Hanson Building acquires concrete company
Hanson Building Products has finalised the purchase of Cretex Concrete Products
PR Newswire
CCP is a maker of reinforced concrete pipe, box culverts and other infrastructure products
Hanson withdrew from its planned IPO earlier this year
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Hanson Building Products (HBP) announced that its North American concrete pipe and precast business has finalised the purchase of Cretex Concrete Products (CCP) headquartered in Maple Grove, Minnesota. Terms of the transaction were not disclosed.

CCP is a manufacturer of reinforced concrete pipe, box culverts, precast drainage structures and bridge components with a network of 17 manufacturing facilities and 850 employees across 11 states in the US. Scott Szwejbka, senior vice-president of HBP's pipe and precast business, said:
We believe this is a great development for HBP as it combines two highly complementary businesses with similar cultures and values. CCP's strong presence in the upper Midwest market of the US expands our geographical footprint.

Lynn Schuler, president and chief executive officer of Cretex Companies, added:
We are proud of, and will always cherish, the legacy created by all the people who, over the past century, built CCP into an industry leader in safety, quality, and innovation. However, the significant opportunities we see in the strategic expansion of our remaining portfolio of companies made the sale of CCP a logical step for us to take. CCP is a strong business that performed well for Cretex, and we believe it will continue to grow and prosper under HBP's ownership.

HBP is a multinational manufacturer of a diversified range of concrete and clay building products. It has interests around the world including Australia.

Formerly affiliated with Heidelberg Cement, HBP became a separate business in March 2015 and employs a staff of approximately 5,000 worldwide and operates a network of 120 sites in the US, Canada and the UK.
Hardware retail statistics, August 2015
ABS retail sales for hardware, August 2015
Australian Bureau of Statistics
Per capita retail revenue by state/territory
Comparison of hardware retail revenue statistics between 2014 and 2015
Click to visit the HBT website for more information
The Australian Bureau of Statistics (ABS) has released its retail sales figures for August 2015. Queensland posted the largest percentage gain of 17.28%, compared to the previous corresponding period (pcp), which was August 2014.

This was followed by New South Wales with 15.65%, representing a gain of $58 million over the pcp.

Tasmania fell the most in percentage terms, down by 12.63% over the pcp, a loss of $5 million in revenue. The Australian Capital Territory fell by 3.10%. Victoria was down by $2 million.
ABS Retail Sales for Hardware, August 2015

In longer term trends, NSW grew at a higher rate than it has since 2009, while VIC, which had showed higher levels of growth than NSW since 2009, flattened out. QLD has returned to the pattern of growth it had since 2010, which was interrupted with a decline in 2014. TAS has reported good gains for August in 2011 through 2014, but has returned to a level just above that of 2013.

According to commentary from the ABS, Household Goods Retailing (which includes hardware) saw both a trend and a seasonally adjusted estimate growth of 0.2%. Hardware's trend estimate rose by 0.3%, while its seasonally adjusted estimate fell by 0.3%.
Online retail

The National Australia Bank's (NAB) Online Retail Sales Index showed that in seasonally adjusted terms sales rose by 0.6% for August 2015, while the trend estimate was 0.4%. NAB estimates that online retail sales have grown by 7% over the past year.

NAB estimates that in the 12 months ending August 2015 Australians spent $17.5 billion in online retail. This would be slightly over 7% of the spending in physical retail in the 12 months to July 2015. The daily deal category continues to see its sales decline, while electronic games, media and fashion all showed strong gains.
NAB Online Retail Sales Index Aug 2015
Greycork betters IKEA
Greycork's living room furniture
View the Greycork video
The Greycork studio can be rented on Air BnB
Click to visit the HBT website for more information
A group of designers in the US has come up with a way to out-IKEA IKEA. Greycork Furniture's furniture concept is a higher-quality version of IKEA's flat-pack furniture, which can be assembled in about a fifth the time an average IKEA assembly takes.

The company defines its mission as:
Make it easier to move into a new home, while bridging the gap between modern culture and manufacturing ... We design for the modern user, the sort of person who values quality and price, but also needs furniture that's easy to get, and keep as the years pass.

The set of lounge furniture they developed has already been market tested. Greycork launched its first products on the crowdfunding site Indiegogo in August 2015, with funding closing on 18 September 2015.

The company originally sought US$50,000 to get started with. Instead, they ended up with close to US$260,000 in funding.
The design process

The design company is made up in part of ex-students from one of the most prestigious design schools in the US, the Rhode Island School of Design (RISD), along with some members who have experience in manufacturing.

The market for their designs was largely determined by the raw statistics of the US market: 80 million US residents are between the age of 20 and 40. Of that group, 87% rent their homes, 30% live in cities, and 16% would prefer to buy furniture online.

Greycork's first effort was a set of folding tables, which they saw as ideal for the restless lifestyle of their target market. They essentially took a "classic" furniture piece, then redesigned it by using high-quality, high-finish materials.
The Greycork table

While these tables did eventually achieve sales, the design team quickly realised that the consequence of the high quality materials was that tables were priced beyond the means of the market they wanted to reach. The standard table ended up retailing for US$1500.

In finding a solution, they fell back on what they had learned at design school: they decided to research their customers. This began with a survey of 1228 people, interviews with 253 couples, and the development of 20 different concepts.

The end result was eight prototypes of what would become a unique set of lounge furniture.

Part of the enthusiastic response is no doubt due to how much the designers have managed to provide at a very low price point. The furniture is made from a combination of Ash wood and MDF, as well as artificial fibres for the cushions. Assembly has been kept as simple as possible, and requires no tools at all. Average time to put the sofa together, for example, is less than five minutes.

The furniture is shipped in very slim packages, each designed to fit easily through the small doorways common in apartment buildings.

The Greycork sofa and chaise longue were sold through Indiegogo for a combined price of US$700, including free shipping. A combined living room set, including the sofa, chaise, a coffee table, end-table and bookcase was sold for US$1000, including shipping.
Greycork furniture
Competing with IKEA

The company did not just happen to stumble into a competition with IKEA: it deliberately sought this out. As part of the promotional material, Greycork provided this contrast with the larger Swedish company's products:
Comparing Greycork with IKEA
Smooth, protective composite decking
MoistureShield Pro is built to be tough and aesthetically pleasing
PR Web
MoistureShield composite decking has always been protected to the core
MoistureShield maker, A.E.R.T. trades on the OTCQB venture stage marketplace
Click to visit the HBT website for more information
MoistureShield(r) Pro composite decking from Advanced Environmental Recycling Technologies (A.E.R.T.) adds an extra layer of protection that enhances fade and stain resistance while maintaining its high performance against moisture.

The product has generated positive reviews from homeowners, builders and building material resellers in the US. As a result, the editors of Professional Builder magazine have named the capped composite decking a "Top 100 Product" of 2015, in the outdoor living category.

It is available in three colour variations from a light understated brown to sultry deep brown hues. Each board provides a blend of colouring.

MoistureShield composite decking is the only composite tough enough to be installed on the ground, in the ground or underwater while still being protected by a lifetime warranty.

Its expanded family of outdoor living products offers a range of options to fit most backyards. Homeowners can choose from the Vantage Collection - a high performance reversible board - or Pro collection - a capped board with an added layer of protection and beauty.

Homeowners can also complete their deck design with MoistureShield Deck Lights, Hidden Fasteners and Pro Aluminum Railing.

A.E.R.T. trades on the OTCQB venture stage marketplace for early stage and developing US and international companies. New technologies and patents has enabled it to manufacture composite products from recycled wood fibre and recycled polyethylene plastic for the building and construction markets. A.E.R.T. is the exclusive manufacturer of MoistureShield composite decking and accessories.
A shed that repels spiders
UK-based Tiger Sheds have come up with a spider-proof shed
Telegraph UK
It has been developed through the use of silicone sealed joints
Video of Tiger Sheds
Click to visit the HBT website for more information
The spider-proof shed from UK-based Tiger Sheds has been developed through the use of silicone sealed joints. Rather than having airy gaps and holes through which spidery friends can climb, this spider proof shed blockades them outside. Airtight windows and an airtight door step up the security, and the interior is lined with spider repellent paper.

On top of that, the shed has a sky blue exterior, a colour that is proven to fend off spiders.

Tiger Sheds have also come up with a few other ideas to keep garden tools arachnid-free.

It's possible to have the shed timber impregnated with peppermint, citrus and insecticide, to drive away the spiders. End-users can also build in an additional creepy crawlies "den" to attract bugs away from the shed and into the box instead.

If users still don't feel secure, they can sign up for a six-month spider inspection, carried out by a member of the Tiger Sheds team. Think of it as a spider exorcism. Tiger Sheds spokesperson Hannah Moore said:
We'd had several requests for a spider-proof shed from people too afraid to venture into their outbuildings in case spiders were lurking. We wanted to help these people and make them feel comfortable enough to enter their sheds once more, which is why we decided to create the world's first spider-proof shed. We're confident it will keep spiders out.
Carter Holt delays listing again
Stock market listing of Carter Holt Harvey's building supply group has been postponed
National Business Review
It trimmed the scope of its share float in August 2015
Carter Holt Harvey Building Supplies was being positioned for a sale in late 2014
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The initial public offer of Carter Holt buildings supplies group, Carters has been deferred again. In a statement, the company said:
Consideration of a proposed stockmarket listing for building supplies distribution business Carters is on hold.
While the Carters business continued to perform strongly, benefiting from the robust New Zealand construction environment, the uncertainty in global equity markets had led Carter Holt to review the merits of a listing at this time.

According to sources, the company may pursue a trade sale rather than mount a third attempt at an IPO.

One market source said that while it was possible Carter Holt had a private buyer lined up, "it's certainly not an easy market to get an aggressive price. It was always going to be a struggle for this business to get the [earnings] multiple the seller wanted."

Carter Holt formally announced plans to list on the NZX and ASX in May, saying it had appointed investment banks Credit Suisse, First NZ Capital, Deutsche Bank, Deutsche Craigs, and Forsyth Barr to manage the deal.

That plan was put on hold in June, with the company saying changes in market conditions had led to uncertainty about the earnings outlook of its Australian timber business. The company said in a statement:
The new Board of Carter Holt Harvey Group, in conjunction with the Group's advisors, determined they were unable to finalise the forecasts in the IPO offer document given the necessary level of confidence required as to the forecasts' accuracy and probability of being achieved.

In August the float was on again, but in a different form - this time offering only the New Zealand building supplies business and leaving out the wood processing activities on both sides of the Tasman.

The revised scheme aimed to offer a stake in the Carters business, a supplier to the building trade with 50 distribution outlets and nine frame and truss sites across New Zealand. The company said at the time:
This well-established national network puts Carters in a strong position to capitalise on the continuing strong demand for new housing.

Kiwi billionaire, Graeme Hart, paid NZ$3.31billion in 2006 for the then sprawling company. He offloaded the forestry and farm land divisions to leave a smaller business focussed on building supplies and distribution.
Lowe's leads in online-offline sales matchup
Lowe's oven webpage
J.D. Power
RSR: top three concerns for retailers
The B&Q website review
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A recent study shows that US-based big box retailer Lowe's Home Improvement has a core advantage over its rivals when it comes to major appliance purchases. The source of that advantage? It's the Lowe's website.

This isn't about buying major appliances online, however. It's about researching online and buying in the physical store. It's the triumph, in this category of "webrooming" over "showrooming".

Not that long ago (about 18 months) "showrooming" was thought to be a big problem for retailers. The fear was that customers would go into physical stores, find the products they wanted, take some pictures, then research cheaper prices online.

While there might have been an initial surge of that type of activity, indications are that, whatever negative (from the retailer's perspective) effects there might have been from e-commerce, they've been more than balanced by the positive effects.

Shopping offline/buying online was popular when it was new and different, but in a more mature market customers have returned to what they generally do: balancing price, quality and convenience to find what works best for them. The best result does not always add up to purchasing online.

One indication of this switch is the Google Trends result for the word "showrooming". (Google trends is a service of Google that gives an idea of how popular certain search terms have been.)
Google trends for showrooming search

Two recent studies have highlighted how significant this switch has been in the US market. The first is the J.D. Power 2015 Appliance Shopper Website Evaluation Study released on 22 September 2015. This examines the effectiveness of brand websites and retailer websites in guiding prospective purchasers in their selection of major appliances (refrigerators, stoves, ovens, dishwashers and so forth).

The second is RSR Research's Retail Benchmark 2015 study, undertaken in July 2015. This asks retailers about their current concerns, then contrasts these with the results of past years. RSR also divides the responses into those from "winners" (successful retailers) and responses from "laggards" (less successful retailers).

Combined, these studies show that well-designed retailer websites can provide a boost in sales traffic by easing the research task, and supplying some types of reliable information. The studies also point to the importance of investing both in-store staff and in integrating online and offline sales.
Appliance Shopper Website Evaluation Study

This J.D. Power study looks at four different aspects of a website, and grades sites out of a total score of 1000. The four key aspects it examines are: information/content, navigation, appearance, and speed.

The study is based on responses from more than 4000 major appliance purchase intenders who evaluated both brand and retailer websites. It was conducted during June and July 2015. The brief summary of the survey can be found at the link below:
J.D.Power appliance survey

Lowe's scored 848 points in the study, followed by Best Buy and Home Depot, both scoring 840 points.

One of the most important findings of the survey is that potential buyers are particularly discouraged by overly-complex websites:
The complexity of an appliance website - how well organized and easy to use it is - is crucial for brands and retailers, as it affects the purchase intent of appliance shoppers as well as the likelihood they will visit a store location. Appliance brand websites that are less complicated than shoppers expect are nearly three times more likely to drive showroom traffic than those that are more complicated than expected (62% vs. 22%, respectively).
Additionally, among appliance shoppers who visit a retailer website and the experience is less complicated than expected, 66% say they "definitely will" consider purchasing other products by the brand, while 51% say the same for brand websites.

After complexity, one of the most important findings was about what consumers really valued in a website. The two most important forms of information research were product reviews, top ranked by 69%, and pricing, top ranked by 64%.

For US consumers, the study indicates that retailer websites are important to 77% who are shopping for major appliances. They are guided secondly by brand, and thirdly by search engine results.

The percentage of people doing their online research on a mobile device has increased to 26%, versus 20% in the survey's 2013 results. For consumers using mobiles, there is a strong tendency to prefer using websites over mobile apps for their research.
How does Lowe's do it?

Even a quick look at the Lowe's site shows how clear and informative its major appliance content is. Below is a diagram of a simple entry for a popular oven:
Lowe's oven webpage

There is a very wide range of information supplied here, but it is neatly ordered and tucked away until needed. Note not only the clear shipping options on the right, but also the extended warranty upsell below that. These options could have been provided on a dropdown or tab arrangement. This simple display means making a choice and changing selections is very easy.

Just as important, here is the comments section for this oven:
Comments section on Lowe's oven webpage

You will note that this oven has a high number of comments - close to 300 - and a good overall rating of 4.5 stars. Lowe's, however, displays some of the more negative comments right at the top of the rating.

How does that work? First of all, web shoppers are sophisticated today to know that just about every product with over 100 reviews will have at least one negative comment. Buyers will read most of the negative reviews, but what they are looking for is a pattern - something that breaks frequently, or a missing feature of some kind.

With a product that has a good overall rating, putting the negatives at the top actually serves to validate that rating. It means that the negatives have not been excluded. That is a powerful incentive not only to trust the product, but also to trust the retailer.

This seems to be a point that Australian retailers find difficult to accept. There is an overriding corporate dictum at some large companies that sees any negative content anywhere as being a "bad thing".

Frankly, this is just not how social works at all. Social is about being "real", not a continuation of retail propaganda. It rewards the best performers, and outlines clearly the problems that do exist, like a constant, public consumer survey.
Retail Benchmark 2015

In RSR Research's Retail Benchmark 2015 study, undertaken in July 2015, the researchers believe they have uncovered evidence of the reassertion of the physical store as a core part of retail. The survey results can be downloaded from the link below:
RSR Retail Benchmark survey

As a part of this trend, RSR states, it believes employers are paying more attention to retail employees, and seeing them as key to their success.

One of the graphs that RSR presents to support this view shows the behaviour of retailers in boosting payroll expenditure:
RSR: Payroll to sales ratio

As the graph indicates, the retailers who have tended to perform better (the "winners") have also tended to increase payrolls.

In another graph, looking at the top three business challenges faced by stores, there has been a dramatic decline from the 2014 to the 2015 response to the need to reduce payroll costs. At the same time, there has been a significant increase in concerns about customer dissatisfaction over a lack of integration between online and offline:
RSR: top three concerns for retailers

The UK-based home improvement chain B&Q is virtually tailor-made to exemplify some of the tensions in the RSR research. Industry website Internet Retailing has reviewed the B&Q website on 24 September 2015. The review can be read at the link below:
Review of B&Q website by Internet Retailing

According to this review, Kingfisher has spent GBP60 million on its website system over the past year. The majority of this money has gone towards making the website serve both its retail customers and the retail staff. While from a company point of view this has been great work, it has yet to result in a significant improvement in the website itself, the review states.

The ratings are as follows:
  • Navigation and IA - 3/5
  • Persuasion and Trust - 3/5
  • Product Page and Merchandising - 4/5
  • Checkout/Bookings - 4/5
  • Accessibility - 3/5
  • Overall - 17/25

  • Some of this relates to basic fundamentals, such as videos that provide DIY advice that do not play properly, and sluggish response when it comes to loading images. However, the mobile site does score well for its design and features.

    The review also highlights many of the steps Kingfisher is making to integrate the offline with the online shopping experience. The B&Q app, for example, will display product information when a barcode is scanned on the shelf. The review concludes by stating:
    The in-store "B&Q Spaces" software (not yet rolled out across the estate) allows customers to discuss, design and create a kitchen, bedroom or bathroom all within its in-house planning software. B&Q claims it saves considerable time, turning what used to be a multi-hour development process into as little as four minutes. However, as customers cannot complete the design themselves, there is an ongoing in-store labour investment in the utilisation of this piece of software.
    Finally, the inclusion of in-store kiosks would further augment the interactive offering.

    Retailers are increasingly focusing on what can best be done online, what needs to be done in physical stores, and how these can be linked.

    One way of looking at this question is to ask where and how can advice be best delivered? Online, the best advice is surfaced through the use of comments and user reviews. This is an extremely valuable resource. It must also be emphasised that this resource cannot be conjured up in a month or two. It takes a minimum of a year to create a good review community.

    In terms of the physical store, the source of advice is really three-fold. Firstly there is the layout of the store. Are products grouped to make comparison easy? Does the ranging of the products make sense?

    Secondly, there are the in-store aids to purchase. At the moment, these tend to be somewhat minimal, and there is a lack of integration. As an example of an integrated situation, imagine a display kitchen in a home improvement store, with a computer screen attached that could be toggled through all the colour/material options available for that one specific kitchen display.

    Thirdly, there is the staff. While staff training and performance has progressed substantially over the past three to four years, it can still do better. One way to enhance staff is to provide them with better on-floor digital tools, such as access to a customer's purchase history through their participation in a loyalty program.
    US paint brand creates digital studio
    Pittsburgh Paints & Stains has developed the Digital Inspiration Studio
    It features an interactive 42-inch digital touchscreen
    Pittsburgh Paints & Stains is available exclusively at Menards
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    Pittsburgh Paints & Stains is providing a new way homeowners choose paint colours with its Digital Inspiration Studio. The palette display features an interactive 42-inch digital touchscreen and serves as an "inspiration station" to simplify the process of selecting paint colours.

    The colour centre is currently in all Menards stores.

    Gone are the days of sorting through row after row of colour swatches only to leave the paint department empty-handed and frustrated, according to Luke Klein, brand manager at Pittsburgh Paints & Stains, a brand of PPG Architectural Coatings. He said:
    In designing the colour centre, we wanted to provide homeowners with an inspiring experience that not only helps them select paint colours for their homes, but also as a creative launch pad for their entire paint project.

    The touchscreen allows customers to virtually paint a room with selected colours, view colour on-screen on a larger scale, receive an email containing the paint swatches and painted room to view later, view colour-tips videos, ideas and product information, as well as browse by colour, style and personality.

    Klein adds that the process for selecting paint can often be overwhelming for people, with the large number of colour choices available. He said:
    The state-of-the-art Pittsburgh Paints & Stains Digital Inspiration Studio at Menards makes the process of exploring and choosing the just-right colours and paint for homes more manageable. We want customers to leave the store with the confidence that the colours they have chosen will be perfect for their homes.

    Other features of the digital colour centre include:
  • A nine-foot-long colour library featuring 1,081 colour swatches and brochures segmented by colour
  • Ability to bring to life colour swatches and brochures on the touchscreen by scanning a barcode on each swatch and brochure, and then viewing colours on the screen, finding complementary colours and virtually painting brochure room images in different colours
  • Guides to room-by-room projects with various styles and information about using colour;
  • 2016 colour trends
  • Painting tips
  • Reports
    Kmart, DJs data theft first hint of severe risk
    Diagram of reshipping scam
    Krebs On Security
    Site that offers credit cards for sale
    Advice from the US Postal Inspector Service on reshipping scams
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    When US retailers Target and The Home Depot found themselves the victims of credit data theft, HNN warned that it would only be a matter of time before we saw similar situations emerge in Australia.

    Unfortunately, that seems to have happened now, with both the Wesfarmers-owned discount store Kmart and "upmarket" department store David Jones reported to have suffered a security breaches.

    According to a report by IT News:
    The company [Kmart] yesterday informed affected customers their name, email address, delivery and billing addresses, phone numbers and product purchase details had been taken in the attack.
    Customer data stolen from Kmart Australia - IT News

    David Jones tagged its message to customers with a warning the data might be used for phishing:
    David Jones warned customers not to fall prey to phishing attempts, advising it would not request customers to provide financial details over the phone or email.

    Read more at the following:
    David Jones customer data stolen - IT News

    Kmart uses an ANZ payment gateway, which stores the credit card information, and this was not breached. The rest of Kmart's online systems rely heavily on IBM software. David Jones relies on similar IBM WebSphere software.

    While actual credit card information is safe in both breaches, it does seem possible that the information stolen could aid perpetrators of identity theft.
    Not simple theft

    One reason why retailers frequently do not take the theft of customer data as seriously as they should is that they fail to fully understand the depth and sophistication of the criminal industry behind these thefts.

    Many retailers imagines, one supposes, that the credit numbers are used by some unsophisticated schemes that, for example, rewrite the information to blank cards and attempt to purchase fairly liquid assets such as gift cards.

    While those schemes do exist, and are one of the mainstays of some street gangs in the US, there is a far more sinister, wide spread network of criminal industry that feeds off the theft of credit card information.

    The full extent of this industry was detailed in a recent paper published by a number of US security experts, entitled "Drops for Stuff: An Analysis of Reshipping Mule Scams".

    These include Michael Eubanks, who is a Supervisory Special Agent in the Cyber Initiative and Resource Fusion Unit of the Federal Bureau of Investigation, and Brian Krebs, a highly regarded expert in a number of fields of cybercrime, in particular credit card data theft and utilisation, as well as ATM scams.

    The paper provides shocking details of an unbelievably sophisticated network of specialist criminal enterprises, which are apparently centred on Eastern Europe, and in particular Moscow in Russia.
    A complex, profitable business

    In the early days of internet e-commerce, quite substantial sums were lost to criminals who stole credit card information, then used that information to order goods online. These goods were delivered to locations where tracking down those responsible would be difficult if not impossible.

    Indonesia was, in the late 1990s one such popular destination, along with some locations in Eastern Europe. This led to either the total banning of delivery of online orders to those areas, or at the very least severe restrictions.

    This criminal enterprise has now evolved a series of sophisticated techniques to overcome these restrictions, and to see goods ordered with stolen credit card information delivered to locations that resist enforcement, in particular Moscow.
    Diagram of reshipping scam

    We can begin looking at this criminal enterprise with the theft of the credit card data. Criminal hackers have become increasingly sophisticated in their efforts, and have actually moved on from hacking the EFTPOS systems of individual retailers, to infiltrating the EFTPOS systems with "malware" during their manufacture.

    Once the criminal hackers have obtained the credit card information - often for thousands of cards - this information is offered for sale on websites. There is even a sophisticated system of guarantees. More expensive card data is guaranteed to work within a specific time, or the buyer gets their money back. Cheaper data carries no such guarantee, or a limited guarantee.

    The credit card information is purchased by a person whose role in the scheme is described as the "Stuffer". The Stuffer's next step is to obtain the services of what is known in the parlance as the "Operator". Operators can be found on criminal underground forums, with the Stuffer advertising for help with "drops of stuff".

    The Operator plays a crucial role in this criminal enterprise by supplying the Stuffer with what are known as either "Drops" or "Mules". These Mules are, overwhelmingly, innocent participants in the enterprise.

    The Operator finds Mules by setting up what look like a completely legitimate online job websites. The Operator then advertises for people interested in earning money at home for part-time work. When people sign up, they are asked to provide considerable personal details, such as passports, social security numbers and payslips from former jobs.

    This is how the scheme works:
  • The Stuffer uses the stolen credit card data to buy some form of expensive, easily resalable items from an online merchant. Particular favourites are Apple merchandise, video game consoles and camera equipment.
  • In the "ship to" address the Stuffer uses the original name of from the credit card data, but with the address of the Mule. This helps to evade most fraud detection.
  • The goods are shipped to the Mule. The Mule then unpacks the goods, photographs them and the invoice, then repacks the goods, sometimes combining a number of such shipments into a single larger shipment.
  • Depending on the arrangements, either the Stuffer or the Operator provides the Mule with a prepaid shipping label. The label will be addressed to a real address (most frequently in Moscow), but with a fake name for the addressee.

  • As you can see, this provides a virtually untraceable chain of supply of goods purchased with stolen credit card information.

    Mules are typically used for a very short space of time, up to around a month, which would be when they would usually expect the first payment for their services. At that point their account on the "jobs" website is simple erased, and they find they have no other information about their "employer".

    In a further, very sad twist, the information these Mules have provided when obtaining their "jobs" is then unsold and used to perpetrate identity theft against them.

    In terms of the profits to be made, the paper gives the example of a video console purchased for US$400, that could be re-sold for US$300. After costs, this would likely net the Stuffer around US$100.

    Estimates contained in this paper suggest that a single criminal enterprise operating for a year has obtained revenue of US$7.3 million, with most of that being pure profit.
    Why this is important

    The main reason why it is so important for retailers to understand the details of these schemes is that they must grasp how large scale these operations have become. The question that needs to be asked is, how hard and how long people will work for what amounts to $10 million in funds a year.

    The short answer is very hard and very long. Cybercriminals are no longer opportunistically waiting for some flaw to appear in the security of a payment system. They are actively working to create those flaws, through subverting protective systems, or the "social engineering" of employees.

    The main consequence of this is that while as recently as ten years ago retailers could rely primarily on passive systems of detection, today it is vital they also make use of active systems as well.

    They need employees who are constantly testing their security, and constantly on the lookout for unusual patterns that could indicate theft of data.
    Smart deadbolt from Schlage
    The Schlage Sense Smart Deadbolt is a Bluetooth-enabled lock
    It allows users to control their door lock as part of their smart home
    It will be available for retail through Home Depot, Lowe's, Amazon and
    Click to visit the HBT website for more information
    Introduced at the 2015 International CES trade show earlier this year, the Schlage Sense Smart Deadbolt is a Bluetooth-enabled lock and includes patented and patent pending technologies. Designed to work with Apple HomeKit, it allows users to control their door lock as part of their smart home.

    Apple HomeKit technology provides advanced security, with end-to-end encryption and authentication between the Schlage Sense Smart Deadbolt and an iPhone, iPad or iPod touch. With an Apple TV in the home, remote capabilities are possible.

    Additionally, HomeKit lets consumers talk to unlock their Schlage Sense Smart Deadbolt using Siri voice control.

    The Schlage Sense Smart Deadbolt has the ability to manage and schedule up to 30 access codes through a dedicated, easy-to-use app. The app allows individuals to create and delete codes, check on lock status and view activity. It will update settings and check battery life without requiring a connection to an existing home automation system or incur a monthly subscription charge.

    The lock also gives homeowners the choice and flexibility of entering their home using the lock's illuminated touchscreen or with their iPhone or Apple Watch.

    The Schlage Sense Smart Deadbolt is available in two styles, Camelot and Century, and in a variety of finishes, including Matte Black, Satin Nickel and Aged Bronze, to fit different homes and their unique design aesthetic.

    The lock is designed to be easy to install with a patented Snap & Stay feature that makes most installations a one-person job, and is simple to set up and program.

    Schlage is offering consumers its Sense Smart Deadbolt for pre-order at specific outlets including, and

    It will be available for retail starting in November in select Lowe's and Home Depot stores and on,, and Schlage is a brand of Allegion.
    The Home Depot rewards innovation
    The Echo 58-volt line of outdoor power equipment wins the top innovation award
    The Home Depot
    The Wink Smart Home Hub was released in late 2014
    Optum VorMax Tall Height Elongated Toilet from American Standard
    Click to visit the ITW website for move information
    The Home Depot recently announced that TTI Homelite/Echo won the retailer's 2015 Innovation Award for its Echo 58-volt line of outdoor power equipment.

    The annual award recognises new products that provide benefits to consumers. Suppliers must exceeded expectations in sales, service and program execution.

    Runner-up honours were awarded to Wink for its Smart Home Hub and American Standard for its Optum VorMax Tall Height Elongated Toilet. Additionally, Solar City won Environmental Partner of the Year for its Residential Solar and Liberty Hardware won the Marketing Innovation award for its monthly DIY project posts, content and social campaign. Ted Decker, executive vice president - merchandising said:
    The Home Depot's goal is to offer customers the most innovative, ground breaking products that will help them improve their homes while saving them time and money, Our merchants consistently work with our manufacturing partners to develop pioneering products that differentiate The Home Depot and attract customers.

    The Echo 58-volt line of cordless outdoor portable power equipment came to market in 2015. This professional-grade system uses a 58-volt battery platform to operate five outdoor tools, combining the power of gas and the convenience of cordless. The system carries one of the industry's most powerful lithium-ion battery packs and a competitive charge time.

    Each unit comes equipped with a brushless motor customised for that particular tool. The range includes a string trimmer, hedge trimmer, blower, mower and chain saw.

    In addition to the top three award winners, The Home Depot acknowledged the companies that round out the top 10 product innovations.
  • Milwaukee Tool FUEL Bare Tools
  • ITW Paslode Pneumatic Fastening Gun
  • ETi Solid State Lighting Linkable LED Shop Light
  • Toro Custom Z-Builder
  • Broan NuTone EZ Fit Bath Fan
  • JELD-WEN Architectural Fiberglass Door
  • LG Side-by-Side Refrigerator
  • News
    HI Weekly No. 4 - September 30
    HI Weekly's fourth issue for 30 September 2015
    HI Weekly No. 4
    The market map for Milwaukee Tool
    TTI CEO Joe Galli presents results for Milwaukee Tool
    Click to visit the HBT website for more information
    The fourth edition of HNN's Home Improvement Weekly (HI Weekly) is out, and can be downloaded from:

    As more technology enters the power tool industry, markets are changing and being reshaped. In this edition of HI Weekly, HNN looks at how two innovative companies, the Techtronic Industries-owned Milwaukee Tool, and the Stanley Black & Decker-owned DeWalt, are using technology to expand their market share. We also look how the incumbent in that expansion market, Hilti, is moving to counter these moves.

