue, capturing consumer spending that might otherwise go to the telecommunication and entertainment industries.
    IoT: Capability in search of a purpose

    Benedict Evans, a respected senior technology analyst with the premier Silicon Valley venture capital firm Andreesen-Horowitz, has an interesting view of the dynamics between the IoT and the smarthome. Essentially, he suggests that the IoT is best seen as a kind of reflection of the smartphone industry. He outlined these views in a recent podcast.

    The task of the smartphone industry has been to take a well-established and well-known set of needs, then to try to wrangle the available technology to fit those needs - making devices that are progressively smaller, lighter, more powerful and with longer battery life.

    The IoT as it meets up with the smarthome concept is really all about taking much of the technology developed in the smartphone area and finding a use for it. To paraphrase Mr Evans, it's like a lot of sensors and communication protocols coming together and looking for some kind of shared purpose.

    So far, the search for that commanding and central purpose has not been all that successful. The closest the smarthome has come to a centre is the thermostat. As HNN has commented in the past, there is a high potential for what are known as "programmable, communicating thermostats" (PCTs) to become a dominant force in home automation. They can deliver direct, measurable benefits through reduced expenditure on energy, as well as broader societal benefits through reduced expenditure on electricity infrastructure.

    However, this is a slowly developing area, and will likely only reach full viability by 2020, as it requires a shift in thinking by consumers and electricity providers, as well as state and federal governments. For the moment the IoT remains centreless, and is scrabbling to find some kind of consumer traction in a range of areas, notably: home environment, security, convenience, and appliances.
    Developing systems

    A major feature of this uncertainty is that home automation still has a range of conflicting communication protocols - not only is there little guidance as to what automation devices should do, most of them can't talk to each other. The two main emerging communication systems are those built around Google's Nest thermostat and Apple's HomeKit system.

    Google's "Works with Nest" is a system that is steadily gaining traction. The core idea behind the Nest system is what we might call "contextual awareness". The Nest thermostat itself monitors home activities then begins to modify its settings based on patterns it senses. As it connects with other devices, such as the Nest Protect smoke alarm, it becomes more accurate and responsive. Eventually it will likely connect with the Google Now system, so that your house will know that your flight touches down at 11:00am, you will likely arrive home at 12:15pm, so it will turn on the airconditioning at 11:55am.

    Apple's HomeKit is still effectively under development. It has emerged recently that remote operation of devices running under HomeKit will require users to have an AppleTV connected to their home network. It is likely to evolve into more of a command/control network, with only a marginal reliance on context.

    Outside of these two systems is what amounts to a plethora of additional protocols. Lowe's has one, the office supplies superstore Staples has another, and you can add to that list half a dozen major players, including companies such as Samsung and Qualcomm.

    And so, onto the products that were actually showcased at CES 2015.
    Home environment
    Google Nest thermostat

    It's hard to believe, but Google acquired Nest close to a year ago. Speculation at the time was that Google would use the high-end learning thermostat as the basis for an entire smarthome ecosystem. That is a prediction that has been borne out by the company's acquisitions, among other factors.

    [Continues in full text]
    Delta Faucet products premier at KBIS
    Delta Faucet's toilets with FlushIQ Technology are integrated with sensors
    PR Newswire
    Delta TempSense Technology will premier on the new Tesla bath collection
    The Kitchen and Bath Industry Show was held in Las Vegas recently
    Click to view details of the SpotOn golf ball competition
    Delta Faucet introduced its latest lineup of products at the Kitchen and Bath Industry Show (KBIS) in Las Vegas recently. They incorporate smart technologies that can enhance user experience with greater functionality and performance. The Delta products and technologies on display at KBIS include:
    Toilets with FlushIQ[tm] technology

    These toilets address consumers' primary bathroom concerns with three key innovations in one smart toilet:
  • Overflow protection

  • A sensor on the back of the bowl monitors the water level and if the level rises to a critical point, the sensor will prevent additional flushes until the issue is resolved.
  • Leak detection

  • A built-in sensor identifies possible tank leaks, potentially saving money and water. If the water level drops and breaks contact with the sensor, the LED indicator will change to solid yellow the next time the toilet is flushed.
  • Touch-free flush

  • A simple wave of the hand can activate the toilet to flush via a strategically-positioned sensor on the tank.
    TempSense[tm] technology

