HI Weekly Vol. 1 No. 12
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HI Weekly No. 12
Dulux consists of five internal segments
Hitachi has agreed to purchase Metabo
Click to visit the HBT website for more information
Each week, the HNN weekly e-newsletter can be accessed in one convenient PDF. Easy to read onscreen, or print it out.

Just use the following link to download the PDF:

In this week's edition, we take a look at forecasting specific to hardware and home improvement retailers including the drivers and influencers. We discover a number of basic tools that could prove useful. DuluxGroup's annual results are examined along with Hitachi's planned acquisition of Metabo.

Other news stories this week include Haymes Paint's transition to the next generation of managers and online housewares retailer Temple & Webster's purchase of furniture e-tailer Milan Direct.

Also in this edition: a selection of the latest home improvement jobs from around Australia and bamboo composite material as a potential replacement for steel in the future.

Plus all our regular features: big box updates; HNN Home Improvement Index; new products; and hot links.
Construction and manufacturing forecasts
Percentage change in metal fabrication and machinery manufacturing
HNN Sources
Gross value added from mining
Construction activity: Overall
Click to visit the HBT website for more information
Modelling the future for tools, industrial, and construction suppliers is far from being a simple task.

For example, a great deal has been written over the past two to three years about the Australian economy transitioning from mining and manufacturing to being more of a services-based economy. If, as is commonly suggested, cities act as the main drivers of the kind of creative innovation needed to drive a services-based economy, then it benefits everyone if they operate as efficiently as possible.

As a result of Australia's dramatic increase in the population of its urban areas, most large cities are not very efficient. In part this is because they are struggling with an ongoing infrastructure deficit.

One good example is the public transportation system - especially light and heavy rail - for the region stretching 40km around Melbourne in Victoria. Under constant stress to carry an increasing number of people from ever increasing average distances to the city centre, the rail system has so far chosen to reduce convenience and amenity in favour of increased capacity.

Thus there are now far fewer tram stops, and more express rail services that have reduced services in inner-urban areas. Rail carriages have been altered to remove a further 20% of seating, increasing standing room and thus overall capacity.

As "economical" as these changes may seem, they still carry infrastructure costs. Increased frequency of trains places additional stresses on the level crossings that halt traffic on major roads whenever a train goes through them. This leads to increased traffic congestion, and ongoing safety concerns. Thus the Victorian state government has found itself forced to invest in creating rail overpasses at key level-crossings - a very costly necessity.

Digging a little deeper into this example, what are the causes of so many people travelling from far outside the city to the city centre? It is an obvious case of centralisation, but what is helping to drive this increase?

One candidate is the decline of manufacturing. Manufacturing is, and has been, one of the main forces that - in the past - allowed Australian cities to decentralise to some extent. No one builds factories close-in to a city centre, for a wide range of reasons, including land cost and environmental concerns.

We all know of entire suburbs that seem to have been created to service certain industrial clusters. With many of those regions now entering decline - which will accelerate sharply as, for example, automotive manufacturing ceases - the residents of these areas now have to get to the city in order to have a job.

Of course, our cities need to get "smarter". They need to be better designed. New forms of decentralisation need to be introduced. Even new forms of work itself need to be encouraged - for example, if 35% of city workers would "telecommute" - work from home - just one day a week, that would reduce transportation stress by 7%, which is a huge gain.

Underlying all these possible changes, however, is one simple constant: infrastructure. The reality is that every major Australian city has a large amount of infrastructure work that really must get done if they are to function effectively in what - we are told - is Australia's future economy.

To put that into the terms that relate directly to tools, industrial, and construction suppliers, there is an ongoing, steadily increasing demand in this area. However, it is going to be greatly restricted by the twin issues of financing and planning.

Australia will be forced over the next five to six years to look increasingly to overseas financing of its public infrastructure projects, which brings with it a number of political difficulties. Equally, in terms of planning, governments remain torn between expenditure on shoring up the considerable remnants of a past economy and investing in parts of the new economy.

In this type of environment, it is just very difficult to forecast what is going to happen in the short term. HNN can say with some confidence that tools, industrial, and construction supplies is going to be a very, very good business in the future. Exactly when that particular part of the future is going to come more fully into effect is very difficult to judge.

While HNN does not feel confident to offer much in the way of a forecast, we can take a look at some past trends that will give a good view of what is likely to happen through the next calendar year.

The level of statistics readily available for manufacturing makes providing good forecasts quite difficult. This is a sector that at the moment in Australia varies quite widely from one area to another. Much of that variance can be put down to, aside from what is happening on the demand-side, how well each area is coping with the transition to being part of a high-cost industry.

In a paper prepared for the Prime Minister's Manufacturing Taskforce in April 2012, entitled "Australia's Manufacturing Future", Roy Green & Goran Roos outline the differences in approach needed when moving from a lower-cost to a higher-cost manufacturing environment.
Moving from low-cost to a high-cost manufacturing environment

In the following chart, HNN has graphed the percentage change in two key manufacturing areas, metal fabrication and machinery, against the currency exchange rate for the AUD to the USD. What this graph shows to some extent is the difference between the pre-GFC and the post-GFC manufacturing environment.

Pre-GFC the value of the AUD would seem to be regularly influential on these forms of manufacturing, with a low-value AUD tending to enhance manufacturing. Post-GFC, that relationship is less clear. What is clear is a strong downward trend, as the percentage change becomes overwhelmingly negative.
Percentage change in metal fabrication and machinery manufacturing

The story of mining in Australia is one that has been well-documented, but it is worth looking at a quick chart to see how the various factors play off against each other.

In the chart below, it is clear that the major growth driver in mining has been iron ore. It is also clear that the sharp drop in commodity prices, which is expected to continue, will keep driving the value of mining activity downwards.
Gross value added from mining

To begin, this is a graph that provides an overview of engineering construction and building construction in terms of value of work done:
Value of work done in sectors of construction

This is a graph of the overall view of work commenced, work done, and work yet to be done:
Construction activity: Overall

The following graphs break this down by industry sectors.
Roads, Highways and Subdivisions
Construction activity: Roads, Highways and Subdivisions
Construction activity: Bridges
Construction activity: Railways
Construction activity: Harbours
Water storage and supply
Construction activity: Water storage and supply
Sewerage and drainage
Construction activity: Sewerage and drainage
Electricity generation, transmission, distribution
Construction activity: Electricity
Construction activity: Pipelines
Construction activity: Recreation
Construction activity: Telecommunications
Oil, gas, coal and other minerals
Construction activity: Oil, gas, coal and other minerals
Other heavy industry
Construction activity: Other heavy industry
Impact driver test: Milwaukee & DeWalt
Height of the drivers
HNN Sources
The DeWalt has three lights to the Milwaukee's one
Electronic speed setting on Milwaukee
Click to visit the HBT website for more information
There is a good reason why you probably do not see that many written reviews of power tools these days, while online video reviews have proliferated. In general, for most common power tools, the design and construction of them has reached a stage where differentiating between most brands comes down to a question of preference and taste. It is an emotive and fun subject, and something ideal to cover in a good video clip.

The two impact drivers that we are looking at here are a good example of this. On the surface, they would seem to have some big differences. The DeWalt DCF 886-XE is an 18-volt impact driver and the Milwaukee M12 CID is a 12-volt impact driver.

The DeWalt has a few "higher end" features, such as three lights to illuminate the driving area, where the Milwaukee only has one. On the other hand, the Milwaukee does offer a two-speed drive mechanism, where the DeWalt has only the single, basic setting.

In doing our battery life/endurance test, driving 50mm 14g Bugle Batten screws (from Otter) into construction-grade pine battens, we found that both impact drivers had nearly equivalent speed performance, with the DeWalt getting perhaps 0.1 second on the Milwaukee on the average 3.4 seconds to 3.6 seconds per screw drive time.

To measure the battery endurance of the impact drivers, we first devised a means of measuring total charge in the batteries. To do this we hooked up the batteries to their respective light units, then shined these lights on a photoelectric sensor. When the light eventually went out due to a flat battery, the photoelectric sensor passed this message along to an attached computer, which noted the time of battery exhaustion.

HNN drove 50 of the 50mm screws in with each driver, operating from a freshly charged battery. The batteries were then re-attached to their light units, and the photoelectric sensor recorded how long it took for them to go flat once again. Simple maths provided us with the proportion of charge consumed, and we could work out from this the total number of screws each impact driver could fasten without recharging.

Not surprisingly, given its voltage advantage, the DeWalt came out ahead. Our calculations show it could drive 127 screws using the 18-volt 2.0 amp-hour battery. The Milwaukee showed it could drive 96 screws using its 12-volt 2.0 amp-hour battery.

Of course, this doesn't mean that one tool is in any way universally "better" than the other. Both tools can be equipped with larger batteries, though the DeWalt accepts an overall larger battery than the Milwaukee can. For many users, however, having a capacity of around 100 of these large screws would be more than enough.

In casual use by a range of people who happened to drop by the HNN offices, opinion about the two tools was very much divided. For some, the DeWalt has a more "balanced" feel, as the heavy motor in the head is balanced by the mass of the battery at the other end of the handle. The people who liked this aspect of the DeWalt actually felt that the Milwaukee felt heavier in the hand.

On the other side, people who liked the Milwaukee tended to do so with some enthusiasm. The most common comment about the bright red impact driver was that it felt "handy". Fitted with the 2.0 amp-hour battery it is about 19cm tall sitting on its handle butt, versus the 22.5cm of the DeWalt.

For HNN in the end, the one "killer" feature that the DeWalt does have is its Bluetooth battery. The more we use this, the more impressed we have become with its future potential for people who need to manage more than 10 or so batteries.

We are also very much looking forward to trying out Milwaukee's One-Key tool management system in the future. It will be interesting to see how both systems develop.
Wesfarmers restructures industrial division
Blackwoods will now absorb Protector Alsafe, Bullivants, Bakers and Total Fasteners
The Australian
Protector Alsafe will be part of the larger industrials division
Total Fasteners will also be integrated into the division
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As the head of Wesfarmers' industrial division, Rob Scott recently unveiled a reorganisation of the Wesfarmers Industrial and Safety (WIS) business that will see its Blackwoods workplace safety brand absorb the company's other brands, such as Protector Alsafe, Bullivants, Bakers and Total Fasteners.

The New Zealand businesses of Blackwoods Protector, NZ Safety and Packaging House will also come together as an integrated New Zealand operation. Scott said the changes were designed to improve the company's offer to customers, reduce costs and strengthen its platform for the future.

Blackwoods would emerge as a "new Blackwoods with unparalleled scale and capability in the Australian market", according to Scott. He said Blackwoods' customers would continue to have access to the specialist products and services of the other businesses in the WIS portfolio including the Workwear Group, Coregas and Greencap. He told The West Australian:
We are committed to strengthening our market leading services in specialist areas such as safety, lifting and rigging, fasteners and construction to name a few. Our specialist operations can now benefit from being part of a larger and stronger national platform which will enable us to invest more in innovative customer solutions.
This transformation will see greater focus and investment in new products, digital solutions and service delivery models to meet the changing demands of our customers.

He told The Australian the business needs to prove its worth within the conglomerate to attract more capital and chase growth opportunities in the sector, including acquisitions.

The industrials division unites Wesfarmers' chemicals, energy, fertilisers, resources and industrial and safety businesses. Scott was made its managing director in August. He said that he wasn't focusing on a potential sale of the underperforming division but rather getting better returns for its owner.

Wesfarmers non-retail businesses have suffered recently from collapsing coal prices and the slowdown in the resources and mining sector. In fiscal 2015 pre-tax earnings for Wesfarmers industrial and safety businesses collapsed 46.6% to $70 million.
Wesfarmers to purchase workwear brands - HNN
Wesfarmers will reinvest in workwear brands - HNN
Bunnings retail insights
The new Bunnings Warehouse at Epping, Victoria
HNN Sources
The Bunnings palette example
The cafe is a vital element to Bunnings
Give to Amnesty International
Competing retailers often see Bunnings as succeeding simply through its scale and access to an efficient supply chain. In fact, however, Bunnings' success owes just as much to its merchandising and clever use of its store spaces. By looking at what Bunnings does and how it does it, it is possible both to find innovative ideas that can be used elsewhere in retail, and to better understand the strengths and weaknesses of the Bunnings business model and ways of doing business.

HNN has recently undertaken a survey of Bunnings stores in Victoria, ranging from Cranbourne and Carrum Downs in Melbourne's south-eastern suburbs, out to Ballarat in the state's west.

More recently we visited the brand new Epping store. Based on these experiences, but using the new Epping store as the main example, we've developed six key examples of how Bunnings excels at merchandising and retail store/situation design.
Insight #1: The drop palette

At its origins, the "drop palette" (a palette of goods positioned in a large aisle of a store) was likely a quite innocent invention. Retailers had some seasonal goods to sell. The didn't want to allocate permanent shelf space to them, and they didn't want the work of packing and storing existing items to make room for the new items, only have to repeat the process in another two or three months.

So, creatively, they "made space" in the store, by plunking down a complete shipping palette stocked with the seasonal goods in the middle of an aisle. It made a quick impression on customers, and - importantly because these seasonal items were strong sellers - it was easy to restock: hoist the palette on the forklift, take it back to the storeroom and restock, or simply bring out a fully stocked palette to replace the existing one.

At many hardware/home improvement stores - including Masters Home Improvement - things have not really moved on since that stage of development. There is a little more art and craft in selecting products, but the basic palette concept has stayed the same.

Not so at Bunnings. Bunnings has taken this casual invention and raised it to the status of an almost scientifically designed on-floor selling machine.

The following images explain what HNN understands about how Bunnings designs and makes use of its drop palettes.
Bunnings - drop palette
Insight #2: Scale

It might seem at first that the use of scale is an obvious technique for Bunnings to use in some of its very large warehouse stores. However, scale has to be carefully applied, especially in such large spaces. Too much use of scale, or a poor use of scale, can make a space seem disorienting.

Bunnings only uses scale for two reasons. The first is pure functionality. When a selection has to be made from a large number of small items, or from a moderate number of quite large items, scale can transform that task into something much easier to achieve.

The second use of scale that Bunnings makes is just pure fun. It's enjoyable to see certain objects displayed at scale across a vast space. It brings a new perspective to the process of choosing and comparing.

The examples below illustrate some of the good uses of scale that Bunnings makes.
Bunnings - scale
Insight #3: Go vertical

As with scale, going vertical in a large warehouse space seems like an obvious idea. However, using vertical space correctly is even more difficult than making use of scale. Looking up can easily become uncomfortable, awkward or make product selection difficult.

One of the key aspects that Bunnings gets right is making sure to space the products out. Tightly packed products at height are hard to see and hard to assess. The whole point of the vertical should be to add perspective to what is being seen.

The following are some examples of this use of the vertical.
Bunnings - vertical
Insight #4: The little touches

While the big design ideas we've looked at so far are important, they are supported in Bunnings stores by a range of smaller design touches. Many of these seem at first to be quite casual - until you go to a number of Bunnings stores on the same day, and find they have been repeated in nearly identical form.

Bunnings' insight about these little touches is the customers will not necessarily be attracted to slick displays of merchandise. Often what they are looking for is something friendly and approachable - something to which they can relate.

Coming up with this kind of display is something Bunnings is expert at. Here are a few examples.
Bunnings - little touches
Insight #5: Bring the community into the store

The newer Bunnings Warehouse stores tend to have what HNN has come to call Bunnings' "Community Pod". This consists of a space for DIY courses, a play area for children, and a cafe. These are usually alongside each other, though in some circumstances the cafe will be separated, or the play area in a different location.

The possibility for community interaction that these facilities provide is substantial. Dad or Mum can attend a DIY course, while the other parent has a coffee, popping over once in a while to make sure their children are playing safely. Mums and Dads can meet up with other Mums and Dads, their children can play together while they sit in the cafe. And so on.

What Bunnings is offering through these facilities is a genuine set of solutions to shopping and socialising for parents with their children.

Insight #6: Trust the customer

One of the rules we have at HNN is that if we spend a long amount of time in a store, and especially if we have any interaction with the staff, we must buy something from the store. (That is only fair, as we are using up the store's resources in some ways.)

So at the end of our Bunnings store visit at Epping, we trooped off to the power tool section to buy a tool we intended to product test.

Unfortunately, as sometimes happens with new stores, while there was a display for this tool, there was no stock to be found. About mid-way through the interaction we were having with the staff, we realised that the team member we were dealing with likely had a learning disability, and was part of the programme Bunnings has in place to provide some assistance in these circumstances.

It was, without doubt, one of the best retail experiences we have ever had. The young man in question was polite, keen, attentive. He was more distressed than we were, it seemed, that the product could not be found.

What occurred to us later about this experience was this: in offering that assistance programme, Bunnings is, more than anything else, trusting its customers. The thing about that is, in view of the kind of demographic that Bunnings does attract, it can absolutely trust them.

There are probably not that many places in the world where that could be said with such confidence - perhaps some of the Scandinavian countries. But we all know that young man is going to do fine. He'll be looked after. Because it is just unthinkable to us, as a society, that anything else should happen.

Until next time,


You can contact me directly via email or Twitter @HNN_Australia

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HI Weekly Vol. 1 No. 7
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HI Weekly No. 7
Mark Laidlaw, CEO of Mitre 10, at the hardware industry lunch event
HNN Home Improvement Index week for ending 16 October 2015
Click to visit the HBT website for more information
Read all the content from the HNN weekly e-newsletter in one convenient PDF. Easy to read onscreen, or print it out.

Just use the following link to download the PDF:

In this week's edition, we take another tour of Masters older and newer stores. We attended the recent opening of the latest Masters store in Cranbourne (VIC) and compared it to the very first store it established in Braybrook (VIC).

We also cover Mitre 10 CEO, Mark Laidlaw's recent presentation at the National Hardware Industry Luncheon held at the MCG in Melbourne recently. We examine what Mr Laidlaw had to say about the industry and Mitre 10's strategy going to 2020.

A transcript of the presentation is also included.

Also in this edition: regular updates on big box retailers and independent retailers; winner of the Rising Star award from Hardware Australia; IKEA's CEO admits the retail group was late to e-commerce; a report on the opportunities that exist in prefab construction and an overview of the Pro Tool Innovation Awards.

Plus all our regular features: HNN Home Improvement ASX Index; new products; and other news.
HI Weekly Vol. 1 No. 6
Download HI Weekly, issue number six
HI Weekly No. 6
Metcash sales revenue to 2015
HNN Home Improvement Index for week ending 9 October 2015
Click to visit the HBT website for more information
Read all the content from the HNN weekly eNewsletter in one convenient PDF. Easy to read onscreen, or print it out.

Just use the following link to download the pdf:

In this week's edition we cover Mitre 10's presentation at the recent Investors' Day. Mitre 10's CEO, Mark Laidlaw, emphasised the role of the Sapphire store concept in the company's future. Will it be enough to offset under-investment by Mitre 10's parent, Metcash, and increased competition from Bunnings and Masters Home Improvement?

Also in this edition: updates on big-box retailers and the latest at the UK's Screwfix; online home improvement services gather momentum in the US; and a recent US study indicates big box stores are losing market share to some specialty stores, especially in paint.

Plus all our regular features: Indie store update; HNN Home Improvement ASX Index; new products; and news.
Shining light on the jobsite
GearWrench LED light provides 380 lumens of illumination
The LED light in action
It will last five hours of continuous use
Click to visit the HBT website for more information
The GearWrench LED light is one of the brightest hand held inspection lights on the market, providing 380 lumens of illumination that will last five hours of continuous use. This light also has three settings to brighten up any environment at the touch of a button: torch mode, 50% light and 100% light.

The mounting magnets on the back and base of the light will make sure the unit stays in one place, and the versatile hanging hook allows users the option of above the head lighting.

For those working in tight spaces, the GearWrench LED light can be rotated 150 degrees for access to difficult to reach places. The LED light is also capable of being charged via a PC or via wall mounted socket with a USB charger.

Other features include:
  • Super bright spotlight
  • 360-degrees folded out swivel hook
  • Samsung 3.7V/2600mAH Li-ion rechargeable battery
  • Includes USB charger
  • Thin design provides access to hard to reach places
  • News
    HI Weekly #5: Bunnings grows categories
    Download your copy today
    HI Weekly 1.5
    ABS Retail stats
    Greycork provides quality IKEA alternative
    Click to visit the HBT website for more information
    The latest edition of HI Weekly is out now. You can download the complete PDF by using the link below:

    In this week's edition, we look at how Bunnings is seeking to expand sales through going deeper into certain market categories.

    It has already had some success in broadening the appeal of its Kaboodle kitchen brand, by making it an option in the $12,000+ market. Now Bunnings is doing the same with its outdoor furniture as well.

    How can Bunnings extend its ranges into the quality/luxury category without alienating the core Bunnings customer? It's a drama that is being played out in the big-box retailer's advertising - and HI Weekly is covering it, print ad by print ad.

    This edition also takes a look at just how credit card data thieves make use of the data they steal. It's a frightening world of complex, global criminal organisations using innocent "reshipping mules" to disguise their location. With profits for just one such operation estimated at over US$7 million, this means retailers have to be especially vigilant in protecting their systems.

    All that, plus the latest retail statistics from the Australian Bureau of Statistics, the HNN Index is lifting up a little, the latest big-box news, new products, and more.
    HI Weekly Vol. 1 No. 5
    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
    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
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    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.
    Big box update
    Bunnings Maitland is probably moving to a new site
    HNN Sources
    Masters has gained approval to build in Tuggerah (NSW)
    Bunnings has altered plans for the store it wants to build in Panorama (SA)
    Click to visit the ITW website for move information
    Bunnings has confirmed it is looking at a new site for its Maitland store in regional Victoria; approval has been given for the development of a Masters Home Improvement Centre at Tuggerah (NSW); Bunnings revises plans for its store in Adelaide's south east; and Harvey Norman opens a third branch in Northern Ireland.
    Bunnings Maitland is moving

    After the Bunnings store in Maitland re-opened following the extensive damage it suffered during the April superstorm, much of the site remains closed. The prospective new site is the vacant lot next to the current warehouse.

    Bunnings management said the decision to investigate potential new store locations had nothing to do with the April superstorm. Andrew Marks, general manager - property told the Maitland Mercury: "Well before the storms earlier this year we started investigating opportunities to increase our offering with a larger store, to meet the growing demands of the community.