    This edition of HI Weekly also takes a look at the small electrical appliance market, Home Depot's innovative use of hydrogen fuel cells at its distribution centres, and Mitre 10 New Zealand's bumper year.
    Restoration Hardware 2015-16 Q2 results
    Restoration Hardware 2015/16 second quarter results
    Restoration Hardware
    Restoration Hardware announcement video
    Part of the RH Modern collection
    Click to visit the ITW website for move information
    US-based home furnishings retailer Restoration Hardware (RH) has released its results for its second quarter ending 1 August 2015.

    Net revenues were US$506,942,000 up 16.9% over revenue for the previous corresponding period (pcp), which was the second quarter of 2014/15. Fully adjusted net income was US$45,864000 up by 31.6% over the pcp.
    Restoration Hardware 2015/16 second quarter results

    During the quarter, net revenues from stores grew by 21%, as contrasted to 9% for the pcp. Revenue from direct order business (largely driven by Restoration Hardware's catalogue) increased by 13%, versus 19% in the pcp.

    The company's selling square footage reached 605,000 square feet during the reported period, up from 549,000 in the pcp. It currently operates 67 retail operations, down from 69 in the pcp.

    While the company demonstrated good growth for the quarter, its CEO, Gary Friedman, pointed out that the company's performance for the year would be largely determined by events in the upcoming third and fourth quarters.
    The continued momentum of our core business, coupled with the launch of RH Modern and RH Teen, and the opening of four next generation Design Galleries later this year, gives us further confidence in our financial outlook for fiscal 2015. We are increasing our adjusted net income guidance for fiscal 2015 to growth in the range of 33% to 37% - well above our long term target of mid to high twenties - and now expect net revenues to grow in the range of 16% to 17%. While still in the early stages of building RH into the leading home brand for the luxury customer, we are well on track towards our long-term goal of US$4 billion to US$5 billion in North American sales, mid-teens operating margins, significant free cash flow and industry-leading return on invested capital.
    Restoration Hardware's expansion plans

    In response to a question at the investment analyst presentation, Mr Friedman explained some of how the company developed its strategies:
    We go through two significant strategic reviews in the company a year. And as we go through those things we always have ideas that get surfaced. Current things we're working on, new things we're working on, new things that come to the table, as thoughts connect we see new opportunities and new businesses. And we go through a very rigorous strategic process here, where every idea is dimensionalized and valued based on its financial value, its strategic value and its emotional value.
    And so the financial value to the company is that sometimes a more obvious one, what is the revenue value, what is the earnings value, what is the cost reduction value, what is the efficiency value, when we think about the financial value to the company. Then we go into the - we rank everything on strategic value. How does it position us in the market? What competitive - how does it create competitive differentiation? And how does it position us long-term to win? And so we go through many discussions around that. We try to value things strategically, and then we try to value things emotionally. And emotionally, as it relates to two constituencies, one, our consumers had is what we're doing? How will it connect with consumers? How - why will they care about it? And will they connect to it emotionally?
    And two is our people. How will our people connect to this choice, this initiative, this strategy, because to get great people and to get great people to do great work, they have to really care about what they do. We would like to say inside, I mean, I shouldn't say this publicly. By now I guess, I can't, okay. But we - they have to give a blank, right, about what we're doing, and they have to feel connected and passionate to it.

    Mr Friedman adamantly defended RH's offline-first to retail investment in a presentation video that accompanied the results.
    Many investors and analysts are seduced by the notion of a capital-light retail strategy and completely overlook the fact that the ongoing advertising expense to market an invisible online store is an unproven, and we believe, unsustainable model.
    Shifting transactions from one channel to another does not change the economics. We know of no store-based retailers that significantly increase their operating margins are growing online faster than retail.
    While our model might be capital-heavy it is also earnings-heavy, which we believe will prove to be significantly more valuable than a capital-light, earnings-light model.
    The Australian connection

    As part of the Restoration Hardware range, outdoor furniture from Australian designers Nicholas and Harrison Condos launched a series of outdoor furniture settings for the brand.
    Outdoor furniture for Restoration Hardware from Nicholas and Harrison Condos
    Mythbusters duo star in Dulux campaign
    The same campaign is being rolled out in new Zealand
    Video of the Wash&Wear brand at a Bunnings store
    Mythbusters re-enact scenes from the Breaking Bad TV series
    Subscribe to HNN weekly e-newsletter
    Dulux has recruited pop-scientists from TV show Mythbusters to be the face of the company's biggest advertising campaign in almost a century.

    The four 30-second TV commercials, created by PR agency Communicado Marketing Communications, are a major change in direction for the paint maker. It had been using an Old English Sheepdog as the brand's mascot and star in ad campaigns for 50 years.

    Mythbusters stars Jamie Hyneman and Adam Savage spruik the new Dulux Wash&Wear paints by performing science experiments to test the durability of the range.

    Dulux Australia's marketing director, Murray Allen, said the company's new range represented a "huge leap in technology" and using the Mythbusters duo are the "perfect choice" to align with the innovative nature of the product.

    Hyneman and Savage, who are famous for challenging the myths, beliefs and rumours in science - often creating mayhem in the process - said there was "real alignment" when approached to participate in the campaign. Savage tests the endurance of the paint by drenching it in red wine and drawing on it with markers. He said:
    In our characteristic style, we jumped in with both feet and found playful ways to challenge the Dulux claims.

    Hyneman and Savage, who filmed the campaign in San Francisco, developed the scenarios, co-wrote the scripts and designed the machines.

    In addition to the 30-second TV ads, Dulux will air 15-second versions, while the full versions of the videos will appear on YouTube and on a dedicated webpage

    You can view the campaigns here:

    GWA Group FY 2014-15 full year results
    GWA Group continuing operations for FY 2014/15
    GWA Group
    GWA Group consolidated reported results for TY 2014/15
    GWA Group revenue and normalised EBIT
    Subscribe to HNN weekly e-newsletter
    Australian building fixtures and fittings company GWA Group has released its results for FY 2014/15.

    As with several companies in the home improvement industry, the results for GWA are something of a tale of two companies. During the 2014/15 financial year it divested three divisional operations, and re-focused its operations out of manufacturing.

    The divisions divested were Brivis Climate Systems, the Dux Hot Water business, and Gliderol Garage Doors.

    Brivis Climate Systems was sold to Japanese company Rinnai for $49 million. The sale was announced in December 2014, and finalised in early February 2015.

    Dux Hot Water was sold to Japanese company Noritz Corporation for $46 million. The sale was announced in November 2014.

    Gliderol Garage Doors was sold to Reliance Doors in July 2015 for $7 million. GWA purchased Gliderol for $42 million in 2010.

    In addition to these changes, GWA has also closed a number of manufacturing facilities, and will instead rely on the importation of product for its bathroom and kitchen operations from low-cost production regions, such as China. The closure of its manufacturing facilities at Wetherill Park, New South Wales and Norword in South Australia resulted in GWA incurring a one-off restructuring charge of $39.3 million.

    To further add complexity to this time of transition, GWA is set to lose two of its long-term executives. Les Patterson, the chief executive of GWA's bathrooms and kitchens business has left as of 30 June 2015, after 11 years with the company. GWA's well-respected CEO, Peter Crowley, will retire as GWA Group managing director on 30 June 2016.

    Mr Crowley's replacement has already been located and hired. He is Tim Salt, whose previous position since 2008 was as managing director of Diageo Australia and New Zealand, a beverage company.

    Mr Salt joined the GWA Group on 7 September 2015 as executive general manager of GWA's bathrooms and kitchens business. He will replace Mr Crowley as managing director on 1 July 2016. Mr Salt has a background with US-based Pepsico and Australia's Lion Nathan.

    In addition, the company appointed a new chief financial officer, Patrick Gibson, in April 2015.

    Thus not only has the FY 2014/15 been something of a transition year for the company, but FY 2015/16 is set to be another transitional year as well.

    To accommodate this, HNN is presenting two sets of numbers for the company. The first set of numbers relates to its statutory performance, that is, including both continuing and discontinued operations.
    GWA Group consolidated reported results for FY 2014/15

    The second set of numbers reflects results for continuing operations.
    GWA Group continuing operations for FY 2014/15

    While the company is overtly optimistic about its future, the reported numbers provide some cause for concern. In particular, the doors and access systems part of the business seems to have increased sales, but its EBIT has not kept pace. This is partially explained for FY 2014/15 by a one-off increase in stock provision for its Gainsborough business.
    GWA Group revenue and normalised EBIT

    In answer to an analyst's question during the presentation of the results, Mr Crowley defined a rough share of the markets in which the company competes.
    In terms of the demand drivers of our business, as I've said we're of the view that commercial activity is about 12.5% of their our business. The real driver of the business is what we call the replacement and renovation market which ranges somewhere between 50% to 55% of demand for our products and the remaining number is what I would call the dwelling well in construction which can be split between detached houses and medium density and high rise. That runs at around 33% to 35% of demand for our product.

    In regards to the above, the company has commented that it has seen a lag in demand, which it partly puts down to demand for its products as being heaviest during the completion stage of dwelling construction, the "final fix". However, other commentators believe that GWA's market share has been eroded significantly, and that even if sales do pick up in the near future, they will still lag past performance.

    GWA sees the statistics around new dwelling activity to be very encouraging. In its presentation to analysts it supplied this slide, based on statistics from analyst firm BIS Shrapnel:
    New Dwelling Activity - 12-month moving annual

    Mr Crowley discussed some of this expectations for the housing market in response to a question from an analyst at the results briefing:
    Certainly that market [renovation] has been positively anaemic for some time. It hasn't seemed to rebound and I think we all would have thought with rising house prices [it would have]. But I might add that I think we're all aware that the real driver of the rising national rising house prices has primarily been Sydney. And Melbourne. Queensland has been much lower and the other states are much lower so probably more a Sydney/Melbourne thing.
    But the renovation activity has not been that strong. I would expect that over the coming years we could expect to see that improve; there's a view that about every fifteen years or so houses need to be done up. The last big construction boom was in the early 2000s, so probably a lot of those houses that were built then are coming up to a freshen up time. So I have a view that 2017 to 2018 onwards, we actually might see some reasonably good activity on that front but it certainly in the last year or two has been pretty ordinary.

    The company presents itself as being very interested in innovations, with plans for a number of new products that it hopes will boost its market share. In response to an analyst's question at the results presentation, Mr Crowley provided some detail to these plans.
    I think there's some really good opportunities for us in terms of new product development and innovation around products, around digital. That's where we see a significant opportunity and that's where we are really giving our focus.
    There's quite a lot of new things coming through the line. What we've got coming on pretty much as we speak is a lot of new taps. I mentioned earlier we saw tapware as an area where we can get growth and we have a range of new product. Really more product styles, to be honest with you, than new technology coming through in the tapware area.
    If we go into the other parts of the bathrooms and kitchens business we have a range of new ceramic products and I don't really want to get into much more than that, other than that they are in regards to toilets.
    But we see some new, broader bathroom solutions that ... I probably still a little ways off but will need some investment to support.
    The other thing is we're continuing to invest around digital strategies to reach more and more of the decision makers in our target markets, and finding how we how we can engage digitally with decision makers.

    In terms of general markets, Mr Crowley also sees the commercial market as a good source of revenue:
    Just addressing your question about the non-residential market. I'm actually quite optimistic that we will see some growth in that sector. Our commercial order books are at record levels. We've got a couple of very big projects coming through particularly around Sydney as you might expect. And I'm certainly very confident given the order books we have and the work we're quoting that we will see upswing and activity in the non-residential sector.
    Bathrooms and kitchens

    GWA is responsible for the following brands:
    Owned brands
  • Caroma
  • Dorf
  • Fowler
  • Stylus
  • Clark
  • Distributed
  • Hansa
  • Schnell
  • EMCO
  • Virtu
  • Sanitron
  • Products and markets

    GWA's Caroma brand has a fine history of innovation. It introduced one of the first two-button dual flush toilet systems in 1982, and also developed lower-capacity effective flushing mechanisms, such as Smartflush. It was also the first company to gain a Water Efficiency Labelling and Standard (WELS) rating of 5 for a toilet suite, and the first to gain a WELS rating of 6 for a urinal.

    Its primary markets are renovations, new residential dwellings, replacement systems and commercial usage. During the results presentation in response to a question from an analyst, GWA's chief financial officer Patrick Gibson, offered some information about the relative market share of products in this division:
    Sanitaryware is obviously the largest segment. That's probably roughly about two-thirds of the of the business. The next largest then is tapware. Which obviously grew here. I think that our net sales are just under 8%. And then kitchen/laundry and bath/spas, which are relatively small in terms of volume and revenue.

    Mr Crowley followed up these remarks:
    We talk about baths and spas. Baths as a product category seems to be in decline. Particularly with the move towards more apartments so that seems to be a declining and pretty small market to be honest with you. Kitchen and laundry, what we're talking about there is kitchen sinks and laundry tubs. Kitchen sinks seem to be by far the biggest part of that business.
    Tapware is as big a market as sanitaryware in total dollar opportunity. Our place in the tapware market is somewhat lower than where we are with sanitaryware and that's been an area where we think we could grow and we see significant opportunity going forward.
    When I talk about tapware, I'm referring to the one-piece and three-piece tap you might find in either a kitchen or a bathroom or a laundry, but also showers and products like that. Also, the sort of accessories that go with taps and showers. That's a pretty big market actually and it's a great market opportunity. When we talk about a sanitaryware we're talking about toilets. We're talking about ceramic and plastic cisterns, we're also talking about basins and that's an area where we are very strong...

    Asked by an analyst at the results briefing about the surprisingly flat volumes in sanitaryware, Mr Crowley replied:
    The main factor that we've identified in that category probably relates more to plastic systems to be honest, where we have seen a number of homebrand-type plastics come into the market. That would be the primary impact on the volume upside that we've seen in the business. In terms of other areas in that category, we've been performing pretty well.
    Doors and access systems

    GWA is responsible for the following brands:
  • Gainsborough
  • Renovator
  • Trilock
  • Austral Lock
  • Distributed
  • Salto
  • Hillaldam
  • Eco Schulte
  • Service
  • API Locksmiths

  • As part of a response to an analyst's question at the results presentation, Mr Crowley indicated the company would pursue the development of digital security devices, as well as standard manual locks.
    When we go over to door and access there are some very clear product opportunities that we're pursuing around locks whether they be manual locks, but also electronic access opportunities. So those things will be progressively coming through from later this year through the next 18 months or so.

    The two words that seem to describe the approach GWA has taken to radically altering its business are "determined" and, actually, "courageous". The company has taken some very tough decisions, and taken them all at once, thus giving itself the best chance of improving its circumstances. No doubt, this has not been easy to achieve.

    That said, one of the difficulties that any company faces in performing a sharp change in direction is that its new strategies are formulated by the same people who formulated the previous strategies. In the case of GWA it does seem as though the pace of development post-change is more suited to a manufacturing-based company, even though that is now a minor part of GWA's business activities.

    The difficulty is that this slow pace reduces the amount of time available to a company in finding its new direction. Technology-based products in particular often need to go through several revisions before they work successfully in the market.

    That said, the bathroom, kitchen and home access are areas where technological innovation will play a big part in the future. For example, there is US bathroom and building fittings company Kohler's surprise hit "Moxie", which places a Bluetooth-enabled speaker in the showerhead.
    Kohler's Moxie Bluetooth speaker showerhead
    Dewalt, Milwaukee make smart tools
    Screenshots of the DeWalt App
    Tool Guy
    The Tool Guy provides some more in-depth information on One-Key
    These systems help to replace scanner-based tools
    Click to visit the HBT website for more information
    Technology is set to play an increasing role in the development of power tools. The industry is just at the beginning of bringing "internet of things" (IoT) developments to these tools, enabling a range of functions that will help make construction projects and worksites more efficient, and possibly open up new business opportunities as well.

    Two of the companies at the forefront of this kind of development are the Stanley Black & Decker-owned DeWalt, and the Techtronic Industries-owned Milwaukee Tool. DeWalt has launched a range of 20-volt batteries of two-amp and four-amp capacities that can be controlled by Bluetooth connection with a smartphone app. Milwaukee Tools is set to launch a range of innovations in the near future. It has announced its One-Key system which delivers a range of computing cloud-based functions directly to its tools. MilWaukee has also announced an expansion of its battery range to include much more powerful options.
    DeWalt: batteries that stay in touch

    On any construction or reasonably-sized worksite, the effective management of batteries for cordless tools is essential to keeping things running smoothly. With a mix of privately-owned tools from sub-contractors and the tools owned by the main contractor, keeping track of everything can be tough. Added to that is the need to keep a constant supply of freshly-charged batteries available, so that no-one is held back from completing a task by a flat battery.

    The DeWalt batteries provide a mix of facilities to help site managers achieve better efficiencies. This new line of batteries has been provided with an inbuilt Bluetooth-based system which enable managers to monitor the status of a battery. Each battery is "paired" with DeWalt's mobile app, running on a smartphone or tablet. The app then provides a menu of functions for controlling the battery.

    There are six basic functions provided by the app to control the battery: charging, "fencing", enable/disable, identification, lending and alerting.

    The DeWalt app enables the manager to check on the charge status and general condition of any battery at any time. Factors that can be checked include:
  • Remaining charge
  • Is the battery currently charging?
  • Has the battery completed charging?
  • Battery temperature (is is overheating?)

  • Managers might, for example, notice that one particular workgroup is about to experience low-charge on most of its batteries, and dispatch a runner with a fresh set to avoid a break in work.

    The DeWalt app enables the manager to set up a "virtual fence" around the worksite. Typically, this means that if a battery leaves that worksite, it will be automatically shut down completely, rendered unusable, until it is returned to the site. The app can also alert the manager at the time the battery crosses the virtual fence.
    Remote enable/disable

    Managers can choose to disable a battery at any time, and re-enable a battery at any time. This can be applied to individual batteries, or to all the batteries on the worksite.

    A typical example of use might be to disable all batteries at the end of the workday, then re-enable them at the start of the next workday. This would prevent their use elsewhere, and also ensure that over-keen workers did not, for example, violate noise restrictions when commencing work in the morning.

    It is frequently the case that the identity of a battery can be difficult to determine. Stickers, barcodes and even RFID systems can experience accidents that render then unusable. The DeWalt app enables the manager to identify a battery by causing its built-in identity light to flash on and off.

    The DeWalt app enables managers to set up a battery to function for a pre-determined amount of time. Thus the battery can be loaned out for a day or two days safely, as at the end of that time it will shut itself down, and be useless until its owner re-activates it through the app.

    The DeWalt can be set to issue alerts whenever a battery needs to be charged, or when it leaves the Bluetooth range of its paired mobile device. There is also an alert for charge completion.
    Milwaukee Tool: direct management

    While DeWalt has taken the clever step of concentrating on the rechargeable battery as the key component of the power tool, Milwaukee has taken a slightly more comprehensive approach by concentrating on the actual tool.

    Its One-Key system is a computing cloud-based system. This means the information that relates to the fleet of tools is not stored on individual mobile devices, but instead centralised on internet-connected remote computers.

    Milwaukee Tool is progressively rolling out various features of One-Key. There are three core features that are planned at the moment: inventory management, tool reporting and tool control.
    One-Key inventory management

    This feature will become available during September 2015. This creates a central place where users can manage their total inventory of tools, including both Milwaukee and non-Milwaukee tools. As it is cloud-based, this central database can be accessed through Milwaukee's mobile app, but also through a browser interface on any laptop or desktop computer.

    As One-Key equipped tools are released, these will automatically synchronise with the inventory management system, making it easy to keep track of tools on a worksite.

    The platform is free to use, and enable the storage of comprehensive information about the tools, budgeting for the future, and assignment of location and "ownership" of each tool, ensuring there is accountability.
    One-Key tool reporting

    This feature will become available during October 2015. It will be activated in conjunction with the introduction of Milwaukee's Force Logic 6T Utility Crimpers. These will be closely connected to the overall system, providing data about the use of tool, and enabling management to track the success and timing of electrical terminations made with the crimpers. One-Key will also keep track of service intervals.
    One-Key tool control

    This feature will become available in January 2016. It will be launched in conjunction with the launch of Milwaukee's new M18 Fuel drilling and driving products. Managers will be able to build profiles for specific scenarios of tool usage, altering settings such as torque and speed. This will make it easy for the actual tool users to select exactly the right profile for a specific job, ensuring the work gets done to specifications, and that the tool is not over-stressed or damaged.

    These profiles can be selected on the actual tools themselves, with four different settings available.

    Tool Craze has posted a video showing the system in operation:

    Tool Craze website
    Milwaukee Tool batteries

    In a separate event, Milwaukee has announced it will soon release an even more powerful 18-volt battery to completment its current range of batteries with up to five-amp power. The new battery will be a nine-amp unit, which the company says will deliver more power and provide more battery uptime.

    The battery packs are, of course, slightly larger, and make use of six series of three batteries each to deliver the power. They are designed for use on larger power tools with greater demands, such as Milwaukee's "Hawg" line of hole-boring tools and large circular saws.

    [Continues in Full Text]
    HomeKit compatible switches from iDevices
    HomeKit devices launch
    Thermostat provides multiple options
    iDevices Outdoor Switch
    Click to visit the HBT website for more information
    With the launch of iOS 9 on its mobile devices, Apple's home automation software, HomeKit, has launched as well. One of the first companies to provide a HomeKit-compatible system is iDevices, which is launching its product line in US-based big-box retailer Lowe's Home Improvement.

    A preview of iDevice's products was available at the Las Vegas Consumer Electronics Show in January 2015, but the company has now launched its final retail models. The three main products that are available are the Switch, the Outdoor Switch, and the Thermostat.

    The Switch is for indoor connection and control of devices, and the Outdoor Switch is a "ruggedised" version for external use. Beside offering automated control, both switches also enable the user to monitor current energy usage, and historical energy usage, providing a convenient weekly summary.

    The Thermostat is a more complex device that provides features such as a standard weekly schedule of heating and cooling, as well as user profiles which can be set up to adjust room temperatures to suit whoever is home at the moment.

    Combined with HomeKit running on a device updated to iOS 9, all of these products can be controlled through speech, utilising Apple's artificial intelligence-based speech analysis system Siri. For example, the system can be "taught" to respond to the command "Siri, lights out" by switching off all the connected devices at the end of the day.

    The mobile device app that enables the system will also work with a number of other Apple HomeKit-enabled devices. This includes the Schlage Sense Smart Deadbolt, providing a security option.

    The Switch will retail for US$59.99. All the products from iDevices will be available at Lowe's by the end of September 2015, and will also be sold online from the iDevices website.

    iDevices also manufactures a number of thermometers for use in grilling and cooking that are not currently compatible with HomeKit.
    HI Weekly - your weekly HNN magazine
    HI Weekly download
    HI Weekly
    A sample page from HI Weekly
    Previous week's edition of HI Weekly
    Click to visit the HBT website for more information
    HNN is pleased to announce the launch of its weekly PDF magazine, HI Weekly.

    HI Weekly contains all the content from the previous week on the HNN website, along with a few extras.

    The PDF is formatted to A4 size, making it easy to read on screen, or to print out and share with others.

    To download the latest edition of HI Weekly, just use the link below:

    The above link will be updated every week.

    The link to download the archived version of this week's HI Weekly is:

    The file size for these downloads is usually between 6MB and 8MB.
    Hot links
    Samsung's Smart Things was launched at the IFA trade show in Berlin
    HNN Sources
    Lowe's Iris smart home solution joins the Z-Wave Alliance
    Habitat plans to increase its floor space by 25% through Homebase stores
    Click to visit the HBT website for more information
    Samsung has started to sell a starter kit for connected homes; plans to grow UK furnishings retailer Habitat in Homebase stores; Lowe's smart home solution Iris has become part of the Z-Wave Alliance; Kwikset deadbolt range now comes with home connect technology; reformulated paint and primer-in-one from PPG Pittsburgh Paints; Stanley Black & Decker makes another donation to Toolbank USA; and Valspar expands its professional range to include new coatings.

    For further information, simply click on the images provided.
    Smart Things from Samsung

    Samsung's starter kit for connected home was launched at the IFA trade show in Berlin recently. Called Smart Things, the line of devices includes electrical sockets, sensors and a central hub that connects to a home's internet router to coordinate different appliances. It went on sale in the UK and US during September and will be more broadly available next year.
    Samsung has launched a starter kit for a connected home
    Habitat plans comeback through Hombase

    Furnishings retailer Habitat will increase its floor space by 25% by the end of the year, as it embarks on its first major re-launch since falling into administration four years ago. Habitat, which was rescued by Homebase owner Home Retail Group, aims to have 80 concession stores across the UK, based mainly in Homebase stores.
    Habitat plans more concessions in Homebase stores
    Z-Wave Alliance includes Lowe's Iris

    Lowe's has become a member of the Z-Wave Alliance, a global consortium of over 325 member companies supporting the Z-Wave wireless IoT (Internet of Things) standard. A retail destination for a variety of Z-Wave smart home devices, Lowe's Iris joins a growing membership of companies committed to the Z-Wave brand.
    Lowe's Iris joins the Z-Wave Alliance
    Kwikset uses remote locking technology

    Kwikset's new line of Signature Series Deadbolt Locks with Home Connect[tm] technology utilises the Z-Wave wireless protocol to enable remote locking and unlocking. This allows homeowners to remotely access and control the lock from anywhere in the world, using a smartphone, tablet or Internet-enabled device.
    Remote locking is available on Kwikset's Signature Series Deadbolt Locks
    New formula for PPG's Regency range

    PPG Pittsburgh Paints has introduced its reformulated line of REGENCY(r) Paint + Primer-In-One acrylic latex paints. The range provides long-lasting coverage and colour retention in three formulations - all with low volatile organic compounds (VOCs) and low odour. It includes Regency Interior, Regency Exterior and Regency Interior/Exterior.
    PPG Pittsburgh Paints launches its reformulated line of REGENCY paint
    Stanley Black & Decker donates tools

    Stanley Black & Decker will donate more than US$225,000 worth of tools to ToolBank USA, an organisation that lends tools to non-profits for use in service projects. Charities, schools and faith-based organisations are among those who borrow ToolBank tools such as drills, hammers, rakes, ladders and generators.
    Stanley has been a ToolBank sponsor since 2007
    Professional coatings from Valspar

    Valspar has expanded its professional portfolio of products to include a new range of coatings. Professional painters will find a wider selection of water-based coatings, including Direct-To-Metal primers and topcoats, Pre-Catalyzed Epoxies, Catalyzed Epoxies, DryFall and a zero-VOC primer. They are suitable for maintenance, commercial and light industrial jobs.
    Valspar has expanded its professional range of products
    More Siam Global outlets in SE Asia

    Thai building materials retailer Siam Global House plans to open three stores in Myanmar, Laos and Cambodia, and seven new domestic stores over the next five years. It expects to increase store count to 39 by end of 2015 from 32 stores at the end of 2014, as it looks to boost growth in a slowing domestic economy.
    Thai building materials retailer Siam Global House has growth plans
    Construction power tool market to be disrupted
    Market map for Milwaukee Tool
    Hardware News Network
    Hilti fleet management services
    Force-Logic crimpers from Milwaukee
    Give to Amnesty International
    While HNN has looked at the effect of the move to cordless tools in the consumer market, we have yet to cover what is happening in the industrial and construction markets.

    Cordless tools have brought many changes to industry and construction. They've made many work sites more efficient and effective at their tasks, improved safety - and, of course, been something of a boon to tool sellers.

    What they've also done, however, is to change some of the dynamics of the tool market itself. While builders, construction contractors and factories have all tended towards adopting a single brand of tool for reasons that include per-unit cost, maintenance and training, the coming of cordless has seen this further emphasised.

    Buying a cordless tool also means buying into a battery system, and, where possible, everyone wants to have as few of those on a worksite as possible.

    The most important aspect of this transformation in terms of marketing is that brand has become, once again, very important. Brand is starting to re-assert itself now because businesses are aware that they are effectively "marrying" themselves to a single brand due to their choice of battery systems.

    As in the consumer market, when using corded tools businesses have been free to choose from a range of brands, matching individual tools from different brands to their needs. They might buy a Hitachi circular saw, for example, and use that alongside a Makita drill. Buying into a battery system means they would be better off buying both the drill and the saw from the same brand.

    Similar to the consumer market, this leads towards "brand spread". As the importance of brand begins to reassert itself in new ways, brands will steadily increase their range and possible applications.

    Milwaukee, for example, has expanded into cordless metal drilling saws for construction, and cable cutters and crimpers for electricians and linesmen. Every such extension makes a single brand more suitable for multiple applications, and more attractive to building, construction and industrial companies looking for simple solutions.
    Tool management

    Cordless is, however, just a start. Another way for power tool brands to increase their market share is through introducing connected computer technologies. Providing management systems is more than just a "value-add".

    Like cordless battery tools, management systems provided through software form bonds with clients that are difficult to break, and make changing brands just that little bit more difficult.

    This is a technique that has long been used by Liechtenstein-based power tool provider Hilti. Hilti discovered long ago that the real profit in the construction industry came not from selling tools to businesses, but providing tools as a form of service.

    It has consequently been very successful for a number of years. However, Hilti has not really kept up with the latest technologies, and now faces new challenges which it seems not really ready to face.

    Before we look further into Hilti's market situation, let's look at some of the exciting new developments from Techtronic Industries' Milwaukee Tool and Stanley Black & Decker's DeWalt.

    For example, Milwaukee is rolling out its "One-Key" system over the next four months. In its early release, it consists of a "cloud based" inventory system that extends to both Milwaukee and non-Milwaukee brands. In its later releases, it will grow to provide tool-by-tool monitoring, enabling managers to change the basic settings on each tool, to monitor its usage patterns and its location constantly.

    Currently, Milwaukee has its inventory system available for anyone to try out. You can access this system at the link below:
    One-Key login

    One-Key asks for some very basic information, then opens up to a screen that gives you three choices: account management, inventory and reporting. This is the basic account screen:
    One-Key account page

    The inventory management screen looks like this:
    One-Key inventory management

    As this page indicates, One-Key will permit you to provide details of any brand of power tool. However, it is much easier to enter Milwaukee brand power tools, as all you need to do is to supply the model number, and the other details are filled in for you. This includes kits with multiple elements, where every element of the kit will be added to the inventory.

    Each tool can be added to a category. A number of these are pre-loaded, but more can be added by the user. The same applies to locations, where, as with categories, once a new location has been added, it remains available for future re-use. For non-Milwaukee tools, a descriptive photograph can be uploaded (the picture appears automatically for Milwaukee tools).

    Purchase information can also be added, including purchase location, purchase date and value. Scanned images of order information and itemisation can also be uploaded.
    Entry screen for non-Milwaukee products
    Deeper integration

    Milwaukee also offers deeper integration of One-Key with some tools. The company plans to extend this integration throughout most of its range, but the first tools to feature it are the Force-Logic crimpers.
    Force-Logic crimpers from Milwaukee

    One-Key has a screen dedicated to the monitoring and control of these Force-Logic devices:
    Force Logic screen on One-Key

    The same monitoring and control is also available through the Milwaukee One-Key iPhone (and Android) App:
    Milwaukee One-Key iPhone app
    The future

    All this is just a prelude to a much more comprehensive tool management system. As new tools are produced by Milwaukee, they will feature closer integration into the One-Key system, including reporting on usage, settings which can be adjusted from a central location for an entire range of tools, and tools that can report back on their locations.

    For companies facing heavy compliance requirements, and operating a large fleet of tools, these technological developments at Milwaukee will help to revolutionise the way they use their tools.
    DeWalt Tool Connect

    DeWalt has cleverly cut its way to the heart of the matter. Rather than waiting to roll out a complex system such as Milwaukee's, DeWalt already has available a system that concentrates on the batteries for the cordless tools, Tool Connect.
    Tool Connect from DeWalt

    The batteries can be monitored through mobile apps for their charge state and location.
    DeWalt mobile app

    (The 20-volt DeWalt Bluetooth batteries are listing at US$236, but selling for US$129.)