    Available on select faucet models, the Delta TempSense[tm] technology features an LED light at the base of the faucet that lets users know when the water has reached the desired temperature by changing from blue, which represents temperatures below 80 degrees F (27 degrees C), to deepening shades of magenta as the temperature rises to approximately 110 degrees F (43 degrees C), to red when the water temperature is greater than 43 degrees C. This technology will premier on the new Delta Essa[tm] kitchen and Tesla[tm] bath collections, as well as on the Compel(r) bath and Leland(r) kitchen lines.
    Essa kitchen collection

    The new Essa range offers a soft contemporary take on a euro design. With subtle detailing accents and technologies featuring TempAssure[tm], which allows the faucet to be turned on with a simple tap anywhere on the faucet and provides a visual temperature indication, this collection blends with contemporary and transitional design.

    Additionally, the Essa collection is equipped with MagnaTite(r) docking, which keeps the kitchen pull-down spray wand firmly in place with a powerful integrated magnet, so it stays docked when not in use.
    Tesla bath collection

    Featuring Delta's first joystick lavatory faucet, this range is set apart from typical modern design by its divergence from completely straight lines. Inspired by the organic shapes found in nature, it was created with urban high-rises in mind. It also has TempAssure technology, providing touch and hands-free activation as well as a visual temperature indication.
    Odyssey[tm] digital showers

    As digital innovations in the bathroom continue to grow, the Odyssey[tm] digital and Odyssey XO digital shower solutions mean consumers can control shower function with a touch screen panel. Unlike digital shower offerings that require separate access panels, the Odyssey digital shower installs just like a standard shower and allows maintenance in front of the wall to reduce installation time.

    For showers with multiple outlets, the Odyssey XO Digital Shower lets users control a combination of showerheads, handshowers or body sprays. It has a pause/play functionality to stop the flow of water easily to perform tasks such as lathering up or shaving, and then return to the same temperature and outlet settings.
    Fastenal reaches profit expectations in Q4
    Fastenal's strong Q4 results met Wall Street's profit expectations
    Star Tribune
    Softer sales means lower utilisation of Fastenal's trucks which impacts gross margins
    Fastenal now has 46,855 vending machines on customer sites
    Subscribe to HNN weekly e-newsletter
    Nut, bolt, hand tool and factory supplier Fastenal posted strong fourth quarter growth, meeting Wall Street's profit expectations. The company, however, missed revenue estimates.

    Sales for the fourth quarter ended December 31 rose 13.8% to US$926 million. Profits rose 19.3% to US$118 million, or 40 cents a share.

    On average, analysts expected earnings of 39 cents a share and revenue of US$936 million.

    The weaker-than-expected sales comes amid a construction slowdown during this time. Construction activity in the US softens in the holiday months of November and December.

    The company also said that slight price changes -- inflation for the non-fastener products and deflation in the key fastener products -- held back sales growth.

    In a conference call with analysts, chief executive LeLand Hein Jr. and chief financial officer Dan Florness credited the quarter's profit growth to improved US manufacturing and building trends, as well as Fastenal's efforts to manage expenses and increase the sales staff within its retail stores.

    The company hired 82 new workers during the last quarter and opened 24 new stores during 2014. It will add 20 to 30 more well-staffed stores this year to focus on sales growth.

    The investment is necessary "to add selling energy to the organisation," Hein said. Since July 2013, Fastenal added 2,032 workers, an increase of 19%, to its stores and regional management staff.

    Besides the personnel ramp-up, Fastenal benefited from the army of self-service industrial vending machines it has installed at customer sites over the past few years. Vending machine sales make up 40% of the company's revenue. Florness said:
    Fast Solutions industrial vending devices give us a great platform for growth.

    Fastenal boosted its vending machine count 15% in 2014. It now has 46,855 machines on customer sites.
    Annual results

    For all of 2014, Fastenal's total sales rose 12% to US$3.73 billion. Earnings rose 10% to US$494 million.

    Fastenal benefited from dropping fuel costs last year. However, the company also had weaker profit margins during the quarter as it works out staffing costs, pricing and competitive pressures.

    Gross margins in 2014 dropped to 50.8% from 51.7% in 2013 and 51.5% in 2012.