    "We have now identified land next to the existing Maitland store and we are speaking with the relevant authorities to understand if there is an opportunity to develop a new, bigger store to replace the current warehouse."

    While the plans are still under assessment, Marks said talks had already begun with Maitland City Council. He added: "The existing Bunnings Warehouse Maitland is currently undergoing the final stages of repairs and will be completed regardless of the outcomes of these discussions.

    "If there is an opportunity to develop a new Bunnings store, the existing, fully repaired store will provide an attractive prospect for other retailers seeking to establish a presence in Maitland."

    Bunnings leases the site from The Bunnings Warehouse Property Trust, which is a separate entity.
    Masters gains approval for Tuggerah

    A Masters Home Improvement Centre in Tuggerah will be built after the Joint Regional Planning Panel gave its unanimous approval. Masters plans to invest more than $26 million on the development. The site will include the Masters outlet, a vegetated riparian corridor and public art. More than 130 local jobs are expected to be created once the Masters centre is open for business.
    Bunnings makes amendments

    Bunnings has altered plans for the store it wants to build in Panorama (SA). However the amended plan for the $42 million store has met a mixed response from locals.

    The hardware retailer has acceded to residents' calls to cut a planned entrance from the plans. It has also proposed installing traffic lights at the site's sole entrance. Panorama Clapham Community Group spokesman Neil Baron welcomed the amended plans. He told Adelaide Now: "Bunnings has shown good faith by being open and listening to our concerns...They needed to understand our concerns about traffic management and having the new lights and crossing makes it a...safer proposal."

    Panorama Clapham Community Group, along with the Say No to Bunnings Panorama group, have protested against the development since the company bought the site more than a year ago.

    Bunnings property general manager Andrew Marks said the company would continue discussing the proposal with Mitcham Council. Mitcham's Development Assessment Panel is expected to assess the application in March 2016.
    Harvey Norman's growth in Ireland

    Harvey Norman's third store in Northern Ireland follows outlets in Holywood Exchange and Newtownabbey. It is a multi-million pound investment by the retailer. The latest store is the company's first Harvey Norman Home Centre. In addition to Harvey Norman product lines - including a higher-end range - it will also have store concessions operated by independents for other aspects of home improvement, such as paint, wallpaper, curtains and fabrics. A new restaurant has also been added, run by home-grown chain Synge & Byrne.
    Forecasting: understanding drivers and influencers
    Adding the ASX 200 as a background influence
    House Prices in Australia
    Right-shifting house prices
    The simplest possible graph
    Give to Amnesty International
    Predicting retail sales for the Australian home improvement industry is one of the more difficult tasks in retail-related forecasting. While any kind of retail-related forecasting can be tough, home improvement tends to involve a very large range of economic factors.

    It has become a common, accepted practice within the industry to regard some simple statistics as a good general guide to how retail sales will do in the future. The most commonly used measures are house prices (as a reflection of the housing market in general) and building approvals plus building completions.

    While these have often proved to be good general guides, they do not always deliver reliable results. HNN has taken some time to delve a little deeper into some of these stats, and we've tried to develop some better general guidelines, without making matters too complicated.
    Retail sales and house prices: some basics

    To begin with some industry basics: home improvement retailers often look to the sales prices of residential property as a helpful hint about how well their own retail sales will perform.

    Looking at the Australian Bureau of Statistics (ABS) actual numbers for hardware retail sales and the ABS price indices for dwellings in major Australian cities, there does seem to be some substance to this view.

    There are some interesting tools that can be used when working out how statistics might fit together. Most of these are really a simple extension of what anyone would do when comparing graphs to see if they match up.

    If you think about it, when you examine a couple of graphs to see how they might fit together, what is it you look for? You pick a couple of consecutive dates in the time series - two years, or two months, for example - and look at one graph to see whether the graph goes up or down, then check out the second graph to see if it moved in the same direction. You then do this across a number of different date ranges. What you are looking for, of course, is consistency, whether both graphs go in the same direction or in opposite directions for most of the date ranges.

    A slightly more formal way to do exactly the same thing is to graph not the raw information in each graph (such as the amount of retail sales for each financial year), but to instead graph the percentage change between each data point on the graph. So if sales in 2010 came in at $400,000, and in 2011 sales were $500,000, you would calculate the percentage change as 500,000 - 400,000, divided by the older data point which is 400,000, yielding the result 100,000 divided by 400,000, which is 25%. That number goes at 2011, and it represents how much sales grew between 2010 and 2011.

    The important thing to remember about this kind of graph is that a straight line on the graph indicates a constant rate of growth, not the absence of growth. Similarly, a line that has a positive slope, climbing to the right indicates not just growth, but that the rate of growth (the growth of growth, you could say) is increasing.

    When you graph the percentage changes for two or more sets of data, it becomes much easier to see the relations between them. There are, of course, much fancier and more technical ways to develop what is known in statistics as the correlation between two sets of numbers, but with fairly simple data this one technique can often yield good results.
    Chart 1

    This is what we've done with Chart 1. The first datasets used in this graph is the total retail sales for the hardware retail category for Australia. This has been first annualised to the standard financial year (July to June), and then converted into a graph of the percentage change from one year to the next.
    Simple chart of house prices to retail sales

    The second dataset we've used is also provided by the ABS. The ABS over the years has worked very hard to develop a reliable price index for housing. The version of this we are using here is the Residential Property Price Index using a weighted average of eight capital cities. This provides perhaps the best overview, in a single number, for what Australian property prices are doing at any particular time.

    Looking at this graph, you can see that there is some kind of a partial connection in the data. At times when residential property prices have increased, hardware retail sales have also increased. At other times the lines really don't match up.

    If you look at this graph for some time, you might begin to get a funny feeling about it. It's like you can't quite put your finger on it, but there is a better relationship somewhere between these datasets.

    Chart 2 takes a closer look at what that better relationship might be.
    Chart 2

    Chart 2 shows a greater correspondence between these two sets of numbers. In this chart, we have moved the retail figures ahead by one year, so that the retail numbers for the year 2006 are contrasted with the dwelling price index for 2005, and so on.
    Right-shifting house prices

    This seems a little better fit. It's not perfect, of course, and we are going to get to some possible reasons why it is not perfect, but first let's look at why such a shift might actually make some sense. To do this, we need to dig a little deeper into these statistics, and what they might be representing. In doing that, we might turn up some interesting ideas.
    The connections

    The use of house prices as an indicator of retail sales has been accepted for some time, but how do these two sets of numbers work together?

    On the top layer, we can see two main ways in which changes in house prices affect hardware retail sales. The most direct effect is simply that higher house prices tend to encourage greater building activity, which leads directly to more sales of building materials, tools, and other associated products. This, of course, would be largely in the trade area.

    A second influence is that as house prices rise, so does the estimated valuation of other, mortgaged buildings. This can have the effect of making more credit available to the holders of those mortgages. It is not uncommon for this credit to be spent on renovation projects for the mortgaged house, as the rising house price makes this seem a good investment. This leads to increased hardware sales.

    Both of these influences would tend to lag the actual increase in house prices. Builders will wait to see if house prices are stable before committing to further projects, and those commitments will take some time to put together. In particular, house valuations will lag some considerable time, as an increase in value must be sustained for some time before it leads to revaluation, and the release of further credit.
    Deeper connections

    In addition to the above fairly direct influences, it is also possible to think in terms of more indirect connections. House prices are themselves an indication of underlying economic factors. To name just one, the influence of lending rates directly affects how much money home buyers can borrow, and thus has a strong effect on house prices. Lending rates are likely to directly affect hardware retail spending as well. Higher interest rates, for example, would mean that home owners on variable mortgages will have less money available for projects, and home owners seeking to borrow money for renovations will be discouraged by the increased cost of borrowing.

    When we really think about it, there is a range of similar factors that do influence house prices and hardware retail spending, but somewhat independent of each other. Luckily for us, some very good work has been done to work out what factors influence house prices. This makes a good starting point for us to consider which factors might also directly influence hardware retail sales.
    The academics

    In 2005 Peter Abelson, Roselyn Joyeux, George Milunovich and Demi Chung wrote an influential academic paper entitled "House Prices in Australia: 1970 to 2003 facts and explanations". This outlined a series of factors they believed affected house prices, and made some attempt to quantify those effects. Many of this paper's basic precepts continue to be widely accepted.

    The paper can be downloaded at the following link:
    House Prices in Australia

    The key factors the authors saw as affecting house prices are these:
  • Real disposable income
  • Consumer price index
  • Rate of unemployment
  • Real mortgage rates
  • Equity prices
  • Housing supply

  • Just glancing through these, it is possible to begin to see why the house price index might be a reliable indicator for hardware retail sales only some of the time.

    An increase in housing supply (according to the academic paper) turns out to make of house prices go down, as buyers have lots of auctions to go to. "House Prices in Australia" (HPIA) predicts that for every additional 1% of housing supply, prices are reduced by 3.6%.

    From the standpoint of hardware retail spending, increased housing supply may have the opposite effect. It leads to more houses being sold, thus more activity. It might also create a situation where more funds become available to homeowners for renovations, due to the drop in house prices, which reduces their debt burden.

    Of course, this could be balanced by a drop in home building activity, as lower house prices remove some of the incentive to build new ones. It is likely that something of a balance is achieved between these influences.

    More clearcut is the effect of an increase in equity prices. While a strong result from the ASX 200 will see house prices decline as households shift their investment money from housing to stocks, good investment results from the sharemarket will tend to boost spending on hardware. Families which have invested in the sharemarket will find their incomes boosted, and where better to spend that money than in investing more in their major asset?
    Chart 3: looking for reliability

    These two variances alone - housing supply and equity market performance - may explain why housing prices seem to be a reliable indicator of hardware retail sales at some times and not at others.

    This is illustrated by Chart 3, which overlays the ASX 200 and over the shifted data in Chart 2. You can see that the ASX 200 index performs well up to 2009, and then enters a steep decline (as the GFC took hold).
    Adding the ASX 200 as a background influencer

    In line with this, housing prices are not a great way of determining hardware retail sales prior to 2009, but become a good general predictor after that year. After 2009, the year-shifted hardware retail sales and house prices show more of a connection.

    Part of what is wrapped into this set of conclusions is that the performance of the stock market also has a one-year lag when it comes to affecting hardware retail sales.
    Chart 4: housing completions

    This chart is probably a little too complex for it to work as a kind of handy reference, but it is still worth considering. We have added housing completions to the picture, again making use of ABS data.

    In general terms, in times where housing completions climb significantly, the increase in house prices will tend to diminish, while gains in hardware retail sales will continue to climb.

    Unlike house prices, completions have an immediate effect on hardware retail sales. Thus in this diagram, we can directly visually relate the retail sales and the housing completions, but not the house prices and the housing completions. This makes interpretation quite difficult, and means we have really pretty much exhausted the usefulness of graphing.
    Adding housing completions begins to over-complicate the graph

    At this stage we really need to start thinking about mathematical formulae instead. As this is a simple introduction to looking at these statistics, that's a little beyond the scope of what we want to cover.

    Our goal in developing these guidelines to what seems to influence hardware retail sales has been to provide a simple tool that people in the industry can use to get some ideas of the range of future sales. To develop these guidelines into a forecasting tool would mean having to include more variable. We could need to consider the mix of detached and multi-unit dwellings, total value of work completed, building approvals versus building completions, spending on renovations, the secondary effects of public building construction, and so on.

    We would also need to more formally factor in consumer-sensitive statistics, such as the consumer price index, consumer confidence, mortgage interest rates, and the Australian dollar exchange rate. We do think this is a "good enough" introduction to modelling hardware sales.
    DuluxGroup 2015 full year results
    Dulux results for FY 2015
    Dulux Investor presentation
    Chart of GDP growth quarterly with change in renovation activity quarterly
    Patrick Houlihan talks about his career
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    Australia's independent DuluxGroup (Dulux) delivered reasonably strong results for its FY 2014/15. Sales improved by 4.7% over the previous corresponding period (pcp), which was FY 2013/14, reaching $1687.8 million. Excluding non-recurring items (-nr), earnings before interest and tax (EBIT) was up 4.7% to $192.4 million, and net profit after tax (NPAT) was up 11.5% to $124.7 million, compared with the pcp. Statutory NPAT (including non-recurring items) was $112.8 million, up 7.9% over the pcp.
    Dulux results for FY 2015
    Overall commentary

    Market conditions during its FY 2014/15 were not ideal for Dulux, but due to its diversified market spread, the company was able to return a reasonable result. Dulux's respected CEO, Patrick Houlihan, pointed out several times during the presentation to investors that the strongest growth segment had been the construction of new housing. While Dulux has a decent representation in this market, it is a particularly low-margin market as compared to renovation/refurbishment consumer sales.

    Despite this, Mr Houlihan is confident that Dulux did gain market share, in particular through the launch of some new products. He commented on some elements of this during his introductory remarks at the presentation to analysts:
    Whilst our focus on marketing and innovation, sales and distribution effectiveness and customer service may seem simple, as a combination they have been very effective.
    In summary, our markets grew pretty strongly at 5%, with new housing in Australia the strongest component. Our share outcome was positive. In particular we gained share in our core renovation and repaint market, particularly late in the year, following the launch of our new Dulux Wash & Wear range.

    Dulux consists of five internal segments: paints & coatings ANZ (PCANZ), consumer & construction products (CCP), garage doors & openers (GDO), cabinet and architectural hardware (CAH), and other businesses. This last category includes garden product company Yates. Chart 1 indicates the share of overall business EBIT each of these represent.
    EBIT proportion for divisions
    Paints and coatings ANZ

    Sales for this division improved by 6% over the pcp, coming in at $870.8 million. EBIT (-nr) increased by 5.7% to $146.8 million, while EBIT margin (-nr) was flat at 16.9%.

    One factor that did affect the outcome for this division was the change in arrangements for Mitre 10 New Zealand (which is completely separate from Mitre 10 Australia). Dulux has withdrawn its stock from Mitre 10 New Zealand, and is now offered exclusively by Bunnings stores there. This had an initial impact of limiting its sales there for FY 2014/15, which had a flow-on effect for the overall division's results.

    According to the full-year results:
  • Core premium renovation and repaint markets, which represent 75% of Dulux PCANZ market volume, grew by around 5%. However, the company believes that additional "stock build" by retailers, related to the release of its new Wash and Wear products, contributed up to 2% to this number, meaning that the underlying number is closer to 3%.
  • New housing, which represents 20% of PCANZ market volume, grew by 15%.
  • Commercial (trade) paint sales, which represents 5% of PCANZ market volume, is estimated to have grown by around 3.5%.

  • The company is confident that it has increased its market share in key sectors, such as the consumer-based renovation and refurbishment market. Mr Houlihan went into further detail about the market for its core market, decorative paints for consumers:
    Look, the big picture around this market is that it's tended to grow over the long run about 1% to 1.5% which is about half the rate of GDP. Now clearly when you get movements like interest rates that are positive or housing prices or housing churn those things are all collectively positives. But when we've gone back over the years I often share with you guys -- we can't get strong correlations to any one of those factors.
    The best thing we model our business off and using actual data looking backwards there are two variables we use. We use GDP firstly. If you think about it 75% of the decorative paint market is existing homes. But roughly two thirds of that is do it yourself; one third of that is do it for me.
    That's been pretty consistent growing at roughly about half the rate of GDP; doesn't have big peaks or big troughs. Even during the financial crisis Bunnings will say their weekday sales of a whole lot of home improvement products including paint went up because people went from full time to part time employment. They still did jobs around their homes. So in our models we use GDP.

    As Mr Houlihan pointed out elsewhere, statistics prepared by the Australian Bureau of Statistics (ABS) and other sources do not typically include renovations that do not required permits and cost under $10,000. This means that much DIY painting does not get picked up in the standard statistics.

    The chart below provides an overview of Australia's GDP mapped against one of the ABS's measures of renovation expenditure. This is the renovation data used to develop national account numbers, and it attempts to backfit renovations costing under $10,000 by referencing information from the ABS household expenditure data.
    Chart of GDP growth quarterly with change in renovation activity quarterly

    Mr Houlihan also described Dulux's overall approach to its paint market:
    Our view is, as we look to improve the value proposition for the consumer and impacts that can have on price, impacts that can have on share -- and we think there's still plenty of share growth for us -- we've got on average share in the mid to high 40%s but if I take the retail channels in Bunnings, our big box partner, we've got over 60% of their business, maybe even two thirds of their business.
    In Mitre 10 our independent hardware partner we've got about 70% of their business. At Inspirations, our paint specialist partner, we've got 90% of their business. So if we help our key retailers win our weighted average share goes up. So that's really the strategy we're playing.

    Later, responding to an analyst's question, Mr Houlihan offered this summary of Dulux's ongoing strategy and position:
    I suppose it's like a giant game of Monopoly. I'm not sure who's going to try and play where on the board or whatever but I feel confident that we're working absolutely on the right things. My comments that again we've got the best products and the best brand and the best people and the best customers I think sum up my state of mind at the moment.
    New product: Wash and Wear

    One reason why, despite mildly unfavourable conditions, Dulux still managed reasonable growth, was its introduction of the new formula Dulux Wash and Wear paint. Introducing this product to the analysts, Mr Houlihan said:
    Many of you will have seen the MythBusters advertising campaign associated with the new Dulux Wash & Wear. Whilst we are happy with the campaign itself, it is in fact a product which is the breakthrough, representing our most significant step change in performance in 20 years. We have not used lightly the term, the best we've ever made and we've received strong endorsement from both the trade and our retail partners.

    Later, in response to an analyst's question, Mr Houlihan went into some detail about what is actually not just one product, but an entire product mini-range. According to his comments, this is how the product range breaks down:
  • Standard Dulux Wash and Wear low-sheen. Four litres of white paint retails for $72, up from $69.
  • Wash and Wear Super Hide. This had advanced coverage characteristics. Dulux claims that two coats of this paint in white will effectively cover a black undercoat. This retails at $90 per four litres.
  • Wash and Wear Kitchen and Bathroom provides mould protection, and retails for $86 per four litres.
  • Wash and Wear Super Tough is a two-pack paint product that remains application-stable for 10 days after it has been mixed. This is seen has having commercial applications, though it may be suitable for some home uses as well. It retails for 100 per four litres.
  • Wash and Wear Matt. Mr Houlihan stated that this used a new advanced formula to provide stain resistance in a matt paint. He believes that this will also appeal to trade customers. (Pricing details were not provided.)

  • One of the main points that Mr Houlihan made about these points is that by providing advanced capabilities to customers, the overall price of its paint can be lifted, resulting in better margins.

    Mr Houlihan was also asked about Dulux's response to competitors, in particular the introduction of the US-brand Sherwin-Williams to the Australian market. This is a question that gets asked at most Dulux reports, and Mr Houlihan's response tends to be similar. First, he points out that Dulux has one of the best brand reputations in Australia. Currently it is the second most trusted brand of any Australian brand, and is first in its category.

    Secondly, he points out that a number of international competitors have entered the market in the past, and not lasted for very long. Mr Houlihan believes this is because the paint business is inherently local, and that people prefer to use a trusted brand with which they have some kind of history.

    Commenting directly on Sherwin-Williams, Mr Houlihan stated:
    In terms of Sherwin they've launched into Masters. They are in Lowe's in the US. Sherwin is primarily in the US. There's no paint company really like us because we play in both retail and trade. If you thought just about trade business largely that's what Sherwin are in the US. They've got 3000 of their own stores. Increasingly they play a little bit now in Lowe's - in the likes of Lowe's. So presumably there's some link there with the Lowe's and Masters relationship.
    They've launched product in Australia. Their super paint product is retailing at $72. Just for the record that's for 3.66 litres. So if you turn it into four litres it's at AUD$80 a can. They've got another product that's up in the - that's even higher priced than that.
    Consumer and construction products

    This division returned a mostly flat result. Sales rose by a very modest 0.1% over the pcp to reach $266.2 million. EBIT (-nr) actually fell slightly, coming in at $29.2 million, a loss of 2% over the pcp.

    The two main components of this division are Selleys and Parchem.

    Revenue from Selleys grew slightly, the company reports. It also increased its profit and EBIT margin, due to careful cost control, and a product mix that suited the current market. Marketing expenditure on the product line has been increased. Selleys has also released a new product, the Ezi Press range, which is familiar products packaged in a self-applicator container. The company describes this product:
    Selleys Ezi Press is a new easy to use application system that doesn't require a caulking gun. Simply press the lever to apply and deliver a precision finish. Ezi Press comes in 4 variants to cover any filling, sealing or sticking home improvement applications.
    The Ezipress line

    Mr Houlihan also noted that the Selleys' product line was playing a key role in the company's ongoing expansion into south-east Asian markets:
    We're revving up Selleys. We've got good momentum in Selleys Vietnam this year where we moved away from having a local distributor to setting up our own entity a few years ago. That's started to bear some fruit this year.

    While Selley returned decent results, Parchem was a less positive story. Its sales were affected by a decline in infrastructure spending in Australia. Commenting on this in its review of operations attachment to the annual financial results, the company states:
    The immediate market outlook for Parchem is challenging, particularly given the construction chemicals business has been historically focused on the energy and resources sectors, which are in decline. The growth in future civil and commercial infrastructure projects is unlikely to offset the decline in energy and resources projects in the near term.

    Balanced against this is the statement in the same document that:
    Parchem sales were adversely impacted by a decline in resources infrastructure spend. In the core construction chemicals segments (55% of revenue), share gains partially offset market declines.

    The company has declared that it does expect Parchem to deliver growth in EBIT for FY 2015/16, though it adds this will likely occur in the second half of that period. This was balanced somewhat by a cautious statement by Mr Houlihan in his introduction to analysts:
    Our Parchem and protective coatings businesses have exposure to engineering construction markets, with Parchem in particular exposed to energy and mining sectors. These sectors, and the market overall, have been weak in FY15, and the outlook is that they will remain weak for FY16, with the emerging pipeline of several construction projects unlikely to fill the gap in the near term.

    Mr Houlihan was more optimistic in describing the potential for Parchem:
    For Parchem we've been progressing on two fronts: growing revenue into new markets and restructuring the business in difficult markets. From a revenue perspective, the launch of the Avista range in decorative concrete is an important step to taking what has been a relatively commoditised range to a premium branded range. Distribution for this product is building with trials now in place at a growing number of Bunnings stores.