    There are six basic functions provided by the app to control the battery: charging, "fencing", enable/disable, identification, lending and alerting.

    The DeWalt app enables the manager to check on the charge status and general condition of any battery at any time.

    The DeWalt app enables the manager to set up a "virtual fence" around the worksite. Typically, this means that if a battery leaves that worksite, it will be automatically shut down completely, rendered unusable, until it is returned to the site.
    Remote enable/disable

    Managers can choose to disable a battery at any time, and re-enable a battery at any time. This can be applied to individual batteries, or to all the batteries on the worksite.

    The DeWalt app enables the manager to identify a battery by causing its built-in identity light to flash on and off.

    The DeWalt app enables managers to set up a battery to function for a pre-determined amount of time. Thus the battery can be loaned out for a day or two days safely, as at the end of that time it will shut itself down, and be useless until its owner re-activates it through the app.

    The DeWalt can be set to issue alerts whenever a battery needs to be charged, or when it leaves the Bluetooth range of its paired mobile device. There is also an alert for charge completion.
    The target

    It seems likely that, overtly for Milwaukee, and less so for DeWalt, the company that will end up considering itself targeted by these moves is Hilti.

    Through its leasing/fleet service system, Hilti has gained a firm grip on the large construction and industrial market.

    As explained by bcg.perspectives:
    Hilti, whose core business is tool manufacturing, picked up on these unaddressed pain points. In response, it shifted from selling tools to selling a tool management service aimed at alleviating the burden on contractors so they could focus on getting the job done. Hilti now leases tools to contractors, guarantees availability of the right tool at the right time, and automatically upgrades customer fleets with the latest equipment. It also provides theft insurance. Its service is accompanied by a new revenue and operating model. Many contractors, who in the past had purchased a small share of their tools from each competitor, dramatically increased their share of business with Hilti in order to obtain the full benefits of the company's tool-management service.
    Hilti's success depended on possessing a deep understanding of how the customer uses tools and what causes them frustration. Based on this understanding, the company expanded its view of the role it could play in delivering value to customers. This was a shift from a purely product-based mind-set to one that also included supporting services and solutions.
    Hilti's business model - bcg.perspectives

    A fully inter-connected, "Internet of Things" (IoT) power tool would make the business model of Hilti less valuable. It would, effectively, be self-reporting and self-tracking.

    Given that, what should Hilti's current response be? As you might have guessed, with Milwaukee and DeWalt entering its area of expertise, it is now entering into their area of the market, and selling through retailers to consumers.

    At HNN we first became aware of this potential in late 2014, when we came across a promotional competition offer from an Australian home design magazine that featured Hilti drills as a prize. This seemed very odd, but we could find out no further information. We had to presume Hilti was considering the possibility of direct sales.

    In September 2015 that was finally confirmed. While Masters Home Improvement had previously sold a few Hilti tools, including a gas-powered nailgun and a corded circular saw, in September Masters began to sell other Hilti power tools as well, such as a 14-volt compact drill and a 14-volt impact screwdriver (each priced at around $500).
    Market maps

    One way to get a clear idea of what is going on around Hilti, DeWalt and Milwaukee Tool is to draw up a market map for each brand, and trace the target of its actions.

    When we do this for these three brands, a very clear picture emerges.

    DeWalt has long had one of the more clever market strategies of any power tool maker. It has consistently managed to brand itself as the tool of the "craftsman" - a customer description that easily crosses a range of usages, including builders, tradespeople and some in the prosumer market.
    Market map for DeWalt

    The Tool Connect battery system is equally clever, because it directly extends the existing market for DeWalt tools. Some builders, for example, will sign up for the new batteries with a real sense of relief, finding a persistent, nagging set of problems finally solved, for the most part.

    Tradesmen and smaller builders may find that the new battery system enables them to expand their activities more easily, and they will begin to buy more DeWalt tools, or convert entirely to the DeWalt tool system.

    The Tool Connect batteries also make a good argument for the deployment of DeWalt tools on construction sites with larger fleets of tools. This is a move that would be backed up by DeWalt's constant expansion in recent years into more industrial tools.

    It is likely - especially given the product's name - that this tool system will expand over coming years to include some of the promised features of the Milwaukee Tool product.
    Milwaukee Tool

    Where the DeWalt brand has chosen to go deep into a particular sector of the market, Milwaukee has taken a much broader approach, and pursued technological advantage wherever it could.

    What One-Key directly offers Milwaukee is a pure sideways-step in the market, an opportunity to scale what it has already worked so hard to develop.
    Market map for Milwaukee Tool

    Additionally, the added capabilities of One-Key will help the brand reach slightly upwards as well, encompassing more of the industrial sector.

    Like DeWalt, this is very much a move into contiguous - "touching" - areas of the market map. Unlike DeWalt, however, it is also very much a "stretch" goal.

    There are going to be some bumps in developing this technology, but the CEO of TTI, Joe Galli, has proved himself more than capable of handling rapid technological development.

    Looking at the market maps for DeWalt and Milwaukee Tool, one thing is quite clear: both brands are, for the first time, beginning to really impinge on the Hilti area of the market, and they are doing so through technology.

    Hilti has traditionally had two major strengths in its market. The first, and perhaps surprisingly probably the most important, is the people who make up Hilti. The company has an outstanding reputation as an employer, and is well-known for its careful, thoughtful development of its personnel, and close attention to overall company culture.

    The result is a company that for the most part provides near faultless service to its clients, and is consequently able to charge a premium for its services.

    The second strength of the company is the quality of the tools it produces. As it provides tools for the most part as a part of a service, either through lease agreements, or which substantial after-sales service, the goal of Hilti tool design is to bring total cost of ownership down as low as possible. That means tools that are very well constructed, and made in such a way that they can be easily and effectively repaired.

    Looking at the Hilti market map, however, gives some idea of the kinds of challenges the company will face over the next decade.
    Market map for Hilti

    If Hilti in Australia is going to seek to sell its tools directly through retailers such as Masters Home Improvement, it introduces a big discontinuity - break - in its market focus. It is worth noting just how contained much of the Hilti business is. For example, when establishing an account on the Hilti website to order products directly, there is this curious checkbox:
    Hilti checkbox
    The Blackberry of power tools?

    The unfortunate thing is that we've actually seen this kind of market map before. In the years leading up to its collapse, the Canadian smartphone maker Blackberry (formerly known as Research in Motion) ended up with a very similar market map, and for many of the same reasons that Hilti does today.

    Like Hilti, Blackberry for many years sold its products only to business users, who bought an entire IT system to enable features such as Blackberry messaging. Eventually, somewhat reluctantly, it opened out its services to include consumers as well.

    Two years after Apple's iPhone was launched, Blackberry found itself confronted by a terrible dilemma. Its physical keyboard devices continued to sell well, but market growth was all but ended, and there were the beginning signs of decline.

    The dilemma was that if the company began to produce smartphones like Apple's it would effectively be destroying its own market. In the end, the company couldn't bring itself to take that step. It ended up trying to produce a series of "hybrid" devices, none of which really worked.

    Just as you would have expected major smartphone developments to emerge from the one-time market leader in smartphones, Blackberry, so one might expect a company like Hilti to be at the forefront of developments such as those launched by DeWalt and Milwaukee.

    That is, however, almost never the way things work. Instead companies that have once held a dominant position in a market simply cannot adapt to the new technologies when they emerge, and end up instead entering a period of decline.

    Whether that will end up being Hilti's fate it is too early to tell. For the moment, however, things do not look good. It's hard, in looking at the outline of Hilti's tool management programme, not to find it a little behind the times.
    Hilti fleet management services
    Market development

    Given this market situation, what is likely to happen next? What, for example, do you do if you are a company like Makita?

    One possibility we could see develop by calendar 2017 is that some of the other power tool makers - Makita, Hitachi, Panasonic, perhaps even Hilti itself as well - could get together and establish something like, say, a cordless battery communication standard.

    This could be somewhat similar to the standard that Apple has for its HomeKit "connected home" software available in iOS9 that links IoT devices in the home. Batteries could enable communication over wireless networks that followed specific protocols. The development of the software that made use of these protocols could then be left up to third-party vendors.

    It is likely that, with this kind of system, the software development would happen very rapidly, and likely end up with systems superior to that developed by Milwaukee and DeWalt.

    Customers could then safely buy one of the certified compliant brands of tools and be sure that it would work with tool management software they had bought elsewhere. This would lead to less restricted use of software, and also more interoperability between brands, bringing a greater range of choice to the customer.

    Another area to pay attention to in the coming years is a likely pressure to some further change and consolidation of brands in the power tool area. The pressure of cordless systems/battery systems coupled with the pressure of advanced software management will likely see some smaller, specialist companies get together, either in merger/acquisition, or through specialist joint ventures aimed at developing shared cordless technologies.
    What this means for power tool vendors

    If the power tool market continues to develop down this pathway, it could lead to a return of the specialist power tool vendor. Vendors might choose to limit the lines they sell even more, so as to better manage the complexity of the software management systems, helping their customers in a more deeply integrated manner to adopt whole tool systems.

    Certainly, though, these developments should point to further market development. As the capacities of tool systems increase, so does expenditure on their implementation, and many tool vendors would be ideally situated to add expand the service/training portion of their business.

    Until next time,


    You can contact me directly via email or Twitter @HNN_Australia

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    HNN Index week ended 25 September 2015
    HNN Home Improvement Index week for ending 25 September 2015
    HNN Sources
    Westfield Woden is fighting a local businessman
    Goodman Group's Sydney Corporate Park
    Click to visit the HBT website for more information
    The HNN Home Improvement Index fell by 14 points to reach 923.49 points in the week ending 25 September 2015. On a scaled basis, the underlying ASX 200 index fell by 24 points to reach 938.1 points. Unscaled, the ASX 200 index fell 128 points to reach 5042 points.

    Metcash was the only stock which increased by over 5%. It rose by 6.4%.

    UGL Ltd fell by over 12%. Bluescope Steel fell by 10.3%. Boral was down 8.7%, Downer EDI lost 7.5%, and CSR fell by 6.2%.
    Boral, construction union make peace

    Boral said it had reached a legally binding agreement with the Construction and General Division of the Victorian CFMEU. Under the deal, the union and its organisers will not interfere with the supply of any of Boral's products on building sites for at least three years.
    Boral, construction union make peace - Sourceable
    Brambles CEO Tom Gorman shuns short-termism with $2.08b 'moat'

    Brambles chief executive Tom Gorman is investing $2.08 billion over the next four years and reinvesting cost savings to ward off competition. The $15 billion supply chain logistics giant is committing savings from its One Better program, which aims to cut overhead costs by US$100 million, back into its business to shore up its market dominance over the long term.
    Brambles CEO Tom Gorman shuns short-termism - Fairfax Media
    Charter Hall Group
    Charter Hall Retail REIT hit lowest point this year

    Securities in shopping centre owner Charter Hall Retail REIT have hit their lowest point so far this year due to headwinds such as weak supermarket sales. The real estate trust is down 7% since January. Charter Hall Retail REIT has more than $2 billion worth of assets across its portfolio.
    Charter Hall Retail REIT hit lowest point this year - Fairfax Media
    Goodman Group
    Climbing the wall at Goodman Group's Sydney Corporate Park

    Goodman Group has gained 28 new customers this year for the Sydney Corporate Park, one of its flagship south Sydney properties. The property, which Goodman bought in December 2013 for $343 million, has a range of office and warehouse spaces. Rents for the office space range from $375 to $420 per square metre gross, and for the industrial space from $170 to $290 per square metre gross.
    Climbing the wall at Goodman Group's Sydney Corporate Park - Fairfax Media
    Banks selling ideas to Metcash

    A line of investment banks are believed to be pitching ideas to Metcash as its shares remain at depressed levels, with its market value sinking from $3.6 billion to $900m over two years. A break-up of Metcash would be increasingly likely if the company's share price fell further, according to sources.
    Banks selling ideas to Metcash - Business Spectator
    Westfield fights small businessmen's vision for Lyons in Woden Valley

    In the Canberra suburb of Chapman, David Bowditch and his business partner, electrician Wayne Taylor, are trying to redevelop their shops, after overcoming objections from Westfield Woden, a neighbouring business and the ACT government agencies.
    Westfield fights small businessmen's vision for Lyons - Fairfax Media
    Document reveals Woolies' woes as manager hits out at 'devastating' mental health issues

    A leaked Woolworths document has revealed the dire state of the supermarket's relationship with its suppliers, while one senior manager has slammed the company for forcing staff to clean up for mistakes at the top. The revelations come as the Australian Competition and Consumer Commission said it was investigating reports about the conduct of Woolworths and Aldi towards suppliers.
    Leaked document reveals Woolies' woes - News Limited
    Sales softness at H.B. Fuller
    H.B. Fuller expects softer sales for the year
    It broke ground on a future manufacturing facility in Surabaya, Indonesia
    Net revenue for H.B. Fuller declined 0.5% to US$524.1 million
    Subscribe to HNN weekly e-newsletter
    H.B. Fuller Co. cut its financial projections for the year on continued sales softness but projects results to improve next year. Chief executive Jim Owens said in a statement:
    The operational problems that hampered us a year ago are largely behind us.

    The company now projects US$2.23 a share on US$2.08 billion in revenue for the current year, down from its earlier view of US$2.45 a share on US$2.1 billion in revenue.

    For the latest period, H.B. Fuller reported profit of US$26.8 million compared with US$3.99 million, a year earlier. The year-ago results had been impacted by delays and cost overruns in a systems upgrade in North America and business integration in Europe.

    Net revenue declined 0.5% to US$524.1 million compared with US$526.8 million in the prior year. Adjusting for currency fluctuations, the company said, revenue rose 6.7% from the year-ago period.

    Gross margin improved to 28% from 23.8% a year earlier.

    By segment, Americas Adhesives, which accounts for more than 40% of revenue, reported an 8% decline while Europe, India, Middle East and Africa, which represents 28% of total revenue, saw a 17% decline.

    Its Asia Pacific and Construction Products segments, which combined account for about 30% of revenue, saw a 50% and 30% jump in revenue.
    Construction site drones
    Drones are being used during the construction of a stadium in California
    Technology Review
    Turner Construction is running the Sacramento project
    Video of the construction drones
    Subscribe to HNN weekly e-newsletter
    The site of a lavish stadium for the Sacramento Kings basketball team in California is being monitored by drones and software that can automatically flag slow progress.

    Once per day, several drones automatically patrol the Sacramento work site, collecting video footage. That footage is then converted into a three-dimensional picture of the site, which is fed into software that compares it to computerised architectural plans as well as a the construction work plan showing when each element should be finished.

    The software can show managers how the project is progressing, and can automatically highlight parts that may be falling behind schedule.

    Mani Golparvar-Fard is an assistant professor in the department of civil engineering at the University of Illinois, who developed the software with several colleagues. He said:
    We highlight at-risk locations on a site, where the probability of having an issue is really high.

    It can show, for example, that a particular structural element is behind schedule, perhaps because materials have not yet arrived. Golparvar-Fard said:
    We can understand why deviations are happening, and we can see where efficiency improvements are made.

    Video is being captured by a drone-operating company called ImageInFlight.

    Lincoln Wood is the regional manager for virtual design and construction at Turner Construction, which is running the Sacramento project. He said the near-real-time aerial images and software analysis being used provides a comprehensive picture of what's going on, and can highlight how a slowdown in one area may affect the entire project.

    The University of Illinois team is currently testing a system that will allow drones to attach cameras to locations across a building site, so that activity can be monitored continually.

    In experiments, they are also using a crowdsourcing platform to categorise workers' activities in video footage. A manager can then see how different tasks are being performed overall, and how much time each individual is spending on a job.
    Hot links
    Lowe's Iris has become a member of the ZigBee Alliance
    HNN Sources
    Buildbase is rolling out Paintbase for painters and decorators in the UK
    EverBlock is a modular system of full-scale plastic blocks look like Lego
    Click to visit the HBT website for more information
    Lowe's is making its Iris smart home solution more accessible; UK retailer Buildbase is launching Paintbase for decorators; polypropylene blocks emulate life-sized Lego pieces; and Ivee Voice is another digital assistant for smart homes.

    For further information, simply click on the images provided.
    Lowe's Iris strategy

    Lowe's is expanding the accessibility of its Iris smart home kit by becoming a member of the ZigBee Alliance. It joins the 450 members currently working to develop and promote ZigBee Internet of Things (IoT) standards. Having Iris conform to ZigBee standards should theoretically make Lowe's smart home solution easier for consumers to implement and customise.
    Lowe's Iris smart home solution joins the ZigBee Alliance
    Buildbase goes into paint market

    Buildbase is rolling out Paintbase, a specialist offering for the growing professional painter and decorator trade in the UK. It has historically stocked painting and decorating products for builders. The introduction of Paintbase within Buildbase stores should provide an improved range and service to existing customers. Currently there are plans for nine Paintbase branches.
    Buildbase is launching Paintbase
    Life-size Lego blocks

    EverBlock is a modular system of full-scale plastic blocks that, like Lego, interconnect without fasteners or special tools. They are a functional, full-scale building system that can be used to create furniture, walls and entire rooms. Made of polypropylene, the blocks are recyclable.
    EverBlock emulate life-sized Lego blocks
    Voice controlled smart homes

    The Ivee Voice will provide users with on-demand traffic and weather updates, and can also control smart home products. It is compatible with products such as Lowe's Iris, Logitech Harmony, Belkin Wemo, the Nest Learning Thermostat, Philips Hue, SmartThings and Wink. Ivee Voice features multi-room support which means users can control their home from just about anywhere.
    Ivee Voice will compete with Amazon's Echo
    Big box update
    A new Masters store is set to open at Windale (NSW)
    HNN Sources
    Bunnings has opened its store in Seaford (SA)
    Bunnings Maroochydore will open in mid-October
    Click to visit the ITW website for move information
    A Masters store is being planned for Windale (NSW); Bunnings has opened the doors to its warehouse in Seaford (SA); and Bunnings Maroochydore is getting ready to open with new staff.
    Big boxes in the Hunter

    A Woolworths spokesman said it is committed to opening a Masters store at Windale. He told The Herald: "We are working to finalise timelines for construction and will update the community when we have more detail."

    Planning documents indicate a 13,750sqm Masters store would be built on the Pacific Highway at Windale.

    The hardware retail competition in the region kicked off a few years ago, with Masters outlets built at Rutherford and Heatherbrae. Bunnings already has stores at Belmont, Boolaroo (formerly Glendale), Cessnock, Kotara, Morisset, Maitland, Port Stephens, Wallsend and Singleton.

    Each Masters store has a construction value of about $15 million and employs between 130 to 150 staff.
    Bunnings' expansion in SA

    Bunnings opened its store in Seaford, as construction work at a new Gawler store and the extension at Windsor Gardens continues. The $25 million Seaford store increases Bunnings' presence in South Australia to 17 stores.

    Store manager Peter Stewart said the new store was "lighter and brighter" and ready to offer more choice.

    The big box retailer is also supersizing its Windsor Gardens offering to a $47 million warehouse and is currently hiring up to 70 staff for the $16 million store at Gawler that is expected to open later this year.

    Another Masters store at Parafield, near an existing Bunnings warehouse, is under construction and due to open in May next year.
    Bunnings Maroochydore staffing

    Over 250 locals are part of the official team members of the $48 million Bunnings Warehouse Maroochydore, which is set to open in mid-October.

    Complex manager Kevin Harris said he was excited to welcome the more than 50 new staff members to the existing team of 200 who will transfer to the new store. A number of staff are qualified tradespeople including carpenters, horticulturalists, interior designers, painters and plumbers, who will all be on hand to provide customer with expert advice for their DIY projects.

    Bunnings Warehouse Maroochydore is located at 78-90 Dalton Drive, Maroochydore (QLD).
    Bunnings' share of small electrical
    Bottom half of the small appliance market
    Roy Morgan Research
    Chart of sales of small electrical goods in Australia
    Kogan sells is own-brand Certa mini saw
    Click to visit the HBT website for more information
    Data recently released by Australian business research and marketing company Roy Morgan show just how far Bunnings has penetrated the small electrical sales category.

    While the big box home improvement retailer does not rank in the top 10 bricks-and-mortar outlet sellers of small electrical goods, it is just outside that ranking.

    The data tracks the number of items (without taking into account price) sold during an average four-week period. The data comes from Roy Morgan's Single Source service, and was collected between July 2014 and June 2013. The sample was 14,987 Australians aged above 14 years.

    At number eight is Aldi with sales of 40,500 items, followed by Bing Lee with 37,500 items and at number 10 JB Hi-Fi with sales of 37,000 items.

    Roy Morgan reports that Bunnings sold 33,000 items in an average four-week period. Other retailers selling close to that number include Betta Electrical and Dick Smith Electronics.
    Chart of sales of small electrical goods in Australia
    The big players

    The Good Guys and Harvey Norman dominate the numbers, ranked first and second respectively, with sales of 233,500 items and 208,000 items.

    However, according to Andrew Price, general manager of consumer products at Roy Morgan Research, the number of items does not completely reflect their market power:
    Australians buy almost 1.7 million small electrical items during an average four weeks, spending an average $154 per item. While the average small electrical item bought from a discount store such as Big W, Kmart or Target costs $72, it's over $200 at market leaders Harvey Norman and The Good Guys. So while these two sell 26% of all individual small electrical items, these sales represent 37% of the market by dollar value, or over $96 million in an average four weeks between them.
    Top ten small appliance retailers (by number units)

    The top four retailers in this area (The Good Guys, Harvey Norman, Big W and Kmart) comprise around 50% of the overall market. If these are removed, then the truly unconsolidated nature of the market is revealed, which explains why retailers with a limited presence in these markets are ramping up.
    Bottom half of the small appliance market

    The 46% of "other" represents a large number of quite small retailers. This is one reason why the small electrical appliance area is seen as a major growth opportunity. Both Dick Smith Electronics and JB Hi-Fi set to ramp up sales in this area during FY 2015/16.
    Online continues to grow

    The influence of online e-commerce continues to increase in this area, though it does have certain in-built limiters as well. Some 10% of all small electrical goods (by numbers) are bought online during a typical four-week period, amounting to 179,000 items in total.

    Of these, around 75% (134,500) are purchased from online-only stores with the remainder purchased through the online operations of bricks-and-mortar stores.

    Additionally, some 57,000 items are purchased through online auction site eBay in an average four-week period, making eBay the largest single online source in this category.

    While this remains a growing market, Roy Morgan is quick to point out that there are limitations on the growth of the online market in this area. According to Mr Price:
    Overall, Australians spent around $27 million on small electrical items online in an average four weeks, whether through eBay, an online-only retailer or the internet site of a bricks-and-mortar store. This represents only around 10% of our total spend in the category. Unlike items such as clothing and books, it can cost too much for consumers to ship small electrical goods from overseas-and in many cases they can't even be plugged in here. This has made the category safe from international sites such as Amazon.

    That said, there is some locally-grown competition that is more than willing to expand in this area online. In an interview with Fairfax Media, the founder of online retailer Kogan, Ruslan Kogan, has explained how he intends to grow Kogan into the equivalent of an online department store.
    Kogan has plans to become department store

    Mr Kogan points out that the store currently sells over 30,000 product lines, and is expanding into areas such as fashion and outdoor goods. It is already trading strongly in small electrical goods, and has moved into sports equipment, power tools, manchester, and travel goods.

    In the interview Mr Kogan explains that the secret of Kogan's success is its sourcing methodology. Rather than being tied down to specific suppliers, Kogan is constantly searching out the best deal. That means goods purchased from one supplier one week, will move to a different supplier the next week, and yet another supplier in the week after.

    However, in areas such as small electrical appliances and power tools, Kogan has built up its own brands, and successfully marketed those online.
    Home Depot uses fuel cells in DFC
    Inside Home Depot's new DFC in Troy, Ohio
    Gas World
    The numbers behind the new distribution centre
    Home Depot explains its systems
    Click to visit the ITW website for move information
    Faced with the logistics problems of a huge warehouse space, The Home Depot has chosen to use materials handling vehicles that rely on fuel cells for power. These replace the more common lead-acid batteries at Home Depot's mammoth direct fulfillment centre (DFC) near Toledo, Ohio, which had its grand opening on 18 September 2015. This facility will make use of 172 fuel cells in total to service its 149,000 square metres of floor space.
    Replacing lead-acid

    Like lead-acid batteries, fuel cells produce no toxic outputs, only water and oxygen, making them ideal for operation in an enclosed space. Unlike lead-acid batteries, the fuel cells do not require lengthy recharging, and can instead be refuelled instantly with hydrogen. Their output is pure electricity, making it easy to integrate them into existing materials handling machinery, such as forklifts.

    Just as importantly, the use of fuel cells is very friendly to the environment. The fuel cells will help save the production of 800 tons of greenhouse gas CO2 emissions every year, as compared to the use of lead-acid batteries.
    Speed and efficiency

    That near-instant refuelling could prove crucial to the kind of rapid and smooth operations this DFC will need. The Ohio DFC has been designed to provide a boost to distribution of online orders.

    Unlike other forms of distribution centres (DCs), which are intermediate distribution centres and can typically schedule picking and packing with an eye to efficiency, DFCs are sending out goods directly to consumers. They need to get picked and packed very fast, as they usually operate under next-day delivery constraints.

    Home Depot's three DFCs will enable it to deliver 90% of online orders of regionally stocked parcel items at a maximum of two business days, using economical "ground delivery service".
    The distribution strategy for e-commerce at Home Depot

    The US-based Journal of Commerce provides a good overview:
    Article on Home Depot strategy at Journal of Commerce website

    Delivering rapid distribution services is important to Home Depot. The US-based home improvement retailer has, for the past two years, seen growth of online e-commerce as central to its business.

    The new DFC (along with two others) is seen as a key piece of infrastructure if the company is going to successfully scale this business. In its most recent quarter, Home Depot's online revenue was close to US$1.25 billion, and it continues to grow rapidly.
    Plug Power system

    Home Depot sourced its fuel cell system from Plug Power, an established supplier of fuel cells. The company has purchased the GenKey solution from Plug Power. This package consists of three bundled parts: the GenDrive fuel cell system, the GenFuel hydrogen refuelling system, and GenCare aftermarket support.

    GenDrive fuel cells are designed to fit easily into existing electric forklift, pallet jack and other material handling truck fleets, working as virtually a drop-in replacement for batteries.

    Plug Power lists a number of advantages of the fuel cells over batteries. The refuelling takes less than three minutes, compared to the 15 minutes it takes to replace/recharge a battery system. This leads to cost savings, not least because the business does not need to manage a fleet of batteries as well as a fleet of vehicles. Fuel cells also experience no loss of power during their operation.

    In the case of Home Depot, Plug Power helped Home Depot build a separate refuelling facility on the DFC site. The company looks after the sourcing and delivery of the hydrogen fuel.

    Plug Power is deploying its own skid for the facility. There are three components to the fuelling station: a cryogenic bulk storage tank, compression pumps, and gaseous storage tubes.
    Plug Power outdoor hydrogen pad

    GenCare provides a range of support services. These include training for the operators of materials handling vehicles, and an on-site technician from Plug Power to ensure the safe and proper functioning of the facility.
    Plug Power

    While this is a large installation, it is not the largest that Plug Power has helped to build. In 2014 it provided 270 fuel cell units for a turnkey Wal-Mart Stores operation in Pennsylvania. Its clients also include Volkswagen and US supermarket chain Kroger.

    The company has also announced plans to commence a joint venture with Hyundai Hysco in South Korea to secure manufacturing and distribution of the fuel cells throughout the Asian region.
    Brickworks reports 24% profit slump
    Brickworks made 675 million bricks in the year to July 31
    Fairfax Media
    The Gables residential development at Box Hill in Sydney's west
    Brickworks products used in a modern home extension
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    Brickworks managing director Lindsay Partridge has brushed off calls that home building in Australia has peaked, saying that while Western Australia is declining and Victoria will peak soon, Queensland and NSW will continue to lift.

    He said home builders in the major markets of Sydney and Melbourne had work in hand extending up to a year, and Brickworks is scrambling to supply the hot construction sector.

    In March the nation's biggest brick maker began restarting mothballed brick factories with stock on hand falling to just eight days at some plants.

    Brickworks made 675 million bricks in the year to July 31. Partridge said the company has capacity to produce another 50 million to 100 million bricks.

    Residential home building hit a record in 2014-15, with construction started on 214,700 new homes, up from 181,000 the previous year.

    Partridge believes demand is still robust and pointed out that at The Gables residential development at Box Hill in Sydney's west, there were more than 4000 registered interested buyers for 120 lots.

    There were still about 100,000 families waiting to buy somewhere to live, according to Partridge. He told Fairfax Media:
    There is a massive number of people who would love to buy a house. For every block of land that comes for sale there's at least 10 people in line to buy it ... the demand is a long way from being satisfied.
    Every other housing upturn has come to an end because of a credit squeeze and I don't think anyone anticipates a credit squeeze, so it can go on until we build out the demand.

    His comments come as Brickworks reported a 24% slump in full-year profit to $78.1 million. Excluding $49.5 million of impairments, Brickworks said its underlying profit for the 2014-15 year rose 18.8% to $120.3 million.

    Earnings in the building products business rose 25% to $56.4 million, and land and development earnings rose 3.1% to $64.4 million.

    Investment earnings - which come from Brickworks' 42.72% stake in listed investment group Washington H. Soul Pattinson - rose 22.9% to $54.8 million.
    Seasonal trend in grey pavers
    Boral's paver range attracted interest at the DesignBUILD exhibition in June
    The pavers featured in a landscaping project at Leighton Gardens in Moss Vale (NSW)
    Boral's pavers are benefiting from the housing boom but in a different way
    Click to visit the HBT website for more information
    According to Mark Dell, national sales and marketing manager of Boral Roofing & Masonry East, grey pavers were a popular choice in this year's House Rules TV show. He said:
    It establishes them as a must have for adding visual interest to residential outdoor designs. Ideal for a range of projects, the grey tones provide an appealing contrast to the earthy hues of timber decking or screening, as well as the greens and blues of surrounding garden and pool areas.

    Boral supplied Stoneworks Travertine in Bluestone to the recent series of House Rules on Channel Seven. Designed for those working with grey-based schemes, the Bluestone pavers are a bolder alternative to cream and beige tones for creating a sleek neutral look. Dell said:
    Renovation shows are inspiring more homeowners to take action and invest in improvements to outdoor areas. Adding a paved area is a quick, simple and cost-effective option for enhancing the functionality of gardens and creating different lifestyle zones.
    In addition to using pavers for pool surrounds and barbecue areas, homeowners are seeking creative ways to add practical new design elements, including paths, driveways and paved islands for pergolas. Paving is also an ideal solution for the time-conscious homeowner, as adding a paved area will reduce the size of the lawn and mowing required.

    Stoneworks Travertine pavers measure 500mm x 500mm and are available in standard and bullnose format, making them suitable for steps, paths, courtyards and pool-side applications.
    Another record year for Mitre 10 NZ
    Mitre 10 New Zealand is one of the country's "most loved" brands
    New Zealand Herald
    The Auckland real estate market has helped fuel demand for DIY goods
    Mitre 10 New Zealand is moving into new corporate headquarters
    Click to visit the ITW website for move information
    New Zealand hardware retail co-operative Mitre 10 has recorded the highest sales revenue figures in its 41-year history, after passing the billion-dollar barrier last year.

    The chain's revenue was NZ$1.13 billion in the year ended June 30 - up 8.7% on the previous year's NZ$1.04 billion.