    Officials also noted additional expenses related to winning large customer accounts. Large customers ordering in bulk are key to its business, but such customers also hurt profit because of discounting, the company said. This was partially offset by the fact that large orders decreased operating expenses due to reduced shipping costs. Florness told analysts:
    As Fastenal attracts large customers, gross profit is negatively impacted. However, as our monthly sales per store increase, we [will] leverage the operating expenses of the business and improve our pre-tax earnings.
    Marsden Park driving NSW economy
    Marsden Park is one of Sydney's major growth centres, twice the size of Sydney's CBD
    Nine News
    Bunnings Marsden Park during construction. Photo credit: Blacktown Sun
    Sydney Business Park is a master planned, mixed-use commercial precinct
    Give to Amnesty International
    Signs of economic growth in NSW can be seen in the suburb of Marsden Park. Bunnings being first to open in the area can be seen as a clear strategic decision. Bunnings store manager Brett Taylor told Channel Nine News:
    It's an exciting growth area. It's great to be the first big box retailer out at Marsden Park.

    Marsden Park is one of Sydney's large growth centres, with billions of dollars being invested. In coming months, Bunnings will be followed by Ikea, Masters, Costco and Aldi in a large retail and business zone. Owen Walsh of Sydney Business Park said:
    That's probably bigger than twice the size of the Sydney CBD, twice the size of Macquarie Park and bigger than Norwest.

    In the next decade, 17,000 people will work in the area and 60,000 homes will be built nearby - housing almost 200,000 people.

    Marsden Park delivers a double benefit - housing and retail. These are two of the key drivers helping to give the NSW economy a huge boost.

    With NSW again outperforming other states by topping the state economic rankings, and with an election around the corner, the State Treasurer believes Marsden Park points to a growing sign of confidence. Andrew Constance said:
    Tens of thousands of jobs (are) being generated, housing construction off the back of it, the ability for people to take up employment near their homes in Western Sydney is very important.

    For the second time in six months, NSW has topped the state economic rankings which are put together by CommSec in its "State of the States 2015" report.
    50,000 new home starts

    Beyond Marsden Park, new home building in NSW is tipped to top the 50,000 in 2015, according to another report from the Housing Industry Association (HIA).

    The predictions, in the spring 2014 edition of the HIA's New South Wales Outlook, come off the back of a strong 2014, where dwelling commencements are expected to have increased by 9.5%, following a 31.7% rise in 2013. The HIA said a further growth of 4.5% is expected in 2015, bringing commencements up to 50,800. HIA executive director, NSW, David Bare told Property Observer:
    We have been pleasantly surprised by the performance of new home building in NSW, with activity on track to exceed initial expectation over the next 12 months. NSW's $7.9 billion home renovations market is likely to reap the rewards of robust dwelling price growth and record low interest rates.
    Activity on this side of the market has fallen steadily over the past decade but the recovery currently underway is likely to lift activity by a cumulative 25% or so.

    Home renovations in the state are also expected to increase in 2015 by 3.9%, respectively. In two years the HIA believes home renovation to reach $8.43 billion.
    US home remodelling slowdown in 2015
    Growth in remodelling spending in the US is expected to deflate somewhat in 2015
    Biz Journals
    Lower home sales in the US is contributing to the slowdown in remodeling activity
    he US remodeling report is put together by Harvard University's Joint Center for Housing Studies
    Subscribe to HNN weekly e-newsletter
    Spending on home remodelling in the US is expected to slow down later this year, because of a drop in home sales and a reluctance by young people to buy homes in the current market, according to a new report issued by Harvard University's Joint Center for Housing Studies.

    The centre's "Leading Indicator of Remodeling Activity" shows that last year ended solidly for the US home remodelling industry, as the sector grew by a 7% in the fourth quarter.

    But the Harvard centre estimates that growth will ebb this year, falling to 6.2% growth in the first quarter, to 3.3% in second quarter and then to 1.6% in the third quarter.

    Growth in first two quarters of the year should still be stronger than it was during the first half of 2013, the report notes. But the real fall comes in the third quarter when growth falls well below 2%, compared to 5% growth in the third quarter of 2013.

    The culprits: Lower home sales and a lack of first-time buyers jumping into the market, despite a recovering economy and historically low interest rates. Chris Herbert, managing director of Harvard's Joint Center said:
    Due in part to weakening home sales last year, growth in remodelling spending is expected to deflate somewhat in 2015. Homeownership rates continue to slide as lending remains tight and first-time homebuyers are not yet returning to the market.