    The report also notes that sales declined for decorative concrete, as the company shifts its focus to these Avista products, which carry a higher margin.
    Garage doors and openers

    This division saw sales fall slightly, down 0.2% over the pcp to $169.5 million. EBIT fell by 6% and EBIT margin fell by 0.6% over the pcp. The company states that sales were weak during the first half of its FY 2014/15, but recovered in the second half.

    Commenting on the B&D garage door and garage opener business, Mr Houlihan said:
    Our split for B&D is approximately 50% existing home, 35% new housing and 15% non-residential, compared to the market, which is 45% existing home, 45% new housing and 10% non-residential.
    We spoke at length at the first half about the transitional issues associated with the launch of new products late last year and the implementation of the dealer distribution strategy. We believe that we've made good progress in addressing these issues through the second half, and the revenue on profit growth we achieved reflects this. We do, however, acknowledge that there is more to be done.
    We've appointed a new Executive General Manager to this business, following an external search, and he will start shortly.

    Later, Mr Houlihan went into some depth in describing the B&D business. He said the market is largely controlled by the three main companies, with B&D on the top, followed by Steel-Line and then the troubled Gliderol business. He described the business:
    Forty-five per cent of the market and 50% of B&D's business relates to the existing home, an end market that has proved to be resilient over the long term for DuluxGroup other businesses...Finally, as a market leader with both premiumness and scale, both the doors and openers parts of our business are profitable.

    Mr Houlihan went on to describe the opportunities he sees B&D presenting:
    We have outlined over the past couple of years that our task has been focussed on the frontend of the business, to rebuild the B&D brand, innovation, sales capability and distribution network, and we've made a lot of progress. Clearly the transitional issues that impacted the first half of FY15 were disappointing; however we do believe that the opportunity for growth in this business remains very strong, and that we are well-placed to deliver. Furthermore, it presents some interesting growth opportunities in the adjacent home access market.
    Cabinet and architectural hardware

    This division produced a mixed result. Sales rose by 8.3% over the pcp to reach $172.8 million, but EBIT was much flatter, increasing by 0.1% to reach 9%. EBIT margin declined.

    Sales of the high-end Blum hardware led the upward tick in sales. However, the Lincoln line, while recording good sales, continued to provide low EBIT. Mr Houlihan commented that:
    There is clearly work to be done with Lincoln to reduce the cost to serve and improve its EBIT margin, and systems will play a role. However, this was a business with a declining revenue and EBIT base when we acquired it, so we are happy that we have now turned around the revenue line for the last two years as phase 1 and have grown EBIT from the AUD7.1 million two years ago to AUD9 million. We now need to move to phase two to substantially improve the flow-through of revenue to the bottom line.
    Other business

    This amalgam of smaller businesses posted a surprising 30% uptick in EBIT (-nr), improving to $15.9 million. This came on top of a 6.7% increase in sales to $221.7 million. Yates was a good contributor to revenue, as it grew market share in a vibrant market. DGL Camel, which is based in Hong Kong and manufactures power coatings, produced essentially flat sales results, but improved EBIT through better margins.

    The phrase that Mr Houlihan repeated several times throughout the presentation to analysts was "Do it once and do it right". This could be taken as a primary message that Dulux seeks to convey to consumer purchasers of its products.

    It's also a message that aligns nicely with the essentially segmentless approach that Dulux's main retailer, Bunnings, takes to the home improvement market. Bunnings' marketing approach could be said to be based on two basic questions: 1) Who is not coming to our stores? and 2) Of the people who do come in our doors, what are they not buying from us?

    The equivalent Dulux question would be "Why would you use anything else?" There are quite literally some markets in Australia where a DIY or professional painter would need a very good excuse not to use Dulux. Like the Bunnings approach, it is essentially segmentless.

    That said, if there was ever a company that could provide a good reason to try something else, it might well be Sherwin-Williams. It is an all-paint company that is seven to eight times the size of Dulux, and its products are highly regarded by both professionals and amateurs in the USA.

    One does have to wonder if "local" quite means what it used to in the paint world. An indication of that has been the Dulux marketing for its new Wash and Wear range itself, which relies on imported American talent for its impact.

    Which is not to say that Sherwin-Wiliams poses any real threat to Dulux today. In the future, though, even a small loss to Sherwin-Williams could effect Dulux earnings, as it would come at the expense of the highest margin portion of the market.
    DuluxGroup produces strong 2014 results [update] - HNN
    Hitachi Koki acquires Germany's Metabo
    Hitachi's great little cordless circular saw
    Hitachi Koki
    Metabo's LiHD technology
    Metabo history
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    On 13 November 2015 Japanese power tool company Hitachi Koki announced that it had put in motion the acquisition of German power tool company Metabo Aktiengesellschaft.

    The move is widely seen by industry commentators as granting Hitachi access to advanced Lithium-Ion battery technology, something it has not yet fully developed for itself. Metabo has recently launched what it calls "LiHD" for "Lithium High Density". This technology makes use of high performance battery cells, and technologies that limit current losses. The company claims a gain of 67% power and 87% more runtime for this development.

    Many see this as an ideal competitive move. Hitachi has made its name for the exceptionally well-designed electric motors in its products, particularly its cordless circular saws. Marrying its home-developed technologies with the German-developed battery technologies of Metabo could see Hitachi move from its current niche status to compete more broadly with tool brands such as DeWalt and AEG/Rigid.

    As Hitachi already has exclusive distribution deals developed with Masters Home Improvement in Australia, and Lowe's Home Improvement in the US, it already has a path to market for newly developed technologies.

    Hitachi also plans to use the Metabo connections to establish its brand in Europe. Metabo has sales offices established in 25 countries, and has a particularly strong presence in Europe.

    Hitachi states in its press release that the acquisition of Metabo is part of the company's plans to reach a goal of an operating margin above 10%.
    Acquisition details

    Metabo, which is located in the German town of Nurtingen in the country's south near Stuttgart, is 80% owned by a holding company, Power Tool Invest, which is based in the Netherlands. The remaining share of the company is owned 10% by the company's founding family, and 10% by the company's employees.

    Hitachi intends to acquire Power Tool Invest, and also acquire the remaining 20% at the same time. The French investment firm Chequers Capital Partners is assisting Hitachi with this acquisition.
    Metabo history

    Metabo has a long and interesting history. Founded in the 1920s, it made its first electric drill in 1934. The company was responsible for developing the first impact drill in 1957, and then went on to develop a series of innovative products such as drills with electronic speed regulation.

    The company entered the Lithium-Ion battery technology field early, in 2005, and has been developing Li-ion cordless products ever since then.
    HNN Index for week ending 20 November 2015
    HNN Home Improvement Index for week ending 20 November 2015
    HNN Sources
    BlueScope Steel has confirmed it is on track for a sharp lift in underlying first-half earnings
    Discounting at David Jones has limited sales growth at Myer by as much as 2%
    Click to visit the HBT website for more information
    The HNN Home Improvement Index for the week ended 20 November 2015 closed up by 25 points at 941.37 points. The underlying ASX 200 Index rose even more, closing up 38 points on the comparative index. The actual index closed at 5256.1 points, up by 205 points.

    Nine stocks in the HNN Home Improvement Index rose by more than 5% during the week. Myer Holdings and UGL Limited both rose by more than 9.5%. Bluescope Steel was up 9.2%, and Super Retail Group rose by 8.6%. Downer EDI and GUD Holdings rose by almost 7%. JB Hi Fi, the Goodman Group and Harvey Norman all rose by 5.5%.
    Bluescope Steel
    BlueScope Steel confirms profit lift, warns of pressures ahead

    BlueScope Steel has confirmed it is on track for a sharp lift in underlying first-half earnings but has warned of increased margin pressures in the second half of the year. The steelmaker reaffirmed its late-October guidance for a 40% increase in earnings before interest and tax to about $50 million for the six months to December.
    BlueScope Steel confirms profit lift, warns of pressures ahead - The Australian
    Charter Hall Group
    Charter Hall sees earnings grow 21% in FY15

    A decade after listing on the ASX, property funds manager Charter Hall has recorded a statutory profit after tax of $117.9 million, up 43.6% for the 2015 financial year. Speaking at the company's annual general meeting, Charter Hall chairman, David Clarke, announced the company had posted earnings growth of $98.8 million for the last financial year.
    Charter Hall sees earnings grow 21% in FY15 - Money Management
    James Hardie
    James Hardie warns on FY profit

    James Hardie has detailed a near flat profit result in the second quarter, while delivering a strong lift for the full first half. The slowing growth has seen it warn it may fall short of analyst expectations for the full-year. In the three months to September 30, James Hardie delivered a net profit of $US130.2 million ($A183.1m), up just 2% on last year's corresponding result. Over the first half, however, the building materials supplier saw net profit rise 22% to $US128.8 million.
    James Hardie warns on FY profit - Business Spectator
    Myer Holdings
    David Jones discounts crimp Myer's performance

    Discounting at David Jones has limited sales growth at Myer by as much as 2%, according to analysts, who believe the upmarket department store is still benefiting from "acquisition accounting". One analyst said it would be difficult for David Jones to sustain its current sales growth without the discounting that was a legacy of South African Woolworths Holdings' $2.2 billion acquisition of the business in 2014. He believes these price reductions had cut as much as 2% from Myer's like-for-like sales performance.
    David Jones discounts crimp Myer's performance - Fairfax Media
    Tools for underwater projects
    Nemo Power Tools' new Diver drill can go to 165 feet (50 metres)
    Deeper Blue
    A fresh/chlorinated water version is aimed at pool and spa technicians
    A new Special Ops version will be released in 2016
    Click to visit the HBT website for more information
    The new Diver drill from Nemo Power Tools resembles a cordless electric drill unlike previous incarnations of underwater power tools which were driven by either hydraulics or pneumatics. However its design wasn't a simple matter of adapting existing designs for new applications.

    When the Israeli Army approached engineer Nemo Rotem to design a submersible drill for them, he wasn't even a certified diver. In order to understand what would be required of such a tool he became a PADI (Professional Association of Diving Instructors) open water diver. This could have been a metaphor for the entire design process of the Nemo Diver V2 drill.

    Rotem developed the tool from the ground up with a die-cast aluminium body, two 18V Li-ion batteries, a keyless metal chuck and rotating seal similar to those used in the drive-shafts of boats. It can go to 165 feet (50 metres), making it a portable powerhouse for commercial divers as well as hull cleaners and scientific researchers - anyone who needs a bit of extra muscle in the deep.

    There is also a lighter, fresh/chlorinated water version specially aimed at pool and spa technicians. This cordless, battery-operated submersible drill can be used underwater to a depth of about 33 feet (10 metres).

    Two LED lights are built into the drill housing for use after dark. The drill has a 10mm stainless steel chuck and an 18V Li-ion battery pack. Its net weight (with battery) is 3kg.

    The products were displayed at DEMA 2015, an expo for the Diving Equipment & Marketing Association in Orlando, Florida (USA).

    In 2016, the company will expand its line to offer a high-torque hammer drill, a Special Ops version in low-profile all-black with no logos that will go to 328 feet, and an angle grinder that uses a Li-polymer battery to provide enough energy for high-intensity applications.

    Its 2016 catalogue also features a 60,000 lumen handheld dive light. Ideal for search and recovery, low-visibility, or other situations where a high level of illumination is required. This light is also usable topside, with an on-board cooling system to disperse the 1,000 watts.
    Temple & Webster grows through acquisitions
    Temple & Webster intends to list on the ASX in a $60 million IPO
    Fairfax Media
    It has acquired furniture e-tailer Milan Direct as part of its growth strategy
    The company is considering taking the Temple & Webster brand offshore
    Click to visit the ITW website for move information
    Locally-based online homewares retailer Temple & Webster has acquired furniture e-tailer Milan Direct and intends to list on the Australian Securities Exchange in a $60 million IPO.

    Temple & Webster will issue 55.9 million shares in the IPO at a price of $1.10. The listing is expected to give the company a market capitalisation of $116.3 million.

    Temple & Webster has agreed to pay about $20 million in cash and shares for Milan Direct, an online retail pioneer founded in 2006 by Dean Ramler and Ruslan Kogan.

    The announcement is the latest in a string of acquisitions that form part of Temple & Webster's aggressive growth strategy. In August, Temple & Webster purchased the Australian arm of US furnishings and decor business Wayfair for an undisclosed amount. It has since been rebranded as ZIZO.

    Temple & Webster co-founder and managing director Brian Shanahan said the acquisitions would help the four-year-old company boost sales and customer numbers. He told Fairfax Media:
    The acquisitions are very complementary. Temple & Webster is about 80% homewares and about 80% of Milan Direct's revenue is from furniture. The three brands (, and will allow us to appeal to a wider group of Australians looking for furniture and homewares online and target different types of shoppers - discovery shoppers or intent shoppers.
    Temple & Webster is a members only shopping club but there are a lot of people looking to buy straight away - we realised there was an opportunity to capture more of the Australian customer with an open e-commerce destination where you can go to the site and use different filters to find what you are looking for.

    The ZIZO and Milan Direct acquisitions will boost Temple & Webster's sales by around $34 million to $60 million (on a 2015 proforma basis) and lift its share of customer "visits" or website traffic to 5.1% - ahead of online visits for established retailers such as Fantastic Furniture, Freedom Furniture, Harvey Norman's Domayne and Nick Scali.

    Temple & Webster has forecast a 27% increase in sales to around $76 million this financial year, according to its prospectus.

    However, the company has yet to make a profit. Directors expect losses to shrink slightly from $11 million before interest and tax in 2015 to $9.5 million this year as it steps up spending on marketing to raise brand awareness.

    Temple & Webster was asked by the Australian Securities and Investments Commission to issue a replacement prospectus to highlight the fact that it has a history of losses, which are forecast to continue in the near term as the company invests to build its business.

    The Australian furniture and homewares market is worth $12.1 billion, according to Euromonitor International, but online penetration is only around 3.8%, well below the 9.5% penetration rate in the US and 12.8% in the UK. Shanahan told SmartCompany:
    Online spending in the category in Australia today is only 3% for online. There's going to be a natural migration of spending from offline channels to online channels and we want to position ourselves to capture that change in the consumer as they go forward. To do that, we need to ensure we've got great brand awareness and a fantastic customer experience and invest now to win the market. I'd rather be two years too early [in listing] than two years too late.

    To increase brand awareness, Temple & Webster is planning to open bricks and mortar retail showrooms, broaden its customer base, allow shoppers to touch and feel before they buy and leverage its relationships with more than 1200 suppliers.

    It is also looking at bolt-on acquisitions and is considering taking the Temple & Webster brand offshore, to South East Asia, China and the UK, where Milan Direct already has a presence.
    Haymes Paint makes the transition
    Haymes Paint has made a successful transition to a new generation of managers
    The family behind the Haymes paint brand
    Glen Cooper from Coopers Brewery is a new member to the Haymes network
    Subscribe to HNN weekly e-newsletter
    Reflecting on the past four years when his children were coming back into the family company, former Haymes Paint managing director David Haymes says it was jealousy and lack of communication that caused problems. He did not expect the one of the "lows" during his time in the business would be when he handed the company over to his children.

    David, whose father established the Ballarat-based business, never assumed his children would take over from him. Instead, in 2008 when he wanted to retire he considered all of his options, selling the company, bringing in professional management or continuing it as a family business.

    His three children, Matthew, Tim and Belinda, all had their own careers. But they decided to come back into the family company, triggering a four year period that could have sunk one of Australia's most successful homegrown paint companies. He told BRW:
    I assumed that because they had different skill sets they'd work together and it would all just work. But it didn't and that's because I didn't know how to communicate.

    David's son Tim, who is the commercial director of Haymes, says the lack of structure, family personalities colliding and the Haymes staff still seeing their father as boss resulted in turmoil.

    Improved communication between the Haymes siblings has resulted in strong business growth and a happier family environment. He said:
    There were a lot of fights. Our board meetings at the time consisted of us having raisin toast around the breakfast table. We were all trying to do the right thing...but with any business you need formal structure.

    It took attending a few Family Business Australia conferences for the family to start making the necessary reforms to let the business run smoothly. David said:
    You have to all get together and talk. Bring your sons, the wives of your sons, your daughters and get them all together and talk about the issues. If you don't you'll end up with broken hearts, sadness and grandkids that never see their grandparents.

    Matthew Haymes, who admits to be the most volatile one in the family, says his lightbulb moment came when he realised it wasn't about them, "it was about the 100 other families that worked in the business". He explained:
    We were all fairly self-interested and wanted to be heard. We all had our careers outside of Haymes and it took us years to work out what we were all good at and to respect one another.

    The siblings are now developing their sixth edition of the family constitution, and by having well-defined roles and a formal structure, the business is performing strongly.

    The company says it has grown its share of the architecture and exterior paint market from 2.5% to 7.5% in six and a half years, and it's revenue is growing at 15% per annum. Haymes Paint has 350 distributors nationally, 11 company owned stores and one store owned by a partnership. Tim said:
    Over the last 10 years we've innovated, filled gaps in our product, service and colour offerings. Traditionally we were in retail trade, but now we've tapped into commercial work, maintenance work for government buildings and schools, protective coatings and everything in between.
    Seeking opportunities
    A territory manager will be responsible for managing Bunnings and independent hardware accounts
    HNN Sources
    Bunnings is looking for a store manager based in Cowra (NSW)
    Masters is currently recruiting for a store manager in Cairns (QLD)
    Visit the Mecca Website
    A selection of home improvement and hardware retail roles around Australia. A publicly listed Australian business with global manufacturing operations requires a territory manager; a Bunnings store management role in Cowra (NSW); Winning Appliances requires a manager to lead its Queensland team; and a Cairns-based store manager role at Masters.

    For further information, simply click on the images provided.
    Consumer goods experience

    Reporting to the state manager, the territory manager will be responsible for managing a number of Bunnings and independent hardware accounts. The successful candidate will be focused achieving sales targets and executing distribution plans, as well as identifying new opportunities for growth. Degree qualified with previous experience in sales within the consumer good industry.
    Territory manager for hardware supplier
    Managing Bunnings in Cowra

    A big box store management role involves managing a team of over 150 people. Bunnings is looking for a candidate who can "advance their retail career in an autonomous environment where their decisions shape its business". Applicants should have a minimum of seven years experience in senior management in a high volume environment, leading a large team.
    Store manager for Bunnings in Cowra, NSW
    Overseeing Queensland stores

    Winning Appliances requires a manager who can "balance tactical and strategic decisions whilst providing supportive leadership and co-ordination to its Queensland stores". Reporting to the CEO, this hands on role will see the successful candidate leading the direction of the Winning brand in Queensland.
    Head of Queensland stores for Winning Appliances
    Masters store management role

    Masters is currently recruiting for a store manager in Cairns (QLD). The individual will have "significant accountability to inspire their team to deliver exceptional customer service and drive sales". The store manager will be treated as a "talent developer and strategic leader within the business".
    Masters store manager wanted for its Cairns store
    The impact of Aldi appliances on Masters
    House brand appliance sales at Masters may be impacted by Aldi
    The Aldi Stirling house brands are primarily supplied by Tempo Australia
    Aldi is set to expand in South Australia
    Click to visit the ITW website for move information
    According to ChannelNews, house brand appliance sales at Masters are said to be slow with the home improvement retailer now looking at expanding into more "branded" appliances in an effort to increase sales.

    Sources have told ChannelNews that Aldi house brand sales of ovens, microwaves and washing machines are impacting house brand appliance sales at Masters.

    But the expected move to branded products could face a stumbling block with several big brands telling ChannelNews that they would not supply Masters.

    The Aldi Stirling house brands are primarily supplied by Tempo Australia who also supply both large white goods and small appliances to the discount supermarket and general merchandise retailer.

    Insiders claim the success of Aldi appliances is said to be the main reason that Bunnings has decided not to expand its range of appliance products.
    Aldi having an impact on appliance sales - HNN
    Indie store update
    Home Timber & Hardware releases a new video in time for Christmas
    HNN Sources
    A home renovation showroom replaces a former Home Timber & Hardware site
    Ruralco has appointed Travis Dillon as its new chief executive
    Click to visit the ITW website for move information
    Home Timber & Hardware's latest video; the former site of a Home Timber & Hardware store in South Australia is being transformed into a renovation centre; and new leadership at Ruralco.
    Christmas campaign from HTH

    In the lead up to Christmas, Home Timber & Hardware has released a video showing a different kind of gift wrapping - "Hard" wrapping. The two-minute, light hearted video features a young guy wrapping a massive teddy bear the way the hardware retailer says "hard" men should wrap their gifts this Christmas.

    He says to forget traditional wrapping using fancy silk and ribbons. Instead think tarp, sandpaper, liquid nails and a flannie to finish off the decoration. And a bit of plywood and a butt hinge should do the trick for a card. Not a squeak in sight.

    This latest video follows on from Home Timber & Hardware's highly successful "Brekky in Shed" video which received over half a million views during the Father's Day campaign, and aligns with the retailer's national "This Christmas It's Hardware Not Software" campaign, featuring tools and hardware to gift family and friends this festive season.

    The video is hosted on Home Timber & Hardware's Facebook page. You can see the video here:

    Reno showroom replaces HTH site

    Following the closure and sale of Home Hardware Tranmere in St. Morris (SA), the site is being transformed into a home renovation showroom. Magill's Creative Bathrooms & Kitchens owner Stephen Maio has confirmed he purchased the sprawling property. Maio says he plans to spend more than $500,000 turning the site into a "sister store" to his bathroom and kitchen showroom. He also hopes to open a new business venture, Creative Home Plus, by April 2016.

    Maio said the site was a perfect location to build because of its prominence. He hoped it opening would have a flow-on effect and bring more businesses and people to the area. He told Adelaide Now: "It's very central location, there's parking facilities at the back that are quite good...It's a great corner site which gives businesses a great opportunity to gain some exposure."
    Ruralco confirms new CEO

    Ruralco has appointed Travis Dillon as chief executive after he led the agribusiness on a temporary basis for the past six months. Adelaide-based Dillon, who stepped up when John Maher quit in May, has also been appointed managing director following what the company says was an extensive search.