    Sales from the 38 larger-format Mitre 10 Mega stores beat the average - up 9.3% on last year. Mitre 10 Mega stores now make up 80% of total revenue. Chief executive Neil Cowie believes it comes down to the customer appeal of its large stores. He told the New Zealand Herald:
    They're better stores. They're big with garden centres and trade and a bigger retail footprint offering a bigger range.

    Mitre 10's 64 retail members also got richer. Chairman Martin Dippie said member distributions rose 17.1%, from last year's NZ$57.3 million to NZ$67.2 million.

    Cowie attributed the financial performance of the chain to a combination of factors including a wider range of products and focus on customer service. He said:
    A lot of the growth over the 41 years is to do with what we've focused on. It was a small business when it started and Mega - 10 years ago - was embraced by our membership because we knew we had to change.
    Members are very entrepreneurial because they're owner-operators so they want to succeed.

    Two new stores will open this financial year - the first in Queenstown before Christmas is a replacement for an existing smaller store, with a new Mega opening in Christchurch in the middle of next year. That will take the chain up to 82 stores including 40 Mega stores.

    In terms of e-commerce, Cowie said:
    Online sales are very small at this stage but we don't say what it is. We have doubled the number of products online in the last 12 months and we now have almost 10,000 items online that can be purchased.
    But we have five to six out of 10 customers who go online before they go to a store. The space we're in is still very much about the experience.

    Cowie named the trade and garden sectors as standouts, along with paint and hardware. He also said the good summer had helped drive more business as customers focused on the outdoors.

    The cool winter has also helped in the latest financial year, with strong sales of heating equipment, particularly fireplaces.

    The group has 48 Hammer Hardware stores but the latest result does not include those figures because Cowie said they are a subsidiary business.
    Upcoming challenges

    Even as the Auckland real estate market helped fuel demand for DIY goods, the retail chain is bracing for headwinds as the Kiwi dollar weakens and economic growth slows. In a separate interview, Cowie told BusinessDesk:
    Economically things were pretty good for us last year ... Certainly high levels of home ownership, with seven out of 10 Kiwis owning their own homes - they tend to do maintenance, upkeep their homes, they tend to spend on their homes.

    Auckland's housing market where real estate prices have risen to record levels, have flowed through to the hardware retail group's sales, as punters look to spruce up their homes before a sale, while new owners look to change things, according to Cowie.

    Demand for new housing, driven by record immigration flows to Auckland, has also created a building boom in the city, and contributed to Mitre 10's increased revenue.

    Cowie said deteriorating consumer confidence, which rose from a three-year low this month but is still softer than last year, is something the hardware retailer was watching closely. Local firms have been gloomier about the economic outlook in recent months as a slump in global dairy prices threatens farm incomes, and prompted the New Zealand Reserve Bank to start cutting interest rates in June. Cowie said:
    Clearly there are headwinds coming. Migration is expected to ease, will that take pressure off capacity? I don't think so. We've still got the Auckland challenge for a while. Our unemployment rate is low, and interest rates are low, but certainly consumer confidence drives retail trends and it would appear that's trending down.

    Margins remained solid with stable costs, however the sharp decline in the New Zealand dollar would weigh on the chain's buying power. Cowie said:
    We've been pretty focused on margins and making sure we shore up our margins. The challenge of course going forward with the currency is that there will certainly be some inflationary pressures coming on retail in general, and I'm not just talking our business. However the flip side is the exporters are getting a little bit of relief, but there will be some pressure.
    Multitasking trimmer
    Rover's R2600 curved shaft line trimmer in action
    Many trimmers in Rover's range feature a curved shaft
    It can fit a number of attachments including the Rover power battery starter
    Click to visit the HBT website for more information
    The R2600 curved shaft line trimmer from Rover has been designed with a uniquely curved shaft which offers balance. It also provides a clearer view of the trimming area, for added safety.

    With a powerful 25cc, 2-stroke engine, Rover's spring assist starting technology and attachment capabilities, users will find the R2600 easy to get started.

    The Rover R2600's curved, two piece shaft can fit a variety of added attachments, including the Rover power battery starter, garden cultivator, lawn edger, articulated hedge trimmer, blower, pruning saw and brushcutter.

    The 43cm cutting path complements the bump head line release technology, which instantly releases pre-measured line, allowing for continuous and effortless operation.

    Backed by a 2-year engine and unit domestic warranty, Rover can provide peace of mind for the user.

    The Rover R2600 curved shaft line trimmer is being distributed through Masters stores only.
    HI Weekly No. 3: Market evolution
    Latest edition of HI Weekly
    HI Weekly
    EBIT and revenue at GWA
    Divisional sales at Kingfisher
    Click to visit the HBT website for more information
    HI Weekly packages up the weekly home improvement retail news in a single A4 PDF file that you can read online, download, or print-out and distribute.

    In this week's edition we follow up our previous article on segmentation with one that looks more closely at how segmentation may evolve in retail's future.

    We also carefully analyse the results of the GWA Group, an Australian company undertaking the painful evolution from home-grown manufacturer to international importer and distributor.

    Kingfisher, newly reformed by its dynamic CEO Vernonique Laury, has released its first half results for 2016. Ms Laury continues to refine and revise the company's strategy, and HNN examines how that is working.

    Plus new digital extras to tools from DeWalt and Techtronic Industries' Milwaukee Tool, our roundup of news about independents and big-box retailers, the HNN Index and general news.

    To access all this in a single PDF file, just click on the image or the link below.
    Latest edition of HI Weekly
    Home Improvement Weekly PDF - Issue No. 3
    SwannOne connected home suite
    SwannOne smart home gadgets are compatible with other IoT devices
    The Inquirer
    It is controlled through one app
    The SwannOne hub
    Click to visit the HBT website for more information
    Swann is taking on Samsung with the launch of its suite of SwannOne smart home gadgets that are compatible with hundreds of pre-existing Internet of Things (IoT) devices such as Philips' Hue and Nest's Thermostat.

    The SwannOne Wireless Smart Home Control Kit is controlled through one app and consists of several home security gadgets, including indoor and outdoor HD security cameras and sirens. They are all controlled via a key fob remote control with "home", "away" or "night" modes.

    The automated home system is powered by the SwannOne Smart Hub, which incorporates the latest wireless technologies that allow users to add devices via WiFi such as cameras, sensors and accessories to record and monitor what's happening at home.

    The unique feature of the SwannOne hub is that users don't have to purchase only Swann IoT products for it to function. It can work with existing IoT devices such as Nest thermostats and Hue light bulbs, all working through the Swann app so they don't have to switch from different applications on a smartphone. The company said in a statement:
    The connected homeowner can turn any appliance on or off with smart plugs based on the rules and schedules they create.
    For example, the electric heater can be turned on remotely so it's ready when the user gets home from work on a winter's day. There is also no need to worry if the iron is left on when leaving the house as it can be turned off remotely.

    Other features include built-in microphones that analyse sounds like breaking glass, baby cries and car alarms to alert the user. There is also a carbon monoxide detection feature, although Swann said that this won't be available at launch and will arrive next year.

    All elements of the kit can be bought separately including additional cameras, sensors, sirens and smart plugs.
    Cree's improved LED bulb
    The latest Cree LED has an improved longer lifetime
    The new Cree LED Bulb delivers 460 lumens for the 40-watt replacement
    Cree released a low-price LED bulb in late 2014
    Click to visit the HBT website for more information
    Cree says it has introduced a better LED bulb. It delivers better light with better performance, a longer life and more energy savings. Chief marketing officer, Betty Noonan said:
    We believe that better light changes everything, and the newest Cree LED Bulb reflects our commitment to never compromise on performance.

    The latest Cree LED bulb is built to provide true LED performance in colour quality, light output and dimming. It has an improved longer lifetime of over 27 years (30,000 hours), lasting as much as six times longer than other LED bulbs.

    Its proven 4Flow[tm] filament design ensures that it looks and lights like a traditional incandescent. The new bulb also provides consumers with a higher colour rendering index of 83 to better display colours, and an ENERGY STAR(r) compliant omnidirectional distribution for all-around light. It is fully dimmable with most standard dimmers and suitable for enclosed fixtures.

    The new Cree LED Bulb delivers 460 lumens for the 40-watt replacement and 815 lumens for the 60-watt replacement in soft white (2700K) and daylight (5000K) colour temperatures inside a durable, shatterproof housing. It consumes up to 85% less energy during its lifetime. (This is based on Cree LED Bulb 40-watt replacements at 6-watt, US$0.11 per kilowatt-hour, 30,000-hour lifetime and average usage of three hours per day.)

    It has achieved the trusted ENERGY STAR certification again by meeting all the relevant high performance requirements.
    Segmented, unsegmented market advantages
    Hitachi driver appeal map
    HNN Sources
    Ozito drill appeal map
    Toilet seat appeal map
    Give to Amnesty International
    HNN believes that over the next three to four years some areas of the home improvement market will tend towards segmentation.

    This will be driven in part by technology, as cohesive systems of devices, making use of Internet of Things (IoT) and other technologies, move customers more towards buying brands than single devices. Examples of this are cordless (battery-powered) tools and "connected home" systems.

    Another force driving segmentation will be an increase in the use of services (the "do it for me" development), coupled with the desire that these services produce a guaranteed and "safe" outcome.

    We've seen this spread in the US market, where Amazon and other companies are helping to brand and certify the services of what amount to individual trade businesses acting as sub-contractors. You don't contract a tradie to perform a widescreen TV installation, you add the installation as a service to the purchase of the TV.

    What we want to focus on here is a new and interesting force driving segmentation. This is the rise in the importance and influence of what we can call "end-market" segments.

    To get a better grip on these end-market segments, and understand why an unsegmented approach does not work as well with them, we need to first better understand unsegmented marketing itself, and why it has been such a success in Australia over the past ten years.
    The success of the unsegmented

    At HNN we began thinking seriously about unsegmented markets after listening to a rather forceful statement by the managing director of the Wesfarmers-owned Bunnings, John Gillam. At the Wesfarmers Strategy Day in May 2015, the well-known CitiBank retail analyst Craig Woolford was pressing Mr Gillam on Bunnings' approach to some segmented markets. Mr Gillam responded:
    The delineation down into micros is relevant I think if you are only selling toilets, or only selling lighting. But we are thinking of everything, we look at all the opportunities and every bay has something that is suitable for light commercial as well as households, and for this use or that use, entry-level, or a higher quality product.

    When Mr Woolford continued to press him on the issue, Mr Gillam extended his comments further:
    If you have any doubt about our ability to be commercially relevant I would encourage you to go ... to [the Bunnings store at] Alexandria at 6:30AM, and sit and watch for an hour, and consider if you ever want to ask that question again.
    That's the only thing I can say. We are not going to start breaking out market share, we never have. When we sat down with the ACCC to talk about Bunnings plus BBC we talked about the market by the same definitions we are talking about it now. It's how we think, it's how we believe, it's helped us make our decisions, it's how we drive our business.
    We've built competencies across direct marketing skills, across relationship marketing skills, and mass marketing skills that allow us to play across heavy and light and into consumer - and all three in any particular way. We are able to be a necessity or discretionary provider into consumer or into commercial. And that gives us plenty of ways to cut the cloth, trim the sails, whichever analogy you like, and find better outcomes in trading today and to position our business for growth.
    We have not allowed ourselves to fall for the trap of being too narrow in our thinking, by narrowing around a share of something - we think of everything. If we see someone using lots of a product we stock that we've never sold to them, we think 'Why aren't they buying that from us? What are we missing?' We find our way [to a solution]. Sometimes it is one little product, or just a connection - and you are away. It is a very exciting part of how we grow our business.
    Bunnings Strategy Day 2015 -HNN report

    That is very clear, very forceful, and virtually an anthem for the unsegmented approach to some markets. Marketing in this situation isn't really about persuading, it is about pure communication. The product itself needs to be so appealing, at such a good price point, that it sells itself. All it needs is that the communication about its availability is made clearly in a catalogue, an email, or through simple advertising.
    The Kingfisher approach

    To develop these ideas just one step further, we can take a look at the unsegmented strategy being used by UK-based European home improvement retailer Kingfisher.

    As Kingfisher goes forward with a process to narrow down the SKUs it carries, it divides products into one of three categories: Unique, core essential and complementary.

    Unique consists of products that need a degree of variety and customisation, such as bathroom storage, shower and bath fittings, basins, and so forth. Core essential products are those that have some variance, but which are largely the same everywhere, such as toilet seats and waterproofing bath sealant. Complementary products include things like bathroom accessories - soap dishes and so forth.

    These three categories are less about markets and market response, and much more about supply. The question that is being asked is: "How much commonality is there to these products?"

    If there is a great deal of commonality, as in a product such as a toilet seat, this means that Kingfisher can order at huge scale, and use that scale to drive the price way down - at the same time delivering itself a good margin.

    What does that low price do? First of all, the price itself actually unsegments the market. A customer has come in with the intention of buying an $80 toilet seat. But here is a toilet seat for under $20, which delivers 90% of what they want.

    This kind of purchase then has a flow-on effect. The customer has just saved $60, so why not find a better toilet roll holder, or a little shelf that can hold a flower vase? And if those items are also provided at low prices, DIY itself becomes more attractive, because the value proposition has improved.
    Comparing unsegmented and segmented approaches

    It is helpful to take a look at a slightly segmented and an unsegmented approach to a single product area.

    On one weekend in September 2015 both Bunnings and Masters Home Improvement had a special deal on low-end mitre circular saws. The Bunnings deal included one of its cheaper saws, along with a small, sturdy table mount. It retailed for $99.

    The Masters offer was quite similar, except that the saw was of better quality, and so was the mount offered with the saw. It provided a roller feeder mechanism, which would make handling longer planks of wood easier. This retailed for $198.

    Of the two offers, in terms of sheer value, it is likely the Masters offer was the better deal, and the one with the deeper discount. In terms of appeal, however, it is pretty certain that the Bunnings offer was the more appealing.

    The Masters offer was really segmented in two different ways. Firstly, though it offered more, it also had a narrower appeal. Not everyone has a need to handle longer planks of wood, and those who do so occasionally can rig up something to make it possible.

    Secondly, the pricing of the Masters offer would have the effect of making this more of a discretionary purchase than a necessity purchase.

    To summarise this: the disadvantage of market segmentation is that while a segmented offer can say "YES!" to some segments, it almost always is going to say "no" to others.

    An unsegmented offer is able to say "yes" to many segments, and "maybe" to most of the others. A segmented offer's success is judged by the intensity of the response from a narrow range of customers. An unsegmented offer's success is based on the breadth of its appeal.

    In most cases, an unsegmented offer is driven by cost/supply-chain potential. A segmented offer is usually driven by design/capability options.
    When segmentation does work

    There are, however, certain specific conditions where segmentation will tend to outperform an unsegmented approach. One of the most common, and a growing one in the Australian market, is where it is necessary to target one or the other extreme end of a market, its endpoints.

    To see how this works, we can refer to some diagrams. Figure 1 is an illustration of the width of appeal of something like a toilet seat. This is a basic household commodity, and it is almost completely unsegmented.
    Toilet seat appeal map

    Figure 2 is the appeal map for a surprisingly popular tool, the Hitachi 3.6V Cordless Driver Drill DB3DL2(HL) sold by Masters. This drill has over 100 reviews on the Masters website, and is rated at over four out of five stars.

    While it is a single function tool, that function (driving screws) is very common, and the tool is developed to not only make this easy to do, but to also accommodate a wide range of applications, from installing locks, to driving the fiddly, delicate screws a gunsmith uses.
    Hitachi driver appeal map

    Figure 3 is the appeal map for a tool that at first would seem to be very like the Hitachi driver in many regards, but actually is entirely different in appeal terms. The Ozito CDL-1200 drill driver is really a substitute tool - it is a "stand-in" for a fully-featured drill. It cleverly provides only the very core features of a cordless drill, and thus delivers just enough at a very good price.
    Ozito drill appeal map

    Figure 4 is a product that you will likely never see at a hardware store. It is a Certa branded 18-volt cordless circular saw, with a 136mm blade capable of cutting to a depth of 38mm, and 29mm at a 45 degree bevel. It does have lithium-ion batteries, but these are only 1.3 amp. It is sold directly from the Kogan website.
    Certa saw appeal map

    Generally speaking, it is a bit pathetic. However, the bare saw costs only $36 (including free shipping). One battery and a charger would cost an additional $45. You could instead buy a drill kit, with a drill, two batteries and a charger for $78, for a total cost of $113, though with shipping on the drill that becomes around $125.

    As the appeal map indicates, even light DIYers would likely find this a less than satisfactory tool. It would be incapable of cutting a 45 degree bevel in a dressed 2x4, for example.

    However, it is one that is popular with hobbyists and craft workers. That's because its function is not about cutting up large planks of wood, or doing any kind of cabinet work. It is really a very enabling tool for people who would struggle to, say, cut a plank of wood with a handsaw. As such it doesn't improve on or provide better performance. It makes new things possible.

    Where all the other products we have profiled appeal fairly strongly to at least three types of customers, this tool appeals to just one. This is because its market is at one end of the range of customers. It is an endpoint.

    As such, it really cannot be supported by unsegmented marketing. It would require a segmented approach that sought to extract maximum value from only this narrow market range. Without that approach, it simply would not earn the space it consumed in the shop display.
    Why does this matter?

    For many retailers today, the craft/hobby market does not really seem like that great a market to be in anyway. Typically it is a market of under-powered tools that are under-utilised and so have a low replacement turnover.

    However, if we look to the US, we can see that this is a strong and growing market there, and there is similar growth just starting in the UK market as well. A large number of blogs are devoted to the craft approach, which largely involves taking discarded furniture and finding unique ways to repurpose it. This area is just starting to break into dedicated US lifestyle TV channels in a big way this year.

    For the Australian market, HNN expects it will not have much influence during the 2015 Christmas season, but will have some influence by the end of 2016. It is likely to take off in 2017, and produce a strong market at that time.

    Perhaps more importantly, it is likely to act as a "gatekeeper" market. Through this kind of craft work, predominately women in families will build relationships with specific home improvement stores, and are likely to influence larger family purchases to take place at these stores.
    How will Australian retailers cope?

    The most likely way that Australian retailers will cope with an increase in segmented areas of the market is to develop a specific brand approach to segments. For example, where power tools today are largely sold unsegmented, offering a variety of price/quality/features/range-width, one specific brand of power tools may be offered that caters to the need of craft/hobbyist customers.

    Until next time,


    You can contact me directly via email or Twitter @HNN_Australia

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    HNN iPad App
    Big box update
    Details have been revealed about Bunnings' Gungahlin store
    HNN Sources
    Bunnings has unveiled 3D details of its new Toowoomba store
    Geraldton Homemaker Centre has been sold for $27.3 million
    Click to visit the ITW website for move information
    Bunnings discusses plans for its $59 million development at Gungahlin (ACT); Bunnings has provided images of what its new Toowoomba (QLD) store will look like; and Geraldton Homemaker Centre has been sold for $27.3 million.
    Bunnings ACT plans unveiled

    Bunnings general manager of property Andrew Marks provides details about the retailer's Gungahlin store. He revealed to Fairfax Media it wants to expand its Tuggeranong and Fyshwick stores and look for additional investment.

    According to Marks, space for other retail outlets have been incorporated into the design at Gungahlin but conceded "it is a lot of money". He said: "There's no doubt it's an expensive building, even from a Bunnings perspective."

    But it's not the biggest Bunnings in Australia, nor even the most expensive. He said: "It would be in the top percentile but it wouldn't necessarily be the most expensive. We've done some pretty big, multi-level projects in metropolitan Sydney where we're bigger again than this."

    Marks said the $59 million project at Gungahlin included land costs, the outlet and all its stock and fittings and another 5000sqm of retail space to be leased out to other tenants, likely to include large and small retail, food, community uses and government.

    The overall building is 23,000sqm and will see the retail areas developed under the Bunnings store, which is 17,000sqm. Marks said part of the urban design requirement was that it has a high-street style, retail shopfront on the Hibberson Street side. It created 12 or 14 tenancies which Bunnings will lease out to other parties.

    Marks said Bunnings would be lodging a development application "in the near future" to expand its Tuggeranong store by an extra 30% or 4000sqm at a cost of $8-10 million.

    The company is also keen to expand or replace its Fyshwick Bunnings, pending approvals and land sales. It would move the store a little further to land yet to be released near the Canberra Outlet Centre. He said: "There are also a couple of holes left on the western side of town where we're less represented and they're hard to get in over there but in time we'll plan to do something in that market."
    Bunnings Toowoomba uncovered

    Bunnings has disclosed details of how its store in Toowoomba's CBD will look once it opens at the site of the former foundry.

    The big box retailer recently held progress meetings with the Department of Transport and Main Roads and Toowoomba Regional Council. An interactive 3D-model walkthrough was presented showing major changes to Ruthven Street where the store is located.

    You can see at the 3D view of Bunnings' Toowoomba development here:
    3D view of Bunnings' Toowoomba store - The Chronicle

    Toowoomba Regional Council approved the $43 million development in April this year. Bunnings has not revealed when it plans to have the warehouse completed and trading.
    Geraldton Homemaker Centre sold

    Sentinel Property Group has acquired the Geraldton Homemaker Centre for $27.3 million. Retail properties account for more than 50% of Sentinel's assets under management, which is closing in on a total value of $1 billion.

    The property is the first located off the eastern states of Australia for Sentinel, which has a total portfolio of 35 retail, industrial, office and land assets in Queensland, New South Wales and Victoria. It is also the second asset for the newly-launched Sentinel Homemaker (Open Ended) Trust.

    Warren Ebert, Sentinel managing director, said Geraldton is a strategic hub and major seaport for the mid-west of WA and has enjoyed 14 years of consecutive population growth.
    HNN Index for week ended 18 September 2015
    HNN Home Improvement Index for week ending 18 September 2015
    HNN Sources
    Brambles has reaffirmed a plan to increase capital investment
    Breville recently reported slightly lower sales and earnings for the June year
    Click to visit the HBT website for more information
    After pulling out of its steep dive last week, this week the HNN Home Improvement Index climbed slightly. It rose 3 points to 937.5 points. Meanwhile the underlying ASX 200 index continued a recovery.

    On the adjusted index, it rose 18.5 points to reach 962 points. On the market, the ASX 200 climbed nearly 100 points to reach 5170.5 points.

    UGL managed to increase its share price by more than 5%, while Metcash fell by more than 5%.
    Construction union ordered to pay up to $9m to Boral over industrial dispute

    The Construction, Forestry, Mining and Energy Union has been ordered to pay up to $9 million in damages and legal costs to Boral following the union's boycott of the construction company. The Victorian Supreme Court also banned the CFMEU from stopping workers from using Boral products at any Victorian worksite, and from interfering in the supply of Boral's goods and services. The injunction lasts for three years.
    Construction union ordered to pay up to $9m to Boral - ABC
    Breville brings buying directors to the boil

    Breville recently reported slightly lower sales and earnings for the June year and the share price has returned to levels last seen in 2013. Five of the seven directors have taken the opportunity to increase their stakes, spending close to $1 million between them.
    Breville brings buying directors to the boil - Fairfax Media
    Brambles shares slip on market update

    Pallet maker and logistics giant Brambles has reaffirmed a plan to increase capital investment and maintained its soft earnings forecast from a month earlier. Brambles told an investment market briefing in California that it is anticipating organic growth investment of US$1.5 billion over next four years, with growth capital expenditure heavily weighted toward well-established businesses.
    Brambles shares slip on market update - Business Spectator
    CIMIC Group
    Thiess India chief executive exits CIMIC

    Construction group CIMIC has fired the head of its Thiess India business, Raman Srikanth, as its new management team tries to distance itself from corruption allegations. He is one of the most high-profile executives in CIMIC's international operations to leave the company since Spanish construction group ACS acquired Leighton Holdings in early 2014.
    Thiess India chief executive exits CIMIC - Fairfax Media
    Metcash launches grassroots campaign to fight Aldi incursion

    Grocery wholesaler Metcash has kicked off a grassroots campaign to defend the market share of IGA retailers in South Australia and Western Australia. Aldi is preparing to open two distribution centres and the first of as many as 120 stores in South Australia and Western Australia early next year.
    Metcash launches grassroots campaign to fight Aldi incursion - Fairfax Media
    Super Retail Group
    Super Retail Group CMO departs

    Super Retail Group's marketing leader, Kevin McAulay, has left the ASX-listed retailer and will not be directly replaced as the group undertakes a major reshuffle. The shared services marketing function is being decentralised, with many of the roles realigned to existing business teams and functions.
    Super Retail Group CMO departs - CMO Australia
    Goyder's boys bank bonuses

    Coles managing director John Durkan made $4.6 million in his first year in the role, eclipsing the pay of all other Wesfarmers divisional bosses except Bunnings' John Gillam. Mr Gillam's $4.8 million pay was 63% performance-related. He hit 93% of his bonus target.
    Goyder's boys bank bonuses - The West Australian
    Woolworths builds solar portfolio to 1.2MW

    Woolworths is quietly building up one of the biggest aggregate rooftop solar arrays in the country, with more than 1.2MW so far installed on 27 of its retail sites. The increased investment in rooftop solar has been noted by market analysts in recent months, notably with trade in renewable energy certificates held by the company.
    Woolworths builds solar portfolio to 1.2MW - Renew Economy
    Indie store update
    Performance of Bowens Timber & Hardware has been rated highly
    HNN Sources
    The Good Guys wins customer satisfaction award for the fifth year running
    Beecher Nursery promotes prices "cheaper" than Bunnings
    Click to visit the ITW website for move information
    Bowens Timber & Hardware has been singled out for its strong performance in Australia's Top 500 private companies; The Good Guys tops customer satisfaction awards for the fifth year running; a nursery owner promotes turf prices that are less than at Bunnings.
    Bowens rated highly

    A report in The Australian has highlighted the performance of Bowens Timber & Hardware. According to the article, Bowens' revenue increased by 18% to $282 million over the year. The company moved from 210 to 191 on the list of Australia's Top 500 private companies. The lift was helped by its strong performance in commercial construction that fuelled demand for its prefabricated wood products.

    It indicates the hardware and building supplies retailing sector is expected to have an annualised revenue growth of 2.3% over the next five years, boosted by upward trends in capital expenditure on private dwellings. However, IBISWorld warns that in the short-term retailers are likely to face decreased demand due to deterioration in consumer sentiment and household discretionary income.

    With competition among the major players expected to remain a crucial part of the industry's structure over the next five years, smaller hardware retailers could find it difficult to remain competitive.

    Bowens' listing shows the following details.

    Revenue: $282 million. Staff: 800. Industry: Basic material wholesaling. Managing director: John Bowen. Rated: 191.
    The Good Guys wins again

    The Good Guys has been named Australia's favourite electronics retailer by consumer research company Canstar Blue for the fifth year in a row.

    Respondents were asked to rate the electronics retailer they most recently visited across a range of criteria. The Good Guys scored a full five stars in all seven categories: overall satisfaction, value for money, price compared to others, point of sale service, product range, store layout and catalogue.

    The retailer was the only one to win five stars for overall satisfaction, ahead of Bing Lee (4), Harvey Norman (4), JB Hi-Fi (4) and Dick Smith (3).
    Cheap turf at Gladstone nursery

    Beecher Nursery owner, Tracey Hick recently took a public stand against what she describes as big business bully tactics. The Gladstone Observer reports that Facebook post she made back in June, promoting the turf available in her nursery, led to a stern warning from a supplier she shares with Bunnings.

    The post said her Sir Walter turf was available at $9.90 per square metre or $7.50 per strip; and that it was "cheaper than Bunnings".

    She claims she's within her rights to advertise that way - and the Office of Fair Trading doesn't disagree - but she says her turf supplier contacted her to deliver a warning about advertising that her prices were cheaper than the big box hardware retailer located close by.

    Both Bunnings and the supplier's head office have denied issuing any kind of warning. But Bunnings area manager Mark Ridge said the team at Gladstone Bunnings welcomed the "healthy competition" with the local nursery. He told the Observer: "The team at Gladstone is keen to see healthy competition continue in the area and is focused on ensuring the local community has access to the widest range of products at the lowest prices."
    Menards store spans multiple acres
    Menards has opened its largest store in Pierre, the capital of South Dakota
    Cap Journal
    The store - including parking lot space - is situated on 17.36 acres of property
    Menard Inc. paid US$43 million to buy the Southdale Shopping Center in Bloomington
    Click to visit the ITW website for move information
    Menards has opened its largest store in Pierre, the capital of South Dakota in the United States. By comparison, another store in Minnesota built in 2011, is 235,000 square feet. That is roughly five and a half acres.

    The Pierre store - including parking lot space - is situated on 17.36 acres of property.

    Menards, the third-largest home improvement chain in the US, has a presence in 14 states, according to Tom Boehde, the store's general manager.

    What makes Menards different from a Home Depot or a Lowes is that it carries more inventory - and not just in home improvement items. He said:
    We're your one-stop shop. We've a little bit of everything. Patio furniture. A small grocery department, plumbing, electrical - everything you're going to need.

    Boehde explained the layout of the Pierre store is different from other Menards stores because it has a rear mezzanine for storage. This is in addition to the front mezzanine, which will be used for seasonal items, such as Christmas trees.

    The front mezzanine is a feature in every Menards, Boehde said. A bridge connects the two mezzanines.
    Bloomington retail centre

    Menards parent company Menard Inc. also recently paid US$43 million cash to buy the Southdale Shopping Center in Bloomington. The 136,000-square-foot shopping centre was decimated by store closings in the recession and lost four of its five national retail anchor tenants, leaving only the 19,000-square-foot Michaels Arts & Crafts.

    The complex is now fully leased, with other tenants including Cost Plus World Market, Staples, Marshalls and Total Hockey.

    This isn't a typical acquisition for Menard, which usually buys and sells real estate in and around its home improvement stores. The retailer operates a nearby Menards store in Richfield. The store was built in 2013 to replace an older location.
    Hot links
    Adairs reported strong sales at its end-of-year results
    HNN Sources
    Herman Miller will open larger format stores
    Muji is renovating rundown apartment blocks in Japan
    Click to visit the HBT website for more information
    Housewares are delivering strong sales for retailers off the back of the housing boom; Lifestyle brand Muji collaborating with Japan's housing agency to makeover old apartments; Totem bin wins top design award; Furniture retailer Herman Miller plans bigger stores; and Roomba robot vacuum cleaner joins the smart home trend.

    For further information, simply click on the images provided.
    Housing boosts housewares sales

    Pacific Brands, owner of iconic Australian homeware label Sheridan, and home retailer Adairs both reported strong sales in their end-of-year results. Retail analysts believe the popularity of renovation shows like The Block and thriving home decoration communities on blogs and social media are also boosting sales.
    Pacific Brands, owner of Sheridan, reported strong results
    Design award for Totem bin

    Kitchenware supplier Joseph Joseph's innovative waste and recycling bin, Totem, has taken a top award at the Maison & Objet homewares fair in Paris recently. Totem has a unique range of waste separation and recycling units occupying the same space as a conventional kitchen bin. It offers more functions without compromising on capacity.
    The Totem bin wins top design award
    Larger stores for Herman Miller

    Furniture maker Herman Miller is planning to close some small format stores as leases expire and replace them with larger format stores. The change will translate into a net increase of about 55,000-square-feet for fiscal year 2016. It plans to open six new larger format studios by the end of 2016, the first two planned for next month in Scottsdale, Arizona and Berkeley, California.
    Herman Miller is planning larger stores
    Muji reno collaboration

    Japanese lifestyle retailer Muji is working with the country's housing agency and turning rundown apartment blocks from poky, multi-room flats into open-plan studios. The renovations market in DIY-shy Japan is still small, but Muji is one of several household names pushing to make it mainstream.
    Muji renovating rundown apartment blocks in Japan
    New, upgraded Roomba

    The Roomba 980 vacuum cleaning robot is the first model to use visual localisation and adaptive navigation together. It can be controlled from a mobile app over WiFi and it has an improved ability to suck dirt off floors. The cleaning robot uses a variety of sensors and a low-resolution camera to build its geographic map.
    Roomba 980 vacuum cleaning robot
    Taubmans' Endure gets new TVC
    Taubmans has a new TV commercial for its Endure brand
    The TVC shows items bouncing off the walls
    Taubmans' Endure is the company's flagship premium paint brand
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    Taubmans has a new TV commercial from Naked Communications that shows items bouncing off the walls.