    However there's no need for panic, centre officials say. Abbe Will, a research analyst in the Remodelling Futures Program at the Joint Center said:
    Although contractor sentiment has cooled in recent quarters, it remains favourable overall. House price gains are moderating but still strong and home sales appear to be turning a corner now, all of which bodes well for continued, if more moderate, home improvement gains for 2015.
    Karcher's eco approach
    Karcher's eco!ogic range is made for the environmentally minded user
    Karcher Australia
    The K 6.800 eco!ogic model cuts the time it takes to clean flat surfaces
    The eco!ogic range is exclusively stocked at Bunnings
    Click to view details of the SpotOn golf ball competition
    Every drop of water counts these days and it's with this mentality that Karcher has created its eco!ogic range of pressure washers. Made for the environmentally minded operator, these washers get any cleaning job done consistently with minimal water wastage.

    The latest in eco-friendly technology, the Karcher eco!ogic range uses 20% less electricity than other pressure washers and 80% less water than a standard garden hose. Built with a powerful 230V motor, grit and grime is not an issue for these eco-friendly pressure washers that are over 90% recyclable.

    Ideal for cleaning lightly soiled areas around the home, the K 3.800 is made from recycled plastic and is PVC free. The durable water-cooled induction motor provides optimal efficiency and a motor stop function switches off the motor when the trigger gun is closed.

    The K 5.800 delivers enough pressure to cut through the toughest stains with ease and can handle any cleaning task around the house quickly and efficiently. With a 10m hose, bayonet wash brush, retractable hose reel and Plug 'n' Clean detergent, it is a versatile machine designed to the highest standards by Karcher engineers.

    Built with a powerful T400 T-racer patio cleaner accessory, the K 6.800 cuts the time it takes to clean flat surfaces dramatically, without splashing or spattering. The additional power-nozzle gets into every corner and crevice, ensuring wall-to-wall cleaning.

    The eco!ogic range is exclusively stocked at Bunnings.
    Kwikset adds to contemporary range
    Kwikset's Milan lever is part of its contemporary collection
    PR Newswire
    The streamlined Halifax lever is another model in Kwikset's modern range
    The NAHB International Builders' Show in Las Vegas featured Kwikset's latest levers
    SpotOn is your source for laser levels and other tools
    Consumers want to remain up-to-date with their home design so Kwikset has created three new levers to provide homeowners with a line of sophisticated hardware.

    It showcased the levers - Lisbon, Montreal and Sydney - at the 2015 NAHB International Builders' Show in Las Vegas ahead of their official launch.

    The sleek design of Kwikset's ADA-compliant levers gives builders and homeowners more affordable options for incorporating modern hardware into their homes.

    Lisbon and Montreal feature a square base with curved accents, while Sydney's round foundation is accentuated with soft lines. The simple details make the designs the ideal hardware accent for any modern or transitional home. Marty Hoffmann, vice president, marketing, Kwikset:
    Homeowners expect a combination of style, durability and security when choosing the right door hardware to complement their home decor, and our contemporary collection delivers on all three aspects to provide a chic and functional hardware option.

    In response to the growing number of multi-generational homes, the interior privacy levers feature ADA-compliant push buttons, offering an easy way of locking and unlocking.

    The entry levers also feature Kwikset's patented SmartKey(r) Re-Key Technology with BumpGuard[tm] protection, providing the ultimate in safety and security. The hardware should deliver on functionality, security and design at an accessible price point for many homeowners.

    Lisbon, Montreal and Sydney levers come in Venetian Bronze, Satin Nickel, Polished Chrome and Satin Chrome. The levers complete Kwikset's full contemporary collection, including the streamlined Halifax and Milan levers and deadbolts.

    Builders and homeowners can mix and match the levers and deadbolts for a unique pairing of modern hardware.
    Bid process for Carter Holt Harvey
    The sales process for the Carter Holt Harvey Building Supplies business may have begun
    The Australian
    Pinex is just one brand distributed under the Carter Holt Harvey name
    Credit Suisse was first contacted in late 2014 to advise on the potential sale of Carter Holt Harvey
    Subscribe to HNN weekly e-newsletter
    According to a report in The Australian, financial services company Credit Suisse could be starting the sales process for the Carter Holt Harvey Building Supplies business. Various private equity houses are reportedly doing preparatory work before receiving information memorandums.

    Likely suitors will include private equity groups Pacific Equity Partners, Archer Capital and Crescent Capital which has companies related to the sector in its stable, such as the Steel-Line Group and Prime Panels.