    Dillon joined Ruralco in 2007 and has held several senior leadership roles including general manager - mainland operations and general manager - rural retail. He was installed as acting CEO on May 4, 2015.

    Ruralco is a large agribusiness with interests that span rural merchandise, wool, livestock, fertiliser, grain, seed and stock feed, risk management, real estate, water management, finance and insurance. These businesses consist of joint venture and 100% owned operations and include some iconic rural services brands such as Rodwells, Primaries of WA, GDL, BGA and Davidson Cameron & Co.

    Dillon, who has worked in the agribusiness industry for more than 20 years, will relocate from Adelaide to Sydney, and will receive fixed remuneration before bonuses of $750,000 from the start of his term on November 16, 2015.
    Hot links
    IKEA is in talks to open its first outlet on London's Oxford Street
    HNN Sources
    Alabaster has been chosen as Sherwin-Williams' 2016 Colour of the Year
    Travis Perkins will "digitally transform" its Wickes stores
    Click to visit the HBT website for more information
    A well-known London shopping street may get an IKEA; Sherwin-Williams names Alabaster as its 2016 Colour Of The Year; UK home improvement retailer Travis Perkins will implement its omnichannel strategy with a new digital store platform; and USG supports Mars exploration.

    For further information, simply click on the images provided.
    IKEA on Oxford Street

    The Swedish furniture and homewares chain is in talks to open its first outlet on one of London's main shopping streets. IKEA said it will be a click and collect store. The retail group's first order and collection point has already opened in Norwich in the UK and the second is due to open in Aberdeen in spring 2016. The development underlines the experiments by big box retailers with smaller format stores.
    IKEA in discussions to open a store on London's Oxford Street
    Choosing Alabaster colour

    A natural white, Alabaster has been chosen as Sherwin-Williams' 2016 Colour of the Year. It is seen as a hue symbolic of new beginnings. Jackie Jordan, director of colour marketing, explains: "Alabaster represents a straightforward and necessary shift to mindfulness, well-being and an atmosphere that is pure...Alabaster is neither stark nor overly warm, but rather an understated and alluring hue of white."
    A kitchen painted in an Alabaster colour
    Travis Perkins' digital changes

    UK-based building merchant Travis Perkins has engaged OneView Commerce to transform customer interaction across all its 19 retail brands. The first brand undergoing transformation is Wickes, where a full in-store POS and cross-channel implementation is underway. The OneView platform will be extended across all 256 stores during the first half of 2016.
    Travis Perkin's is implementing a digital strategy
    USG part of Mars research

    Building materials company USG has partnered with Honeybee Robotics on the field testing of Honeybee's Planetary Deep Drill System. The field testing will take place at USG's Plaster City gypsum quarry in Salton Sea, California. It is part of Honeybee's broader Mars exploration program, which aims to better understand the planet and the capabilities needed to send humans to the planet by the 2030s.
    USG contributes to Mars exploration
    Robots could replace brickies
    Fastbrick Robotics recently listed on the ASX
    Wall Street Journal
    Fastbrick created a remote-controlled Hadrian robot
    The company says it will eventually be able to build a four-bedroom house
    Click to visit the HBT website for more information
    Perth-based Fastbrick Robotics - which recently listed on the ASX - has invented a machine it says will eventually be able to build a four-bedroom house in two days without human help.

    Australia's residential construction market has made brick layers in demand and in short supply. A bricklayer can now make close to a six-figure salary in large metropolitan areas. That is not quite as much as what mine workers attracted at the height of the resources boom, but it is considerably more than what they were able to command as recently as a couple of years ago.

    Bricklaying is among the manual trades globally where ranks are thinning as baby boomers retire and young people opt for white-collar jobs. Mike Pivac, chief executive of Fastbrick, highlights the physical strain of the job. He told the Wall Street Journal:
    There are no young people coming out of school and saying I want to be a bricklayer like Dad, because Dad got to about 45 or 50 and couldn't bend over to touch his toes anymore.

    Fastbrick's remote-controlled Hadrian robot - named after Hadrian's Wall, also known as the Roman Wall, built by the emperor Hadrian across the north of England in the second century A.D. - could eventually lay 1,000 bricks an hour. That compares with roughly 100 bricks an hour for an experienced mason. A prototype version of the robot lays about 300 an hour, explains Pivac.

    Competitors include SAM - short for semi-automated mason - created by New York-based Construction Robotics, which works alongside human masons, doing rote tasks such as picking up bricks, applying the mortar and putting them into place. A traditional bricklayer is still needed to handle tricky areas such as corners.

    SAM is at a more-advanced state of development, with the first commercial units set to go on sale for around half a million dollars.
    Blink smart home monitoring system
    Blink was one of Kickstarter's top technology campaigns in 2014
    PR Newswire
    Blink is part of the 2016 CES Innovation Honoree products
    It raised an additional US$5.8m from private investors
    Click to visit the HBT website for more information
    Blink, one of Kickstarter's top technology campaigns in 2014 with nearly 7,000 backers and over US$1 million in pledges, has raised an additional US$5.8 million from private investors. They include Easerich Industrial, Innosilicon and venture investment firms Baker Capital and Dot Capital, both headquartered in New York City.

    The affordable, wire-free battery-powered HD home monitoring and alert system is entering production, following a successful Beta release.

    Blink has also been named a 2016 CES (Consumer Electronics Show) Innovation Awards Honoree in the smart home category. Products entered into this program, administered by the Consumer Electronics Association, are judged by an expert panel of independent industrial designers, engineers and members of the consumer electronics trade media.

    CES Innovation Honorees reflect innovative design and engineering in some of the most cutting edge tech products and services coming to market.

    Blink's Kickstarter campaign and subsequent pre-order program caught the eye of several supply chain partners, who have invested in the product. To date, approximately US$6.8 million has been raised in support of Blink's entry into the US DIY smart home market, which is forecasted to grow from US$1.28 billion in 2014 to nearly US$7.8 billion by 2019. (Source: NextMarket)

    Peter Besen, CEO of Immedia, the company behind Blink said:
    We're proud to welcome several of Blink's supply chain partners as investors in the product, a validation of our relationship-based approach to product development. Their collaboration and input ensures that we can deliver the product more quickly and efficiently. The system design has also benefited from feedback from the Blink community.

    Blink's features include motion-based video alerts and Live View. The system is designed to appeal to budget-minded consumers.
    Outdoor storage offers style and function
    Trex Outdoor Storage range included in "Top 100 Best New Home Products of 2015"
    Market Wired
    It includes complementary and customisable built-in storage solutions
    All items are manufactured with high-density, low-maintenance resin that won't warp
    Click to visit the HBT website for more information
    The latest Trex Outdoor Storage range has been named by This Old House as one of its "Top 100 Best New Home Products of 2015".

    Introduced earlier this year, the collection of waterproof outdoor cabinets and storage components has been recognised by editors of the well-regarded home improvement publication for its ability to bring both utility and style to outdoor living spaces.

    The range landed a spot on the magazine's coveted list in the November/December issue and posted online at Adam Zambanini, vice president of marketing for Trex Company said:
    In recent years, the popularity of outdoor entertaining has surged and today's homeowners are giving more thought to intentionally designed outdoor living spaces that feature kitchens, dining areas and storage.

    From concealed ice chests to drawers for cushions, garden and pool equipment, the Trex Outdoor Storage includes an number of complementary and customisable built-in storage solutions. Components include base cabinets, pull-out ice coolers, bench drawers, waste receptacles and hampers, along with optional roll-out drawers and shelving. Marble, granite or stone tops are also available.

    All items are manufactured with high-density, low-maintenance resin that won't warp, fade or crack. Pieces are offered in five Trex Transcend(r) tropical decking shades, including Havana Gold (a warm, golden colour), Island Mist (silvery shade), Spiced Rum (earthy umber), Lava Rock (reddish-black) and Tiki Torch (light brown), and are engineered to withstand the elements and resist corrosion.

    Trex Outdoor Storage is manufactured and sold by Florida-based NatureKast Products under a trademark licensing agreement with Trex Company.
    Paint brand creates Colortopia exhibit
    PPG's Glidden Paint has created the Colortopia exhibit at Walt Disney World Resort
    It works as visual treat and a dynamic experience for visitors
    This exhibit is supported by the Colortopia mobile app and website
    Subscribe to HNN weekly e-newsletter
    The Colortopia exhibit by Glidden Paint is located at Innoventions at Epcot which is part of Walt Disney World Resort in Orlando, Florida (USA). Colortopia is a show that lasts almost 30 minutes and works both as a visual treat and a dynamic experience.

    It is designed to help visitors explore the different aspects of colour and its impact on the world around them.

    The exhibit takes guests through three special zones where they come across interactions related to life colour theory. The first zone is the "The Power of Color" where guests can find out about the psychology of colour. After exiting this zone, visitors reach the "The Color Lab" where they can play colour games, creating their own hues. The third and last zone is "Color Our World" where visitors can enjoy playing with their own coloured shadows.

    This exhibit is also supported by the Colortopia mobile app and website which help users in several ways. While taking a tour at Epcot, users of the app can play a colour-matching game that responds to the illuminated walls of the pavilion itself. The app also brings Glidden Paint colour palettes, inspired by different countries, that guests can use in their own homes too.

    The app can match shades from a user's mobile or photos with the closest colours, with a simple click. These can be further used to colourise personal photos.

    The Glidden brand is a product line of PPG Architectural Coatings. Architectural coatings volumes fell by high single-digits in the third quarter of 2015 in the Americas and Asia Pacific as a result of weak regional demand in Canada.

    Sales volumes in EMEA (Europe, Middle East and Africa) were flat year over year. The company witnessed a modest rise in protective and marine coatings volumes in the quarter as gains in protective coatings were offset by weaker marine-related demand.

    PPG Industries delivered profit from continued operations (as reported) of US$433 million, up roughly 14.9% from US$377 million recorded a year ago. However, sales for the quarter were US$3,872 million, down around 1.6% year over year.
    HI Weekly Vol. 1 No. 11
    Download the latest HI Weekly, issue number 11
    HI Weekly No. 11
    Mezzanine level outdoor furniture at Mitre 10 Paddington
    Worklights from left to right: DeWalt, Bosch, Milwaukee
    Click to visit the HBT website for more information
    Each week, the HNN weekly e-newsletter can be accessed in one convenient PDF. Easy to read onscreen, or print it out.

    Just use the following link to download the PDF:

    In this week's edition, we visit prototype stores from Australia's top three hardware/home improvement retailers: Bunnings Alexandria, Masters Rouse Hill and Mitre 10 in Paddington. All these stores are located in New South Wales. We also review worklights from Bosch, DeWalt and Milwaukee, and ITW's third quarter results are examined.

    Other news stories this week include CEO changes at buying group Natbuild and USG Boral's focus on the Asia Pacific region.

    Also in this edition: a selection of the latest home improvement jobs from around Australia and B&Q showcases its IT system in Ireland.

    Plus all our regular features: big box updates; HNN Home Improvement Index; new products; and hot links.
    Bamboo composite could replace steel
    A composite bamboo could replace steel in the building and construction industry
    Beams made by combining bamboo composites and concrete have been tested
    Bamboo has long been used as a construction material in the developing world
    Click to visit the HBT website for more information
    A leading Swiss researcher and academic claims to have developed a composite bamboo that is strong enough to replace steel as the main reinforcement material in the building and construction industry.

    Speaking at the World Architecture Festival in Singapore recently, Dirk Hebel - a professor at the Swiss Federal Institute of Technology Zurich (ETH) - touted the new material as a potential game changer that could "finally provide an alternative to the monopoly of reinforced concrete".

    Made from bamboo fibres mixed with organic resin, the material is called bamboo composite material. It can be pressed into any shape and then sawn or sanded like wood.

    Formed into rods, the material could potentially replace steel as a reinforcing matrix for concrete with no loss of performance, according to Hebel. He said:
    We can produce a material that in terms of tensile capacity is better than steel. Our material is only a quarter of the weight of steel. In terms of strength to weight, it performs better than steel.

    Hebel said the material could also be used for other industrial applications such as the automotive industry.
    The material could also be used for car body parts. The big advantage of a bamboo fibre is that it is 100 times cheaper than carbon fibre, but it has potentially the same strength.

    Hebel began experimenting with bamboo as part of a research project to give developing countries more sustainable and affordable alternatives to steel, which has to be imported from producing countries that are mostly in the developed world.

    According to Hebel, 70% of all steel and 90% of all cement is consumed in developing countries. He said:
    We found one very interesting plant that grows exactly in those areas where we expect the highest urbanisation rate. That plant is bamboo.

    Unlike timber, bamboo does not require replanting after harvesting. As with other grasses the root system remains in the ground, stabilising the soil while new shoots are generated.

    Beams made by combining bamboo composites and concrete are tested for strength by bending them in a machine

    Bamboo, which has extremely high tensile strength, has long been used as a construction material in the developing world. But rather than use bamboo in its natural state, Hebel developed a way of extracting fibres from the plant and mixing it with 10% organic resin to create a mouldable material.

    Concrete reinforced with the material has been undergoing testing at a laboratory in Singapore. He said:
    We had a breakthrough - our testing machine was not able to break the material.

    Hebel told Dezeen magazine that the next step is to develop a sustainable alternative to concrete which, together with other cement products, accounts for 50% of all construction materials used globally. He said:
    So right now we are working with Berkeley University to develop an alternative to concrete that is not based on cement but on a biological based material made of mycelium [the material fungi is made of].

    Bamboo composites could potentially be used to build skyscrapers in future, Hebel said.
    Can you build high-rises with that material? In theory you can but that is not the market we're talking. Eighty per cent of all structures worldwide are one or two stories. That is our market.
    Three leading edge home improvement stores
    View from the upper floor of Bunnings Alexandria
    Editorial PDF
    Hafele's excellent display of pantry fittings
    Mitre 10 Paddington mezzanine level outdoor furniture
    Give to Amnesty International
    Each of the top three home improvement retailers has "called out" one of their New South Wales (NSW) stores as being on the leading edge of store development. HNN decided to take a mini-road trip and visit each of these.

    The managing director of Bunnings, John Gillam, nominated its Alexandria store at the last Wesfarmers' Strategy Briefing Day in mid-May 2015 as a good indicator of the company's impact in trade sales. The managing director of Masters Home Improvement, Matt Tyson, has pointed to the store at Rouse Hill as a launch pad for many of the retailer's "Masters 2.0" ideas. The CEO of Mitre 10, Mark Laidlaw, has suggested the Sunlite Mitre 10 store in Paddington represents the best of what the company's Sapphire concept has to offer.

    Each of these stores is, to some extent, experimental. The Bunnings store in Alexandria is partly about the trade business, but also the value and impact of very large store sizes. The Masters at Rouse Hill today is about how the retailer can continue to explore and develop its new store formats. Paddington's Sunlite Mitre 10 is about bringing the Sapphire concept to smaller stores, and evaluating their impact in inner urban communities.
    Bunnings Alexandria

    At the investor day in mid-May 2015 an investment analyst asked Mr Gillam whether Bunnings needed to focus more on trade sales. Mr Gillam replied by suggesting the analyst should show up at the Alexandria store at 6:30am to see the tradie trucks lining up to get in. His point being, what Bunnings is doing currently to encourage tradie business is working.

    The HNN team did try to get to the Alexandria store by 6:30am, but we only made it by 7:30. Even that late (for tradies) we can verify that there was considerable tradie traffic, which continued (at a slower rate) up until when HNN left at 9:00am.
    Trade area 8:45 am

    The Alexandria store is thought to be the largest hardware/home improvement store in Australia, at 20,000 square metres of floorspace. (To give some perspective on this, the IKEA store located at Tempe in Sydney NSW is close to 40,000 square metres, and is the largest IKEA store in the southern hemisphere. Most Masters stores are around 14,000 square metres in floor size.)
    View from the upper floor

    The slightly startling conclusion HNN came to during our store visit was that there is something about this size of store that seems quite "natural" to Bunnings. That may be in part due to the store being built over two floors (more cost effective in this inner urban suburb). At the single-floor Epping store we kept noticing how big the store was, and we also enjoyed some of the spectacular use of the space. At Alexandria the use of space is more utilitarian, which makes the size less noticeable.

    HNN didn't realise how much an impact the Alexandria store had on us until later in the day when we stopped by the Bunnings at Marsden Park in NSW. This is another good Bunnings store, with some creative use of displays and good team members on the floor. However after our experience of the Alexandria store it seemed at first (unfairly) quite average.

    The meaning behind what Mr Gillam said at the strategy briefing also became more clear to HNN. With the expanded size, Bunnings can stock that one size extra, above the standard consumer lines, moving it more into the trade area. For example, in lawnmowers Bunnings Alexandria has the Toro Timemaster. This is a self-propelled, 70kg lawnmower, featuring a 76cm wide cutting path, made possible through the use of two rotating blade sets. While Toro does seem to market this to consumers with big lawns, it is really also an ideal tradie tool for simple landscapers - and one they might not have previously considered.
    Toro Timemaster mower

    Another area of this kind of category expansion is with ladders, with the Alexandria store offering a wide selection of industrial-grade ladders. There are likely a lot more finely detailed expansions and additions as well.

    That said, HNN could also see some examples where Bunnings applied solutions more common in "normal" 14,000 square meter stores that might not be the best answer in these expanded stores. For example, in the display of items such as laminated wood flooring, the Alexandria uses the same "high-set" display that is common to most Bunnings stores. The only stores that currently do not use this are the evolving compact urban stores, such as the one in Collingwood, Victoria, right on the north-eastern outskirts of the central city area. This instead uses a much more accessible low-set flooring display.

    It is likely the high-set display is used as it facilitates keeping adequate stock on the floor, with ample room under each item displayed. In the mid-format urban stores, less stock may be needed due to lower volumes, and restocking in a smaller format is easier to manage, so a low-set display can work. It might be possible to add depth to the low-set display, solving the stocking problem, and making better use of the space in the store.

    The only other area we noted was that the use of the view from the upper floor to the lower floor was not made use of for promotional purposes. It's not unusual to see department stores with similar above-floor views use simple merchandising displays such as extra-large price banners.

    These are, however, just quibbles.
    Bunnings' future?

    Given the success of the Alexandria store, is it possible that what we are seeing here is the first step on the way to the second wave of Bunnings' expansion? Over the past six years Bunnings has built itself out geographically. What we could see beginning in another couple of years is the expansion of regionally strategic stores to this new, very large format. These large stores could become the anchor stores in the Bunnings network, offering an expanded range of products.
    Decking and tools displayed at Bunnings

    *Masters Rouse Hill

    The story of the Masters store at Rouse Hill is one that has been told before. This is the store that Mr Tyson used to test out the "Masters 2.0" concept . Stores built to this new format have a claimed 30% improvement in sales revenues over "Masters 1.0" stores. There are also encouraging signs, the company says, that Masters 1.0 refitted to 2.0 deliver much improved performance as well.

    Rouse Hill was used for this development for a number of reasons. One of the main reasons seems to be that it is relatively convenient to get to by car from the Woolworths headquarters at Bella Vista. That way Mr Tyson could be more personally involved in what went on there.

    Perhaps more importantly, Rouse Hill is itself something of a unique real estate and social development. Put together by Lend Lease and the GPT Group in the early 2000s, the development sought to provide a form of planned but commercially-driven development. Michael Duffy, writing in Fairfax Media, described it like this in early 2008, as the first stage of the project was opened for sale:
    The new Rouse Hill Town Centre opened last week. It's not really a city but it is enormous, particularly striking because it is still surrounded by fields, like something just created in the computer game SimCity. Unusually in the history of Sydney's expansion, the town centre has been created before the town. It's a real centre, containing not just shops, cafes and cinemas, but streets and a town square surrounded by apartments, offices and civic facilities. It's owned and managed by a private company, the GPT Group, but there has been considerable input from state and local government.

    Its basic goals included:
  • Creation of a genuine 'main street' town centre rather than an enclosed shopping centre
  • Integration of residential and civic uses into town centre
  • Set a new benchmark for residential and mixed use developments

  • There was also considerable input by Landcom in association with government bodies to lessen its environmental impact and improve its sustainability credentials. This included:
  • Target of 20% reduction in ecological footprint (25% reduction is likely)
  • 63% reduction in water usage
  • 40% reduction in energy usage
  • 130,000 tonnes of recycled materials used in construction
  • Best practice water sensitive urban design, including 150,000 litre rainwater tank
  • 130,000 plants in the town centre, of which 80% are indigenous to the local area

  • Part of what inspired this kind of development was the range of problems experienced in the development of land just to the south of Rouse Hill, at Kelleyville. In that area ad hoc development led to problems with basic resources such as roads and schools. The commercially-driven Rouse Hill sought to overcome those problems by comprehensive development planning through a privately-owned company that was responsive to governmental oversight.

    It has attracted a fairly homogenous social group in terms of age and income. A statistical breakdown based on census data from 2011 shows the following:
    Country of origin

    69.4% of people living in the suburb of Rouse Hill were born in Australia. The other top responses for country of birth were 3.8% Philippines, 3.3% England, 2.0% New Zealand, 1.9% South Africa, 1.5% India, 0.9% China , 0.7% Egypt.

    63.0% of people are married, 25.7% have never married and 6.4% are divorced and 2.9% are separated.

    65.3% of the people living in Rouse Hill over the age of 15 and who identify as being in the labour force are employed full time, 25.5% are working on a part time basis. Rouse Hill has an unemployment rate of 4.2%.

    The main occupations of people living in Rouse Hill are 22.7% Professionals, 17.7% Clerical & administrative workers, 16.5% Managers, 14.3% Technicians & trades workers, 9.7% Sales workers, 7.4% Community & personal service workers, 5.2% Labourers, 5.0% Machinery operators & drivers, 1.4% Occupation inadequately described/Not stated.

    The main industries people from Rouse Hill work in are 11.9% Retail trade, 9.9% Construction, 9.4% Manufacturing, 9.3% Health care and social assistance, 7.9% Professional, scientific and technical services, 7.2% Education and training, 7.1% Wholesale trade, 6.1% Public administration and safety, 5.2% Financial and insurance services.

    Australian Taxation Office records from 2013 indicate there were 23,005 people of employable age earned an annual average salary of $65,428 for a total group income of $1,505,168,405 a year. The actual average salary of people who were earning a wage is estimated to have been $75,074.