    The TVC is for Taubmans' Endure, the company's flagship premium paint brand. The commercial, which shows potential damage to painted walls being turned into a colourful patterns of confetti and confectionery, is in in keeping with Taubman's "Let's Go Paint" brand positioning that was launched this year. Naked Sydney creative director Jon Burden said:
    Paint itself is so full of colour and energy. We wanted to capture some of that energy and actually bring the stain resistant properties of Taubmans Endure to life.
    Rather than just another 'stain goes on the wall, wipe stain off the wall' spot, there's a little of the fantastic and the playful here. With the surprising soundtrack and some nice technical effects, we'd like to think it does the product justice.

    Architectural Coatings ANZ marketing director Nadine Miller-Vachon said:
    The Taubmans brand was re-launched earlier this year through the 'Let's Go Paint' TV campaign over Easter.
    Our goal is to make people feel less daunted about painting their homes and convey the message that it doesn't have to be a chore, but instead can be an activity that anyone can do, no matter what age or experience level.
    Our focus is to communicate the paint's superiority in a fun and unique way that inspires Australians to pick up a paint brush and say 'let's go paint with Taubmans Endure'.

    You can view the new commercial here:

    Kingfisher results 2015-16 first half
    Kingfisher results FY 2015/16 first half
    Kingfisher divisional sales revenue 2015/16 H1
    French DIY market statistics
    Click to visit the ITW website for move information
    UK-based European big box retailer Kingfisher has released its results for the first half of its FY 2015/16.

    Reporting accurately on home improvement companies has become difficult in calendar 2015, due both to restructuring operations, and currency fluctuations. Kingfisher has been subject to both these influences.

    The figures in the table below reflect results including the currency fluctuations, except for the store-on-store comparison, which utilised constant currency. Details of the performance results for individual divisions are given below in constant currency terms.
    Kingfisher results FY 2015/16 first half
    Overall results

    In more comparative terms, using constant currency figures, group sales grew by 3.5% to reach GBP 5.4 billion compared to the previous corresponding period (pcp), while retail profits grew by 5% to reach GBP 410 million. Profit before tax when adjusted fell by 2.3% to reach GBP 384 million. Adjusted earnings per share were flat for the half, at 12.3 pence.

    Non-operational gains included revenue of GBP 143 million from the sale of a 70% stake in B&Q China. A further GBP 17 million was gained from the sale of some property.
    Country results

    Overall, Kingfisher in the UK and Ireland did well, but the company struggled in France.
    Kingfisher divisional sales revenue 2015/16 H1
    UK & Ireland operations

    In the UK and Ireland sales were GBP 2527 million up by 4.5% in direct terms, and 4.6% in constant currency terms. Like-for-like sales grew by 3.3% in constant currency terms.

    The star of these operations was once again the Screwfix operation, which reported sales of GBP 494 million, up 27.9% in direct and constant currency terms. Screwfix added a further 17 outlets added during the half, moving the total number of outlets up to 412, with a total sales area of 26,000 square metres. The company believes there is potential for a total of 600 outlets.

    For B&Q sales rose by 0.2% in constant currency terms to hit GBP 2033 million, with like-for-like sales rising by 0.7%. Sales of outdoor, seasonal and building products fell by 2.3% over the pcp, while indoor products rose by 3.6%.

    Profit for this region came in at GBP 120 million up by over 21% on the pcp.
    French operations

    Castorama reported sales of GBP 1095 million in direct terms, down by 11.2% on the pcp, but in constant currency terms recorded a bump of 0.1%. Like-for-like sales rose by 0.2% in constant currency terms, with outdoor seasonal products increasing sales revenue by 3%.

    Brico Depot reported sales of GBP 881 million, down 9.3% on the pcp in direct terms, but up by 2.4% in constant currency terms. This company has been heavily affected by a slow house-building market.

    Profit for France was GBP 167 million, down 16.4% in actual terms, and 5.7% in constant currency terms.
    Other international

    Poland, which is the main contributor to this region, reported sales of GBP 508 million, down by 8.2% on the pcp in actual terms, but up by 2.3% in constant currency terms. Profit for Poland came in at GBP 53 million, down 2.5% in actual terms, but up 8.7% in constant currency terms.

    For the overall region sales were GBP 879 million, down by 10.3% in actual terms, but up 5.7% in constant currency terms. Retail profit was GBP 49 million, down by 8.5% in actual terms, but up 3% in constant currency terms. Like-for-like sales increased by 2% in constant currency terms.

    In general terms, the management team at Kingfisher has provided an update on progress on the objectives outlined in March 2015, particularly those that relate to eliminating SKUs that create complexity and do not sell well.

    Kingfisher CEO Veronique Laury also outlined some of the team's developing ideas about the shape of retail at the company. Describing the big-box store, she said:
    We [are] precise in what it means for us. It's best practice. It's not about developing the store of the future. We will do that along with developing our digital strategy, but that's not what we are doing in that first sharp initiative. It's really about taking the good things that we are already doing within the organisation and putting them all together within one store. And we will have several stores across the different geographies.

    Ms Laury identified some elements of the company's product and stock strategy. The difficulty it is facing at the moment is that, in part due to its geographic spread, many product ranges have a vast number of SKUs. The goal is to reduce this as much as possible, while still maintaining the required diversity both to cope with regional needs, and to meet different regulations.

    In the unified group of products that will result from this simplification, Ms Laury stated that there would be three groups of products: Unique, core essential, and complementary.

    To illustrate these different categories, Ms Laury used the example of a bathroom.
    What will be unique in bathroom? For instance, bathroom furniture, we can develop programs on how you can [store] all the stuff in your bathroom. And we've learnt - of course, Arja [Arja Taaveniku Kingfisher's chief offer & supply chain officer] will be very pleased to answer all the questions about that later on, but we've already done a lot of market surveys and we know a lot about how people are living in their bathroom and what they need.
    So we will develop a completely new set of bathroom furniture and everything around water in the bathroom as well: shower, bath, basin. All of that can be very different from what it is today. This will be the unique part of bathroom.

    Ms Laury went on to explain what would fall into the core essential category in the bathroom.
    Core essential, what does that mean? Two examples, not very glamorous. Toilet seats. I don't think we will be creating any revolution or innovation in toilet seats, but we need it. People are buying a lot, I can tell you. The volume that we sell is just completely crazy. But we want - and we will buy those toilet seats together and we can definitely have the same toilet seat across our operating companies.
    Bath sealant for instance, this is core essential for home improvement. Everybody has got that and needs that, even if you are not a very heavy home improver. And of course, we can buy those products together.

    Finally, Ms Laury described what was complementary:
    Complementary, what it will be in the bathroom example, for instance, is bathroom accessories. We won't create any big innovation and we won't be spending a lot of time because it's not the heart and the core. But of course, you need bathroom accessories. It's not a core essential either. So we will be working on it. And again, it can be unified.

    This core product strategy will then be the driver behind three initiatives, Ms Laury explained. The first one has to do with using scale in the best possible way. By narrowing the range of SKUs, and applying this across the retail organisation at scale, buying power becomes concentrated. As Ms Laury put it:
    First this is very big. It's - the core essential products are one-third of our buying scale. Just as a reminder, our buying scale is GBP 6.9 billion. It's one-third. So it's a lot of products that we can work on.

    The second result of this will be an improved result for the customer:
    It's about getting a better offer for customers. This is really - we never forget that, and it's really the headline. Why will it be better? Because it will be simpler, it will clearer, and it will be cheaper.

    In turn, these changes will alter the relationship with suppliers:
    And the third element, the third very big thing about that, that it's a completely new way of working with suppliers, of course. Arja's team has already worked on the principle of that ... but I'm hearing that we will have less suppliers. Of course, we will. We have 6,000 suppliers across Kingfisher today but of course, we will be sourcing every product in more than one supplier; and we've already decided, as an example, that we will be buying at least in two currencies to minimise the FX effect.

    Ms Laury then went on to explain where Kingfisher is in this process, and the kinds of results the company is seeing:
    So let's look at the first result of that. So what we call that first wave was about 20 categories ... It represents 10% of our buying scale to date. We've completed from a range perspective 11 of those categories. We are actually on those categories in the process of tendering, and we don't yet have the results of those tenders, which will prevent me to answer the question about how you will save. We don't know yet. But what we know is what it does in terms of ranging.
    So two examples. Batteries, we had more than 300 batteries across the different operating companies, and we had up to 13 ranges, ranges in certain operating companies ... We will have 36 SKUs for the common range, for the unified range, and we will have up to max four levels of ranges within our format.
    Light bulbs, another example. We had almost 3,000 SKUs in light bulbs and we had 63 suppliers. Where we are moving to is we will have less than 500 SKUs, including local SKUs ... We are in negotiation with 20 suppliers and we are targeting today six suppliers.
    Those products will be available in store in 2016. That's the important thing. The important thing is the pace at which we've been doing that. And the reality of it, it is real. It will be there in store for the customer next year.
    What is important as well is the first results. We have 90% on the 11 categories that we've already done. We have 91%, to be very precise, which will be common, and we will have 10% which will be local.

    Perhaps the most interesting element of the transformation that is taking place at Kingfisher is the angle of approach that Ms Laury and her team are taking. It is a very modern approach because there is very little overt attention being paid to tools and DIY products, but a lot of attention being paid to the house, the home, the rooms in the house, the manner of living of the customers.
    Mitre 10 NZ adds to executive team
    Mitre 10 New Zealand has named two new appointees to its executive team
    Scoop NZ
    Matthew Washington was formerly the CFO at Pumpkin Patch NZ
    Derek Heard was the country manager at Tasman Insulation
    Visit the Mecca Website
    New Zealand home improvement retailer Mitre 10 has named two new executives to its leadership team.

    The hardware co-operative has appointed Matthew Washington as chief financial officer and Derek Heard to the role of general manager - trade. Mitre 10 CEO Neil Cowie said both appointees bring a substantial depth of knowledge and experience into the company.
    These appointments follow a comprehensive search of the marketplace in New Zealand and we are delighted with the experience Matthew and Derek will bring to the table.

    Washington's career spans 27 years and covers a range of roles in New Zealand and overseas in industries spanning professional services, building products and retail. Most recently, he served as the chief financial officer for Pumpkin Patch for 14 years, and previously spent time as a senior manager at Fletcher Wood Panels and Ernst & Young. Cowie said:
    Matthew brings a deep understanding of retail as well as excellent financial acumen and governance experience to help us take Mitre 10 forward.
    Matthew Washington, newly appointed CFO at Mitre 10 New Zealand

    Heard, as the new general manager - trade, is also expected to bring a high degree of experience, with nearly 25 years of experience in several construction sectors under his belt. He most recently served as New Zealand country manager for Tasman Insulation. He has also worked in various management roles within PlaceMakers.
    Derek Heard, general manager - trade, Mitre 10 New Zealand
    Home Depot & Lowe's present at Goldman Sachs
    Goldman Sachs 22nd Annual Global Retailing Conference
    Seeking Alpha
    Craig Menear, CEO of The Home Depot
    Mike McDermott, chief merchandising officer at Lowe's
    Click to visit the ITW website for move information
    The two largest US big box home improvement retailers, The Home Depot and Lowe's Home Improvement, spoke at the Goldman Sachs Annual Retailing Conference in early September 2015.

    The CEO of Home Depot, Craig Menear, and the company's chief financial officer, Carol Tome, provided some details of Home Depot's ongoing progress. Lowe's was represented by Robert F. Hull Jr., chief financial officer, and Michael P. McDermott, chief merchandising officer. A number of common themes emerged during the sessions.
    The professional (tradie) market

    Both companies see the Pro market as a major growth opportunity. From Lowe's, Mr McDermott pointed to four main concerns it tried to answer with its Pro offering:
  • The right brands
  • A wide range of products
  • Depth of inventory
  • Localisation of products

  • The end goal, according to Mr McDermott, is to make the Pro customer's business work better, making it easy for them to find and purchase products, and providing products which deliver great results for Pros and their customers.

    In looking at the Pro market, Mr Menear of Home Depot focused on his company's recent acquisition of Interline, which is a company that specialises in maintenance, repair and operations (MRO) products for businesses. The acquisition has boosted Home Depot's external sales force from several hundred to closer to 2000.
    Online for Pros

    Mr McDermott described how Lowe's has relaunched its "Lowe's for Pros" online offering. He said it had moved from being an informational offering, to a transactional-based service. It provides a range of services, which include:
  • Building requisitions
  • Purchase history
  • Billing

  • The service also makes it possible for Pro users to create their own catalogues, which they can use as a marketing tool to obtain more customers.

    Asked about market resistance, and whether Pro customers were asking for mobile online services, or being pushed into them, Mr McDermott responded:
    I would say it's about a little bit of a push and a little bit of a pull. But Pros are getting more and more sophisticated every day and frankly they need tools to drive efficiency, productivity and profitability just like any business ... We certainly see a relatively slow ramp to a tool like this. We're committed to serving the Pro in the long run. I think this is a tool that will improve loyalty and sales for us with that customer.

    Asked whether Lowe's had any plans to create a loyalty offering that went beyond stock discount and credit facilities, Mr McDermott replied:
    Well I think we've got a variety of credit related tools from a proprietary perspective and certainly that's a critical element of a Pro being able to satisfy their customers and do their job so we'll continue to look for creativity and innovation in that space. But I feel good about the credit tools we have in place to serve their needs.

    Mr Menear of Home Depot had some similar reservations about the speed with which online offerings would be adopted by the Pro customer:
    The pro is coming along in the e-commerce space, maybe not quite as fast as the general population is, but clearly things that they have said are, for example, 'Show me the ability to see the inventory for my entire job'. We have done that. We have gone out, we have created that as part of our app or on our web for the pro. And clearly it's a capability that they are looking for.
    Online e-commerce

    The analyst who acted as host for the company executives, Matthew Fassler of Goldman Sachs, asked both Home Depot and Lowe's the same basic question about home improvement:
    I got a note from an entrepreneur recently, someone who knows a bit about the home sector and said, in essence, home improvement has been insulated. There is lot of friction in the shopping experience, both goods and services. Any time that happens, the internet disintermediates, price transparency comes in and the world changes a lot ... What are the vulnerabilities, if any, in the market?

    Mr Menear of Home Depot replied:
    So I think I would agree with the statement that there is friction and there is no question that in our business, for example, we grew up obviously in a brick-and-mortar space and now we are layering in on top the digital impact. But having said that, I think it's something that we have been focused on for a while in terms of how do we actually disrupt ourselves.

    Mr McDermott of Lowe's responded by saying:
    I believe our competitive advantage is in our ability to focus on and deliver as the project authority for the home improvement consumer. Our journey to omnichannel has taught us that we need to engage whenever and wherever the consumer wants to engage with us.
    One of the other advantages from an Internet advancement perspective is our ability to see very clearly into the competitive marketplace. We leverage those learnings to make sure that every day we're as competitive as we need to be and that we're optimising our opportunities in a variety of products categories.

    Asked about the product areas that he saw as developing in the coming years, Mr Menear of Home Depot nominated lithium-ion battery powered tools, especially for outdoor equipment, LED lighting and ceramic as a replacement for materials such as porcelain.

    As The Home Depot has attributed much of its recent sales growth to a recovery in house prices (making spending on the home more of an investment), Mr Menear was asked whether he was seeing a buying trend followed from this. He related much of the change in sales patterns to the purchases of first home buyers.
    First time homebuyers come in to a home and they begin to personalise it ... And so that can take the form of projects like painting or projects like outdoor landscaping and so on.

    He also agreed with Mr Fassler that this market had not been as active as expected.

    Mr McDermott of Lowe's likewise sees the market as having quite a way to go before it reaches the peak seen in 2007. He characterised the current market conditions as "turbulent", and said Lowe's had been positioning itself carefully in that market.
    We're showing consumers products in a different way today than we did even a year ago. We're helping them visualise these purchases, not just as a single replacement appliance but as appliances in the form of a suite. In the form of the vignette [Lowe's in-store display] including cabinets and countertops.
    So we're leveraging our space, our customer experience, and our associates all across the enterprise ... We're seeing positive mix within those categories, so consumers are very positively responding to new innovation, improved quality, new finishes, new features and benefits as they move up to higher price points to deliver better products to their home.

    HNN would like to thank financial analysis website Seeking Alpha for making the transcript for Home Depot at the conference available for republication. It's a very generous contribution to improving the quality of company reporting on the internet.

    To read the complete transcript of the Home Depot conversation please follow the link below:
    Home Depot at Goldman Sachs Conference 2015 - Seeking Alpha

    (Transcription of the Lowe's conversation by HNN.)
    Rapid charger gives 40% faster recharge
    Milwaukee Tool's rapid recharging unit will charge its M1 or M1 battery up to 40% faster
    Milwaukee Tool
    The charger features REDLINK Intelligence hardware and software
    The charger indicates an 80% state of charge by a slow, green flashing light
    Click to visit the HBT website for more information
    Milwaukee Tool says its latest rapid recharging unit will charge its M1 or M1 battery up to 40% faster than standard chargers. Christian Coulis, vice-president of product marketing said:
    With the rapid expansion of the M18 and M12 systems, there is a growing demand to not only charge both platforms, but do so faster and more productively. While the M18 & M12 Rapid Charge Station is successful, some users do not require the ability to charge three packs at a time and prefer a smaller charger they can throw into their cases or contractor bag. This charger will give users the ability to accelerate the pace of a single battery charge to minimise downtime and get back to work quickly.

    Featuring REDLINK[tm] Intelligence hardware and software, the company said the station is equipped with the most advanced electronic system on the market. REDLINK monitors the health of the battery packs, protecting against over charge and over discharge.

    Each pack has a unique charging profile, optimising its speed and life. The charger also indicates an 80% state of charge by a slow, green flashing light. Rather than waiting until the pack is fully charged, this allows users to pull a battery off of the charger sooner and have the confidence that they can still complete a significant amount of work.

    When compared to existing units that charge (1) M18[tm] REDLITHIUM[tm] XC5.0 Battery in 110 minutes, the new charger has the power to charge the same battery in under an hour.
    Women dominate Kingfisher's management team
    Four out of seven of the executive board at Kingfisher are now women
    Retail Week
    Kingfisher chief executive Veronique Laury
    The proportion of women on its seven-strong leadership team is over 50%
    Visit the Mecca Website
    B&Q owner Kingfisher has hired Emily Lawson as its chief people officer to complete its seven person leadership team. Lawson was formerly a director at UK supermarket chain Morrisons.

    Lawson will join the business in October and her appointment means four out of seven of the executive board at the home improvement group are women.

    Her appointment completes the top team put together by Kingfisher chief executive Veronique Laury.

    The other people on the board include chief financial officer Karen Witts, chief offer and supply chain officer Arja Taaveniku, omnichannel operations director and chief digital and IT officer Steve Willett, big-box operations director Guy Colleau and medium box ops director Alain Souillard. Laury said:
    Women account for around half our customers and make about three quarters of home improvement decisions, and we recognise the importance of building a pipeline of management talent to reflect that trend.
    I am therefore pleased to note that Emily's appointment brings the proportion of women on our seven-strong leadership team to over 50%. Our leadership team is now complete and we are continuing to develop our detailed plans at pace."

    Lawson was previously group HR director at Morrisons and a partner at McKinsey where she held various roles including leading the Human Capital Practice.

    She left Morrisons in June, two years after joining the grocer. She was the eighth senior manager to leave Morrisons executive board since new chief executive David Potts took over the embattled supermarket earlier this year.

    At management consultancy McKinsey, she worked across sectors including pharmaceuticals, telecoms, banking and energy and focused on transformation programs.

    Lawson was responsible for McKinsey's work on people management and was also tasked with delivering leadership and operational performance improvement, along with diversity and cultural change programs. Laury added:
    Her breadth of previous experience is ideally suited to the 'One' Kingfisher plan to create a single, unified company where customer needs come first. I have no doubt she is the right person to help us translate this goal into a reality.
    Children's eco-friendly paint kit
    The Children's Earth Paint Kit is made up of natural ingredients
    The coloured powders can be easily mixed with water
    Young artists can paint bright masterpieces using safe ingredients
    Click to visit the HBT website for more information
    The Children's Earth Paint Kit is made up of pure, natural mineral pigments and organic milk proteins. It was developed by US-based visual artist and mother Leah Fanning Mebane which led her to start her business, Natural Earth Paint.

    The kit contains six richly coloured powders that can be mixed with water in a 1:1 ratio. This creates a thick, tempera-like paint. If it is watered down a little more, it can create light water colours instead.

    Young artists can explore their creativity and paint bright masterpieces without parents worrying about the effects of the paint on their skin, or when they (perhaps inevitably) decide to see what "blue" tastes like.

    By mixing just as much as needed for each art session, users never run the risk of the paint drying out or being wasted. Natural Earth Paint also skips the plastic containers in favour of packaging its products in post-consumer recycled paper, biodegradable plastic bags, and recyclable glass bottles.

    And beyond encouraging eco-friendly artistic masterpieces by pint-sized Picassos, Natural Earth Paint strives to colour the world a little greener by planting one native tree sapling in its home state of Southern Oregon, USA with each item purchased.
    HNN Index for week ended 11 September 2015
    HNN Home Improvement Index for week ended 11 September 2015
    HNN Sources
    Stockland invests in the Newstead Towers in Brisbane
    The ACCC is interested in a proposed takeover of nine Supabarn stores
    Click to visit the HBT website for more information
    The HNN Home Improvement Index for the week ended 11 September 2015 recovered slightly after the previous week's steep decline, closing up nine points at 934.47.

    The underlying ASX 200 Index also climbed, though not as sharply. It closed at 5071.1, up nearly 30 points. On the adjusted scale it closed at 943.5, up 5.7 points.

    No stocks lost more than 5% of their value. High performance stocks included UGL which closed up by 7.4%, Pact Group Holdings which rose by 6%, and Boral which lifted by 5%.
    CIMIC Group
    CIMIC's cut-price bids edging out competitors

    The restructuring of CIMIC, the construction group formerly known as Leighton Holdings, is paying off for its Spanish owners 18 months after it was acquired, as the company wins a series of big transportation contracts including the design and build of a new tunnel for Sydney's M5 motorway. However competitors on projects claim the company is winning with cheaper bids.
    CIMIC's cut-price bids edging out competitors on transportation contracts - Fairfax Media
    Magellan sounds death knell for Metcash, gives succour to Woolworths

    Leading fund manager Hamish Douglass says the Australian grocery industry will remain profitable enough to support three major players but wholesaler Metcash could disappear entirely within 10 years and Woolworths should consider ditching Masters and BIG W.
    Magellan sounds death knell for Metcash - Fairfax Media
    Stockland Group
    Stockland partners with Metro for Brisbane apartment exposure

    Diversified property group Stockland has made a small but significant investment in the private Metro Property Development's Newstead Towers in Brisbane and is preparing a similar backing for Metro's Brisbane Casino Towers project. Stockland's investments, which will be worth more than $40 million, are part of its strategy to increase its exposure to higher-density residential property.
    Stockland partners with Metro for Brisbane apartment exposure - Fairfax Media
    ACCC wary of Coles' Supabarn takeover

    A proposed takeover of nine Supabarn stores by Coles in NSW and the ACT has piqued the interest of the Australian Competition and Consumer Commission, which says it has found potential concerns about limited competition. It said it has received around 60 submissions from consumers about the proposed acquisition, and has asked for further comment to help it assess the risks the takeover poses to competition.
    ACCC wary of Coles' Supabarn takeover - Business Spectator
    Westfield Warringah Mall gets $310m facelift

    The Westfield Warringah Mall shopping centre in Sydney's northern beaches is set to get a $310 million facelift. It will include a new two-storey mall parallel mall, the addition of about 70 stores and a new reconfigured, smaller, Myer department store. The remainder of the Myer space will be let to international and local fashion outlets as well as retailers of electronic devices and tablets.
    Westfield Warringah Mall gets $310m facelift - Fairfax Media
    Masters Home Improvement, the road trip
    The "Masters 2.0" appliance display
    HNN Sources
    The "Masters 2.0" centre tool display
    Bunnings is no slouch when it comes to displays either
    Give to Amnesty International
    This past Saturday evening found the usually lively crew at HNN mildly yet persistently depressed.

    We had set off on Saturday morning on a "road trip". Our task: to visit nine Masters Home Improvement stores in and around Melbourne and its environs over two days. Our purpose: to find out, through "boots on the ground" observation, what really is going on with the Woolworths-owned big-box home improvement chain.

    Our motivation would be clear to anyone who has been following this story. Ever since the announcement of Woolworths' recent troubles - highlighted by a loss of $245 million during FY 2014/15 at Masters - and the resultant resignations of the company's CEO and chairman of the board, the fate of Masters has been a much-discussed topic.

    Many financial analysts, such as David Errington at Merrill Lynch, as well as fund managers, such as Hamish Douglass of Magellan Financial Group, have openly called for Woolworths to shut Masters down as soon as it can.

    It is a distraction, they say, and a waste of money. Most significantly, in their opinion it simply can't compete with the home improvement industry behemoth, the Wesfarmers-owned Bunnings, run by its managing director John Gillam at the head of an able management team.

    In the end all this speculation about Masters comes down to this one, single issue: can the Masters stores become effective and compete directly with Bunnings?

    You can't answer that question sitting at a desk looking at spreadsheets. You need to get out there, see what is happening in a number of stores, and draw your conclusions from that.

    So, the road trip. It began with this sense of depression and concern over the fate of Masters. It ended, however, with a strong sense that the managing director for home improvement at Woolworths, Matt Tyson, is on the right track, and that Masters might deserve more of a future than the analysts suggest.
    The bad news

    The first day of our road trip took us on a loop from Melbourne's inner suburbs out East then down South, covering an area of rapid expansion and housing growth over the past six years. We stopped at six Masters stores in operation, and one (at Cranbourne) which will open soon.

    We also stopped in to assess any Bunnings stores that were located close to the Masters stores, to do a comparison.

    As the morning wore on into early afternoon, and we went into store after store to assess layout, design, product lines, product display, store presentation, staff, traffic and customer response, we found the mood in the car getting increasingly sombre.

    In general terms we had found most of the Masters stores we visited to be underwhelming, and some to be quite disappointing. There weren't (with maybe one exception) any "bad" stores as such, but we really didn't find anything breathtaking, either. In particular, we kept running into little "innovations" that Masters had added, many of which just didn't really work.

    For example, Masters at many stores had installed a display area for doors that extended over two levels. A door style would be shown at ground level, then another door was positioned on the racking immediately above it. This just seems odd.
    Sketch of door display at Masters

    A number of displays, in fact, tried to make use of the height of the Masters warehouse stores to display goods. For example, this display of wood flooring:
    High set display of wood flooring at Masters

    Unless you are around two metres tall, trying to get a good idea of how that flooring looks is very difficult.

    Another not-so-good innovation was the use of "fake walls" in a free-standing display to showcase windows and doors.
    Freestanding door display

    It looks like it should work, but somehow it just doesn't really. That is particularly the case when, as one store did, the display was left marked and dirty - along with a wrapped pallet and a stocking ladder left parked there during the day.
    Store display with "authentic" stocking pallet look
    Bathroom and kitchen displays

    The same "looks like it should work, but it doesn't" effect also applies to the use of bathroom settings. Where the idea of these settings seems to have been to create "vignettes" (to use the US-based retailer Lowe's Home Improvement term), scenes that look a little like actual rooms, the effect tends more to being some floor stock with fake walls around it.
    Masters bathroom display

    While in general the kitchen displays at Masters are among their better features, there are some of these displays that end up looking cheap. The HNN team spent something like 20 minutes in one store, trying to work out what was wrong to achieve this effect, but we're still not sure.
    Somehow this kitchen looks cheap

    There is a similar problem with the conference areas available for people considering a kitchen installation. When you bear in mind that frequently this means spending over $15,000, something better than an open table might be called for.
    Kitchen conference area

    Finally, while it is always great to see retailers experimenting with new products, sometimes the poor display of such a product can end up making this a negative move. At one of the Masters more ex-urban, regional stores, they evidently are experimenting with the sale of microwave ovens - which is a great idea. It could be done a little better, however.
    Microwaves on display at Masters

    This is how IKEA displays its microwaves for sale:
    IKEA microwave display
    IKEA microwave display
    The slightly worse news

    Probably one of HNN's most disappointing experiences was the visit to the Masters store in Box Hill. This had some of the aspects of the new store design which Masters sometimes calls "Masters 2.0".

    In particular, the power tool display area had been improved by moving the tools groups by brand into vertical bays along the sides of the tool area, though some tool brands were displayed in the open area.
    Tool bays at Masters Box Hill

    Overall, while the retrofit probably improved the Box Hill store to some extent, it really wasn't enough to lift it much above the rest of the stores.
    The even worse news

    As HNN travelled from one Masters store to the next, we also dropped in on the Bunnings stores many of them had been paired with. If we weren't impressed by much of what we saw in Masters, we were impressed by a range of things at Bunnings.

    For example, take this display parked out in the entrance to a Bunnings store:
    Other stores' catalogues out the front of a Bunnings

    The store manager has picked up catalogues - probably distributed in that area - and added orange stickers which list the (lower) prices for the items at Bunnings.

    That really represented the kind of attitude HNN felt in the Bunnings stores. Where Masters seemed at times cool and distant, Bunnings was really willing to "get in there", to compete, to provide service, to have contact with the customers.

    That's leaving aside what Bunnings does with its products and pricing. Time and again, Bunnings manages to catch that place in the market where function and price match up.

    However, even with all of this, through repeated visits to the Bunnings stores we could see some problems. There was a real struggle in some Bunnings retail spaces to represent bathroom products well.

    In the larger stores, kitchen supplier Kaboodle had been provided with more space to display its wares, and while these displays were better than the small displays, they still didn't seem to quite "get there".

    Then HNN visited the Bunnings stores at Carrum Downs and Keysborough. That changed our minds.

    In Carrum Downs we saw the first Kaboodle displays that seemed to really work well, such as this one:
    Kaboodle kitchen in Bunnings Carrum Downs

    There was also an interesting counter for customers to sit at and use the online kitchen design tools.
    Counter for customers to use design tools

    As it turned out, that was only the beginning. When we reached the Bunnings store at Keysborough, HNN saw some really interesting store design concepts, such as this "wall of taps" plumbing display:
    Bunnings plumbing display, Keysborough

    This was a really comprehensive display, that had been thoroughly designed and planned. It made looking for a new tap fun and interesting.

    This store also stepped up the display of Kaboodle kitchens one notch above that of the Carrum Downs store:
    Kaboodle kitchen display Keysborough

    The kitchens looked really refined and well made. One of the best features of the kitchen display was how the various component choices were also set out:
    Easily accessed display of kitchen components
    Bunnings versus Masters

    As we drove home that evening, and called each other up to chat about we had seen that day, we discussed how we could possibly write the story. What we were seeing develop, at the end of the first day, was much more a Bunnings story than it was a Masters story.

    What HNN thinks happened with Masters was that in 2010 Woolworths set in place a risky strategy based on three simple principles. The first was that it would develop stores that would be better than the average Bunnings. The second was that it would then locate these stores close to Bunnings stores. The third was that it would scale that growth as rapidly as it could.