    However, it is the hope of some suitors that owner New Zealand billionaire Graeme Hart will consider a break-up of his business. If that is the case, it could mean Wesfarmers entering the process to acquire what could be a good strategic fit for its Bunnings building supply distribution business. The same could be said for Woolworths-owned Masters Home Improvement.

    Parts of the business could also fit well with Fletcher Building's plumbing supplies business Tradelink. However sources told The Australian that Fletcher's and rival Boral were not expected to bid for what is considered one of Australasia's largest building materials companies.

    Hart is said to have rejected the idea of selling down the company in parts, saying all aspects were interrelated. Howerver such agreements typically hinge on price.
    Positioned for sale

    It is understood that Hart's private company, Rank Group, had drafted in advisers Goldman Sachs and Credit Suisse First Boston in late 2014 for the potential divestment of the building materials business.

    Carter Holt Harvey comprises three divisions - Woodproducts Australia, Woodproducts New Zealand and Carters Building Supplies. It employs 5000 people and has annual sales of about $2.1 billion.

    The company has a wide variety of timber products, ranging from plywood to flooring and are sold under brand names such as Pinex, All Seasons and Ramsey Roundwood.

    Australia's building materials industry is facing growing competition from cheaper imports, causing major players to shut down local plants. Many assets in the sector are being sounded out by some private equity firms, hoping to secure them at discounts.

    Boral is understood to have circled the business in the past, but was thought to have been put off by a price considered too bullish. Boral and Carter Holt Harvey jointly own a sawmill at Oberon in central western NSW.
    Sales down at UK's Homebase
    Total sales at Homebase declined by 2.7% to Stg451m in the most recent trading period
    DIY Week
    Sister retailer Argos grew by 0.8% to Stg1,822 million during the same period
    HRG sais pre-tax profit is expected to be in line with the current market consensus
    Click to visit the Globel Industries website for more information
    Total sales at Homebase declined by 2.7% to Stg451 million due mainly to a reduction in net retail space of 3.3%, according to a trading statement from parent company Home Retail Group (HRG). The results cover an 18-week period from 31 August 2014 to 3 January 2015.

    During this time, like-for-like sales increased by 0.6%. There were 12 store closures in the period, resulting in a total of 19 closures year to date.

    The Homebase portfolio has reduced to 304 stores and remains on track to close a total of around 25 stores in the 2015 financial year. The retailer said in a statement:
    There was growth in sales of seasonal products, principally as a result of the warm weather during the period. Big ticket sales performance was broadly flat, while sales in the remaining product categories were slightly down.

    Strong sellers included storage boxes, white emulsion, fairy lights and tinsel.
    Argos reports growth

    HRG said Argos grew by 0.8% to Stg1,822 million although like-for-likes went up by just 0.1%.

    The week of Black Friday - November 28 - was Argos' highest sales week of the period, while online sales during the 18 weeks represented almost half of total Argos sales at 49%, up from 46% in the same period last year.

    Originating in the US as a sales day that following the Thanksgiving holiday, Black Friday is becoming an increasingly popular shopping day in the UK. HRG chief executive John Walden said:
    This year's adoption of Black Friday promotional the UK market significantly impacted the shape of Argos' sales over its peak trading period. For example, on the day alone sales at Argos were up by 45%, while at the same time, it received over 13.5 million visitors to its digital channels, three times last year's visitors. Mobile channels represented 71% of visits and 61% of digital sales.

    The company said group pre-tax profit for the current financial year is expected to be in line with the current market consensus.
    3 Neglected tool categories
    AEG drill and driver kit
    Worx Worxsaw XL
    Safety to become more of a concern for power tools
    Give to Amnesty International
    The home improvement industry has made significant investments in tool development over the past 15 years. In return, it has received excellent results.

    Cordless, precision laser technology, and new cost efficiencies have revolutionised the market. There are at least five other strong contributions. More great developments are on the horizon.

    Even so, there are some market sectors that are not receiving the attention they deserve. This is the result of shifts that have taken place in the market over the past six to seven years.

    Perhaps the most important emerging consumer segment is casual/beginner DIYers. In the past this segment consisted of low-spending, single-task consumers often looking for a single quick fix. Today this segment is dominated by consumers with a set of specific objectives: I need new kitchen cupboards, I need to refurbish the bathroom, I need to update my son's/daughter's bedroom.