    What Rouse Hill provided Masters with was a concentration of the demographic that would be the target market for its Masters 2.0 format. It was, and is, an ideal place to trial its new store concepts.
    What is Masters 2.0?

    The first Masters format had something of an industrial feel to it, and suffered a number of deficiencies in its product ranging. With the arrival of Mr Tyson in early 2014, that began to evolve to better match both the market that was available, and to find ways to work around the dominate position of Bunnings, rather than trying to tackle it head-on.

    What evolved - and is still evolving - is an approach that seeks to provide an effective resources for "real" hardware supplies, but to include more "home improvement" products, such large white good appliances, as well as home decor items like cushions and wall art.

    Key to this new - and still developing - strategy is a high-end brand approach to market segmentation. As Bunnings has a dominant position in low- to mid-range brands, as well as high-regard "tradie" brands, Masters is actively positioning itself at other points in the spectrum.

    In power tools, for example, Bunnings has Makita, the DeWalt 18-volt line, and - the perfect Bunnings brand - the very wide-spectrum of Ryobi products. The counter that Masters has developed relatively recently to this is the Triton range of utilitarian power-tools, supplemented with the Stanley FatMax tools for prosumers. This is topped off with both Panasonic and Hilti tools. In-between the very high end and the prosumer tools, Masters has a range of brands, including some Bosch Blue and Hitachi.

    Similar patterns can be seen throughout the Masters 2.0 ranging. Bunnings has the excellent Kaboodle kitchen products. Masters has its Principal kitchens, supplemented with a wide range of fittings from Hafaele, and so on.
    The Rouse Hill store

    The main question we wanted to answer by visiting the Rouse Hill store was: "What's new?" We found three potential areas where Masters seems to be refining its offer.

    The first is in power-tools, where we seem to be seeing an increasing emphasis on the Triton range of tools. These seem to have largely supplanted the 909 range of tools, though specific 909 tools - such as mitre saws - are still available. While there have been some Stanley FatMax tools in the past, these have also had their presence increased.
    Triton display at Masters

    HNN also thinks that Masters is evolving its small appliances strategy as well. We've seen over the past six months racks of small microwave ovens from a range of suppliers appear in Masters stores. As far as we could tell this was not the case for the Rouse Hill store. Instead it offered for sale large quantities of a single microwave oven from Sharp at a very attractive price-point. This could be the beginning of a comprehensive strategy for a range of small appliances.
    Stack of microwaves

    This small appliance strategy also seems to be part of a super discount strategy by Masters. Where in the past the retailer has provided mid-aisle drop-pallets of competitively priced goods (a major strategy by Bunnings), it seems to be moving away from that to providing large islands of attractively priced products in key locations in the store.
    Discount display at Masters

    The most intriguing development HNN saw, present in both the Rouse Hill store and the Masters store at Marsden Park, was an addition to the paint department. Along with the standard paint counter, Masters seems to be developing a specialised project planning space. At the moment this consists of a single, stand-up table, with a second small table and chairs for children.

    This could be the first signs of Masters considering the development of some kind of in-store project centre, where customers could take time and get inspiration for the design of their homes. That would certainly be a highly interesting development.
    Hafele's excellent display of pantry fittings
    Sunlite Mitre 10 Paddington

    After HNN's review of the Mitre 10's Sapphire concept store in Ballarat, some people on Mitre 10's management team suggested we should take a look at the other significant Sapphire store in the network, the Sunlite Mitre 10 store on Oxford Street in Sydney's Paddington area.
    Sunlite Mitre 10 Paddington

    Unfortunately, after visiting this store, we find ourselves having to pretty much repeat what we have already said about the Ballarat Sapphire store.

    It is perhaps best to first of all go over what exactly the Sapphire store concept is. The idea would seem to parallel what Metcash is doing with its IGA brand by introducing what it has called its "Diamond" store program. This program takes the better-managed and well-located IGA stores and helps to transform them into retail outlets capable of competing with the Coles and Woolworths supermarkets.

    It is a clever strategy, because by improving these individual stores, Metcash helps to improve the overall brand image of IGA. Also, this program gives Metcash a little leverage of the independently-owned IGA stores. Those who are willing to adhere closely to Metcash's guidance on how their stores are run are rewarded with membership in the Diamond program.

    Sapphire has some of the same ambitions with the Mitre 10 hardware stores. The basic design concepts greatly improve the amenity of the stores, making them more accessible, and enhancing their overall presence. Where it does seem to miss a bit, however, is that it is almost totally concerned with store amenity to the exclusion of all else.

    Mitre 10 does also have what seems to be a separate program of promoting a "store-within-store" concept. Companies such as STIHL chainsaws and Beaumont Tiles open the equivalent of mini-franchises inside larger Mitre 10 stores. The connection between this development and Sapphire does not seem evident, as neither of the two Sapphire stores HNN has visited seemed to have had anything that was store-within-store.

    The point is that in developing a new wave of stores, improving amenity alone is not likely to be enough. With its Diamond store program, not only is the store amenity improved, but also the store supply chain (with a particular emphasis on fresh products). Sapphire is really just a slightly improved way of selling the same product lines that all Mitre 10 stores sell. As such, it is difficult to see how this development qualifies for the description Mitre 10 gives it as the "store of the future".

    That said, the Sunlite Mitre 10 store in Paddington is a really lovely little store. It has some clever features, such as a mezzanine level between the main levels, which provides some very good merchandising options. It is a super-clean store, and the staff there, even in HNN's brief contact, were great. The store was busy and active, with people dropping in constantly the whole time we were there.
    Mitre 10 mezzanine level outdoor furniture

    There is little doubt that if a Mitre 10 store like this was in the neighbourhood of any HNN staff member, it would rapidly become a favourite place to drop by for a range of purchases. It is a great little store. It's lovely. We are sure it will be very successful. But it seems unlikely that this is a prototype of the store of the future.
    The possible future

    What would a store of the future look like? HNN thinks that if anyone is really developing a good urban format store, it is probably Bunnings. We've been increasingly impressed by Bunnings at Collingwood in Victoria. This purpose-built store has a range of intriguing design features. Overall it is amazing both how the store manages to fit so much product in, and also how carefully tailored that product is.

    We can see this store's story in just one single feature that, had Mitre 10 incorporated this into its Sapphire design would have been a great advancement.

    Recently Bunnings Collingwood has added to its power-tool displays specially formatted "Special Orders" brochures. As the photographs illustrate, these enable customers to easily browse through additional tool ranges not present in the store, and order these in, through the Special Orders desk that is present in every Bunnings store.
    At Bunnings in Collingwood, Victoria, special orders brochures displayed with tools

    From the store amenity viewpoint, this is a simple addition. The brochures are well-designed, simple to use and very accessible.

    That is, however, a very small part of the story. What rests behind those simple brochures is an entire complex supply-chain network. This identifies the tools that should be featured, provides the images and brochure copy, designs the brochure display mechanism, prints and distributes the brochures, accepts orders from the brochure through the special orders desk, prices the product appropriately, sources the product, and distributes the product to the stores or directly to the customer.

    Simple frontend brochure, substantial backend infrastructure. What gets delivered, in the end, is what is sometimes referred to in digital retailing as the "endless aisle". The size of the store matters less, as it has become partly also a gateway into a much larger range of products.

    To relate this directly to the Sunlite Mitre 10 Sapphire store at Paddington, NSW: in the limited space of the store it does a good job of displaying a narrow range of power-tools. These are mostly the Positec brand Rockwell, as well as some Bosch green products. Those products match well with the usually less-intensive DIY of an inner-urban area.

    Using something like the Special Orders system of Bunnings, the store offer the entire range of Makita products Mitre 10 sells. While HNN was in the store, at 10:am on a Monday morning, there were definitely quite a few tradies visiting, around 10 or 12. Using that kind of backend system, it would be a simple matter for the friendly and helpful staff at the store to develop a solid secondary market.

    And that might really be something towards the store of the future.

    Until next time,


    PS. We would also like to give a shout out to a friend from the industry (our own "Deep Throat") who made it possible for a number of stories to be included in this issue. Thanks again.

    You can contact me directly via email or Twitter @HNN_Australia

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    HNN Index for week ending 13 November 2015
    HNN Home Improvement Index for week ending 13 November 2015
    HNN Sources
    Breville is counting on a sprinkle of Christmas cheer to lift its performance
    Masters is "worth persevering" with according to former Woolworths executive chairman Paul Simons
    Click to visit the HBT website for more information
    The HNN Home Improvement Index for the week ending 13 November 2015 closed down 56 points to end at 916 points. Its performance was slightly worse than the underlying ASX 200 index, which closed down 31 points on the adjusted scale to close at 939.8 points. In real terms, the ASX 200 fell by 164 points to close at 5051.3.

    There were five stocks in the index which lost more than 5% of their value during the week. Bluescope Steel had the worst performance, closing down by 12.7%, followed by GWA Group, which lost 6.5%. CSR fell by 5.7% and CIMIC (Leighton Holdings) fell by 5.5%. Westfield was also down, by 5.8%.
    Breville says Nov-Dec trading crucial

    Appliance maker Breville is counting on a sprinkle of Christmas cheer to lift its performance, amid challenging business conditions. Chairman Steven Fisher told shareholders at its AGM recently: "The key trading period of November and December is always crucial to the group's results, not only for the first half but also for the full year. It is too early to provide more definitive guidance."
    Breville says Nov-Dec trading crucial - Yahoo! Finance
    Charter Hall
    Acquisitive quarter boosts Charter Hall's earnings outlook

    Charter Hall Group's joint managing director David Southon says an acquisitive first quarter helped the property fund manager raise its full-year earnings guidance. Charter Hall said it expected operating earnings per share to be boosted by between 7% and 9% for the year to June 2016. It had previously forecast earnings growth of between 5% and 7% a share.
    Acquisitive quarter boosts Charter Hall's earnings outlook - The Australian

    *CIMIC Group
    Devine tells shareholders to take no action on CIMIC takeover

    CIMIC, formerly Leighton Holdings, has finally moved to clean up its investment in troubled developer Devine with a $58 million takeover bid for half the company it doesn't already own. CIMIC's offer comes after Devine chief executive David Keir resigned and another profit downgrade. In a statement, CIMIC management said the deterioration in Devine's performance prompted it to take action.
    Devine tells shareholders to take no action on CIMIC takeover - Financial Review
    Woolworths should keep BIG W and Masters, says former boss

    Woolworths should persevere with its struggling BIG W and Masters chains to avoid a replay of the value-destroying sale of Dick Smith to private equity investors, according to former Woolworths executive chairman Paul Simons. Simons told Fairfax Media that the Masters home improvement chain was "worth persevering" with because there was room in the market for another major player, and Woolworths had already "done the hard yards" by investing more than $2 billion and securing more than 50 sites.
    Woolworths should keep BIG W and Masters, says former boss - Fairfax Media
    Drill press fence features angled dust port
    he Rockler Drill Press Fence is a fully adjustable fence for a drill press
    PR Web
    It offers users easy adjustability and precise repeatability
    Rockler's drill press fence dust port fits a 2-1/2-inch dust hose
    Click to visit the HBT website for more information
    A new drill press fence from Rockler Woodworking and Hardware features a specially designed dust port that is angled to the side, minimising interference with the drill post and providing up to 3-inches of extra clearance.

    The drill press fence can be fitted to many existing drill press tables and includes a free plan for those who opt to build their own.

    Until now, drill press dust collection has been an afterthought, resulting in awkward and cumbersome setups that interfere with the work area of the table. Rockler's drill press fence dust port, which fits a 2-1/2-inch dust hose, is angled upward and off to the side, keeping dust collection components clear of both the work area and the drill post. This allows easier setups and manoeuvrability on the table surface. Steve Krohmer, Rockler's vice president of merchandising and product development, said:
    This new drill press fence makes adjustments easier and opens up more drilling area. The dust port is angled properly so it will stay clear of the drill post, allowing maximum clearance for workpieces between the post and the drill itself.

    The drill press fence is composed of an aluminium backbone and adjustable 3/4-inch melamine-coated MDF faces. The included flip stop can be anchored anywhere along the top T-track for repeatable drilling setups.

    It can be mounted to drill press tables via T-tracks or thru-slots and quickly positioned and secured with the hardware that is supplied.
    Pliers provide increased flexibility
    The latest tongue and groove pliers from GearWrench have been enhanced
    GearWrench 8" push button tongue and groove plier
    GearWrench is an Apex Tool Group brand
    Click to visit the HBT website for more information
    GearWrench has enhanced the standard tongue and groove plier with stronger capacity and double the jaw locking positions. Quicker and easier to adjust, end-users spend less time finding the best position.

    Automotive technicians can place the upper jaw on the workpiece, push the button and easily slide the bottom jaw into position to get the best fit and handle span for maximum holding and turning power.

    The V-shaped jaw paired with the induction-hardened, angled teeth grip flat, curved, square or hexagonal objects with ease. The longer jaw and thinner head of the new push button tongue and groove pliers provide increased access in tight spaces.

    These pliers are made to handle rigorous demands. While strong and durable, the pliers -- made of forged chrome-vanadium steel -- are lightweight and easy to work with. The professional dipped handle grips quickly wipe clean and are resistant to gasoline, brake fluid and anti-freeze. The pliers also have a protective, anti-rust clear coating.

    Available in three variations; 8", 10" and 12" individually, or as a set of all three pliers. All GearWrench push button tongue and groove pliers exceed ASME performance requirements.
    Big box update
    Bunnings has agreed to purchase Capricorn Coast Hardware in Yeppoon
    HNN Sources
    Bunnings has sold its Springfield Central warehouse for over $40 million
    Sales of chicken coops have increased in recent years at Bunnings
    Click to visit the ITW website for move information
    Bunnings has purchased Capricorn Coast Hardware in Yeppoon (QLD); a Melbourne-based private investor has purchased the Bunnings Springfield store; and chicken coops are one of the fastest-growing categories at Bunnings.
    Bunnings secures Yeppoon site

    Bunnings has reached a "conditional agreement" to purchase Capricorn Coast Hardware in Yeppoon (QLD), according to The Morning Bulletin. It said all current employees would be offered employment with the company.

    The store is expected to be "re-branded" and "transformed" into a smaller format Bunnings warehouse in the coming months. The store will be added to the 50 already in operation across the state.

    Capricorn Coast Hardware owner Theron Bond said the sale was a "relief" and was excited for what it meant for the region. He said: "Things are going bigger and bigger. It is hard when they are trying to enforce buy local, but people don't support it."

    Bond has owned the hardware store for the past 21 years, and the offer from Bunnings came at just the right time. He said: "I was willing to go, it has given me an exit strategy to get out; Bunnings was coming here regardless. They offered (the staff retention) up front, and it made the decision a lot easier...they have been pretty good with the way they have gone about it."
    $40m gains for Springfield store

    Bunnings has sold its Springfield Central warehouse in outer Brisbane for over $40 million. The 15,972sqm store opened in August and was sold with a new 12-year lease with further options available. The store is developed on a prominent 37,110sqm site situated opposite the Orion Springfield Central shopping centre.

    Springfield is one of Australia's largest master planned communities and is located within 30kms south west of the Brisbane CBD and is part of Greater Brisbane's booming south-west corridor.
    Demand for single-hen coops

    Sales of chicken coops at Bunnings are being driven by a desire by many Australians to have fresh eggs and feathery pets, according to the big box retailer.

    Bunnings general manager Clive Duncan said with the growth of urban chook-keepers, it had to expand its product range to meet demand for smaller coops. He told the Financial Review: "Some people might have only one chicken to lay a few eggs a week. Our product range has certainly grown and developed. We now make smaller, compact ones that is just big enough to house one chook."

    Ingrid Dimock, owner of chook selling and renting business City Chicks, said in the past seven years the business experienced double-digit growth. The business started out as a farm and a shop in the outer Brisbane suburb of Anstead and now it has franchises in Sydney, Brisbane and Sunshine Coast.

    She said the rise of online retail platforms like Gumtree and eBay means it is a lot cheaper for city residents to set up a chicken coop.
    Indie store update
    Natbuild has a new CEO
    HNN Sources
    HTH Group will discontinue marketing the Plants Plus brand
    Kennards Hire makes an acquisition
    Click to visit the ITW website for move information
    Buying group Natbuild has announced it has a new CEO; Home Timber & Hardware Group will no longer be marketing the Plants Plus brand; and Kennards Hire makes an acquisition.
    New leadership at Natbuild

    Peter Way has been appointed as Natbuild's new CEO following Frank Cordi stepping down from the role. According to the announcement: "Peter is well known in the industry, having spent 25 years working in building supplies and associated manufacturing operations. Much of his career was working with JH Williams and later with Cairns Hardware. He leaves his most recent position as CEO of Bretts to take on the new role."

    Way also has an understanding of the workings and challenges of Natbuild after serving as a board member from 2007 to 2010. He holds an MBA and will take up the CEO position on 4 January 2016.

    In a separate announcement, Natbuild thanked Cordi after more than 18 years at the helm of Natbuild. He first joined the group as its CEO in 1997 from Hudsons.
    HTHG stops marketing Plants Plus

    Home Timber & Hardware Group officially announced it will discontinue marketing the Plants Plus brand. Stores will still be able to trade under the Plants Plus brand. The decision refers to the cessation of group marketing and business operations support that HTH Group offers to current Plants Plus garden centres, which will cease from 1 March 2016.

    However HTH Group will continue to support all Plants Plus stores through the same wholesale buying conditions they currently enjoy including access to Chargeback and DC purchasing arrangements.

    While the decision to discontinue marketing the brand was not made lightly, HTH Group said the marketing and business support for the Plants Plus brand has become unsustainable in recent years with declining national membership. This resulted in the program not delivering the value required by garden centres.

    To ensure HTH Group can continue to deliver sustainable business growth, it has decided to focus on where it sees the strongest future growth opportunities for the business. Moving forward, it will concentrate on hardware stores and the brands that fit this model - Home Timber & Hardware and Thrifty-Link Hardware

    This decision does not indicate a withdrawal of support for other independent groups. HTH Group remains fully committed to supporting independent hardware businesses and continues to seek opportunities to support independent stores at a retail (marketing) and wholesale (buying) level.

    It will work with all Plants Plus stores and suppliers throughout the transition process.
    Kennards Hire buys local business

    Rental company Kennards Hire has acquired family-run rental business Hire It Plant Hire, based in Doncaster (VIC). The companies said an expanded range of equipment would be offered from the outlet, with all customer accounts transferred to Kennards Hire. The Doncaster branch will be Kennards Hire's 26th branch in Victoria.

    Hire It Plant Hire's Mike and Lesley Gaffney and Rodger Knights issued a joint statement: "We and all the staff would like to thank our customers for their loyal support over many years and commend Kennards Hire, also a family business, for their excellence in customer service and equipment. After many years of providing community and customer service through Hire It, the time has come to pursue some personal interests."
    Targeting tradies with utility products
    KEEN recently launched its new work boot range in Australia
    HNN Sources
    The Detroit Mid Work Boot is both lightweight and versatile
    The heavy duty Tradies Box Trailer is the latest product from Trailer Guys
    Click to visit the HBT website for more information
    US footwear brand KEEN recently released its new work boot range in Australia, where they are ready to take safety, comfort and worksite style to new heights. The company is well-known for its outdoor range of footwear for men, women and children.

    The Detroit Mid Work Boot is both lightweight and versatile and made to move with the wearer, while still delivering stability, support and protection. The boots are waterproof, oil resistant hand have a steel toe. It has hydrophobic/hydrophilic 2-zone comfort lining. They also have an oil and slip resistant, non-marking rubber outsole.

    The boots meets or exceeds ASTM F2412-11 and F2413-11 I/75 C/75 EH standards - AU/NZS 2210.3.2009. They weigh 24.7oz (700.2g).
    Tradies "best mate"

    The heavy duty Tradies Box Trailer is the latest product from Trailer Guys, a Biggera Waters based business in Queensland. Managing director, Rhys Jones said:
    Our heavy duty box trailers are robust and built to be a hard working companion on the job site. We have fine tuned our Tradies Box Trailers and the latest range has more features and inclusions.

    Features of the Series 3 Tradies Box Trailers include:
  • Full hot dipped galvanised tub and drawbar
  • 400mm high sides
  • 800mm high cage
  • Spare wheel and jockey wheel
  • 45x45mm K1045 solid square axles
  • Tilting draw bar
  • News
    Hot links
    Breville is working with UK celebrity chef Heston Blumenthal to market kitchen appliances
    HNN Sources
    Four RONA stores have been recognised at the Outstanding Retailer Awards
    B&Q will offer discounts on energy saving products to help raise awareness of climate change
    Click to visit the HBT website for more information
    Appliance makers are making deals with celebrity chefs to drive sales; Canadian hardware and building supplies retailer RONA wins awards; UK-based B&Q encourages customers to buy energy saving goods; and Amazon's smart product Echo will be sold through Home Depot,

    For further information, simply click on the images provided.
    Tapping into the Masterchef trend

    Breville is working with UK celebrity chef Heston Blumenthal to design and market kitchen appliances and Shriro Holdings has signed up Australian chef Neil Perry to promote a new range of ovens and cooktops. Both are cashing in on the home renovation boom. They are counting on consumers' growing skills and confidence in the kitchen to drive sales of ovens, juicers, coffee makers and cooktops.
    Celebrity chef Heston Blumenthal promotes Breville products
    RONA stores win retail awards

    Four RONA stores have been recognised at the Outstanding Retailer Awards (ORAs). Launched in 1992, the ORAs are the industry's only independent awards program dedicated to celebrating the achievements of hardware, home improvement and building supply dealers in Canada. In its 23-year history, it has honoured more than 140 retailers.
    RONA wins independent retail awards
    B&Q advocates for climate change

    B&Q and other Kingfisher stores will offer discounts on energy saving products to help raise awareness of the upcoming United Nations climate change talks in Paris. In an interview with BusinessGreen, Richard Gillies, sustainability director for Kingfisher, owner of B&Q, said he wanted to make climate change a tangible reality for customers.
    B&Q stores are selling discounted LED lights
    Amazon Echo available at Home Depot

    Amazon is allowing Home Depot and other retailers to offer its high-tech, assistant speaker online. Echo, which was first unveiled in November 2014, lets users ask the system's personal assistant "Alexa" to update to-do lists, set alarms and timers, check the weather, get sports and news, get answers to questions from Wikipedia or stream music. The device can essentially run consumers' homes.
    Amazon's Echo will go on sale at Home Depot in time for the Christmas rush
    Seeking opportunities
    A national account manager for a supplier of building and hardware products
    HNN Sources
    An operations manager is required for a manufacturer
    A product manager role at ITW Proline
    Visit the Mecca Website
    A selected round-up of home improvement and hardware retail roles around Australia. A national account manager with previous experience in retail hardware or FMCG; operations manager for a manufacturer of home improvement products; and ITW Proline is seeking a product manager.