    The difficulty Masters ran into was that while its initial stores might have been better than the average Bunnings store back in 2011 when it launched, Bunnings didn't sit still. Even as Bunnings has built out its store fleet over the past four years, it has managed to improve the store design, the execution by staff, and its merchandising - all while keeping prices very low.

    One of the main features of this Masters strategy was that there was little room for testing and development, and almost no way for the home improvement retailer to accommodate failure in any one of these three aspects.

    With most of the stores not coming up as equal to Bunnings stores, it now cannot reposition them further away from Bunnings. With the reduction in investment, its early plans for scale, which resulted in it building wherever it could, now means it has an unbalanced store network.

    The only way out, the only way it can make the business work, is to come up with a store that is either better than Bunnings, or shifts the Masters market position so that it is no longer in direct competition. That is really the task that Mr Tyson and his team faces.
    The turnaround

    If we had been a little depressed the night before, on the following Sunday morning HNN was despondent. We set off anyway, heading for our first store visit of the morning. This was to the Masters store at Northland, to the North-East of Melbourne's CBD.

    What we saw there rapidly changed our minds about the potential for Masters future.

    Northland is one of the stores where Masters has done a much more complete retrofit of its developing new format for stores. What it represented was not a set of neat solutions that solved every problem, but it really showed, over and again, that Masters has developed the one thing it needs more than anything else: a really good feedback loop.

    There were two things HNN noticed immediately. The first was the absence of many of the "innovations" that we had found less than useful in other stores. The door display is back to being a normal door display. The fake wall window displays are gone. The in-store displays rely less on building up, and give more of a normal view of products.

    The second thing we noticed, which gave us real hope, was that Masters has begun to vary its aisle width. At most of the stores we had visited, the aisle width had been constant throughout the store, set at a quite wide two metres or so.

    In the Northland store, some of the aisles were set at around 1.6 metres width. In areas such as fastener aisles, the narrower width makes it easier to find things, as well as (importantly) conserving space for other displays.

    As we continued to walk through the store, we kept finding things that indicated Masters had been hard at work developing better solutions. Here are a few we saw.
    Power tool display

    While the Northland store used the same branded vertical bays as the Box Hill store, these were better organised, and backed up by a much better centre display of mixed and branded power tools.
    Power tool display in Northland Masters store
    Northland Masters centre tool display

    It is difficult to describe how good this display is. Someone who really knows their power tools has been through this display, and organised things very well.
    Bathroom displays

    The bathroom displays were joyful, colourful, and evoked a sense of fun. For example, a run of small sinks and taps in different colours:
    Colourful sinks and taps at Masters Northland

    The bathroom vignettes were also much better organised and more inviting:
    Masters Northland bathroom vignette

    The display of taps came up to the same standard we saw at Bunnings, but with a little more organisation:
    Masters Northland tap display

    Great work has been done on the kitchen displays as well. This is an example of a really luxe treatment:
    Luxury kitchen display

    Kitchen sinks are displayed in functional ranks, making it much easier to "try" and select the one that suits:
    Masters Northland kitchen sink display

    Perhaps HNN's favourite feature in the kitchen area: a set of four nooks designed for sitting down with customers to discuss their kitchen plans:
    Masters Northland kitchen conference nooks

    The Northland store provides custom bays for a range of brands:
    Masters Northland appliance bay
    Masters Northland appliance bay
    Mr Tyson is telling the truth

    As we reflected on our experiences of most of the Masters stores, and the Northland store, one of our main conclusions was that Mr Tyson is very much telling the truth. When he speaks, as he has done, at investor conferences about the need to go slowly, and the need for further development, he is not making excuses, he's actually pointing out something that is true.

    Masters still needs to develop its concepts further. That might be a little disappointing to some, but the real victory here is that the organisation has come up with the skills and processes it needs to develop.

    Equally, Mr Tyson is also telling the truth when he says that Masters has a "line of sight" to profitability. Looking at even just the retrofitted design, it is possible to see that Masters is likely getting the 30% increase in revenue he has described. It is also easy to see that there are yet more gains to be made.

    The difficulty that Woolworths faces with Masters, then, isn't about the competency of the organisation, and especially - as even investment analysts freely admit - the competency of Mr Tyson and his management team. What Mr Tyson is representing clearly both to Woolworths itself and to the general community is that this transformation of Masters will take time, and needs to proceed at its own pace.

    The problem that comes with this is really the legacy of the past. Masters set off in the wrong direction for three years or so, and invested a lot of money in that wrong direction. Even if it is going in the right direction now, it is a legitimate question to ask if the correction has happened a bit too late.

    In regard to that question, things at the moment seem quite evenly balanced. However, in HNN's view, that is only the way they seem. HNN believes that an additional factor that needs to be considered in weighing the fate of Masters is the role its one-third US owner, Lowe's Home Improvement, can play.

    HNN has always been of the opinion that, in seeing Masters as in part an effort to rein in Wesfarmers' expansion in home improvement, Woolworths' goal has been to eventually turn over a majority share of the business to Lowe's.

    Thus the real goal could be holding to break-even for two or three years, with the expectation that if it does so, Lowe's might acquire from Woolworths at least an additional one-third share. That would relieve Woolworths both of a capital burden and the need to administer the day-to-day running of the business.

    Break-even as a goal is lot less difficult to reach than a suitable rate of return on equity. That is enough to tip the scales firmly in favour of continuing investment in Masters over the next three to four years.

    You can download the PDF version (Home Improvement Weekly) of the e-newsletter at the following link:
    Home Improvement Weekly PDF

    Until next time,


    You can contact me directly via email or Twitter @HNN_Australia

    To receive a daily dose of HNN, download the free HNNBrowser app from the Apple store:
    HNN iPad App
    Boral full year results for FY2015
    Full year results for Boral in FY 2015
    Boral's results for its construction materials and cement division
    Boral's results for its smaller divisions
    Subscribe to HNN weekly e-newsletter
    Boral reported strong results for its FY 2015. Underlying net profit after tax came in at $249 million before significant items, an increase of 45% over the result for the previous corresponding period (pcp), which is FY 2014. After significant items, profit came in at $257 million, an increase of 48% on the pcp.
    Results for Boral in FY 2015

    In the press release accompanying the results, the CEO of Boral, Mike Kane, outlined some of the changes that had led to the good result:
    We've now firmly moved to the Execute and Transform phases of our Fix, Execute, Transform program and this is reflected in Boral's performance. We've improved Boral's cost base, strengthened the balance sheet and we are managing our portfolio of businesses more efficiently. We're delivering on our promises, which begins with our commitment to ensure a safe and healthy work environment, and we are strengthening Boral's competitiveness.

    In his opening remarks at the analyst briefing on 27 August 2015 Mr Kane highlighted some of the areas for possible growth in the future:
    On the innovation front we are demonstrating an ability to secure access to innovative technologies, as well as develop our own innovations. The launch of Sheetrock Technology and USG Boral is the first major step in this direction, and its success so far is very encouraging. Meanwhile in the USA our developing trim business continues to bring new innovative lightweight poly-ash building products to the market.
    We continue to investigate opportunities to reduce our exposure to high fixed cost businesses, and create a more geographically balanced portfolio over time. We have made significant progress over the past three years in reshaping the portfolio in order to reduce costs, respond to changing market dynamics, and strengthen Boral's long term growth potential.
    Construction materials and cement

    This division delivered good results for Boral, with revenue declining by 6% to $3.1 billion, but EBIT growing by 9% to $301 million.
    Boral's results for its construction materials and cement division
  • EBIT increased by 9% to $301 million
  • Higher earnings from operational and cost improvements in asphalt, cement and concrete placing
  • Concrete revenues increased by 3%
  • Larger volumes of concrete sold, in response to increased house building activity in major cities
  • Concrete prices in New South Wales increased
  • Asphalt experienced strong margin growth
  • Average selling prices for cement up 1%
  • Cement EBIT strong due to efficiency gains and lower cost sourcing
  • Concrete placing profit increased due to efficiencies and better contracting outcomes
  • Property contributed $46m to EBIT, up from $8m in the pcp
  • Minuses
  • Revenue decreased by 6% to $3.1 billion
  • Lower earnings in concrete and quarries
  • Overall rices for concrete flat, declining in Melbourne and regional markets
  • Quarries revenue fell by 16%
  • Quarries volume fell 2%
  • Average selling price for aggregates down 2%
  • Asphalt revenue down by 9%, due to decline in road building
  • Cement revenue declined by 4%
  • Concrete placing revenue down 8%
  • Commentary

    In response to an analyst's question, Mr Kane went into some detail on how he sees cement pricing evolving in Australia:
    Pricing is an interesting thing. The evolution of pricing in construction materials and cement in Australia is going through a transition. You would have seen in our results that cement pricing was up about 1% last year on average, and you can drown in a lake whose average depth is six inches if you step in the wrong spot.
    There are some markets where cement pricing went up substantially. There are other markets where it retreated. We're going through this transition, we're removing more and more at a wholesale pricing arrangements in a market where domestic manufacturing will continue to decline.
    So, whereas in the past cement was the bellwether to determine what would happen to pricing and construction materials downstream, I think it would be less so of an indicator in the future, and so we're going to aggressively try to go after price increases throughout our markets in construction materials, and our objective is to try and deliver on those.
    Future guidance: FY 2016

    Construction materials and cement will be focused on maintaining earnings in line with FY2015.

    Positive influences on the outcome include continued growth in the Sydney construction market. Negative influences include a fall in the Queensland construction market, and decline in a range of construction projects. Pressure on pricing remains a concern.

    Boral states that it expects further contributions from property operations, but is unsure about the timing of income streams.
    Boral's other divisions

    The other divisions of Boral also produced good results. Building products saw its revenue decline a couple million dollars to $485 million, while EBIT grew to $30 million, up from $8 million in the pcp.

    Gypsum operations saw underlying revenue increase by 16% to $1.3 billion, and underlying EBIT lift to $141 million, a 38% increase over the pcp. Revenue from Boral USA came in at A$839 million, an increase of 23%, with EBIT going positive at A$6 million, from a loss of A$39 million in the pcp.
    Boral results for its smaller divisions
  • Building products price gains in New South Wales, Queensland, Victoria and Western Australia
  • Building products EBIT up from $8 million in the pcp to $30 million in current period
  • Bricks and timber increased EBIT significantly
  • Bricks and timber benefited from efficiencies, better pricing, and volume leverage
  • Roofing experienced modest volume growth in Victoria and South Australia
  • Timber softwood prices increased by 9%
  • Underlying business of Boral Gypsum delivered strong and improved performance
  • Boral Gypsum revenue grew by 16% to $1.268 billion
  • Boral Gypsum EBIT grew by 38% to $141 million
  • Boral Gypsum's Australia/New Zealand revenue grew by 16% to $432 million
  • Boral Gypsum's Asia revenue grew by 16% to $836 million
  • Boral USA revenue increased by 12% to US$695 million
  • Boral USA EBIT improved by US$40 million to deliver a US$5 million gain, following a loss in the pcp
  • Boral USA saw volume gains in cultured stone, trim and roofing
  • Boral USA saw price gains in trim, roofing, fly ash and construction materials
  • Boral USA contributed US$20 million in cost savings
  • Boral USA brick revenue rose by 13% to US$246 million, with an 8% rise in volume and a 1% increase in price
  • Boral USA roofing revenue increased by 14% to US$159 million
  • Boral USA fly ash and construction materials increased revenue by 1% to US$162m, even as volumes fell
  • Minuses
  • Slight decline in building products revenue
  • Decrease in timber volumes
  • Roofing experienced volume declines in New South Wales due to competition from substitute products
  • Timber revenue fell by 3%, driven by falls in hardwood sales
  • Commentary

    In response to an analyst's question at the results presentation on 27 August 2015, Mr Kane expanded on his view of the timber part of Boral's business:
    I've recently invested in the timber business. I would have thought, if you'd asked me three years ago, was I going to make any capital investment in timber, I'd ask for a gun to shoot myself, but the reality is -- the reality is that we can see a pathway to get better earnings out of that timber business through some targeted investments, and that we're doing them this year.
    I personally traipsed through the forest of New South Wales and saw the felling of hardwood trees and the processing at our plants, and we've got a lot of ideas to reinvigorate the [lead] process at our timber operations to get better results.
    Softwood is a strong story. From time to time imports come in and complicate matters, but they come in and come out. At the end of the day, the softwood business is a strong earner. So I think timber, in its -- admittedly, this is a small piece of the total enterprise, but timber is a business that is strong enough that I felt a need to recently make some investments.

    In response to an analyst's question Mr Kane also went into details about the growing demand for Boral's Sheetrock products, in Australia and Asia:
    The uptake, the price appreciation that you're seeing in the Sheetrock products, all that is to the positive and we expect that to continue. We're very pleased with the response we're getting in the marketplace across multiple geographies, developing, undeveloped, parts of the globe that are looking at this product.
    And what we're seeing is an interesting phenomena and that is in Australia the uptake has been - exceeded our expectations. In places like Korea the novelty of new technology in this space has driven a lot of volume to our business. In - and in other places we're - as you can imagine, particularly in the developing world in Asia where they really look at premium products, they have a higher respective interest in premium product than you might think. These markets are being driven toward our premium Sheetrock products. So the adoption is faster than anything we had planned and that's what we're seeing.
    Future guidance: FY 2016

    Building products and Boral Gypsum are expectd to maintain earnings, with the gypsum operations benefitting from further efficiency gains.

    Boral USA is expected to increase earnings as housing construction continues to gain strength.

    The entire transcript for the Boral analysts presentation can be accessed at:
    Thomson Reuters transcript on Yahoo!
    Big box update
    Woolworths and Lowe's have injected another $90 million into Masters
    HNN Sources
    The Home Depot is going after the professional market in a bigger way
    Lowe's is experimenting with 24/7 product pick-up lockers
    Click to visit the ITW website for move information
    Woolworths and Lowe's have injected an additional $90 million into Masters; Home Depot wants to become more important to professionals; and customers who shop online at a Lowe's Home Improvement store can pick up their products in lockers that are accessible 24/7.
    $90m more for Masters

    Fairfax Media reports that Woolworths and Lowe's Companies have injected another $90 million into Masters. It is the fourth capital injection this year.

    Documents lodged with the Australian Securities and Investments Commission recently show that the Hydrox Holdings joint venture issued 90 million new shares at $1 each - 60 million to Woolworths and 30 million to Lowe's - on August 28, the same day that Woolworths revealed that losses from home improvement jumped 33% to $224.7 million in 2015.

    Annual accounts lodged by Hydrox Holdings show that while revenues rose 22% to $1.87 billion in 2015 as Woolworths opened new Masters stores, the cost of sales rose at a similar rate, and operating costs including administration and wages rose 24%, leading to mounting losses.

    Woolworths and Lowe's have invested $3.22 billion into the joint venture, up from $2.9 billion last year, but the pair are not expected to see a return on their investment for many years. Most analysts believe the business will not break even until 2020 at the earliest. However, Woolworths insists the chain has future and says it is a patient investor - pointing to the many years it waited for BIG W to become profitable.

    To read more, go to the following link:
    Woolworths and Lowes inject another $90m in Masters - Fairfax Media
    Home Depot wants more professionals

    Home Depot Chairman and CEO Craig Menear said the company is going after the professional market in a bigger way. He made his remarks at the Goldman Sachs 22nd Annual Global Conference recently. Menear noted that the Home Depot is known among professional contractors and home builders as "a great 7-11 for fill in".

    Home Depot estimates it holds a 5% market share among professionals; its goal is 50%. To accomplish this, Menear pointed to a new delivery management program, which is being test-marketed in about 60 locations in the US. Menear admitted that progress in the program "is going slowly, but we want to get that service right before we roll it out".

    Menear and his team of executives believe the US housing market is trending better now than they had estimated it would be at the start of the year. Given that 2006 was the peak of the housing market, they believe the Home Depot has still not recovered US$2.8 billion of the sales it lost when the housing market crashed, and they see that number as an opportunity today. The push for more business from its Pro division is one area that they believe can contribute to accomplishing this goal.
    Pick up lockers at Lowe's

    Large blue metal boxes have been placed in front of a Lowe's store in Charlotte, North Carolina as part of the home improvement retailer's push into more online shopping.

    The product pick-up lockers have been in their current spot for a few months - but they are just a test run and are temporary. Customers who shop online can have their products placed in a locker that they can access 24 hours a day, seven days a week, explains Karen Cobb, spokeswoman for Lowe's. She told the Charlotte Observer: "We're always looking for ways to improve customer service. Product lockers at the Central Charlotte store were installed as a way to get feedback from customers who shop online.

    As customers turn more and more to online shopping, Lowe's has said it's focusing on the omnichannel shopping experience. That means making it easy for customers to browse and buy from Lowe's online, in a brick-and-mortar store or at home, since the retailer has product specialists who can consult with customers at their house on interior and exterior projects.
    Lowe's 24/7 product lockers are temporary
    Indie store update
    Porters is introducing an initial program of voluntary redundancies
    HNN Sources
    Tradelink is rolling out a new store design
    Mitre 10 Mega in Queenstown, New Zealand will officially open this year
    Click to visit the ITW website for move information
    Mackay-based Porters announced it is cutting a number of jobs, citing tough market conditions; new store design and brand revamp for Tradelink; and a Mitre 10 Mega outlet in Queenstown, New Zealand is preparing to open its doors.
    Jobs to go at Porters

    In a statement, Porters managing director Gaven Porter said the building supplies and hardware company is introducing an initial program of voluntary redundancies. He said there was a possibility of forced redundancies but did not say how many workers would be affected.

    Mackay Mayor Deirdre Comerford believes Porters made a wise decision to lay off staff. Councillor Comerford said she thought the move would been a hard decision in difficult circumstances.

    She told the ABC: "They've taken lots of corrective actions over an extended period of time. So for them to be making this next big step, they're seeing they don't have too many other options and they're caring about their long-term future as a company and they're caring about the long-term employees that they do have. So they're making the right decision at this point in time."
    Tradelink opens new generation store

    Bathroom and plumbing products specialist, Tradelink is rolling out a new store design, with prototype sites recently launched in the ACT. Its "Branch of the Future" has been created by interior design agency, Design Clarity.

    The store concept encourages self-navigation and better staff-to-customer communication in a functional and organised environment. It is accompanied by a rebrand for the company, with the exterior fascia of each store showing Tradelink's bold new direction.

    Design Clarity created a back-to-basics environment where products can be displayed in a way that will be easier for trade customers to make purchase decisions. Fixtures were lowered onto the retail floor to maximise visibility across the space and provide exposure to core categories from anywhere in the store.

    The design template also leveraged point of sale technology, additional impulse bins and digital quick-pick selection hubs with a click and collect service. This store concept will be rolled out to several more sites across Australia.
    Tradelink has undergone a rebrand
    Mitre 10 Mega will open soon

    Mitre 10 Mega located in Queenstown (NZ) will officially open this year, according to Jason Smith, managing director of H&J Smith, the store's owner operator. Smith said after filing for resource consent with the Queenstown Lakes District Council on November 11, 2011, building finally began on January 5 this year.

    The NZ$20 million project comprises an 8000sqm development which includes retail space of about 3500sqm. The main store, featuring offices, staff rooms and training rooms, will include a children's playground connecting to a cafe with an outdoor courtyard and a direct view over the 900sqm garden centre.

    Smith said the existing Mitre 10 store, at Remarkables Park, will continue to operate until the new store is ready to open.
    Home Retail Group has encouraging FY2016 Q2 results
    Results for Homebase, FY 2015/16 second quarter
    Home Retail Group
    Statistics for Homebase second quarter sales over the past five years
    Habitat managing director, Claire Askem interviewed by Furniture News
    Click to visit the ITW website for move information
    UK-based big box retailer Home Retail Group has released a trading statement regarding its results for the second quarter of its 2015/16 financial year. Sales declined mildly for both its major brands, electrical retailer Argos and home improvement retailer Homebase.

    The decline at Argos was from GBP 901 million in the previous corresponding period (pcp), which is second quarter of 2014/15, to GBP 897 million in the current quarter. It opened 44 digital concessions in Homebase stores, as well as eight digital concessions in UK retailer Sainsbury's.

    Store closures were blamed for the 2.8% decline in the quarter's sales for Homebase, which came in at GBP 378 million. However, like-for-like sales grew well, recording a 5.9% improvement. The company noted that sales of big ticket items were particularly positive.
    Results for Homebase for FY 2015/16 second quarter

    In a press release that accompanied the results announcement, Home Retail Group's CEO, John Walden, is quoted as commenting:
    Argos delivered an improved sales performance in the second quarter. It made good progress with new stores, opening more than 50 digital concessions within Homebase and Sainsbury's, which have generated encouraging early results. Consistent with our previous guidance, Argos' sales continued to be adversely impacted by the performance of a number of key electrical product categories as well as weaker overall market conditions in August.
    Homebase performed well across its peak trading season, delivering good like-for-like sales growth in both quarters of the first half, while continuing its progress on both its store closure programme and the Productivity Plan more broadly.
    Habitat expansion

    British homewares retailer Habitat, which was acquired by Home Retail Group in 2011, has plans to increase its retail space by 25% during calendar 2015. Over the past six months the number of concessions has grown from 35 to 65, and the company plans to add a further 15 before Christmas 2015.

    The concessions range in size from 1000 square feet to 4000 square feet. Staff utilise iPads to help customers go through the available choices. This means the company's website is central to its operations. The managing director of Habitat, Clare Askem, described how important the website is during an interview with Furniture News:
    For us, the website is absolutely crucial. It's where the brand should live and breathe. In fact, it's the easiest place to access any brand - therefore it's got to be a lot more than just a transactional website. It should be bringing the full Habitat experience to life - visitors should be able to find blog posts and insights, follow our buyers on a trip, see lots of lovely photography, and post what they've done with their own products. There should be a real community. And, obviously, as well as that, they should be able to buy product.

    One of the larger concessions is in Chichester at 5600 square feet, with 1300 SKUs and more advanced technology than other Habitat concessions. While Ms Askem admits there are real advantages to 40,000 square foot stores, she believes websites can still provide a good experience.
    Of course it's a lot more magical to stand in the middle of a whole room set than it is to only look at one piece of the range, but it's something physical nonetheless, and can give a customer the confidence to purchase a similar model online. For our customer, it's a multichannel journey - in fact, the website is really our home, and a huge number of our customers begin their journey there.
    Mr Bricolage rejects takeover offer
    Mr. Bricolage rejects a takeover offer from Bricorama
    Bricorama made an offer that valued the company at around EUR 155 million
    Kingfisher ditched a planned purchase of Mr Bricolage six months ago
    Click to visit the ITW website for move information
    Paris-based DIY retailer Bricorama said it made an approach to take over French rival Mr Bricolage with a 15 euros per share offer, valuing the company at around EUR 155 million.

    However ANPF (Association Nationale des Promoteurs de Faites Le Vous-Mene), a group of franchisees that has a 41.9% holding of Mr Bricolage, has rejected Bricorama's bid. The founding Tabur family holds 26.3% of Mr Bricolage.

    The takeover offer comes six months after Kingfisher, Europe's largest home improvement retailer, ditched a planned purchase of Mr Bricolage amid concerns over the number of store closures that would have been required to clear antitrust hurdles.

    Bricorama said in a statement that on September 1, it had approached ANPF to combine the two companies and create a major player in the French DIY market.

    Bricorama's offer matches the 15 euros Kingfisher had offered ANPF and the Tabur family to purchase their holdings.
    IKEA preliminary results for FY 2015
    Peter Agnefjall (left) and his predecessor in the CEO role, Mikael Ohlsson
    Comparison of the Apple and IKEA strategy
    Example of the Metod kitchen range
    Click to visit the ITW website for move information
    IKEA has issued a preliminary report for its FY 2015 results, covering 1 September 2014 to 31 August 2015. The company has reported total sales of EUR 31.9 billion, which represents an increase of 11.2% over the previous corresponding period (pcp). Adjusted to account for a positive currency fluctuation (due to business in the USA), sales increased by 8.9%. Like-for-like (comp) sales increase by 5.1%.

    IKEA's current CEO, Peter Agnefjall, has been in that position for two years now. He succeeded the slightly controversial Mikael Ohlsson, who had launched IKEA on a program of rapid expansion of over 20 stores a year.

    Since taking the role in 2013, Mr Agnefjall has tempered the rate of expansion. In FY 2015 the company opened 13 new stores and three additional pickup-points.

    The company's Australian managing director, David Hood, announced in July 2015 that IKEA would build at least another three of its large format stores, with the next major opening to be in Canberra in November 2015. Mr Hood believes both Sydney and Melbourne could support an additional IKEA large format store.

    Smaller stores are a major part of IKEA's expansion plans in Australia. IKEA will open the first of the 19,000 square foot stores in the UK, in Norwich, over the next three months, to trial the concept.

    Up to 12 of the small-format stores will also be built in Australia. To back these up, IKEA will also build a further two distribution centres. This will form part of IKEA's ongoing push into e-commerce. Mr Hood has hopes that this expansion will, over the next five years, lift IKEA's Australian revenue above $1.8 billion a year. Revenues for FY 2014 were $733 million.

    Currently, IKEA's fastest growing market is China, followed by Russia. The US stores returned a strong year, and its operations in Germany also showed growth.

    The company has launched a number of new products in the past year, including a new kitchen system for both the European/Rest of World market and the USA. The kitchens are largely identical, but provide differently sized spaces for kitchen appliances.

    IKEA has been relatively cautious in its entry to the US market, which started in 1985.Today it has 40 stores in the US, and is believed to be the country's second largest retailer of furniture. It has plans to open a total of three stores over the next 18 months.

    The company is continuing to work on tailoring its offering to the US market, including further customisation to local city and state markets. For example, it has continued to offer more products suited to living in small spaces, picking up on a trend common in cities such as Moscow and Tokyo, and now increasing in the US thanks to the reduced requirement of the millennial generation.

    The full formal results for the company will become available in December 2015.
    Another squeegee with power
    Black and Decker's Powered Squeegee Vac helps get rid of streaks
    Gadgetz Geek
    Its Lithium battery lasts for about 25 minutes, according to the company
    The Powered Squeegee Vac vacuums left over liquid
    Click to visit the HBT website for more information
    Black and Decker has introduced a new Powered Squeegee Vac, which enables users to easily clean mirrors, glass, windows and other smooth surfaces.

    The device sprays chemical cleaner or water on these surfaces and vacuums the left over liquid. This leaves the surfaces shiny clean without going using a roll of paper towels.

    The company also boasts its product will make quick work on pollen covered car vehicle windows.

    The Powered Squeegee Vac is built with a Lithium battery powered, fade-free suction mechanism and spray-powered squeegee for a quick clean. It also includes a rotating head with a microfibre scrubbing pad for easy removal of insistent grime. There is a small, 3.38-ounce tank to store water in, allowing for both indoor and outdoor use. It's squeegee cleaning head cleans an 11-inch area.

    The product weighs about 2.2lbs (almost 1kg) and has a battery that lasts for approximately 25 minutes of cleaning. The battery can be charged with a micro USB charger.
    B&Q invests in telematics
    B&Q will be using new telematics products for its truck fleet
    Fleet News
    They will used across a fleet of 185 vehicles
    UK company Microlise provides telematics solutions
    Click to visit the ITW website for move information
    B&Q will be using Microlise's products across a fleet of 185 vehicles, and hopes to improve its customer experience as well as safety and driver performance levels.

    Telematics will enable B&Q to monitor the status of deliveries against a schedule, in real-time, as each journey unfolds. It is expected this will facilitate proactive customer service, where any issues identified can be addressed before the customer becomes aware through a missed or late arrival.

    B&Q will also utilise the Microlise Driver Performance Management mobile application aimed at engaging with drivers by delivering easily accessible performance league tables and real-time performance information. Chris Blogg, store delivery network manager at B&Q, said:
    We are always striving to improve the experience for our customers. That is why we opted for Microlise which will enable us to make significant savings whilst improving the precision with which we can track our home delivery vehicles.
    Customers expect specific allotted times for deliveries and Microlise helps us to meet and exceed customer expectations.

    Nadeem Raza, chief executive officer at Microlise, said:
    We predict that B&Q will make a return on investment in a short timeframe following the introduction of our fleet performance product. It will provide significant fuel savings for the company...[and] a powerful tool in helping to deliver excellent customer service.
    Effective communication across the supply chain - including towards customers - is key to this.

    The Microlise Digital Tachograph Download feature will be used by the home improvement retailer to reduce management overheads and administration time by allowing compliance data to be remotely collected.

    As part of the fleet performance delivery, B&Q has opted for the Microlise Safety Module which includes 3G forward facing cameras via the Microlise Incident Data recorder. This gives detailed insight into what was happening 30 seconds before and after any incidents.
    EveryDrop helps with water reduction
    EveryDrop is a water maximiser, designed to move more water into the soil
    ScottsMiracle-Gro launched EveryDrop to help Californian residents during the drought
    ScottsMiracle-Gro has a long track-record of water conservation
    Click to visit the HBT website for more information
    Scotts' EveryDrop[tm] helps soil absorb water that hits its surface, whether it comes from the sprinkler or Mother Nature. It drives water deeper into the ground, reaching the roots and reducing evaporation. EveryDrop can be used on lawns, gardens, flowerbeds as well as indoor plants.

    The product also makes sure the benefits of lawns and gardens go far beyond the backyard: they cool the environment, serve as a natural air purifier and provide an area for children to play and for family to gather. With the launch of EveryDrop, homeowners have the ability to use less water and still enjoy their outdoor space.

    ScottsMiracle-Gro has a long track-record of water conservation and is determined to help those dealing with drought care for their lawns and gardens in California. With the support of California's Department of Food And Agriculture, it expedited the launch of EveryDrop to help residents meet the state-wide mandate of reducing water use by 25%.

    Jim Hagedorn, chairman and CEO of ScottsMiracle-Gro said:
    We pledged ourselves to a new era of water consciousness several years ago. We know water is not an infinite resource, every drop counts, and we all have to do our part to use water in more efficient ways. New product development and the introduction of EveryDrop is part of that commitment.
    Briggs uses social media to raise interest
    Briggs & Stratton's social media initiatives has led to over 150,000 Facebook followers
    Journal Sentinel Online
    It recently launched a "Grime to Shine" photo contest
    The company's mower mouth social media contest has won an award
    Subscribe to HNN weekly e-newsletter
    Briggs & Stratton Corp. is gearing up for an event aimed at generating hundreds of online product reviews and social media attention.

    Earlier this year, Briggs went to Phoenix for three days to solicit consumer feedback on nine new products. This effort resulted in 460 online ratings and reviews.

    People were asked to test a riding mower, a pressure washer and other equipment. Then, on the spot, they gave a rating or wrote a review on iPads provided by the company.

    The tests were brief but focused and authentic, according to Rick Zeckmeister, vice president of marketing and planning. He said they focused on various things such as how quiet a mower was compared with other mowers.

    During the event, Briggs also solicited feedback from about a dozen bloggers and others with social media influence. The result was a total of 134 Twitter and Instagram posts that reached nearly 1.4 million followers. Zeckmeister said:
    Now, with the internet, word-of-mouth is stronger than ever. We believe this is the way to reach our next generation of customers.
    Consumer reviews

    Product reviews are important, with nearly 70% of consumers, and 81% of millennials, seeking advice and opinions before making a purchase, according to a survey of 2,000 US adults.

    The survey from market research firm, Mintel Group, found a majority of opinion seekers aged 25 to 34 look to social media contacts for recommendations,

    Consumers also use product reviews to validate the choices they've made and avoid "buyer's remorse." But some reviews are fake or wrong, which complicates things for people seeking honest opinions.