    If we were to sum up this market, it would be that they are looking for something better and more custom than IKEA, but at a close to IKEA cost.

    There are three reasons why this market matters as much as it does. First, as the overall level of DIY skills is declining in the Australian community, beginners must be nurtured into becoming the next generation of experienced consumers.

    Second, helping out beginners is probably one of the few good opportunities left for retailers (and brands) to truly establish loyalty in consumers.

    Thirdly, this market is currently being undersold. Customers in this segment are walking out the store door after spending $100 to $150, when they should be spending $400 to $500. What's more, as consumers they will get far better value from spending the $400 than the $100.
    Start with tools

    Tools are a good place to start in looking at the needs of this market. The transition from quick fixes to a lengthy project often begins with the purchase of a "serious" tool.

    However, the way this segment looks at tools is quite different to that of other segments. To generalise, where other segments look at what a tool can do, its functions and capabilities, this segment looks at what they can do with a particular tool.

    We've identified three types of tool that would benefit from further development and attention, on both the supplier and the retailer level.
    1. Easy to use tools

    Most toolmakers will claim - often with good justification - that they spend a lot of time and effort making their tools easy to use.

    The question that needs to get asked is: Easy to use for whom? Not only do toolmakers not always take into consideration the needs of a neophyte, but sometimes the "easy to use" features they introduce for advanced users can make tools more difficult to use for beginners.

    For example, it is possible to optimise hammers to be lighter and deliver the same force per blow as much heavier hammers. Less weight definitely makes a hammer easier to use - for experienced users. Usually such changes make the hammer more difficult to use for beginners.
    Power tools for beginners

    In last week's editorial we mentioned some of the interesting brand implications of the inexpensive power mitre saws that both Bunnings and Masters sell.

    One of the interesting things that emerged was that, while the purchasers and users of those saws thought they were very good for the money, they explicitly mentioned that they were probably not good for beginners.

    This wasn't due to any fault with the saws, but rather because the saws lacked a laser guidance system. As experienced users, the reviewers knew how useful those systems can be.

    Both Bunnings and Masters do sell power mitre saws with laser guides which on discount cost around $120. What is interesting is that in those stores - as in most home improvement stores - there is a lack of clear guidance for what beginners/casual DIYers should buy.

    It is a kind of guidance that, in today's retail environment, is usually supplied by brands or sub-brands. At the moment there are very few in-store guides to help beginners make these kinds of wise purchasing decisions.
    2. Safer tools

    In recent years health officials in many states have started issuing press releases before long weekends that warn of the dangers of power tools. No one has collected the exact numbers on injuries just yet, but everyone agrees those numbers are on the increase.

    Once that data does get collated through Medicare, you can be sure there will be a push to improve the safety regulations around power tools. It would be a good idea for both tool manufacturers and retailers to get out ahead of that movement.

    More than that, for the beginner DIY segment safety is an active concern. There is a good deal less "bravado", and they will freely admit that some aspects of power tools really worry them.

    Or, to put that a little differently, safety is actually a good selling point in this market, and something these customers will willingly pay for.
    Safety down the product range

    One of the ironies of tools is that the high-quality, well-designed tools the professionals and "prosumers" use tend to have extra safety measures built in. The cheaper tools that beginners buy do not - even though the beginners are the users who most need them.

    One difficulty is that at the moment, there seems to be no way a consumer looking at a range of power tools receives much guidance as to which tools are safer than others. Not only is there no rating system, but digging up the details takes some work.

    As a simple example: Bunnings should be applauded for providing blade braking on even its cheapest mitre power saws, and making this information readily available in its product descriptions online.

    Stopping the blade once the power switch is released is a basic and vital function, especially for beginners. Competing products are not clear on this issue.

    What this offers is a great branding/promotional opportunity. A simple tag that identifies a tool as being particularly safe would be enough to trigger a sale in many cases. Not only direct sales, either, but gift sales as well.
    3. Tools for women

    This is a category that is ready to become viable. In the past this category has been misunderstood and abused. Tools with pink handles, for example, were really not ever going to sell well.

    One sign of viability is the substantial increase in editorial pages devoted to DIY for women in home interior design magazines. Much of this editorial has moved from pure "craft" projects to more serious DIY. The projects are still simple in nature - low commitment, big results - but many of them require tools such as power drills and power saws.