    For further information, simply click on the images provided.
    "Hands on" leadership role

    A supplier of decorative and functional building and hardware products is searching for a national account manager. The company's product range is used in the commercial, industrial, residential and home improvement sectors and sold through hardware chains including Masters, Mitre 10 and Bunnings. This role involves management of a small team of state based account managers.
    u&u recruitment placing a national account manager for retail hardware
    Overseeing factory operations

    A manufacturer based on the central coast of New South Wales is seeking an experienced operations manager. The successful candidate will have responsibility for after sales, logistics and customer service. Previous experience managing tradespeople and sub-contractors is mandatory.
    Cameron Recruitment looking to place an operations manager in the home improvement sector
    Managing product life cycles

    ITW Proline requires an experienced, self-motivated, commercially-minded product manager to assume responsibility for brands and product categories that are sold through the retail hardware channel. This senior role will provide the successful candidate exposure to all things marketing - from conception to commercialisation. The individual will be degree qualified in marketing or business.
    ITW Proline has an opportunity for a product manager
    B&Q showcases new IT system
    Kingfisher chose B&Q in Dublin to demonstrate its new IT platform
    Irish Independent
    The B&Q DIY chain has had mixed fortunes in Ireland
    Kingfisher CEO Veronique Laury
    Click to visit the ITW website for move information
    According to Kingfisher CEO Veronique Laury, the visit to Dublin to see the retail group's company-wide unified SAP IT platform will include a series of presentations. It is being rolled out at B&Q before its implementation across the entire business which includes Screwfix, Brico Depot and Castorama.

    The IT pilot programme began at B&Q Ireland in July this year. The company will also give investors and analysts a number of in-store demonstrations highlighting some of the improved functionality for staff and customers.

    Kingfisher has been pursuing its "One" strategy which aims to realign and reorganise the group. The revamped IT system is part of that strategy.

    Staff at B&Q stores in Ireland claim that the system has transformed how staff interact with customers in its outlets here. They say it now provides real-time stock visibility and other benefits. Staff use new portable handsets to carry out a number of functions in-store that were previously time-consuming and laborious.

    The B&Q DIY chain has had mixed fortunes in Ireland, having placed the chain into examinership back in January 2013 as the downturn gripped the country. Turnover at its Irish arm hit a high of 124 million euros in 2009, but had fallen 24% to 94 million euros in the financial year that ended in January 2012.

    It initially planned to close outlets in Athone and Waterford, but ultimately decided to keep the Athlone premises open.

    Kingfisher had set aside GBP 21 million (then 25 million euros) to cover the restructuring of its Irish business. It included a 2.4 million euros equity investment in the unit.

    The latest set of publicly available accounts for the Irish division, which cover the 12 months to February 2014, show that it made a 1.4 million euros loss that period compared to a 26 million euros loss in the prior financial year. Turnover fell to 76.8 million euros from 83.9 million euros.

    Kingfisher's group turnover was just under GBP 11 billion in its last financial year, when it made a GBP 675 million pre-tax profit.
    Kingfisher results 2015-16 first half - HNN
    Henkel is upbeat on earnings growth
    North America and Russia helped boost Henkel's third quarter results
    It expects slower economic growth in China to impact sales this year
    Henkel recently entered the Australian and New Zealand laundry markets
    Subscribe to HNN weekly e-newsletter
    Henkel posted a larger than expected increase in third-quarter profit as sales in North America and Russia more than offset continued weakness in its Chinese adhesives business. In a note to clients, Nomura analysts wrote:
    The company's third-quarter results are providing evidence of Henkel's often underestimated resilience stemming from the group's geographical diversification, strong pricing power and the ability to quickly adapt its cost structure.

    The maker of Loctite glue increased its third-quarter adjusted operating profit 12.3% to 778 million euros (US$836 million), beating an analyst average forecast of 748 million euros in a Reuters poll.

    Chief executive Kasper Rorsted said he expected the market environment to remain challenging but said whenever Henkel saw growth slowing, it was even stricter with cost control measures.

    The adhesives business increased sales on a like-for-like basis, and stripping out currency moves, by 2.3% after a 1.7% rise in the second quarter. This result was helped by higher prices. It has suffered from fierce price competition in packaging in the United States and slowing demand in China.

    The division contributes half of Henkel's sales, providing glues, sealants and coatings for food packaging, car production and electronics assembly. The United States and China are its biggest markets.

    While adhesives sales rose in North America in the three months through September, sales in China declined, mainly due to weakness in the automotive sector.

    The company now expects sales to rise by 3% this year, at the lower end of its previous 3% to 5% range. It believes slower economic growth in China will curb gains in its adhesive technology business.
    Henkel to buy Colgate-Palmolive's Australian laundry brands - International Business Times UK
    Grafton Group acquires tool distributor
    Grafton Group, owner of the Woodies brand, is acquiring Dutch tool distributor Isero
    Irish Times
    Gavin Stark, chief executive officer of Grafton Group
    Isero is a specialist distributor of tools and fixings in the Netherlands
    Click to visit the ITW website for move information
    Irish merchanting and DIY group Grafton has agreed to acquire Dutch tool distributor Isero for 91.5 million euros. The acquisition is the group's largest to date in continental Europe.

    Isero is a specialist distributor of tools and fixings in the Netherlands, and trades from 38 branches under the Gerritse, Breur Ceintuurbaan and Van der Winkel brands.

    Grafton Group will pay H2 Equity Partners, the majority shareholder in Isero, private individuals and management who have a small shareholding in the company, a consideration of 91.5 million euros, including the refinancing of assumed debt.

    Isero reported revenue of 94 million euros, adjusted earnings (EBITDA) of 10 million euros and adjusted operating profit of 8.8 million euros for the year to June 30th 2015.

    Gavin Slark, chief executive officer of Grafton said the deal will give the group a presence in the Netherlands for the first time and strengthen its branch footprint in the mainland European market. He said:
    Isero is being acquired at an early stage in the recovery of the Netherlands economy and there are excellent opportunities for the organic and acquisitive expansion of the business.

    He added that Isero's small store format will broaden the group's merchanting capabilities.
    Grafton's half yearly Irish revenues up almost 14% - RTE
    ITW third quarter 2015 results
    Restructuring of ITW
    Operating margin
    ITW presentation slide 10 (extract): Construction
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    ITW has released its results for its third quarter of 2015. Overall revenue declined to US$3,400 million, a drop of 9% over the previous corresponding period (pcp), which was third quarter 2014. The company faced tough markets, and the pcp was a period of relatively high earnings.

    However, earnings per share (EPS) increased to US$1.39, up by 9% over the previous corresponding period (pcp), which was third quarter 2014. The EPS increase would have been 18%, without the negative effect of changes in currency exchange rates. The gains in the EPS were attributed to ongoing changes to company structure and operations, which have continued to provide ITW with high efficiency benefits.

    Regionally, overall revenue in the Asia-Pacific (including Australia) fell by 4%, while revenue in North America fell by 2%. Revenue for the overall international market fell by 2%.

    ITW's chief financial officer, Michael M. Larsen, stated in his introductory remarks that ITW's expectations for the fourth quarter of 2015 are subdued. EPS is forecast to be between US$1.15 and US$1.25, with organic (non-acquisition) growth down by 1% or 2% over the fourth quarter of 2014.

    In comments at the results presentation to analysts, Mr Larsen portrayed the company as facing markets that were quite divided:
    When we look at our diverse business portfolio, it's a tale of two economies: industrial and consumer. We continue to see solid organic growth in our consumer-facing businesses, such as Automotive, Food Equipment, and parts of Specialty and Construction, which represents about 60% of our total revenues. In the quarter and year-to-date, these businesses are up 5% organically, so 60% of the company is growing at 5% in a tough environment. On the other hand, our industrial-facing businesses, like Welding, Test & Measurement/Electronics, declined in the high single digits organic.
    Operating margin

    Operating margin in construction overall improved by 4.2%. Mr Larsen broke down the results for the analysts as follows:
    Construction Products had another good quarter on the top line with organic revenue growth of 4%. North America, which is about 40% of this segment, was up 7%, due to continued positive momentum in the renovation/remodel hard and, to some extent, commercial. Europe was down 2% as we continue to focus on PLS and restructuring, activities that in the near term position the business for accelerated organic revenue growth with much improved margin performance. Asia Pacific increased 5%, with strong performance once again in Australia. Operating margin came in at a record 23.1%, an impressive 420 basis points of improvement.

    In response to an analyst's question, Mr Larsen went into more detail about ITW's performance in construction:
    I mean, I think the Construction team has been working for the last two and a half years on implementing BSS in Sourcing and you're seeing some terrific progress. If you had told that team two years ago margins are going to be solidly in the low to mid 20 percentages, I think everybody would have signed up for those types of margins.
    So just on Construction, specifically, what you saw in the quarter, North America, up 7%, really led by renovation/remodel, up double-digit. So again, back to the consumer-oriented, consumer-facing businesses, residential was flat to down slightly in the quarter, and commercial was up slightly; but really the big driver here was on the renovation and remodel side.
    And just quickly globally, Europe, the focus there is still very much on restructuring; so quite a bit of PLS, again, in the quarter. France was actually positive. You don't hear those two words combined too often, France and growth; but France was positive. And then, in Asia Pacific, Australia, another really solid performance, up 5% in the Construction business.
    ITW presentation slide 10 (extract): Construction
    Other company segments
    Automotive OEM

    Total revenues fell from US$631 million to US$612 million, while organic revenue growth was 5%. The growth came from innovations, according to ITW, and better product penetration, as the worldwide industry continued with effectively flat results. Operating margin improved by 2%.
    Test & measurement/electronics

    Total revenue fell from $US586 million in the pcp to US$490 million, with organic revenue also declining by 11%. This was in part due to a solid performance in the comparative pcp, and weaker demand for capital equipment. Operating margin declined by 2.1%.
    Food equipment

    Total revenue declined by 4%, but organic revenue improved by 3%. The increase was driven by the introduction of new products. North America improved by 6%, with equipment up 8% and service up 4%. Operating margin improved by 3.2%.
    Polymers and fluids

    Total revenue was down 14% and organic revenue was off 3%. A soft market in Europe and a decline in demand for offshore wind projects contributed to the reduction. Operating margin declined 1.2%.

    Total revenue fell by 14%, and organic revenue fell by 10%. International was down 17% as markets softened in both Europe and China. Operating margin declined 1.4%.
    Specialty products

    Total revenue fell by 7%, while organic revenue remained flat. Operating margin improved by 2.7%.
    USG Boral shifts its focus to Asia Pacific
    USG is expanding its business in the Asia Pacific region following its joint venture with Boral
    Korea Herald
    James Metcalf, USG Boral president and chief executive officer
    USG Boral is seeking to develop eco-friendly spaces
    Subscribe to HNN weekly e-newsletter
    US-based building materials maker USG has expanded its business in the Asia Pacific region following the joint venture it formed with Australian firm Boral to strengthen its foothold in the plasterboard market. James Metcalf, USG Boral president and chief executive officer, recently visited Seoul to attend USG Boral's board of directors meeting. He said in a recent interview with The Korea Herald:
    Korea is our second-largest market and is one of the big elephants along with Australia, Thailand and Indonesia.

    USG Boral, a 50-50 joint venture formed in 2014, entered the building materials business with sales and operations across Asia, Australasia and the Middle East to grow earnings from the regions. It is also aiming to transform the business over the longer term through its product and manufacturing solutions which include ceilings, cement board, fibreboard and lightweight plasterboard.

    Metcalf, who spent his entire career at North America's largest gypsum maker, said USG Boral has a five-year capital plan of investment and facility expansion, as well as the transfer of technological know-how. He declined to disclose the exact amount of investment, citing confidentiality.

    Metcalf said the marriage between USG's building supply technologies and Boral's plasterboard distribution footprint in the Asian and Australian markets is expected to create greater synergies in the next decade. He said:
    I wouldn't be surprised if this part of the business becomes larger than what we have in North America in the next 10 years.

    Founded in 1901, USG pioneered plasterboard, sold under its trademarked brand name Sheetrock, and has been pursuing innovation as the firm's core value in a bid to improve the construction environment for more than 110 years. He said:
    We ranked among the top 10 innovative companies in the industrial material space, with more than 2,400 patents issued in the last decade and two weeks ago we presented 77 individual patent awards to employees covering 35 new patents.

    With the growing trend toward green building, USG Boral seeks to develop eco-friendly spaces and try different ways to have connectivity with technology. Metcalf said:
    Our products cover large spaces in rooms and buildings such as the walls, floor and ceiling. We try to come up with ideas for how to make your room a more comfortable and desirable place.
    Three lights, three design approaches
    From left to right: DeWalt, Bosch, Milwaukee
    HNN Sources
    The Bosch light
    The DeWalt light
    Click to visit the HBT website for more information
    Most people buy cordless systems rather than cordless tools. That means that products which were once regarded as being more of secondary importance have now become vital for manufacturers to get right. While the competition for the best drill, impact driver and circular saw remains intense, a second front is opening up in these once neglected accessories.

    One of the more important of the accessories is the worklight. Having a really good worklight might be just enough to tip a customer over into buying one brand over another.

    The three worklights that HNN wanted to look at this week are complementary to the impact drivers we are also testing. (Apologies for not having the test results ready yet. We keep completing tests, looking at the results, and seeing either flaws or ways to make the tests better.)

    Like those impact drivers, each of these worklights has its own character and unique set of capabilities. While most of these brands offer alternative worklights, these are the "mainstream", non speciality items that would be suited for most customers.
    Bosch: basic but surprising

    To begin with the simplest of the group: the Bosch GLI VariLED Professional. This light has a familiar design, as it represents a style quite common with NiCad worklights in the past.

    The VariLED attaches directly to either a 18-volt or 14.4-volt Bosch Li-ion battery. It adds about 30mm to the overall height of the battery when folded shut. A red plastic button at the top of the unit turns it off and on. The light also features a plastic lens that can be rotated, producing either a more focused light beam or a less focused, more wide-angle beam. It features a soft plastic band that folds out from the unit, and can be used to hang-up the light.
    The Bosch light

    The top of the light sits flat against the battery, but can be rotated up in 15 degree increments, to a slightly down-facing 120 degrees.

    Though it is not evident at first, this is very much a special purpose light. What it is good for is providing sturdy illumination of a specific work surface. In particular, it would be good for users who need to light something from underneath, in a confined space. Think plumbers, some electricians and even auto mechanics.

    The LED light itself is rated at 300 lux, and while not startlingly bright, provides enough work to get things done with. The rotating lens again just seems a bit of a gimmick more than a carefully thought-through solution.
    Dial adjusts focus

    Outside of this kind of static illumination, it's difficult to see how using this light would work very well. It could be used for, finding the way down a path at night, but holding the battery (which is how you would do it) is a bit awkward.

    The soft rubber hanging loop could make it more useful, but it seems something of an afterthought. For example, to use the loop, you have to slide the light off the battery, fold it out, then slide the light back onto the battery.

    So, to conclude, this is more of a specialists item than it appears at first.
    DeWalt LED Work Light DCL040-XE

    This is definitely one of the more "high-end" handheld worklights on the market. It features an ergonomic pistol-style grip faced with a durable soft rubber finish. Gripping the light naturally brings the forefinger to sit on the light switch. The head of the light tilts from a slightly downwards angle of 80 degrees from the vertical to an upwards facing 190 degrees. The tilt is on a ratchet, with 10 clicks, so around 11 degrees per click. The 18-volt battery attaches to the base of the light on a horizontal slide, and provides a solid, weighty base for the light to rest on.
    DeWalt light

    The light produces 110 lumens, and this is in two zones. There is an outer ring of softer, diffused light, and an inner core of brighter light. The worklight also has a small metal hoop attached to its head, which locks down on a cam, and swivels up to provide a means of hooking it on something. There is also an attachment point for a lanyard on the back of the light near its base.

    Judging by some of the online reviews, this is a light that has found some favour with people on casual security duty, or who have to do regular work in the dark. It is definitely the ideal kind of light to hold while the user illuminates an area where others are working, as it is comfortable to hold for long periods, and the trigger switch provides very good on/off control.

    The switch is, however, a little of an ergonomic oddity. The pistol-style grip means the forefinger constantly rests against the switch, which is not something generally required.

    As mentioned above, the battery gives it a weighty base, so that it can be stood off to one side on its own to illuminate an area. The worklight also can operate quite well resting on its back to shine directly upwards in a tight space.

    It is a very versatile light, but it does still have some limitations. The pistol-style grip that makes it comfortable to use also means it has to be held in just one way, and there could be situations when working solo where it would be awkward to get it pointed in the right direction.
    Milwaukee M12 LED-0 (49-24-0146)

    Where both the Bosch and the DeWalt might be thought of as lights with some of a specialty in a couple of areas, the M12 LED is very much a general purpose light. In fact, with its slim 12-volt battery, it reminds one of a conventional flashlight, especially when the light head is in the directly upwards position.
    Milwaukee light

    As with the DeWalt, it has a tilting head, with a slightly more limited range of between 90 degrees and 180 degrees, incrementally by eight clicks. The off/on switch is a standard plastic-covered unit.

    The light is not as bright as the DeWalt worklight, but it is about as bright as the Bosch. It features a quite strong magnet of the back, making it easy to hang from any handy metal surface. It can be stood on its base, but as this is a triangular area about 40mm to a side, it is not very sturdy in this position.

    Where the light does excel is in the kind of solo work a user does with the light in one hand and a power-tool or screwdriver in the other. For example, the simple tube shape makes it easy to hold the light upside down, and thus, for example, lean over something and shine the light back towards the user.

    It is really part of what Milwaukee does best, which is to rethink conventional designs and make them work better, without sacrificing their basic utility.

    As with all these comparisons, there is no such thing as a clear "winner". It is interesting just how much of each manufacturer's overall approach to the market shows through the way in which they design even these relatively simple accessories.

    In that light, HNN must confess that we are still struggling to fully understand how Bosch goes about its design processes. It is difficult not to believe it is perhaps designing for a slightly older generation than the other two manufacturers.

    The DeWalt is truly an interesting and well thought-out design. It does feel slightly futuristic, and it would seem that at times it would be the perfect solution to a lighting problem and at others just a little less than optimal.

    The Milwaukee light is quite traditional, but surprisingly versatile. What comes through in this design, as in many other Milwaukee designs, is that while the company caters to the "traditional" at times, it also never condescends. It assumes its users will be intelligent, interested in good design, and be able to discern the advantages of the simple.
    HI Weekly Vol. 1 No. 10
    Download the latest HI Weekly, issue number 10
    HI Weekly No. 10
    Triton products in boxes at a Masters store
    First Use: DeWalt Bluetooth 18-volt battery
    Click to visit the HBT website for more information
    Each week, the HNN weekly e-newsletter can be accessed in one convenient PDF. Easy to read onscreen, or print it out.

    Just use the following link to download the PDF:

    In this week's edition, we look at the latest Woolworths results and its home improvement division. A number of questions are included from the presentation to analysts. The DeWalt Bluetooth battery is also tested.

    CSR's first half results are included along with Reece and the most recent hardware retail statistics.

    Other news stories include Mitre 10 New Zealand's annual results and Lowe's top 2015 vendors are named.

    Also in this edition: the online home services market in the US continues to expand with Sears.

    Plus all our regular features: big box updates; HNN Home Improvement Index; new products; and hot links.
    Woolworths 2016 Q1 results: growth under 1%
    Woolworths sales revenues for first quarter 2015/16
    Woolworths Limited
    Masters have improved floor displays
    Lots of Triton boxes, but what does the brand mean?
    Give to Amnesty International
    Woolworths Limited has released its results for the first quarter of its FY 2015/16. The company reported that, excluding petrol sales (due to material changes), overall sales grew by 0.75% when compared with the previous corresponding period (pcp), which is the first quarter of FY 2014/15. Sales were $14,417 million, as compared to $14,309 million in the pcp.

    The Masters Home Improvement division reported sales growth of 23.5%, with sales totalling $294 million. Home Timber and Hardware reported a 17.1% increases in sales, contributing $274 million.
    Woolworths sales revenues for first quarter 2015/16

    Sales for Woolworths' Australian food and liquor division grew by just 0.4%, coming in at $11,064 million. Its New Zealand operations reported growth of 3.9% in NZD, which translated to 2.4% growth in AUD.

    General merchandise, which is largely the company's Big W retail operation, fell by 7.9% over the pcp, delivering $975 million for the quarter.
    Profit forecast

    In the press release accompanying the results, Woolworths indicated it expected its profit for its first half of FY 2015/16 to decline as compared to the first half of FY 2014/15.

    The net profit after tax (NPAT) range for the half currently underway is forecast to be between $900 million and $1,000 million. In the first half of FY 2014/15, Woolworths reported NPAT of 1,384.1 million. This represented an increase of 4.7% over the NPAT for the first half of FY 2013/14.

    The revised forecast for profit in the current first half indicates a fall in profit of between 27.8% and 35.0% compared to the previous first half.

    The Woolworths press released quoted the recently appointed chairman of the Woolworths' board, Gordon Cairns, as commenting on the forecast by saying:
    The Board and management are focused on making the best long-term decisions across all our businesses. There will be short-term consequences, but we are confident that the decisions we are taking are necessary to realise the immense potential of the Group for our shareholders.
    Home improvement division

    The company reported that it had opened four new Masters stores during the quarter, and retrofitted one store in Victoria to the new, "Masters 2.0" format. There are now 62 Masters stores.

    The company continues to forecast that it will have more than 30 of its Masters stores operating in the new format by the end of FY 2015/16. It also continues to report that sales in the new format stores are 30% better than sales in comparable stores in the previous format.