    Over time, online communities tend to police themselves and expose the reviews that are excessively harsh or too positive, according to Tim Cigelske, social media director at Marquette University. But he also warns that the buyer should be aware. He said:
    There's almost a moderating effect from the crowd.

    At its Phoenix event, Briggs & Stratton said the consumer ratings averaged 4.77 out of five. In addition, the company captured 10 hours of video testimonials that are paying dividends online as well as with key retail customers. Zeckmeister said:
    We got genuine feedback from a lot of people.
    In-house team

    Briggs gets more than seven million visits to its website a year and has more than 150,000 Facebook followers.

    The company has four people on its social media team and also uses outside agencies for various projects. It sent 25 people to the Phoenix product demonstrations.

    It's difficult to measure the dollar value from something like the Phoenix event because the results aren't immediate, according to Zeckmeister.
    But I will tell you that the innovations we launched this last year met or exceeded our expectations.

    He believes consumer feedback is important.
    When you show up at an event with nine products, and people start interacting with them, there's a moment of truth when you realise people genuinely, authentically, like them or not.

    For businesses, the No. 1 rule of social media and events like product demonstrations should be to listen to consumers, said Zeckmeister.

    As a result of feedback, Briggs is introducing a new mower in 2016 that combines the features of two other recent models: it folds for easy storage and it never needs an oil change.

    Companies want fresh online reviews, partly because it gives the impression that their products are still popular and the technology isn't out of date. Briggs' research showed that 87% of consumers want to hear from other consumers about a product they're considering purchasing.

    Reviews also give companies a chance to pull a product from the marketplace if it's not meeting consumer expectations. Zeckmeister said:
    Whether it's Twitter or online ratings and reviews, if you're not going to embrace it, and use it for what it can do, you're just wasting money.
    We do market research and focus groups and things that other companies do, but if we are really going to understand how people purchase things, we have to get out there and engage them.
    Cordless tools create segmentation
    The brand is coming back
    HNN Sources
    The Makita coffee machine
    9 Ways market segmentation improves business success
    Give to Amnesty International
    HNN believes that the home improvement market is entering a period of re-segmentation, driven by a range of factors.

    Market segmentation is about finding customers who have a similar level of interest in a set of needs, and placing them into a group (segment). Marketing efforts are then directed at that group.

    Segmentation becomes the right strategy to use when the market (the customers) has started to segment itself.
    The coming of cordless

    One of the best areas to look at today to observe growing customer segmentation is the cordless power tool market. Lithium-ion battery powered cordless tools have been transformative to the market, and are set to become more so over the next three years.

    The most important aspect of this transformation in terms of marketing is that brand has become, once again, very important.

    As we know, when you walk into a newer Bunnings or any well set-up independent hardware retailer, you see that the corded and cordless power tools are displayed in very different ways.

    The corded power tools are typically in a mixed-brand display, ranked by price/features. In contrast, the cordless tools are in single-brand, complete-range displays.

    Why? Because it is easy for consumers to mix brands in corded tools, but when they buy even one cordless tool, they are buying into its battery system as well. This means the initial purchase decision is not about one tool, but also includes the entire available range of tools.
    Range, not single item

    Brand is starting to re-assert itself now because consumers are aware that they are effectively "marrying" themselves to one brand due to their choice of battery systems.

    With corded tools, consumers are more free to choose some areas of high-quality alongside areas of lower quality. They might buy a Hitachi circular saw, for example, and use that alongside a cheap Ozito drill. Buying into a battery system means they would be better off buying both the drill and the saw from the same brand.

    What happens in these circumstances is a major change which is the main sign of a segmented market developing. Unsegmented markets are based on consumers making choices through varying degrees of "yes": "I like this drill a bit better than that one, and it doesn't cost that much more".

    Segmented markets are based on consumer choices arrived at through both "yes" and "no": "I can't buy that drill, because the brand's saw costs too much, and the range doesn't have a decent sander".

    The "network effect" of buying a cordless brand means the purchase decision relates to a number of products in the brand, and not just one.

    This segmenting behaviour has both an upward and a downward effect on brand purchases. The upward effect will see some consumers buy more expensive brands to ensure they have access to key quality tools. The downward effect will see consumers choose a cheaper overall brand because they need to buy four or five tools, and will not pay a premium price for all those tools.

    What this means is that cordless power tools simply must be sold using a segmented strategy. They must have a defined market, and that market position must be communicated to the consumer.
    The TTI example

    At the moment the one power tool company that really understands this is Techtronic Industries (TTI) - which is not a surprise, as it began as an OEM manufacturer of batteries for other brands' power tools.

    TTI's Ryobi brand, for example, has developed a very wide range of tools using the same battery system. Its market promise is 1) We will have whatever tool you need, and even some you haven't thought of yet; 2) they will be adequate and reliable; and 3) we will keep on innovating, you won't be left behind.

    Ryobi's sister brand, Milwaukee, has taken the wide ranging to extremes: there is even a Milwaukee coffee-maker that works off the brand's "Red-Lithium" battery system (Makita has one as well). Its brand promise comes down to: "We've got you". Whatever you need, we've got. We won't let you down. And we will deliver cutting-edge products.

    TTI's other power tool brand, AEG, is interesting, because its marketing is fundamentally based on the appeal of two negatives: It is not Ryobi, and it is not Milwaukee.
    Cordless: the next stage

    While the coming of cordless is going to have this segmenting effect for a number of years, there is also the possibility it will be much reduced in another four or five years.

    To understand how that could happen, let's consider the kind of situation a manufacturer of something like, say, airless paint sprayers will find itself in.

    Handheld, attached container paint sprayers are one product that would really benefit from cordless operation, and there are a few on the market. Most of these, based on Amazon and other reviews, are not all that well-received, usually because the batteries do not last very long. This is because, like sanders which also have this problem, a sprayer is a continuous use product.

    In fact, converting a corded sprayer properly to a cordless model would require significant design and investment. The pump motor would have to be converted to brushless for better efficiency, a more powerful and thus larger battery would be needed, and so forth.

    With good design, one problem still remains: the manufacturer would be asking the consumer to buy another, additional battery system, just for a paint sprayer.

    There are three possible pathways this kind of development could take.

    Firstly, this might mean that paint sprayer companies will become a hot property when it comes to acquisitions. Companies such as TTI and Stanley Black & Decker might see adding a paint sprayer as a great way to boost the attractiveness of their brands.

    Secondly, there may be the potential for a joint venture around specific cordless sprayer products. Companies such as Wagner Spraytech might agree to co-develop some products based on a major power tool company's battery system. That solves problems for both partners.

    The third possibility is the most interesting. What if a range of lower-end tool companies got together and agreed to develop set standards for power tool batteries, making them interchangeable between their brands? That would reduce individual manufacturer costs, as well as individual battery costs through increased production scale.

    If that happens, the market would begin to de-segment itself again. However, it would first require a true commodification of the battery technology. At the moment, driven by the mobile phone and electric car markets, batteries continue to rapidly evolve. Such a development is likely to be at least five years away.

    As HNN has remarked in the past, one of the major changes we've seen in the home improvement industry over the past 10 years is a shift in market power away from manufacturers/distributors to retailers. While some brands have continued to do some marketing, most brands have cut down on their marketing expenditure. The single most important marketing channel has become catalogues and websites of retailers.

    If cordless tools continue to make brands more important, will this lead to increased marketing by power tool manufacturers? Will they begin to play more of a part in in-store tool displays?

    This could be an opportunity for manufacturers to build their digital marketing skills, and begin to engage directly with consumers through websites and social media.

    This is really a very brief introduction to just one of the forces that HNN sees leading the home improvement market to be more segmented. We will be covering this issue further in coming weeks.

    On a final note, HNN has launched a PDF version of the e-newsletter called HI (Home Improvement) Weekly. It's for those who still prefer to download and print. We hope you find it useful. You can download it at the following link:
    Home Improvement Weekly PDF

    Until next time,


    You can contact me directly via email or Twitter @HNN_Australia

    To receive a daily dose of HNN, download the free HNNBrowser app from the Apple store:
    HNN iPad App
    White screws meet kitchen design trend
    GRK Fasteners' White Cabinet Screws are ideal for kitchens
    GRK Fasteners
    They are designed for white cabinets in new and remodelled kitchens
    The white cabinet screws incorporate many unique engineered features
    Click to visit the HBT website for more information
    GRK Fasteners have released a line of White Cabinet Screws in response to the increasing demand for white cabinets in new and remodelled kitchens.

    According to a 2014 US-based study on kitchen and bath renovations, 48% of people who redesigned their kitchen and bath chose white cabinets. Greg Martel, product manager for GRK Fasteners said:
    More and more homeowners are asking for fasteners that hide in plain sight for their new white cabinetry. These screws are necessary for high-end installs where a premium is paid for 'fit and finish' jobs.

    GRK's White Cabinet Screws blend with white cabinet frames without the need of sticker covers. The specifically designed dull white colour blends in better than other shiny white coated screws.

    GRK's specialised coating formulation will not chip while being driven in, allowing for a clean finish. The white heads will also match closet and garage organisation systems and are suitable for other interior applications.
    GRK's White Cabinet Screws

    The white cabinet screws incorporate many unique engineered features that allow tradies to complete their project with speed and confidence. They include:
    Recessed star drive

    Zero stripping with six points of contact means it's virtually impossible to strip the screw head.
    W-Cut[tm] thread

    Reduces friction on the screw shank, resulting in a lower driving torque for a fast and smoother drive. This avoids binding and reduces the risk of damaging both the screw head and cabinet material.
    Zip Tip[tm]

    Eliminates the need for pre-drilling, allowing for faster installation.
    Low profile washer head

    Presses flush against work surface for extra holding power. The low profile washer head increases holding power while delivering aesthetically pleasing results.
    Tech, business integration at Do it Best Corp.
    Do it Best Corp. is part of InformationWeek's list of business technology innovators
    The hardware co-op has an updated e-commerce site
    Do it Best members can now boost their online presence
    Click to visit the ITW website for move information
    US retail hardware co-operative Do it Best Corp. keeps up with technology trends for its 3,800 member-owned stores in the US and 53 other countries, distributing timber, hardware, and other home improvement products. The company was founded in 1945 as Hardware Wholesalers, and its business model was based on how local farm co-ops operated.

    InformationWeek spoke with senior IT executives, Brian Loucks and Mike Barley, to discuss Do it Best Corp.'s approach to projects and some of the challenges facing similar companies, which still base their businesses on brick-and-mortar stores in the era of online commerce.

    The conversation began with a question about the way the company approaches IT projects. According to Loucks:
    The way we handle a lot of projects, when we do it well, we're not tackling it once the issue is found. We do best when we're proactive and get ahead of the curve.
    We try to handle them three different ways: organisationally, in process, and logistically.

    The goal is to bring applications and processes to the table before business users even know there's an issue.
    [We] map out our current systems both architecturally and in process, and look at where they are now and where we'd like to take them in the next two, three to five years.

    Once IT has achieved this, it works with the relevant business division or department before getting an advocate to demonstrate the potential opportunities it has uncovered.

    Much of the company's success depends on the equal partnership between IT and business that both managers said exists at Do it Best Corp.
    Working together

    The partnership between IT and business is relatively new at the company, according to Barley.
    I've been here 22 years and it's a pretty drastic change. For a long time, we were the standard IT 'do what you're told and move on'. For the last few years, we've worked very hard to build the trust with the other business units.

    Here's how it works:
    We're expected to come to the table with a lot of ideas, because we come with a lot of expertise in IT, just as other executives come with a lot of expertise in other areas of the business.

    One of the projects in which the partnership has worked well has been in an overhaul of the MMS (Member Management System). The project "owner" is from the sales team. Loucks said the project benefited because the individual who took ownership had an appreciation for technology.

    Along with the technical bent, he brought a willingness to solicit ideas and comments from all over the business in order to improve the system. Loucks said:
    From the IT side, there are team members who are really passionate about agility, specifically 'scrum', and they're always trying to improve within the methodology.

    In addition, Loucks said the team has been a success because it uses a suite of tools for collaboration including Slack, Yammer, and Trello.
    A lot of the people are in the field and they get to see how we collaborate.

    IT staff members gain insight into the workings of the other business units by getting out of the data centre and going into "the field" to meet colleagues, customers, and co-op members.

    One place this happens is at a regular Do it Best Corp. event, simply called "The Market" where members see new products and talk with staff about processes and procedures.

    Barley has seen the effect The Market has had on Loucks' group. He said:
    It's helped that Brian's team attends The Market, where we get a lot of ideas as well. They get first-hand knowledge of what the [co-op] members say they want and need, and it's nice to come to the table with ideas informed by that member input.

    Loucks agreed. He added:
    That's been a huge difference for us. When we can actually talk to our members face to face, it lets us question them about what they really mean. Getting to be with our stores a little more and seeing what they need has been very valuable to us.

    The Market isn't the only opportunity Barley's team has to spend with members. Barley said:
    We do what's called 'ride-alongs' where members of the IT staff will go out with service people to see the stores. That's been tremendously valuable to us, as well, to let us get new ideas that aren't regurgitated by three or four people.
    Watching the members work can be valuable because a lot of time they don't know that there might be a better way of doing things. We can watch and suggest better ways, then go back to the teams and make those things happen."
    Ongoing innovation

    Understanding the needs of the co-op members is one thing. Meeting those needs is another. Both Barley and Loucks said that their teams have changed the way they develop applications to match the changes in customer needs and company relationships.

    While many organisations are satisfied with the results that come from the scrum approach, Do it Best Corp. Is already moving beyond the scrum. Barley said:
    We're starting to use test-driven development. That's an easy thing to say and a much harder thing to do.

    Barley said the evolution to test-driven development is having serious repercussions for the developers.
    Because of those engineering teams we now have a data strategy, an integration strategy, and a data feed strategy that lets us inform the other teams.

    One of the challenges to fast-paced development is keeping teams from burning out or losing the ability to think beyond the immediate scrum. Barley said that the company has faced that challenge head-on.
    We have something called the innovation challenge where we give the team three days -- and they usually end up going off-site -- where they can come up with something that's innovative and could help the company.
    We don't really have any expectations of where they go with it: It could be mobile, or it could be in the cloud, it's just the team working together creatively.

    The emphasis on agility has extended to the IT department's office layout. Loucks said:
    Logistically we've given the development staff a room that they can use if they want to. They can move around and set things up the way they want, and they can be in the room or not,.
    A lot of teams have chosen to co-locate, but some teams have not and we let them keep their cubes if they want. A lot of the teams like the way the ideas seem to flow when they co-locate in the single room.

    One of the teams that have chosen to co-locate is responsible for the online catalogue that allows members to check inventory and order products. Everyone on the project except the project owner (who is not part of the IT department) has moved into the co-location space. Loucks said:
    The database people, business process, scrum manager, testers, and others all sit together. They have a really good cohesiveness and work extraordinary well together.

    The project owner does come down to the space every day for a stand-up scrum meeting, and visits frequently throughout the day. Loucks said of the project owner:
    He's done great with learning all the pieces and parts of scrum. He's not just available -- he's starting to lead a lot of our sessions.

    Development projects have also changed because of co-location and the project management style it encourages:
    We've been given the space, and we let them do it. It's not managed by managers, we let the teams themselves do the management. The only thing we ask is that they get a phone number for the group so that other people can get hold of them if necessary. That's really the only requirement.

    Barley's group has embraced the co-located space as well. He said:
    I can walk by and hear collaboration going on all day long, and they're getting things solved a lot quicker. Everybody seems to be involved in every project, and it's not a focus on how I get one job done. It's everyone working together on all the projects. It's really been a neat thing to watch.

    Ultimately, the shifting processes in IT and changing relationship between IT and the other business units have led to a sense of ownership in IT projects that goes throughout the organisation. Loucks said:
    One of the things I'm most proud of is the idea that within IT and the other divisions we have a very clear prioritised list of projects. The vice-presidents will help prioritise projects within their group. We have five speeds of IT and they will prioritise.
    Then all the divisions get together in one room to barter and give value to the projects relative to one another. The idea is that we end up doing what is of most value to our members to help them grow.
    Magnetic docking for handheld showerheads
    Magnetix hand showers feature a powerful magnetic dock
    Moen Incorporated
    Each handheld shower optimises pressure
    Magnetix hand showers are available in a Spot Resist finish
    Click to visit the HBT website for more information
    Magnetix hand showers, Engage[tm] and Attract[tm], are the first Moen products to feature a powerful magnetic dock to allow for easy release, while also securely snapping the hand shower back into place.

    The magnetic dock of Magnetix hand showers lowers the height of the handheld for consumers who are shorter or prefer to be seated in the shower. It also reduces arm motion so users can now simply extend the arm straight out to dock in one motion - rather than having to stabilise the handheld within a standard shower arm cradle.

    Since the magnet eliminates the need for a cradle, the hand showers also feature a more streamlined appearance and reduce clutter.

    Engage and Attract with Magnetix offer transitional styling to coordinate with most bathroom decor. Additionally, consumers can maximise their shower experience by switching between six high-performance spray options and have the choice of two different options -- one that features a dial to easily change between settings, and another that has a push-button.

    Each handheld optimises pressure ranging from massage to combinations of soft and forceful full-rinse sprays to meet any shower preference.

    In addition to providing extensive water coverage, the Magnetix hand showers include a flexible, kink-free, 60-inch metal hose for greater reach in the tub or shower. This allows users to accomplish other tasks such as bathing children, washing pets and cleaning the shower with ease.

    Magnetix hand showers are available in chrome and Moen's exclusive Spot Resist[tm] brushed nickel finish which helps resist fingerprints and water spots.
    Hardware retail statistics for July 2015
    Hardware retail revenue statistics for July 2015
    Australian Bureau of Statistics
    NAB online revenue seasonally adjusted
    The NAB Online Index for July 2015
    Click to visit the HBT website for more information
    Australian Bureau of Statistics (ABS) retail revenue statistics for hardware and building supplies showed ongoing growth for the month of July 2015.

    As contrasted with the previous corresponding period (pcp), which was July 2014, South Australia (SA) showed the strongest percentage growth, rising by 19.97% to $75 million in sales, followed by Queensland (QLD) which grew by 14.9% to reach $309 million in sales.

    New South Wales (NSW) provided a good though subdued result of 6.41% growth over the pcp, reaching $407 million. Victoria slowed considerably, returning growth of only 0.31%, and increased its revenue by $1 million over the pcp to reach $359 million.

    Tasmania (TAS) was the only state and territory to show a decline, falling by 4.47% or $2 million over the pcp, to return revenue of $34 million.

    Australia overall returned a number close to that of NSW, growing by 6.8% over the pcp, for a total of $1387 million during the month.
    Other retail

    The ABS reports that for overall retail the trend estimate rose by 0.2% in July 2015, but the seasonally adjusted estimate fell by 0.1% in the period. Most categories reported small increases in trend terms, with only department stores recording a fall, of 0.1%.

    Most states also showed rises in trend terms, with only QLD and TAS reporting flat results.

    The National Australia Bank (NAB) Online Retail Sales Index recorded a fall of 1.4% for July 2015. This was largely due to a very steep decline in sales on "daily deal" websites, which fell by 25.2% over the pcp.

    Department stores recorded subdued growth of 1.9%. Electronic toys and games grew by 19.2%, followed by media at 13.9%. Homewares and appliances grew by 11.7%.

    NAB estimates that total online sales for the 12 months to July 2015 were $17.4 billion.
    Big box update
    Over 2000 people have signed a petition against Bunnings' Panorama store in SA
    HNN Sources
    Building has begun on a new Bunnings Warehouse in Gungahlin (ACT)
    About 30 workers from Bunnings Mount Maunganui recently walked off the job
    Click to visit the HBT website for more information
    Locals are protesting a planned Bunnings store in an Adelaide suburb; construction work starts on a $59 million Bunnings Warehouse in Gungahlin (ACT); and staff went on strike at Bunnings' Mount Maunganui store in New Zealand.
    Bunnings could rethink Panorama store

    Over 2000 people have signed a petition protesting against Bunnings' plans to build a $42 million store in Panorama (SA). They believe it could bring local traffic almost to a standstill.

    A recent public meeting prompted Bunnings to tell Mitcham Council to delay consultation on the proposal. A Mitcham spokeswoman said the council had not been informed about when Bunnings would submit its revised plans. She told Mitcham & Hills Messenger: "The council is waiting on further advice from Bunnings following their request to not commence public consultation until they have reviewed comments arising from the Bunnings open day."

    Bunnings property general manager Andrew Marks said the company would take the residents' concerns on board. Two community groups have protested against the development since the company bought the site a year ago.

    Plans show the warehouse will include a cafe, nursery and parking for at least 370 cars.
    Gungahlin warehouse being built

    Building has begun on a new Bunnings Warehouse in Gungahlin, north of Canberra. Bunnings general manager of property Andrew Marks told Fairfax Media the 17,000sqm outlet was taking shape on the corner of Gribble and Hibberson streets. He said: "Construction of the new warehouse is currently underway with all earthworks, external concrete slabs and wall panels in place. The warehouse steelworks and roof are in progress with external roadworks to commence soon."

    The development will include a main warehouse, an indoor timber trade sales area, a building materials and landscape supplies yard and an outdoor nursery. It includes parking for 420 cars. The store will also have energy and water-saving design features including rainwater tanks to irrigate the nursery, LED lighting and a solar-boosted hot water system.

    ADCO Construction has been appointed to complete the project. The development is expected to be completed by the end of the year.
    Strike action at Bunnings NZ store

    About 30 workers from Bunnings Mount Maunganui recently walked off the job in protest at proposed changes for increased flexibility. First Union retail and finance secretary Maxine Gay said the workers had learned the retailer was proposing a change that would remove the right to determine their start and finish times.

    However Bunnings delivered a quick response to staff who opted to go on strike and stated it would not make wholesale changes to its teams' roster patterns but that some changes would occur.

    Bunnings stated that any and all changes would take place in full consultation with staff with advance notice would be given, so that any significant commitments could be raised and taken into account.

    The big box retailer said it had put forward what it believed to be an industry-leading proposal covering wage rates and rosters, as part of current negotiations covered by individual employment agreements and First Union.

    Bunnings said its offer will guarantee that team members will receive an absolute minimum increase of four per cent this year, with a further guaranteed minimum of two per cent to be paid next year.
    Hot links
    Mitre 10 is sponsoring The Block for the eighth time
    HNN Sources
    LG has recently unveiled its SmartThinQ Sensor
    UK's Toolstation has opened its 200th branch since its launch in 2003
    Click to visit the HBT website for more information
    Mitre 10 signs up as a major sponsor of the latest season of The Block; Houzz buys online advice community GardenWeb; DeWalt launches an app that controls its power tools equipped with a Bluetooth battery; LG's new SmartThinQ Sensor makes home appliances smart; UK home improvement company Entu will no longer have a solar offering; and Toolstation expands with the opening of its 200th location in the UK.

    For further information, simply click on the images provided.
    Mitre 10 part of new Block

    Mitre 10 is joining the series for the eighth time to help out with the contest's building needs and renovation advice. It joins other sponsors including Aldi, Domain and Suzuki. Nine group sales and marketing director Peter Wiltshire said The Block delivers one of the most connected, multi-platform sponsorship opportunities for brands.
    Mitre 10 is part of the latest series of The Block
    Houzz acquires GardenWeb

    Web-based home design company Houzz has purchased gardening forum site GardenWeb from NBCUniversal. Founded in 1995, GardenWeb is an online community for home and gardening advice. The company had 2.8 million discussion threads, over 14 million discussion posts, and nearly 400 discussion topics for home and gardening enthusiasts, all of which Houzz now has access to.
    Houzz has taken over GardenWeb
    DeWalt releases latest app

    The Tool Connect app pairs with Dewalt's first line of 20V MAX 2.0 Amp and 4.0 Amp lithium ion batteries with Bluetooth capability. The Bluetooth enabled batteries allow the smartphone app to run battery diagnostics, alert at low battery charge, high temperature, charge completion and more. The new app alerts if the power tool is out of range and can disable it if out of range.
    DeWalt has released its Tool Connect app
    LG launches SmartThinQ Sensor

    The SmartThinQ Sensor from LG was recently unveiled at the IFA 2015 event in Berlin. It can be attached to a home appliance such as an oven, washing machine, or refrigerator, where it can sense the appliance's temperature and vibration. These readings will then be delivered to the owner's smartphone that has the SmartThinQ app installed.
    LG's SmartThinQ Sensor can communicate with appliances
    Digital hub targets homemaker market

    Bauer Media in Australia is launching new digital hub, Homes to Love. The portal brings together content from its portfolio of homemaker magazines including Australian House & Garden, Belle, Homes+ and Real Living. It provides a mix of practical, accessible and feature articles spanning renovations, decorating, homewares, outdoor and DIY.
    Bauer Media has launched its Homes to Love digital hub
    Entu UK ends solar operations

    UK home improvement company Entu will discontinue its retail solar activities as it expects the market environment for solar to become even more difficult. The firm said the possible increase in VAT (value-added tax) for solar products from 5% to 20% and the planned cuts to feed-in tariffs (FiTs) from January 2016, are some of the reasons behind its decision.
    Entu will discontinue its retail solar activities in the UK
    Toolstation opens its 200th branch

    One of the fastest-growing suppliers of tools, accessories and building supplies to the trade and home improvement industry, Toolstation has opened its 200th branch since its launch in 2003. The new opening forms part of an expansion programme that will see 210 Toolstation stores trading in the UK by the end of the year.
    Toolstation now has 200 outlets in the UK
    HNN Index for week ended 4 September 2015
    HNN Home Improvement Index for the week ended 4 September 2015
    HNN Sources
    Boral has been ordered to pay "substantial" legal costs to the construction union
    Woolworths had Jamie Oliver cooking for dads for Father's Day
    Click to visit the HBT website for more information
    The HNN Home Improvement Index for the week ended 4 September 2015 fell sharply. It lost 41.8 points to end the week at 925.31, following the underlying ASX 200 down as it lost over 4% in the week to close at 5040.6, down over 220 points. On the adjusted index it fell to 937.8, losing 62 points.

    Myer led the slide downwards, falling 23.1% in the week. Harvey Norman lost 13.5%, and Woolworths fell by 10.7%.

    Downer EDI was down 8.2%, CSR fell by almost 6% and Goodman Group fell 5.9%. JB Hi-Fi was off 5.9%, and Lend Lease Group slid 5.6%.

    Factors affecting the stocks are largely environmental, with concerns over the health of the Chinese economy enhanced by the poor performance of the Australian economy. In particular, concerns are growing the final quarter of calendar 2015 will see a sharp contraction in building activity.
    Boral to pay costs as trial delayed

    Boral has been ordered to pay "substantial" legal costs to the construction union after the civil trial in which the company is seeking $20 million in damages from the union was adjourned. The company will now be able to amend its claim to include high-rise residential apartments as well as commercial, industrial and engineering projects.
    Boral to pay costs as trial delayed - Australian Financial Review
    Charter Hall Group
    Aurizon Brisbane headquarters goes to Charter Hall in $170m deal

    Listed freight train and rail company Aurizon will establish its new headquarters at a new $170 million tower in Fortitude Valley (QLD), developed by Consolidated Properties Group and owned by Charter Hall's Core Plus Office and Direct Office Funds. The Charter Hall funds will buy out the development on a yield of 6.5%.
    Aurizon HQ goes to Charter Hall in $170m deal - Australian Financial Review
    Harvey Norman
    Harvey Norman outlays $34m for dairy farm stake

    Harvey Norman has defended its decision to diversify into dairy farming and cattle breeding, telling shareholders it is confident a $34 million investment in one of Australia's largest dairy farms will deliver returns. Coomboona owns land and farm assets in the Goulburn Valley region in northern Victoria. It also operates a pedigree breeding and genetics business and is well known for its Holsteins.
    Harvey Norman outlays $34m for dairy farm stake - Fairfax Media
    Lend Lease
    Australia's sustainable property portfolios leading the world

    GRESB, the global real estate sustainability benchmark, assessed 707 property companies and private equity real estate funds globally, representing 61,000 assets and US$2.3 trillion in asset value. The Australia and New Zealand GRESB score of 69 was significantly higher than the global average of 56, a result welcomed by the Green Building Council of Australia.
    Australia's sustainable property portfolios leading the world - Sourceable
    Woolworths has Jamie Oliver cooking for dads as Coles pushes fresh produce with Curtis Stone

    Coles and Woolworths have adopted contrasting styles with their celebrity chef ambassadors in their latest campaigns. Woolies pushed the Father's Day angle as its rivals continue with a "fresh" approach.
    Woolworths has Jamie Oliver cooking for dads as Coles pushes fresh produce with Curtis Stone - Mumbrella
    spoga+gafa 2015 increases "internationality"
    spoga+gafa 2015 attracted 37,000 visitors
    The Grill Park featured live grilling and lectures on grills and BBQs
    spoga+gafa 2015 was presented on 225,000sqm of space
    Subscribe to HNN weekly e-newsletter
    Event organiser Koelnmesse reports the event attracted 37,000 visitors from 108 countries and 2,024 exhibitors from 59 countries.

    This compares to 36,800 trade visitors from over 100 countries and 2,012 exhibitors from 56 countries in 2014. Koelnmesse chief operating officer, Katharina C. Hamma said:
    spoga+gafa 2015 once again reinforced its significance as the leading international garden trade fair in 2015. Not only the stable, key figures corroborate this, but also the high level of quality of the exhibitors and visitors.
    The top buyers and decision-makers of the industry selected spoga+gafa as the platform for their orders or for establishing new business contacts. Whereas there was a slight decline in the number of domestic visitors, the strongest growth from Europe was recorded from France, Swiss and Turkey...
    Australia, New Zealand, South Africa and South America, recorded the highest growth rates in attendance.

    spoga+gafa 2015 was presented on 225,000sqm of space. This year's event was restructured from five segments down to four. This met with a positive feedback from the visitors and exhibitors, according to the organisers.

    Shorter routes and the partial relocation of related product groups helped to create well-frequented halls. Additional programs at spoga+gafa were also well attended such as the Speakers Corner and the Taspo Talks.

    The Grill Park featured live grilling and lectures on the theme of grills and BBQs. The Landgared Plant Ordering Days ensured there was plenty of living green at the international garden trade fair.

    A new format, TAG DES GARTENS included 114 exhibitors from eight countries presenting their products. They turned the garden theme into an experience. It featured information on the garden market, garden tips and garden. In total, over 15,000 visitors attended TAG DES GARTENS.
    Survey results

    Almost 73% of the visitors interviewed were satisfied or very satisfied with the event overall. As a result, the recommendation rate was high. Almost 90% would recommend a business acquaintance to visit spoga+gafa.

    In terms of the market overview and establishment of new business relations, the satisfaction level increased to 52% compared to 46% last year.

    Seventy-one per cent of the visitors interviewed are involved in procurement decisions, and 41% contribute to the decision-making process. Ninety per cent would recommend another company to participate at spoga+gafa.

    In 2016, spoga+gafa will take place from 4 to 6 September.

    (All attendance figures are calculated in accordance with the guidelines of the Association for the Voluntary Control of Trade Fair and Exhibition Statistics.)
    Adelaide Brighton reports strong 2015H1 results
    Adelaide Bright FY 2015 first half results
    Adelaide Brighton
    Adelaide Brighton operations map
    2014 Revenue analysis for Adelaide Brighton
    Subscribe to HNN weekly e-newsletter
    Australian building materials company Adelaide Brighton has reported good results for the first half of its 2015 financial year. The results were boosted by a $13 million pre-tax profit on property sales.