    To fully develop this category, it is necessary to understand both the different design requirements of women, and their unique buying pattern.
    Design requirements

    A good example of design can women can be found in hammers. Physically, it is true that women tend to have less upper body strength and smaller hands than men. This does not mean, however, that they want to buy little tack hammers and confine themselves to hanging picture frames.

    What might appeal would be a hammer that weighed 12oz, but delivered the whack of a 20oz hammer.

    And guess what? DeWalt makes just such a hammer. Here's a review from YouTube:

    This is really the key to designing tools for the women's market: delivering additional capability, not limiting their uses.

    A second requirement for this kind of design to succeed, of course, is that these tools are marketed appropriately, so that women can easily identify them.

    As with this case, designing well for women often means little more than designing really well for everyone. Many men would benefit from such a hammer, just as men could also benefit from tools that adapted more easily to hands of different sizes, and that were substantially lighter.
    Buying patterns

    Men and women begin their buying consideration at the same point, most of the time. They work out what tasks they will need a tool for, then they match those tasks to the tools available.

    It is what happens next that is different. Men nearly always find the tool that matches the majority of their needs - then buy one that is one or two notches higher in terms of capability. Women are more inclined to buy the tool that exactly matches their needs.

    Also, women are happy to use "community" resources to solve problems. If her power saw isn't big enough to cut through a red gum post she needs for the garden, most women will have not problem in asking a local hardware store to do it for them. They will even feel clever about that solution.

    Most men in the same situation feel something like a small sense of defeat. They will wish they had bought a bigger saw in the first place.
    Some examples

    Choosing examples, especially when it comes to power tools, is always difficult, as there are usually three or four equal options. So the tools I choose here are less a specific endorsement, and more good, well-functioning examples of a type.
    AEG 12V drill/driver and impact driver

    Probably the first "major" tool a woman will buy is a cordless drill/driver. One of the best "starter kits" for a woman to buy is actually the AEG 12V Kit (BS12CKIT2-402B) which includes a drill/driver and an impact driver.

    One of the best features of these units is that their hand grips are very well-designed and can easily accommodate a wide range of hand sizes.

    While as a 12V device, they may seem underpowered to some, they are also lightweight - a feature that is enhanced by this kit including two different battery sizes.

    The impact driver tool is a very good tool form women, though many might not naturally consider it. It might not be evident, but drill/drivers can require substantial force to get screws going, while the impact driver reduces this stress.

    But: just look at the AEG marketing, from YouTube.

    The message is geared towards getting men to accept a lower-power device by associating it with construction sites. That really is not appealing to women consumers.
    Worx WX423 and WX427 saws

    One of the now-common requirements in design magazine DIY articles is some kind of a power saw. Usually a jigsaw is the recommended device - which is a "typical" woman's saw.

    While jigsaws are versatile, and well-adapted to craft work as well as structural wood cutting, they are actually a little difficult to use for the latter. Make a good straight cut through even 90mm x 19mm pine can be hard.

    Circular saws, of course, make this task much easier, but for someone moving from craft work to structural work, they can really be overkill. They are also typically quite heavy - at least 4kg.

    These two saws from Worx are a good size for smaller projects. The WX423 is quite light, at just 1.8kg, but would be pretty much limited to making straight cuts in 19mm pine.

    The WX427, however, is much more versatile, offering up to 45 degree bevel cuts and a cut depth of up to 45mm. It also features a laser guide, and at 2.3kg is still light enough for easy handling.

    Successfully targeting the beginner market is partly a matter of having the right tools available (and perhaps getting more such tools designed and produced), but it is every bit as much about marketing as well.

    While there would be room for dedicated marketing propositions - such as a specific web page for these tools, or even part of a store aisle - just as much can be achieved by adding a marketing overlay on top of existing marketing structures.

    While directly labelling some tools as "for the beginner" might be off-putting to more experienced users, it doesn't take much thought to come up with a more acceptable label - such as "StartUp" - to better identify this category. Similarly, it certainly won't hurt sales to develop a "safety tag" that identifies tools with enhanced safety features.

    This kind of sub-branding would effectively translate to both in-store and online product identification.

    Will it be worth it? Just to summarise the potential benefits:
  • Help ensure the development and growth of an experienced DIY market
  • Capture new customers at a stage when strong store loyalty can be established
  • Help protect novice DIYers from injury
  • Sell higher value merchandise to customers who will appreciate it
  • Expand current markets into new areas

  • Until next time,


    You can contact me directly via email or Twitter @HNN_Australia

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