    Home Timber and Hardware grew its sales largely through acquisitions during the quarter.
    Analysts conference call

    Interim Woolworths CEO, Grant O'Brien, who resigned in mid-June 2015, managed the results presentation. The company has previously announced that it will attempt to introduce a new CEO by its annual general meeting at the end of November 2015.

    There were four question asked by various analysts that related directly to the Masters business.
    Woolworths' relationship with Lowe's

    Phillip Kimber of analysts Evans & Partners asked a question that related to the control exerted by Woolworths' one-third joint venture partner in Masters, US-based Lowe's Home Improvement:
    Masters is obviously getting a lot of press and it was pleasing to see that the sales per store on an annualised basis I think was up this quarter versus last quarter. So it looks like there might be a little bit of stabilisation which is great. But there has been a lot of talk about your partner [Lowe's] and the put option which you talk about in the annual report.
    I was just wondering the other way around, what is Woolworths' ability to be able to change the business without Lowe's approval?...Nobody knows what Lowe's decision is going to be, but are Woolworths able to, for example, exit the business without Lowe's? Are Lowe's able to stop that?

    Mr O'Brien responded:
    Thanks Phil. Look, in relation to the home improvement business, obviously we have got a joint-venture partner in Lowe's, and they are a partner, a very good partner, a supportive partner, and we haven't seen a change in that, and we don't expect a change in that.
    We work very closely together to both promote this business and guide the business and provide the resources and support and give it what it needs. We are pleased with the progress of the newly reformatted stores, but in respect to any decisions that are taken in relation to the home improvement business these are done in concert with the Lowe's guys, and I don't see that changing at this point.
    Masters' progress to profit

    Analyst Grant Saligari of Credit Suisse asked for some indication of how Masters sees itself improving to the extent it would actually become profitable.
    If I could, just one on Masters. You continue with a fairly steady statement around the newer stores doing materially better sales than the preceding stores. I actually struggle to reconcile that, but even if we take that as a given, what is the path to get to an acceptable situation, an acceptable outcome. Because I think even with where you are tracking at the moment that doesn't get you to a profitable position, and so, where to from here with that business?

    The managing director of Woolworths' home improvement division, Matt Tyson, responded:
    We did call out back at the last result we were encouraged by the new format stores. They continue to trade strongly, the 2015 stores greater than 30% ahead of the rest of the estate. But I think we were very clear when we said that we recognise there is much more to do. We need to see those new stores as they mature, increase their sales density. We are encouraged so far, but we need to see much better performance from those stores as they mature.
    As you know, we have started the process of revamping stores, we have completed one more in the quarter. The early signs from those stores are encouraging. Again, we recognise that many of those stores have been open for three years, and the perception in the market for those stores is probably not where we want it to be, and it will take time for the sales density in those existing stores to come up to that level. It is work in progress, but we are working very hard to take some of the elements to take some of the elements of that 2.0 proposition and get it back into the estate.
    I will give you one example. During the quarter we rolled back 2000 lines from those new stores back into the existing estate. Again, all aimed at fixing some of the underlying issues in the business.
    Mr Tyson's ongoing role at Woolworths

    Analyst Craig Stafford of UBS Investment Bank asked for a comment on the ongoing press speculation about Mr Tyson's continued role at its hardware division:
    There has been some press speculation about your future with Masters. I am just wondering if you can provide some comments to us on that.

    Mr Tyson replied:
    Cool, Craig. Thanks for the question. I don't think there is any surprise. I'm no "Spring chicken", and actually the journey we are on for Masters is a journey that will take some time. But I actually fully intend to be engaged with this business on that journey for some time.

    It is worth clarifying that when Mr Tyson says "I don't think there is any surprise", he is commenting on the speculation in the press. He is saying that, as a person over 60 years in age, the press can be expected to speculate on his continued career from time to time.
    Further clarification of Mr Tyson's ongoing role

    Analyst David Errington of Merrill Lynch felt there was more to be explored in Mr Tyson's answer to Mr Stafford's question:
    To Matt, he basically said he is no "Spring chicken", and I can certainly relate to that. But he said that he would be "engaged" in the business in some format. What does that mean - "engaged"? ... What's "engaged" mean? Does that mean he is stepping back a little bit from being CEO?
    And the second question I would like to ask is in this earnings guidance for first half, there has been questions around it, but in that number, is Masters expected to go backwards, first half 2016 on first half 2015 on that number?

    Mr O'Brien made an immediate effort to clarify further what Mr Tyson had stated:
    I don't want to try to pick apart what Matt said, except that he is no "Spring chicken", and he will be fully involved in the business as he said for some time to come.

    Mr Errington sought to make the language as concrete as possible, and so asked:
    Is that as the leader, is that as the boss, Grant? I mean that is a pretty important distinction?

    Mr O'Brien made his answer as clear as possible:
    Yes, as the managing director of the business, David, yes.

    Mr O'Brien further responded that profit numbers for Masters were not available.
    In relation to the outlook from a profit point of view for Masters, we don't break that out.

    The first thing to comment on is the speculation around Mr Tyson leaving his role at Woolworths. It should be quite clear from the partial transcript above that in no way did either Mr Tyson or Mr O'Brien so much as hint that the former would be leaving anytime soon.
    The future of Masters

    There has been a good deal of speculation about the future of Masters in the Australian press. While no one can say for certain what direction a new CEO operating under a new chairman will choose to take Masters in, it does seem unlikely there will be a major shift in direction before May 2016.

    Making changes this close to the Christmas/Summer holidays would not help Masters' position in any way. Woolworths' annual general meeting may see the announcement of a new CEO, but it is likely that appointment will not commence in any real sense until late January 2016 at the earliest.

    Thus the first half FY 2015/16 report might provide some general guidance on direction, but any definitive changes will likely be announced in May 2016, potentially at another Woolworths "Investors' Day" gathering.

    There are two main influences that are likely to help determine Masters' future. The first is, simply, how Masters performs over the remaining nine months of 2015/16. One of the hidden points in what Mr Tyson has to say is that time should bring a degree of natural improvement with its passing.

    The new format stores should "mature", and create a more widespread customer base. Newly refitted stores may also show better results, as customers discover a store they might not have felt was very good has now improved. Added to that is the slowed, but continuing build-out of Masters' store network.

    The second influence will be the performance of Woolworths' food business. The "crisis" that afflicts Masters is really only happening because earnings and profits have fallen significantly at Woolworths' supermarkets.

    In looking at the supermarkets, there appear to have been problems with both the overall strategy and the execution. Strategically, what Woolworths did not entirely understand was the degree of shift between two major "buying incentives": convenience and price. The company missed the increasing importance of price.

    Instead, it invested in building more stores to increase convenience, while Wesfarmers/Coles invested in less expensive refurbishments and price.

    In terms of execution, perhaps the best indication of what happened is a question/comment offered by the financial analyst Craig Woolford of Citibank at the results announcement for the first half of FY 2014/15:
    My other question is fairly high level. I think businesses as large as Woolworth are typically fairly slow moving. How can we be sure that this isn't a more deep-seated problem? And the reason I ask that question is that for a couple of years now the Supermarket business has delivered on an earnings outcome with flat COD to CODB percentage which implies significant cost savings already. And it's not clear where they've actually come from.
    There's no cost saving program being called out. These are large, hundreds of millions of dollars of savings that the company has made. So it feels like staffing levels has been cut back progressively over a fairly lengthy timeframe, rather than just being a problem in the recent period. So I'd be interested in your views about how significant the investment needs to be, given the reduction in costs seems to have been going on for some time already.

    As HNN pointed out at the time, Mr O'Brien either didn't quite catch the criticism in Mr Woolford's comment, or perhaps chose not to hear it. Back in February 2015 he responded:
    It has, Craig. You're right and you will have heard me say before that it's part of our DNA. The ability for Woolworths to remove cost is not something that's happened in the last couple of years. It's been something that has been a feature of this business for the last 20 that I've been involved in anyway. And not just in big programs like Refresh and Mercury. It's something that's done every day and explains part of the reason why the business has been able to provide such profitable growth over the years. You're right.
    They're big numbers, because of the scale of business. But it's the scale of the business that provides the opportunities to find efficiencies in every corner and we've never gone looking in one place, such as labour, to use your example. I said quite specifically a moment ago about how big a prize something like shrinkage is in a business like ours. It's a massive number and a massive opportunity therefore to become more efficient. And you don't have to become too much more efficient to drive significant savings that you can then invest back into the business.
    So for us, what we're signalling more than anything else is we're stepping that up. It's not that we're starting it. We're stepping it up and I've been really at pains today to talk about the fact that the majority of this comes from above store locations so that we can actually invest back into store. And again, what we've been talking about in respect of the uses of this investment, it's not just price. It's about labour in stores. And we've already acted to increase our labour in stores during this month and there's more investment made into the stores in areas of value to the customer and areas that are going to improve our presentation to customers.
    So my simple answer to that is cost of doing business reduction in the form of efficiency is in our DNA. And our ability to do that rather than be a question is evidenced, I think, in how this business has been run for the last 20 years.

    The full transcript of the Woolworths results announcement for first half 2014/15 is available on SeekingAlpha at:
    SeekingAlpha: Woolworths 2014/15 first half results

    In retrospect, Mr O'Brien's is not quite the best answer to Mr Woolford's comment, perhaps. Subsequent events indicate that Mr Woolford may have been right, and that the cost savings announced in prior years resulted more from reductions in service rather than genuine efficiency gains. These reductions have damaged the brand to such an extent that considerable investment is now required to restore it.

    To make matters worse, the ongoing investment in refurbishments by Coles has enabled it to experiment and develop better store layouts. Thus the new standard that Woolworths needs to reach in its own refurbishments is that of stores such as the Coles at Coburg in Melbourne's north, which features a vastly expanded range of fresh produce and other retail innovations.

    Added to this is the development of new format stores by German-based discount supermarket Aldi. This new format more directly challenges the main supermarkets.

    The result of all this is that it is very unlikely much good news will be coming from Woolworths before calendar 2017.
    But is it the right strategy?

    Mr Tyson has been very careful in the past to point out that he and Woolworths do not see themselves as having "nailed" the exact right strategy, but rather see it as a developing process that delivers what Mr Tyson refers to as "learnings".

    As it currently stands, two related problems are evident in this strategy. The first is that it is a very expensive strategy, and the second is that the funds to fully execute the strategy are not available.

    A good example of what is meant by this can be found in power tools. The range of tools that Masters offers is something of a patchwork that needs to fit around pre-existing arrangements by suppliers with Bunnings and other retailers. Thus, for example, Masters sells DeWalt 14.4-volt cordless tools, but not DeWalt 18-volt tools.

    To overcome this problem, Masters has entered into an exclusive arrangement with Triton Tools. This is a good move, but it comes with a problem: how are consumers to evaluate Triton as a brand? While it has a good reputation in some specific areas - especially for routers - its reputation for areas such as, say, cordless hammer drills, is unknown.

    To develop that reputation some kind of more aggressive marketing and branding would be needed. That costs money to do, money which Masters at this stage simply does not have. This means the strategy will likely work to some extent, and continue to improve over time, but slowly.

    It may well be, therefore, that Masters' survival will end up depending less on how good its long-term strategies may be, and more on whether it can successfully develop several low-cost, effective strategies to get it through to Christmas 2016.

    The problem with this is that it means Masters needs to think "outside the big-box". That's something that, based on the immediate past, neither Masters nor Woolworths have proved to be especially adept at.

    Until next time,


    You can contact me directly via email or Twitter @HNN_Australia

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    HNN iPad App
    First Use: DeWalt Bluetooth 18-volt battery
    The DeWalt Bluetooth battery flashes its LED
    HNN Sources
    Completed charging notification
    The lending screen
    Click to visit the HBT website for more information

    The one thing that using DeWalt's newly released Bluetooth equipped battery, the DCB183B, convinced HNN about was that we needed to improve the way we review these new technologies. We're simply going to have to divide our reviews into two, starting with a "first impressions" review, and following up a month or so later with a more reflective review.

    The reason behind that decision is that it is simply almost impossible not to be very enthusiastic about new technologies such as this DeWalt battery when you first start using them. It seems clear to us at the moment that DeWalt has really developed a technology here that will eventually take over a significant part of the market.

    It's not so much what DeWalt has already done with this technology - which is considerable - but how this technology could develop in the future. Just about everyone who uses the DeWalt battery comes up immediately with an additional feature they would like.

    HNN hopes that Stanley Black & Decker is giving some serious thought to opening up the programming end of this device, enabling third-parties to develop more software tools that make use of it.
    The basics

    To start with, the most important thing to emphasise is that DeWalt has made using this battery just as simple as possible. Once you have the battery, you start by downloading the DeWalt app to your smartphone or tablet (Android of Apple iOS) - it's free, of course.

    The next step is to "pair" the battery with the app. If you've used Bluetooth before for something like cordless headphones, a Bluetooth speaker or a mouse, then this is exactly the same. You begin by tapping the "+Tool" button on the home screen. You can give the battery its own name, and optionally choose to register it with DeWalt at the same time.
    Adding a tool.

    When you complete those details, the app will begin scanning for the battery. To pair it up, simply press the button that illuminates the charge indicator on the back of the battery. In our case it took less than 10 seconds for the app to pair up the battery.

    Your first stop after doing that will likely be the Diagnostics tab. This tab shows you five basic parameters: the date and time the battery was "last seen" - when it was in range; "fuel gauge" - the amount of charge on the battery; the battery's status (enabled or disabled); the battery's health; and the current temperature of the battery.

    This seems a simple display, but it is actually quite sophisticated. For example, the fuel gauge will let you know when the battery is being charged, as well.
    Diagnostics tab

    Below the information display are three buttons: Enable, Disable and Identify. If you tap the Identify button, a blue LED set into the side of the battery will begin to flash, and continue for about six seconds. That way you can tell exactly what battery you are dealing with.
    The DeWalt Bluetooth battery flashes its LED

    In fact, whenever you send any kind of command to the battery, the LED will flash to confirm you are making the change. Most of these commands actually reprogram the battery to work in a specific way. That means the battery is not checking back with your mobile device to see what it should be doing. Instead, it carries instructions for its own behaviour. The app simply helps you to change what those instructions are.

    Dewalt has obviously thought pretty thoroughly about how the battery/tool combination should behave. For example, one of the options you have from the diagnostics screen is to simply disable the battery immediately. You might do this if, for example, the battery seemed to be operating at too high a temperature, and you were concerned it might be damaged.

    However, even after the battery has been disabled, it remains usable for some applications. Pressing the trigger on a drill with a disabled batter still makes the drill LED lights go on. In fact, if you have a worklight attached to the battery when it is disabled, the light will continue to work.

    HNN believes this is likely to be a well thought out safety measure. Whatever the reason you may have for disabling the battery, you certainly don't want to leave someone up a ladder in a dark room without a light, for example.

    Many of the interesting things that can be done with the battery an be found on the "Actions" tab. There are five basic actions, and four of these are information alerts.

    The options to "Alert if out of range" triggers a notification on your mobile device when it can no longer "see" the battery. In testing this using an Apple iPad mini outdoors, it seemed the range was reliable up to around 50 metres.

    "Alert at low battery charge" sends a message when the charge is getting low enough that it will affect performance in the near future. "Alert at high temperature" lets you know if the battery may soon exceed its operating temperature range. "Alert at charge completion" tells you when the battery is up above 80% charge again, and ready to be used.
    Completed charging notification

    In addition to those four alerts, the fifth option is "Disable if out of range". This enables the owner to set up the battery so that if it is taken far enough away that the mobile device can no longer communicate with it over Bluetooth, it is automatically disabled. It's a simple theft protection measure.
    Lending the battery

    One of the more interesting features is the ability the app has to set the battery up to be loaned out for a specific period of time. There is a "Lend" button on the actions page. Tapping that button brings up a screen that enables the owner to set a loan period ranging from one hour to months, if necessary.
    The lending screen

    At the end of the loan period, the battery will be automatically disabled, and, optionally, the battery's owner will be sent a reminder message, including the name of the person who borrowed the battery. With the DeWalt Bluetooth battery you can not only be much more certain you will get the battery back, but also that it will be the right battery.

    The alerts tab in the app keeps track of all the alerts the owner receives, from all the Bluetooth batteries owned. The type of alert, and the date/time it was issued are all displayed. Tapping on an alert brings up a screen that enables the owner to delete that particular alert. A button at the bottom of the tab enables the owner to clear all the alerts with a single tap.
    The future of batteries, and ...?

    As we remarked, just about everyone who gets to use the app and the battery comes up with further ideas for it. For example, alert forwarding, where the mobile device of the person actually using the device could also receive an alert after the owner's device received it.

    Many people have suggested the extra hardware features they would like to see on the battery. The one that comes up the most is for a GPS chip, so that the battery could communicate its location back to the owner. Some would like it to have a small sound chip, so that it could buzz, helping to locate the battery if it has been accidentally left behind, for example.

    Perhaps the most exciting idea, however, is that it seems evident DeWalt plans to expand this Bluetooth system to devices other than batteries, and likely to the tools themselves. This could mean that DeWalt is planning a line of tools similar to the Force-Logic tools from the Techtronic Industries-owned Milwaukee Tool, which report on their exact usage patterns. This might extend to something like the control system that Milwaukee has planned, which enables power tool owners to set up programmed parameters on tools, ensuring they are used correctly.
    Making the use case

    Who might effectively use this type of battery? At the moment the most likely market are professionals/tradies with a battery fleet of over 12 or so units. Some sub-contractors, for example, supply most of the tools their crews use, and that can easily run up to 20 batteries for even a small crew of five or six (presuming they need to use more than one tool at a time).

    Aside from helping to limit loss and even theft, these batteries could reduce the total number of batteries required by 10% to 20%. Being able to remotely monitor the battery charge state means more effective charging patterns, and so less redundancy required. That translates directly to more money in the cash flow, which for anyone at anytime in the building industry is always a good thing.

    The one thing HNN would really like to emphasise is that, even if you don't like "fiddly" things, you might still like these batteries. DeWalt has done a great job in making the setup and systems controls as easy to use as possible. There isn't anything difficult to do, and the result is a battery system that makes a lot more sense, and makes using cordless tools even easier.
    Hot links
    Raymor bathroom products have been used to create a children's bathroom
    HNN Sources
    Ace Hardware has endorsed Epicor as its point of sale software provider
    AkzoNobel has opened an academy to train painters and decorators
    Click to visit the HBT website for more information
    Raymor has created a bathroom specifically for children; Ace Hardware stores use Epicor POS software; home decor start-up Stylyze raises US$890K to help find matching designs for homes; and Dulux in the UK opens a painting and decorating academy.

    For further information, simply click on the images provided.
    Products for kids bathrooms

    Several Raymor bathroom products have been used to create a children's bathroom. Designed to cater for two children in an easy-clean environment, the vanity features wide Alpha countertop basins to minimise splashes and wall mount Lavas basin mixers to eliminate the need to clean around hob mounted tapware.
    Raymor products featured in a child-friendly bathroom
    Ace Hardware selects Epicor

    Epicor Software and Ace Hardware have signed an agreement that designates Epicor as the point of sale software provider exclusively endorsed by the retail co-op. Epicor says its solutions are built upon decades of industry experience and will provide Ace retailers with the resources to effectively grow their businesses.
    Ace Hardware endorses Epicor POS software
    Home decor site raises funds

    Stylyze has developed technology that enables online home decor retailers to present customers with digital home decor "styleboards". The Seattle-based start-up adds data to the retailers' products and finds which items go well together. It raised US$890,000 in a seed funding round from angel investors.
    Stylyze has raised US$890K from angel investors
    Dulux UK trains painters and decorators

    AkzoNobel, the Dutch industrial company that owns the Dulux paint brand in the UK, has opened an academy to train enough painters and decorators to cope with the one million new homes that are expected to be built by the end of the decade. Matt Pullen, UK managing director of AkzoNobel decorative coatings, said: "Demand for skilled painters and decorators is exceeding supply. A maturing workforce is now retiring and we have got to do something, re-establish the craft of decorating."
    Dulux UK has opened an academy to train painters and decorators
    Big box update
    The new Bunnings Claremont store is the retailer's first two-story warehouse in WA
    HNN Sources
    The property occupied by a Bunnings Trade Centre in Hervey Bay (QLD) is sold
    Woolworths and Lowe's have invested another $105 million into Masters
    Click to visit the ITW website for move information
    The new Bunnings Claremont store will be Western Australia's first two-storey Bunnings warehouse; an industrial property occupied by a Bunnings Trade Centre in Hervey Bay (QLD) has been sold; and Woolworths and Lowe's have invested $3.3 billion into Masters so far.
    Two levels of Bunnings

    The $13 million Bunnings Claremont redevelopment is next door to its former location on Leura Avenue. WA operations manager Shelley Begley said she was proud of the 5000sqm store. She told Community News: "Claremont is the gateway to the western suburbs. The old store was there for 20 years, but we always wanted to a get a bigger opportunity for a wider range - we were hampered by size."

    Up to 70 staff from the previous store and 27 new staff will work at the warehouse. Store manager Paul Marshall said Bunnings tried to involve local businesses during its opening weekend on November 6, 7 and 8.

    Long-time Bunnings administrator Fiona Sermon said she had worked at the original Claremont store for 22 years. She said the old store was "homely" but she looked forward to a "fresh new beginning".
    Bunnings Hervey Bay property sold

    A private investor has purchased the property occupied by a Bunnings Trade Centre in Hervey Bay for $2 million. It was sold post-auction by Savills at an initial yield of 8.85%. The 4,574sqm site is positioned close to major arterial road networks and a few minutes from the Hervey Bay CBD.

    A 1,891sqm Bunnings Trade Centre has occupied the site since 2009 and has taken a new five-year lease option from August 2015, with four further options remaining. The building features five high-clearance electric roller shutters, three-phase power, high bay lighting, and front and rear all weather awning.

    Alex Smith from Savills said the Bunnings Trade Centre is strategically located in one of the fastest growing residential and tourism areas on the Queensland coastline, and provides prominent positioning in the region's industrial and commercial precinct. With the Bunnings Trade Centre only occupying 41.3% site coverage, the property can accommodate a range of future users, he said.
    Additional investment in Masters

    Sue Mitchell wrote in Fairfax Media that Woolworths and Lowe's invested another $105 million into Masters. According to documents lodged with the Australian Securities and Investments Commission last month, Woolworths injected another $70 million and Lowe's another $35 million into their joint venture vehicle, Hydrox Holdings.