    Including the property sales, revenue came in at $678.1 million, up 12.6% on the previous corresponding period, which was the first half of FY 2014.

    Underlying earnings before interest and taxation (EBIT) were $117.3 million, up 26.8% on the pcp. (Underlying adjustments for 2015 consisted of $500,000 for corporate restructure. Underlying adjustments for 2014 included $14.2 million of costs.)

    Net profit after taxes (NPAT) was $82.6 million, up from $51.2 million in the pcp. Underlying NPAT was $83 million, up from underlying NPAT of $61.2 million for the pcp, an increase of 35.6%.
    Adelaide Brighton FY 2015 first half results

    Positives that improved the EBIT margin included:
  • Property sales
  • Increase in cement and clinker volumes
  • Sales volume and price improvement in lime sales
  • Volume and selling price increase in concrete and aggregates

  • Negatives included:
  • Decline in company's average cement and clinker price due to shift in geographic sales mix

  • The good results saw the company release a special dividend of $0.04 per share, supplementing its standard dividend of $0.08 per share.

    A major driver of the company's performance was increased construction activity. As the company's CEO, Martin Brydon, commented:
    Housing activity is at healthy levels on both the east and west coast of the country and this is augmenting the demand for our products from major infrastructure and resources projects.

    Cement and lime sales benefitted from both higher volumes and better prices. Lime benefitted from the resumption of sales to a major customer in the Northern Territory. Concrete and aggregates benefitted from acquisitions made in South Australian and Northern Queensland.
    Adelaide Brighton acquisitions - Fairfax Media

    The company reports that New South Wales sales were driven by construction in the state's residential sector. Victoria has seen recovering demand, with construction in central Melbourne particularly strong.

    Western Australia and Queensland have been supported by a recovering residential construction market. South Australia had a stable residential market, but non-residential construction has declined. The Northern Territory has been largely stable.

    The company expects to see profit of between $200 million and $215 million for the full 2015 financial year. The company has outlined potential cost savings of around $11 million through factors such as decreased transportation costs as fuel becomes cheaper.

    Upcoming negatives include reduced cement sales in South Australia, a continued decrease in average realised cement prices, and increasing import costs. Positives include increased volumes in many markets, and higher earnings in concreted and aggregates due to acquisitions, improved demand and pricing.
    Dick Smith results FY 2015 full year
    Dick Smith full year results FY 2015
    Dick Smith
    Dick Smith moves into appliances
    The Move initiative from Dick Smith
    Click to visit the ITW website for move information
    Australian electronic goods and accessories retailer Dick Smith Holdings has reported an average result for FY 2015. While total sales came in at $1319.7 million, up 7.5% on the previous corresponding period (pcp), which was FY 2014, like-for-like (comp) sales growth was only 1%.

    Earnings before interest and taxation (EBIT) before significant items came in at $65 million, up 5.5% on the pcp, net profit after tax (NPAT) before significant items was $43.3 million, up 3.1% on the pcp, but was $37.9 million after significant items, a 9% decline on the pcp.
    Dick Smith results FY 2015

    Australian results were generally stronger than those returned by its New Zealand operations.

    While the company's CEO, Nick Abboud, and chief financial officer, Michael Potts, were staunch in their defence of the results, the market saw the result as under-performing, and the stock price slid by 20% in the week after the results were announced.

    One of the main contributions to the decline was the company's decision to cease offering discounts on Apple products. This strategy had been credited with driving customer foot-traffic into stores, and boosting sales, but the company chose to pull back on this offering in the second half of FY 2015.

    The company did have some good news to provide, including the ongoing growth in its online business, which now accounts for 8% of all retail sales, doubling the amount of sales, and advancing its previously 5% proportion for the pcp.

    Sales of its two private label brands, Move and Dick Smith, were also good, representing more than 12.%% of revenue. This helped the company return a gross margin of 24.8% and an EBIT margin of 4.9%.

    The company also grew its "Mates Rates" branded loyalty program. It indicates it is on track to reach a target of two million participants by June 2016.
    Connected Home

    One of the initiatives that Dick Smith pointed to as a potential boost to earnings in the coming financial year was its introduction of small appliance sales. Branded as "Connected Home", this is currently a $1.7 billion market, which is expected to grow strongly in coming years.

    The new store format was recently launched at the company's store in George Street, Sydney, and a second site will launch soon in Penrith. The company predicts this format will have been rolled out to 100 stores by mid-December 2015.

    In responding to an analyst's question about this move during the results presentation on 18 August 2015, this is what Mr Abboud had to say:
    A lot of these products are going to be very integrated and are going to be very app-driven... We've mapped out a hundred stores before Christmas where there will be three different sizes that we will apply in floorspace, ranging between 50m and 200m.
    If you look at what is happening at the moment, we're in fitness in a big way, some months we are no. 1 marketshare in the Australian market, and there is a good association to coffee and juice, which is a real lifestyle adjacency to fitness.
    So, what does Dick Smith look like going forward is that we've got this $1.7 billion market, which, today, we are at zero, it is going to flow nicely into the current products we have, such as fitness, it is an opportunity for us, we have the biggest online business. For small appliances in the UK, 50% of it is sold online.
    Our suppliers such as Nespresso and Breville, who have the largest market share in this space, have partnered with us in a big way. You will see us take this opportunity and execute it I think as well as anyone who is already out there. So a big opportunity to improve our comp sales as we go forward.

    It is helpful to contrast the performance of Dick Smith with what is now one of its main competitors, JB Hi-Fi. The figures from JB Hi-Fi indicate that the launch of its "Home" branded stores, which sold larger appliances (and now will also sell smaller appliances) helped it overcome the loss of its "software" businesses, which include music CDs and video DVDs.

    In contrast, Dick Smith's Move brand and store layouts, which were aimed at the technology as fashion market, have actually underperformed for the company. Essentially, Dick Smith should have moved into the appliance area post Christmas 2014, instead of continuing to boost its Move business.

    That said, the company has now recognised the direction it should take, and taken immediate and effective action.

    For the home improvement industry, the area of most note is that Dick Smith is now relying on the growth of the connected device, "internet of things" market, and has staked out a claim to that area.
    JELD-WEN acquires Australian window company
    JELD-WEN has acquired Australian company, Aneeta Window Systems
    Aneeta Windows has specialised in the manufacturing of sashless windows since 1994
    The acquisition expands JELD-WEN's brands in Australia which includes Stegbar
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    JELD-WEN has announced the acquisition of Aneeta Window Systems. Since 1994, Aneeta Windows has specialised in the manufacturing of sashless windows. It is a system that features two moving panes of counterbalanced glass, without the bulk of a timber or aluminium sash frame surrounding the glass.

    Based in Melbourne, Aneeta currently operates in Melbourne, Sydney, Brisbane, Perth and Adelaide. The company has licensing agreements in the US, New Zealand and The Philippines.

    Aneeta also exports products to Singapore and Mexico, and is exploring other opportunities for international growth.

    The addition of Aneeta expands JELD-WEN's family of brands in Australia, which includes Stegbar, Corinthian, Regency, Airlite, William Russell Doors and JELD-WEN Glass. Kirk Hachigian, JELD-WEN chairman and chief executive officer said:
    The acquisition of Aneeta is a strong, strategic fit for us. As an industry leader, our goal is to offer the most innovative window and door products not only to our customers in the Australian market, but throughout the globe. We welcome Aneeta as part of JELD-WEN, and are pleased to add their products to JELD-WEN's portfolio of offerings.

    The acquisition of Aneeta continues an aggressive growth period for JELD-WEN. It follows the company's recent announcement in early August that it has acquired Dooria, one of the largest door manufacturers in the Swedish and Norwegian markets.

    JELD-WEN operates in more than 20 countries with US$3.5 billion in revenue, half of which comes from outside the United States.

    With a strong commitment to sustainability, JELD-WEN is a recognised leader in manufacturing energy-efficient products. It has been an ENERGY STAR(r) partner since 1998.
    The Home Depot uses digital signage
    The Home Depot Mexico is using digital media across its 115 stores
    Navori Labs
    Digital signage is helping to boost its Do More DIY campaign
    The Home Depot entered the Mexican market in 2001
    Click to visit the ITW website for move information
    The Home Depot Mexico with 115 stores is using digital media to strengthen branding around its Do More DIY campaign, which encourages shoppers to take charge of home projects.

    Megapantallas de Mexico SA de CV (MDM) is building the digital signage network to support the initiative. MDM recommended using Navori Labs' QL Professional digital signage engine to create the platform.

    MDM also provided technical support and training to enable Home Depot Mexico employees to create, program and manage media content in-house. MDM is hosting the QL software, taking advantage of its cloud-based design to reduce operational costs and eliminate systems management on the end user side.

    In addition to bringing the Do More DIY campaign to more customers inside stores, digital media has helped the promotion of special seasonal and sale merchandise. Gerardo Ylizaliturri, CEO of MDM said:
    The most pressing concern was quick deployment, as the digital signage network needed to be fully installed, set-up and operational nationwide within a tight timeframe.
    The system also needed to play high-quality video and audio without interfering with each store's Internet connections or broadband service. With its ease of set-up, intuitive operation and high-quality displays, Navori Labs was the best fit for the end user's needs.

    The rollout included delivery of 42-inch video screens and Android media players to each store. Within 20 days, MDM mounted the screens, configured the QL software, activated the media players, tested and deployed all systems across the 115 stores.

    MDM additionally conducted a two-hour class so that The Home Depot Mexico system administrators could immediately begin handling day-to-day media content broadcasting.

    Ylizaliturri said that the Navori Labs network is scalable, and employees have been trained to manage and schedule content for delivery to up to 1,000 stores in the event of expansion. MDM configured the network to send QL-driven content to every store at once, or designate content for delivery to regional groups or individual stores.
    Lowe's innovation investment in India
    Lowe's is looking to work with startups at its global accelerator in India
    Economic Times
    The accelerator program will be housed inside Lowe's global in-house centre
    Lowe's created Lowe's Innovation Labs in 2014
    Click to visit the ITW website for move information
    Lowe's is opening its first global accelerator in Bengaluru (Bangalore), India in December. The home improvement retailer is seeking startups to develop products in high-tech areas such as augmented and virtual reality, 3D scanning and printing and robotics.

    Kyle Nel, executive director of Lowe's Innovation Labs, said the company is open to opportunities such as partnerships, investments and even acquisitions.
    I don't want good stuff coming out of the accelerator, I want amazing stuff, and for that, we need to think out of the proverbial box.

    The 16-week accelerator program will be housed inside Lowe's global in-house centre (GIC), which employs 300 people. The company is also looking to partner with universities in Bengaluru to develop retail innovations.

    Indian startups will be shortlisted to participate in the accelerator programme and have the opportunity to partner with the Innovation Labs to deploy their technology in the US.

    The Innovation Labs brings in a science fiction writer, provides him with the market data and trends, and commissions him to write a story based on it. The team then renders a comic book, and calls for startups that can bring these projects to life. Nel said:
    We are going to be announcing a story or two for Bengaluru.

    Lalit Ahuja is acting managing director of Lowe's India. He helped open Lowe's GIC in February 2014. He said:
    Bangalore has a wealth of talent that has helped Lowe's build a strong foundation for our technology and analytics centre.

    Lowe's created Lowe's Innovation Labs in 2014 with a vision get technology out of the lab and into the real world. In its first year, it introduced Lowe's Holoroom, the OSHbot autonomous retail service robot and 3D scanning and printing.
    Email scam defrauds import-export businesses
    The original FBI advisory
    Krebs on Security
    Technology firm, Ubiquiti Networks gets scammed
    Supply chain company, Scoular gets scammed
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    How does your business authenticate matters such as wire transfers? If it comes down to just an email from "the boss" to the account administrator, you could find yourself in trouble. Basically, as suppliers and retailers in home improvement expand their operations overseas - especially to China - new vulnerabilities can emerge in payment and other systems.

    While most of us are on the alert for "phishing" scams, which get users to click on fake links in emails to download malware, there is a kind of "social phishing" that relies on scamming the interpersonal trust in an office.

    The sums involved in this social phishing can be huge. US companies recently lost US$179 million during a 14-month period to fraudsters using this sophisticated email scam, according to the US Federal Bureau of Investigation (FBI). The average amount scammed is US$100,000, though some scams have resulted in losses of over US$45 million.

    Known as business email compromise (BEC) or "CEO fraud", the social phishing scam relies on infiltrating executive email inboxes, then using information obtained there to convince other executives in the same company to make overseas wire transfers.

    According to the alert from the FBI:
    The scam has been reported in all 50 states and in 79 countries. Fraudulent transfers have been reported going to 72 countries; however, the majority of the transfers are going to Asian banks located within China and Hong Kong.

    One tactic the fraudsters use is to send emails from addresses that look very similar to that of the target company, for example substituting the numeral "1" for an "L" in a domain name.

    The best way to prevent such losses is to have a non-email based verification process in place, such as a text message or a voice phone call, and to require this for any and all wire transfer authorisations.

    If a company is regularly using email to arrange the movement of money, it should really consider using some form of email encryption. This will not only make sure messages are not intercepted, but provides guaranteed authentication of the sender.

    One of the best systems to use is Pretty Good Privacy (PGP) which works on a system of shared public keys combined with private keys. For details on how to set this up, Lifehacker has a good series of articles:
    Pretty Good Privacy on Lifehacker

    One final note on email security. A fact that is commonly not understood by email users is that the "from" address that appears in an email is highly insecure. It is not in any sense a "system" address - that is, it does not relate to any of the actual delivery mechanisms for the email. It is set by some text in the text "header" of the email message.

    A common hacker trick is simply to change that text. It is easy to "spoof" the sender of an email to display as almost anything - from the President of the USA, to a top CEO. This can be extended to the "cc" part of an email as well.

    So it is possible to send an email that not only looks like it was sent by someone else, but also appears to have been carbon-copied to people who do not receive it.
    Gen Y prefer high-rise housing
    Traditional home ownership is fading for Gen Y
    Gold Coast Bulletin
    The apartment boom is ongoing in Australia
    Gen Y will set the housing agenda in the next decade
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    Generation Y are embracing their own high-rise dream: living close to where they work, surrounded by cafes and restaurants, and walking to the supermarket.

    Less than five years ago, only 10% of new home approvals were in high-rise complexes of more than four storeys, according to CommSec chief economist Craig James. Today more than a quarter of all new homes being built are in high-rise buildings.

    James says the trend will mean more restaurants, bars, supermarkets and service businesses like hairdressers are established in nearby areas, creating opportunities for businesses. He said:
    The millennials have indicated a preference for living close to where they work, to cafes and restaurants and the like rather than commuting.

    That's in contrast to baby boomers or some of generation X who preferred to have a quarter-acre block in the suburbs, commute and spend their weekends mowing lawns. James said:
    The gen Y or the millennials are effectively saying 'no, that's not for us - we want to be travelling, we want a different sort of lifestyle'.

    Australia's multi-unit apartments and townhouses industry has enjoyed strong growth over the last five years, based on research by IBISWorld.

    That's been underpinned by the shift towards more high density living particularly in capital cities and urban areas, a search for more affordable housing for first home buyers and a continued move towards downsizing, said IBISWorld senior industry analyst Spencer Little.

    Urban Taskforce Australia chief executive officer Chris Johnson argues the property development industry is really just providing a product the market wants. Johnson says it's not only gen Y who prefer to live in inner-city apartments. Downsizing baby boomer retirees are preferring to live in apartments close to shops, amenities, entertainment and transport. He told a federal parliamentary inquiry into home ownership:
    A lot of people are preferring this sort of lifestyle.

    But economist Saul Eslake argues that while a substantial decline in home ownership rates in Australia may reflect changing preferences, it's more likely in response to deteriorating housing affordability. He told the inquiry:
    It's much more likely that this decline is largely in response to deteriorating housing affordability and more plausible that changing housing tenure preferences among younger adults are themselves a response to deteriorating housing affordability.

    The high-rise developments are even moving away from a single apartment building and into bigger complexes which have multiple apartment buildings on the one site, notes Little. He said:
    Rather than just having a building there it's now more about the living, the environment and the community. The industry players are certainly looking at ways to attract tenants.

    Putting hundreds of apartments in the one spot requires supporting facilities. James said:
    All those people moving in the area, they've got to have access to a supermarket, they've got to have access to a hairdresser, to a newsagent, takeaway food. There's gains for those businesses in locating there because automatically they've not just got access to a couple of new houses, they've got access to hundreds of new homes.

    Little says supermarket chains, liquor stores, restaurants and other retail outlets often seek to set up close to these new residential areas particularly when they have multiple buildings rather than just the one.
    Looking at it from a consumer point of view, they're often quite time poor, they're looking at the convenience of having these retail outlets, supermarkets, restaurants very close by. So it's certainly very beneficial both for the businesses and for the tenants.
    Sherwin-Williams simplifies colour selection
    ColorSnap is designed to help end-users make paint colour selections efficiently
    A central work area is for customers to arrange and review their colour choices
    The system includes an updated set of online tools
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    Sherwin-Williams' ColorSnap(r) is designed to help consumers and professionals make confident paint colour selections. It has a first-of-its-kind, in-store display that makes colour selection fast and easy. There are also enhanced online and offline tools, and new colours.

    Customers can explore colour with the interactive, in-store ColorSnap Studio display, which groups colour by family, such as red, yellow or blue, then displays colour by saturation level from bright to neutral. There is a category just for whites.

    Each colour family is set on one of 24 rotating panels. By turning a panel, customers can see a curated selection of nearly 50 paint chips of specific colours within that colour family.

    The display, which will be the centre piece of every Sherwin-Williams store, also features new 2-by-3-inch take-home colour chips, rather than strips, so customers can get a bigger idea of how colours will look in their space.

    As part of the new display, a central work area will be added for customers to arrange and review their colour choices, use Sherwin-Williams colour tools and interact with store experts. Customers will also be able to browse and take home nine new colour guides and 12 postcards that are designed to inspire, educate and simplify colour selection.

    Sherwin-Williams conducted extensive testing to ensure the ColorSnap system would improve the overall customer experience. On average, customers found their paint colour of choice in 60% less time than with the previous display.

    ColorSnap will be available in all 4,000 Sherwin-Williams stores across the US and Canada by the end of January 2016.

    In addition to ColorSnap Studio, the system includes an updated set of online tools including ColorSnap Visualizer for iPhone, iPad, Android and online (at The tools allow users to explore colour before ever picking up a paintbrush.

    With the mobile app, customers can scan the new 2-by-3 inch colour chip with their iPhone or Android smart phone for instant access to room scenes featuring that colour, options for coordinating colours, and more. ColorSnap Visualizer also matches a colour in a photo to a specific Sherwin-Williams colour, allowing users to virtually paint a room or simply browse details on the full range of Sherwin-Williams colours. The iPad app features inspirational room scenes that showcase expert colour picks.

    The ColorSnap system integrates with Sherwin-Williams' Sher-Color[tm] Advanced Color Matching Technology, which calibrates colour formulas specifically for every product and sheen.

    The ColorSnap Design Pro Suite includes a revamped and expanded suite of tools for professionals (including an ergonomic fan deck, portable and desktop kits and more), along with the ColorSnap Visualizer online tools. The suite creates a colour selection system that can differentiate a design practice. It will be available in early 2016.
    HNN Index for week ending 28 August 2015
    HNN Home Improvement Index for week ending 28 August 2015
    HNN Sources
    Adelaide Brighton posted a 61.3% increase in net profit after tax
    Metcash expects difficult trading conditions in food and grocery to continue
    Click to visit the HBT website for more information
    The HNN Home Improvement Index for the week ending 28 August 2015 rose by 8.5 points to close at 967.1. The underlying ASX 200 index also rose, by 49 points to close at 5263.6, or up 9 points to 979 on the adjusted scale.

    Over the past three weeks the ASX 200 fell at a steeper rate than the HNN Index, bringing them closer to alignment. Both are now trading below the level they were at on 1 July 2014.

    In a roller coaster week on the markets, three stocks showed a significant decline, and three showed strong gains. The losers were Super Retail Group, down by 8.9%, Breville Group, down by 6.4%, and Boral, which dropped 13.2%.

    The gainers included GWA Group, up 13.2%, CIMIC (formerly Leighton Holdings) up by 6.1%, and Bluescope Steel, which rose by 23.9%.
    Adelaide Brighton
    Adelaide Brighton posts record half year profit

    Adelaide Brighton posted a statutory net profit after tax of $82.6 million for the six months to 30 June 2015. This is an increase of 61.3% over the previous corresponding period, a record result. Revenue for the period was $678.1 million. The improved result was due to higher cement and lime volumes, improved prices, proceeds from property transactions and 2014 acquisitions in South Australia and north Queensland.
    Adelaide Brighton posts record half year profit - Manufacturers' Monthly
    Boral lifts profit to $257 million

    Boral has lifted its full year profit by just under 50% to $257 million. Excluding significant items, which included a $115 million gain on the sale of Western Landfill business and costs associated with the disposal of East Coast Bricks and a restructure, net profit rose 45% to $249 million in the year to June 30. However revenues dipped 15.2% to $4.4 billion.
    Boral lifts profit to $257 million - Yahoo Finance
    Charter Hall Group
    Charter Hall charts expansion course as profit surges 43%

    Charter Hall aims to expand its suite of funds to increase assets under management and deliver higher earnings growth through the property investment business. In the past year, it has undertaken a significant number of acquisitions across office, industrial and retail sectors, which has led it to boost funds under management by $2.1 billion, or 18%, to $13.2 billion.
    Charter Hall charts expansion course as profit surges 43% - Fairfax Media
    Metcash expects tough trading conditions in food and grocery to continue

    Metcash chief executive Ian Morrice told shareholders at the annual meeting recently that difficult trading conditions experienced in food and grocery are expected to continue in the new financial year. Morrice said while the grocery wholesaler's balance sheet had been strengthened by capital initiatives like selling the automotive business and key programs such as Price Match, Private Label and Diamond Store refurbishments, this was not enough to offset food and grocery headwinds in 2015.
    Metcash expects tough trading conditions to continue - Fairfax Media
    Pact Group
    Pact Group flags more growth

    Pact Group posted a profit of $67.63 million in the year to June 30, a 17.24% increase on $57.69m a year earlier. Revenue in the period rose 8.03% to $1.253 billion. The packaging group, backed by Melbourne billionaire Raphael Geminder, in June made its biggest acquisition since becoming a listed company with the $80m purchase of Barry Smorgon and John Tisdale's packaging company Jalco.
    Pact Group flags more growth - The Australian
    Westfield on track despite NY delay

    Westfield Corporation made a net profit for the six months to June 30 of $US466 million. Funds from operations of $US380.3 million were in line with its forecasts. The opening of the $US1.4 billion Westfield World Trade Center, which is being constructed by the New York Port Authority and then leased by Westfield, has been pushed back to the first half of the next financial year.
    Westfield on track despite NY delay - Sky News
    Woolworths 2014/15 full year results
    Woolworths results FY 2015
    Yahoo! Finance/Thomson Reuters
    Results for Masters/HTHG FY 2015
    The Sherwin Williams paint display at Masters
    Click to visit the ITW website for move information
    Australian retailer Woolworths has reported disappointing results for full FY 2014/15. Sales for its overall business fell by 0.2% as compared to the prior corresponding period (pcp), which is FY 2013/14.

    Excluding discontinued petrol operations, sales grew by 2.5%, which is close to the rate of inflation. Net profit after tax (NPAT) before significant items came in at $2,453.3 million, up by 0.1% on the pcp. After significant items NPAT fell 12.5% to $2,146 million.

    Sales in general merchandise, which includes Big W, fell by 5.7%, after a 14.4% fall in the most recent quarter.
    Woolworths results FY 2015

    Masters Home Improvement reported very disappointing results. While sales grew from $752 million in the pcp to $930 million in the current period, a rise of 23.7%, earnings before interest and taxation (EBIT) showed a loss of $245.6 million, nearly 40% up on the loss of $176 million in the pcp. This loss represents over 35% of the over $695 million Masters has lost to date.
    Masters/HTHG FY 2015 results

    The Home Timber and Hardware Group (HTHG) reported a sales increase of 20.9% over the pcp, largely driven by acquisitions. Its EBIT grew substantially, up from $7 million in the pcp, to $20.9 million in the current year, an increase of 198.6%.
    New chairman of the board

    In a media briefing prior to the results presentation, Woolworths announced that the chairman of the board, Ralph Waters, had been replaced. His replacement is Gordon Cairns.

    In comments during the briefing, Mr Waters indicated that 1 September 2015 had become the target date for his replacement after the board decided to select a chairman from outside of itself.

    Issues have emerged regarding the search for a CEO to replace the outgoing Woolworths CEO, Grant O'Brien. Mr Waters indicated that the search process is currently at the "long list" stage.

    This has the advantage of permitting Mr Cairns to shape the process more, but also has the disadvantage of delaying the replacement. As Mr Cairns takes over, it is 10 weeks from Mr O'Brien's resignation, and only 12 weeks from the company's annual general meeting (AGM), when the new CEO was supposed to be announced. With a short list to formulate, interviews and negotiations to conclude, it is possible a candidate will not have signed on by the AGM.
    Analyst briefing on results

    The briefing on the results had something of a curious atmosphere. With Mr O'Brien set to leave his position at the AGM or shortly thereafter, it was difficult to know what value to place on his statements, or how seriously to take any future planning or projections.

    The managing director of Masters, Matt Tyson, essentially restated the earlier guidance that had been given for the business:
    There is much more to do though. At the end of this financial year we're targeting 50% of the fleet in the new format. That puts significant demands on revamping and upgrading the existing store stable. We're working hard to roll those global leading brands back into our existing stable. Brands like Sherwin Williams which we talked about in May, which is the US leading paint provider -- but also brands like Honda mowers, which for the first time in Australia will be available through a big bulk store, but only through Masters. That product today is only sold through specialists. A more complete range - the back-integration of that range into all the stores. So it's early days but I'm optimistic about the progress that has been made. I'm optimistic we can make a real difference in FY16.

    The difficulty with comments such as this is that Woolworths has something a poor record when it comes to predictions about Masters.

    From Woolworths' 2012 Annual Report:
    Of the 150 sites we plan to secure over five years, there are 112 sites in the pipeline. At the end of the year, there were 12 stores under construction and five completing fitout. We expect at least 30 stores in total to be open by the end of FY13 and approximately 100 stores opened by the end of 2016.

    From Woolworths' 2013 Annual Report:
    Based on our planned store rollout profile and current forecasts (targeting approximately 90 stores opened by the end of FY16), we expect Masters to break even during FY16. This forecast assumes moderate growth in sales per store for a start up business, improvements in gross margin as the sales mix stabilises, efficiencies in store and increased rationalisation of costs in the distribution and support network as sales levels increase. Given the greenfields nature of the Masters business, short term results will continue to vary. However, we expect the losses for FY14 not to exceed this year's level.

    From Woolworths' 2014 Annual Report
    Sales were lower than expected and were impacted by a highly competitive market and lower consumer confidence. Losses before interest and tax were higher than anticipated.

    The last statement is of particular interest, as it preceded a year where losses grew even more, despite a strongly performing consumer market.
    Lifting Masters' profitability

    The most interesting comment on Masters was made by David Errington of Merrill Lynch:
    My question is on the asset allocation or the allocation of capital to the home improvement business. My comment is coming on the back of watching Bunnings' results, which they reported about a week ago, where their sales growth in total - not sales, their sales growth is AUD1 billion.
    So their growth is greater than your entire business, and you're slowing down the number of store roll-outs. Whilst I appreciate a 30% improvement in those new format stores, and Matt's doing a great job. This is not a crack at Matt. Far from it. But 30% uplift is just a drop in the bucket.
    Those stores, on my numbers, would still be deeply in losses, because you'd probably need, just doing mathematics on the EBIT of home improvement and the sales of home improvement, you'd need a 100% uplift in sales to store for the stores to break even, let alone to get a decent return on your capital.

    The managing director of Masters, Matt Tyson, responded:
    Clearly these are new stores, so they are by nature immature businesses. They haven't gone through a full season yet, and balancing, as you know, a significant shortfall is often a kick starter for a new home improvement business. But we're seeing greater than 30%. Actually, David, I think for these new stores as a whole we can see line of sight to profitability without ridiculous uplifts in sales. I think the uplift in sales required is reasonable for these stores. I think you're a bit wide of the mark with 100% uplift. We don't need 100% uplift to get to profitability, to get to - and that's our goal. Our goal is to build a proposition that can deliver profitability and returns.

    Mr Errington followed up:
    Matt, how are you going to turn around a $245 million EBIT loss? That's the point. This is the point that Woolworths needs to understand. There's $3 billion of capital employed, but you need to get a return on that. Just breaking even is not an acceptable result.
    Trends for Masters since inception

    Mr Errington's point seems quite a basic one, but something Woolworths cannot quite absorb. Under the current plans, by the end of FY 2015/16, Masters will have succeeded in making one half of its stores lose money more slowly than the other half.

    To make the business viable, something more than that is needed, and that most likely means exploring more radical approaches.

    The primary cause for many of the mistakes made at Masters would seem to be Woolworths' ongoing obsession with Bunnings. Instead of simply seeking to build a viable hardware retailer, Woolworths set out to build a retail operation to disrupt another retail operation. It is hardly surprising, given this, that the end result has been a loss-making enterprise.

    Bernie Marcus and Arthur Blank, the founders of the world's largest home improvement retailer, The Home Depot, expressed the need to create an environment that nurtures the customer relationship by stating that "the customer has a bill of rights at The Home Depot."

    It is this kind of thinking that has been lacking at Masters. The focus on competing rather than serving the customer has created a business that lacks energy and customer engagement.

    It will be interesting to see if, when new top management is in place, Mr Tyson will be able to develop better strategies to grow customer relations, rather than being limited to efforts that engage with the phantom nemesis that Bunnings has become.
    The Leveraxe for splitting wood
    The Leveraxe is being imported into Australia
    The inventor of the Leveraxe, Heikki Karna
    The Leveraxe in action
    Click to visit the HBT website for more information
    Finnish pensioner and retired air traffic controller Heikki Karna found himself, in his own words, "becoming pissed with the traditional axe". This happened while he was clearing a rocky site in the deep forest of Sipoo to build a house for himself and his wife.

    He found the basic axe to be dangerous, and difficult to use. It caused him back pain, and he accidentally hit himself with the blade several times.

    Over time, an idea for how to redesign the axe came to him, and the Leveraxe was born. One of its main features is that it is essentially asymmetric in its construction - the axe blade is actually designed to twist on impact with the wood.

    There is also a hook at the back top of the axe blade, so that the axe will not continue on down once it has split a section of wood, but "hang up" instead, thus limiting injuries.

    One of the main advantages is that with the Leveraxe there is no need to strike the log at its centre. As the company explains:
    With the traditional axe, you are almost always required to strike near the middle of the log. Hitting closer to the edge would be dangerous because it is too easy to miss the log or the axe will bounce wildly from a non-centred strike. In both situations the results can be dangerous.
    Unfortunately, as we all know, splitting a whole log when hit in the centre is the most challenging task. When you have been able to split it in two, the rest will go much more easily.
    With Leveraxe you won't need to take the whole log head on by striking in the middle. Instead, you can easily and safely start splitting suitably sized logs from the sides by striking closer to edges. No more needing the futile first heavy strikes just to get the log split in two.

    Once he had the idea for the axe, Karna made a hundred or so prototypes at a local steel workshop. Now he is ready to produce a sleek new version of the axe for international distribution.

    Karna has turned to Kickstarter for backing, and, as of 1 September 2015, has surpassed his original US$150,000 goal, with 1457 backers coming up with US$172,266, with one week remaining for funding.

    Backing packages that are still open include a single axe for US$119, or a five pack of axes for US$495.

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