    The capital injection, the fifth this year, took the total value of their investment to $3.32 billion. Analysts said Lowe's willingness to inject another $35 million into the joint venture, taking its total investment over the past six years to $1.11 billion, was not necessarily a sign that the US retailer remained committed to Masters in the long term. "They're willing to put it in knowing that they can get it back," one analyst told Fairfax Media.

    To read more, please go to the following link:
    Woolworths, Lowe's tip $105 million into Masters as deadline looms - Fairfax Media
    ABS hardware retail statistics for September 2015
    Retail statistics for September 2015
    Australian Bureau of Statistics
    NAB Online Index September 2015
    Online retail growth
    Click to visit the HBT website for more information
    According to statistics from the Australian Bureau of Statistics (ABS), hardware, building and garden supplies retail revenue for September 2015 reached $1582 million, an increase of 6.88% over the previous corresponding period (pcp), which was September 2014. South Australia had the largest percentage increase, up 16.97% over the pcp, followed by Queensland with a 12.86% increase.

    New South Wales, Western Australia and the Northern Territory all had increases between 5% and 8%, close to the national average. Victoria had subdued growth of 2.24%. Tasmania and the Australian Capital Territory both declined in contrast to the pcp.

    According to the ABS, the following describes activity for household goods:
    In current prices, the trend estimate for Household goods retailing rose 0.3% in September 2015. The seasonally adjusted estimate rose 1.0%. By industry subgroup, the trend estimate rose for Electrical and electronic goods retailing (0.5%) and Hardware, building and garden supplies retailing (0.3%) and fell for Furniture, floor coverings, houseware and textile goods retailing (-0.1%).
    The seasonally adjusted estimate rose for Electrical and electronic goods retailing (2.2%) and Hardware, building and garden supplies retailing (1.1%) and fell for Furniture, floor coverings, houseware and textile goods retailing (-0.8%).
    Online sales

    The National Australia Bank (NAB) index for online sales indicates that sales were 5.7% higher for September 2015 as compared to September 2014. The index showed growth of 1.1%, compared to just 0.6% in August 2015.

    Fashion fell in terms of sales, but all other categories showed an increase. Grocery and liquor sales grew by 1.9%, and homewares grew by 1.4%.
    CSR results for first half FY 2015-16
    CSR results first half of 2015/16
    Yahoo Finance
    ABS: Building completions, private residential, 12m to Sept by year
    Viridian case studies
    Subscribe to HNN weekly e-newsletter
    Australian building products company CSR has reported strong results for the first half of its FY 2015/16. The company stated that these results were the best for a first half in seven years, on a like-for-like basis.

    Overall trading revenue grew by 14% to $1155.5 million. Before significant items, earnings before interest and taxation (EBIT) grew by 31% to $149.3 million, net profit after taxation (NPAT) was up 32% to $92.4 million, and earnings per share (EPS) rose by 32% to $0.183. After significant items, NPAT rose 13% to $77.6 million.

    Significant items included transaction costs for a joint venture formed with Boral to produce bricks.
    CSR results first half of 2015/16

    CSR consists of four main divisions: building products; Viridian, which makes glass; aluminium; and property. Two of the company's strongest divisions were building products, which saw a 42% increase in its EBIT to $89.9 million, and aluminium, where EBIT rose by 32% to reach $54.7 million.

    The company attributed much of its success to increased activity in residential construction, and better EBIT margins in divisions such as building products, due to higher prices. Higher prices of aluminium and gains in property investment also boosted the results.

    The new brick making joint venture with Boral contributed 5% to the half's growth, the company stated. The brick making joint venture is to be branded as "PGH Bricks".

    Capital expenditure (CapEx) for the half was $32 million (excluding property and mergers/acquisition activity). Investments included the AFS Rediwall factory and the development of the Viridian commercial double glazing product.

    Outlining his forecast for CSR during the presentation of the results to analysts, the company's managing director, Rob Sindel, said:
    We expect group net profit after tax pre-significant items will be higher than the previous financial year and toward the upper end of the current analysts range of $128 million to $162 million.

    In analysing the market for CSR's products, Mr Sindel suggested that the most critical figure to focus was that for dwelling completions, as measured by building statistics from the Australian Bureau of Statistics (ABS).

    Mr Sindel began by outlining where the construction market was in terms of approvals for private dwellings:
    Detached approvals are up - continue to improve - they're up a couple of per cent in the numbers that came out on Monday. Multi-residential approvals are up over 30% on the same quarter last year. So you're still seeing multi-residentials increase. For the 12 months to September total approvals were over 230,000 housing starts. This implied an annual commencement rate of 215,000 after allowing for drop-outs.

    He then contrasted this number with the lower numbers for completions:
    What you're seeing is completions are only 185,000 dwellings over the same period. Most of that is obviously multi-residential, but you've also got a significant lag effect here in New South Wales. It's completions that are ultimately the guide of demand for our product. There is no reason why completions will fall below current levels any time soon in our view. This is a very good story for CSR.

    The completion numbers Mr Sindel is using are likely those provided by ABS 8752.0 Building Activity, Australia: TABLE 37. Number of Dwelling Unit Completions by Sector, Australia. The figure Mr Sindel seems to be referring to is in column D of that table: Dwelling units completed; Private Sector. These totalled 185,588 for the 12 months to September 2015.

    The following is a graph of those numbers, 12 months to September, for the previous five years:
    ABS: Building completions, private residential, 12m to Sept by year

    The analyst Michael Ward, Commonwealth Bank of Australia, asked him if he was basically forecasting no further growth. Mr Sindel replied:
    I think the key was the completions piece. It really tops out the market at about 185,000. Not because of constraints around product, it's generally constraints about labour, land and the ability to build. So we think this 185,000 number is the key that people should be looking at. Take the approvals over the last couple of years, project forward the approvals for the next few years -- it might go up a couple of per cent, but it moves around a lot. Some product categories might go up 3% or 4%, others might be slightly off. But we think the key message is, this is going to run for longer than people expect.

    Mr Sindel further confirmed his faith that these completions numbers would be stable for at least a couple of years:
    We don't think building approvals will stay at 230,000 for the next three years. We would concur with what commentators are saying, the multi-res clearly has really run in the last 12 months and obvious reasons for that. But what we're saying is completions though of 185,000, you can see 2016, 2017 and potentially a little bit past that, those sort of numbers continuing.

    The analyst Peter Steyn of the Macquarie Group asked about the increased risk in multi-residential construction. Mr Sindel replied:
    I think your question Peter is, do we expect a whole lot of defaults in multi-res it's the value of the product - we're not seeing it. I looked at Lend Lease's comments, I looked at Mirvac's comments; they're not seeing it. If you look at - if you talk to Meriton, Meriton will build 7000 apartments this year. They don't see any risk in terms of - some of the more speculative development there may be an issue. But the population growth in New South Wales and particularly Victoria continues. It'll come off, but it'll come off - in terms of the 30% approvals increase in multi-residential, a lot of that won't be finished for two-and-a-half years. Is the risk - has the risk gone up? Potentially. Are we seeing it? No.

    :Building products

    CSR is predicting that demand will remain at its current quite high level for the medium term (two to three years). As a consequence the company is expecting year-on-year earnings growth.
    Viridian (glass)

    Viridian is expected to return better earnings in the second half of FY 2015/16. CSR intends to maintain modest investment in the company to ensure it continues to grow.

    The volume of aluminium is expected to increase by 3% for FY 2015/16 as contrasted with FY 2014/15. CSR states that 70% of its aluminium exposure is hedged for the remaining half of the current year.

    For FY 2015/16 the property division is expected to return EBIT of between $20 million and $25 million, above the previous maximum estimate of $20 million. CSR pointed to the sale of its New Lynn assets as a driver of this, along with the settlements related to the previous sale of Chirnside Part assets.
    Comments on building products

    The most interesting comment about building comments came in response to a question by the analyst Keith Chau of JP Morgan. Mr Chau asked about the development of additional plasterboard capacity in Queensland by a CSR competitor (most likely Knauf Plasterboard, which has built capacity at Bundaberg). Mr Chau asked if CSR was moving to counter this competitive threat.

    Mr Sindel replied:
    What are we doing is we actually have spent a lot of time, years, owning the customer. What that means is the significant investment in our Gyprock trade centres, in our retail channel, is an investment in our brand. Those of you who watch The Block would see it. Those things are all about owning the customer and the key to that has really played out in the last couple of years.
    It's actually a little bit more expensive because you've actually end up with a footprint of additional stores and capability. But it's really a protection against the retail channel being owned by somebody else....
    You've got to be as close to the market as you possibly can. We all know that north Queensland, a bit like WA, is a market that's driven by commodity prices, particularly coal and copper and nickel smelters in Townsville. I think that north Queensland market is one that's a little bit challenged. You can see the growth in the south-east Queensland market. I'd want to have my facilities as close to that market as I possibly can.
    Having said that, they'll make their own decisions. We'll bulletproof ourselves by owning the customer.

    Mr Sindel further elaborated on this strategy a little later:
    You can lock in volumes with big builders or whatever. But it's really about the more subtle issues around routes to market. The strategy you've got. How you invest in your brand and how you - what sort of relationship, much deeper relationship you have with the customer.
    Comments on Viridian

    The analyst David Leitch of UBS did ask why, as Viridian was reliant on housing, and housing was doing well, the results - especially in terms of volume - were not better. Mr Sindel replied:
    I think in terms of the home comfort business, we are a little disappointed about our volume growth there. The issue there is not about selling 3mm glass though. It's converting that market to double glazing. So I think the team would be a little bit disappointed.

    The company CFO, Greg Barnes, added a comment:
    Look, I wouldn't underestimate the Viridian result there, given what that business has been through in the last couple of years. I would emphasise that $3 million in the half of long term investment that sits in that P&L, what you are seeing as a business has really gone from $500,000 first half last year to underlying around $450,000 to $500,000. I hear you on volume. But I think longer term what we're doing is repositioning this business and feel we're very much on track.
    Turning furniture into a smartphone charger
    The Zens Built-in Wireless Charger turns furniture into wireless chargers for smartphones
    Tom's Hardware
    The company includes the tool needed to create the correct size hole in the furniture
    The Zens charger is Qi-certified, a leading wireless charging standard
    Click to visit the HBT website for more information
    Zens, a young European technology company making wireless charging devices, announced a new product that will allow users to add wireless induction charging stations to their existing furniture.

    Users will need to create a hole on the surface of the table or desk to which the charger will be added. The company includes the tool needed to create the correct size hole with the purchase of the charger, so users won't have to look for specialty tools. The charger is designed to fit into and cover the hole up.

    The Zens Built-in Wireless Charger is a Qi-certified (a leading wireless charging standard) charging device. The company said there are currently over 500 Qi-certified products on the market that can be charged by the built-in charger, including the last four generations of the Google Nexus phone, the current Samsung Galaxy lineup, and the recently announced Lumia 950 and 950XL from Microsoft.

    Zens said it has also made provisions to make the charger durable and designed to be spill resistant.

    The Zens Built-in Wireless Charger has had its initial release in early November at some retailers and online sellers.
    IKEA turns furniture into wireless phone chargers - Yahoo! News
    Gyprock Plus features new technology
    Gyprock Plus has a thicker, stronger face paper
    Optimised Core technology was launched in 2014 through Gyprock Supaceil
    Optimised Core technology helps to achieve an optimised performance-to-weight ratio
    Click to visit the HBT website for more information
    CSR Gyprock has launched Gyprock Plus which has the standard 10mm plasterboard featuring Optimised Core technology and a thicker, stronger face paper.

    Optimised Core technology enables an advanced performance-to-weight ratio for plasterboard. This means that a greater breaking strength can be achieved in a substantially lighter board.

    The technology works by manipulating the characteristics of a typical plaster mix to achieve an optimised performance-to-weight ratio. The strength requirement in a plasterboard lining is not uniform throughout. For example, there is a difference between the strength required at the face of plasterboard to that needed at the centre of the core.

    Through this technology, Gyprock's technical experts have been able to manipulate the structure of the core to meet strength requirements by focusing density where it is needed. Weight is removed by a reduction in density at the core. The stronger, thicker face paper assists with bending strength and helps to ensure a crisper score and snap.

    The cutting-edge technology was launched in 2014 through Gyprock Supaceil, which is part of Gyprock's standard range of premium residential plasterboards and are designed for ceiling applications. In 2015, Gyprock 's standard plasterboard range evolved by incorporating Optimised Core technology into its 10mm board.

    The result is a stronger, lighter plasterboard with better manoeuvrability, lifting and handling.
    Key attributes of Gyprock Plus

    More robust, Gyprock Plus provides 7.5% greater machine-direction breaking strength with improved production consistency.

    The technology has allowed the weight of Gyprock Plus to be optimised, making it easier to lift, carry and install.
    Score and snap

    Gyprock Plus is lined with a face paper that is approximately 30% heavier than standard, contributing to the strength of the board. It produces a crisper score and snap experience for cleaner cuts and squarer edges.

    Optimised Core plasterboards also exceed the performance requirements of Australian Standard AS2588. Since it was launched in 2014, Supaceil with Optimised Core technology has received consistently positive feedback from plasterboard installers.

    There is no change to Gyprock standard 13mm plasterboard.
    HNN Index for week ending 6 November 2015
    HNN Home Improvement Index for week ending 6 Nov 2015
    HNN Sources
    Woolies ads featuring Michelle Bridges have attracted criticism
    Westfield is taking "big data" seriously
    Click to visit the HBT website for more information
    The HNN Home Improvement Index for the week ending 6 November 2015 closed close to flat, losing just 0.76 of a point to end at 957.82. The underlying ASX 200 Index fell slightly more, losing 4.6 points on the adjusted scale to end at 970.2 points. In unadjusted terms, the ASX 200 fell 24 points to close at 5215.0 points.

    Building products company CSR was the star index performer for the week, lifting 14.8% as it reported good results. UGL managed to outperform even that result, lifting by 15.8%. Metcash continued its ups and downs, closing 13% up for the week.

    These rises were offset by a steep fall by GWA Group, which lost 22% of its value, also in response to its results and forecast prospects. GUD Holdings also had a poor week, losing 10.0% of its share price for the week.
    Boral in line for full year growth

    Boral is on track to achieve its full year earnings guidance, with first quarter growth likely to continue. Chief executive Mike Kane said prices are stronger for its construction materials and cement business in New South Wales and southeast Queensland but steady elsewhere.
    Boral in line for full year growth - Courier Mail
    Moody's upgrades Boral's long-term rating to Baa2; outlook stable

    Moody's Investors Service recently upgraded Boral Limited's issuer rating and senior unsecured rating to Baa2 from Baa3. Maurice O'Connell, a Moody's vice president and senior credit officer said: "The rating upgrade reflects the sustained improvement in Boral's credit profile over the last two fiscal years...Support from improved levels of housing demand in the US and Australia -- as well as meaningful cost reduction initiatives at the company over the last 2-3 fiscal years -- has improved underlying earnings."
    Moody's upgrades Boral's long-term rating to Baa2 - Moodys
    Goodman Group
    Goodman Group and AMP Capital build expansion platform in US

    Goodman Group has boosted its presence in the tough southern California property market with news it is on track to achieve US$3 billion (AUD$4.2 billion) in assets under management in the short to medium term with a strong growth forecast. Its US platform is focused on the core logistics and industrial markets of Inland Empire, greater Los Angeles, northern New Jersey and central Pennsylvania.
    Goodman Group and AMP Capital build expansion platform in US - Fairfax Media
    Westfield's "big data" movement

    Westfield Corporation has increased efforts to capitalise on the "big data" movement with the appointment of a senior executive responsible for capturing the value from the millions of consumer transactions it handles. The company has appointed Raghav Lal as chief data & analytics officer and will set up a big data and analytics enterprise-wide function. It aims to conceptualise, develop and deploy a data strategy and will work in tandem with the San Francisco-based Westfied Labs.
    Westfield's "big data" movement - The Australian
    Social media slams Michelle Bridges' Woolworths ads calling people who grow food 'freaks'

    Social media users have slammed a series of Woolworths advertisements starring Michelle Bridges, in which the fitness personality labels people who grow their own food "freaks". The ads, which are for Bridges' new range of frozen meals, feature the personal trainer frizzy-haired and wearing overalls in a garden while munching on soil. Many on social media called the ads "disgusting", "hypocritical" and "offensive".
    Social media slams Michelle Bridges' Woolworths ads - ABC
    Sears will offer online home services
    Sears Home Services is launching a new website
    Chain Store Age
    Amazon has moved into on-demand home services
    Google followed Amazon Into home services earlier this year
    Click to visit the ITW website for move information
    Sears Home Services is launching a new site,, aimed at connecting homeowners with Sears-certified technicians. The site also offers do-it-yourself information.

    Technicians are regionally listed and rated by criteria such as number of repairs completed, average cost, and length of repair time. Customer reviews are also featured.

    Appointments can be scheduled online with text confirmations and updates. Customers can also find locations and hours of nearby Sears repair centres.

    Earlier this year, Sears Home Services opened a technology office in Seattle to develop technological innovations based on proprietary home and appliance repair data. Sears will continue to update the website in the coming months, adding more features and home service categories. Sean Skelley, president, Sears Home Services said:
    You don't have to go it alone. We are the house experts for homeowners, and our new website connects homeowners to repair or improvement experts quickly. So whether it's one of our more than 6,000 technicians to fix a washer or a home improvement specialist to provide specifications for a new heating system or roof, has you covered.

    The first major retailer to enter the online home services market, which had previously been dominated by portals such as and, was Google entered the space in August.

    However, even Amazon essentially serves as a third-party marketplace for independent contractors, although the retailer says it verifies providers and tracks their performance data.

    Sears is changing the model by focusing on Sears-certified technicians, who do not exclusively but primarily offer services for products sold by Sears. Sears has long been a pioneer in seamless digital customer experience with offerings such as the ShopYourWay social network, but so far has not really caught on with younger, digitally savvy consumers.

    By fitting its seamless retail experience with its more traditional customer base of homeowners, Sears is improving the chances of success in the digital era.
    Amazon launches at-home repair/installation services - HNN
    Online home services market grows in US - HNN
    Costs at Mitre 10 NZ lead to profit slump
    Annual profit declined by 92% at Mitre 10 New Zealand
    National Business Review
    Mitre 10 New Zealand chief executive Neil Cowie
    The hardware co-op recently sold its Mitre 10 Mega Rotorua store
    Click to visit the ITW website for move information
    Mitre 10 New Zealand had a 92% slump in annual profit, as it spent more on land and rent for future stores. Profit dropped to NZ$106,000 in the year ended June 30, 2015 from NZ$1.4 million a year earlier, according to its financial statements.

    Wholesale revenue rose 5% to NZ$708.6 million. Revenue doesn't include actual sales at the stores owned by its shareholders, which rose 10% to NZ$1.1 billion in the year ended June 30. Distributions paid to the retail co-op's members rose 17% to NZ$67.2 million. (The 10 biggest shareholders of Mitre 10 New Zealand own about 70% of the company.)

    Chief executive Neil Cowie says the drop in profit is due to accounting adjustments and a 22% uplift in occupancy costs to NZ$46.7 million. He also noted the company is "land banking" for future stores.

    The value of Mitre 10's land holdings rose to NZ$24.4 million as at June 30, 2015 from NZ$10 million a year earlier. Its portfolio of buildings were valued at NZ$18.7 million at the 2015 balance date, down from NZ$19.2 million in 2014.

    The fair value of its investment property portfolio was reduced by NZ$1 million to $9.3 million in the year.
    Mitre 10 Mega sold

    Mitre 10 New Zealand recently sold its Mitre 10 Mega Rotorua store to one of its members, the Bold Group, which also owns and operates Mitre 10 Mega Tauranga and Mitre 10 Waihi.

    The Rotorua store was originally opened in December 2012 as a company-owned store, with the intention of eventually finding an owner-operator for it. Bold Group director Greg Bold said the company's expansion into Rotorua was an ideal opportunity to grow its network.

    Cowie said he was pleased to see the Bold family's business growing and prospering as a long-standing member of the hardware co-operative. He said:
    The Bold family spans two generations - they've operated Mitre 10 stores in the Bay of Plenty since 1978 and opened one of the first Mitre 10 Mega stores in New Zealand in 2004...We're pleased to be able to divest our company-owned store to them.

    The Bold family's retail footprint has grown from 400sqm to more than 13,500sqm and a full timber and building materials offering covering some 11,000sqm. This is in addition to a pre-nail and truss production unit based in Waihi that is currently being redeveloped in anticipation of the growth in the trade sector of the business.
    Another record year for Mitre 10 NZ - HNN
    Mitre 10 NZ "holding its own" - HNN
    Ninemsn unveils revamped Homes platform
    Ninemsn's Homes aims to showcase trends in living spaces
    Ad News
    DIY projects are a major feature of the site
    The urban garden will be a big focus for the Homes site
    Click to visit the HBT website for more information
    Nine Entertainment owned Ninemsn is ramping up its suite of lifestyle genre sites, with the launch of new urban living platform, Homes. The site is live and focuses on content targeted at homeowners, renters, millennials and Gen Xers.

    Ninemsn managing director Emma Chamberlain said Homes aims to showcase trends in living spaces and will include online tours of the homes of high-profile Australians and DIYers. It has click-to-buy options and custom content.

    Lifestyle experts will also contribute to Homes, including stylist Megan Morton, as well as Instagram celebrities We Are Tribe, Milkwood Permaculture and The Planthunter. Chamberlain said:
    The site is for people who want to make a tangible change to their home by making something, growing something or creating something. The content reflects the way Australians are choosing to express themselves through their homes.

    On how Ninemsn Homes differentiates itself from the huge amounts of homes content available online, Chamberlain told Mumbrella that it will be "more of a pared-back style" than other sites. She said:
    We're going for a unisex, slightly younger audience. The focus will be more on design and architecture. Gardens, and the idea of the urban garden, will be a big focus for us.

    In terms of concrete goals Chamberlain said:
    We'll be wanting to double the unique audience, it's probably around 150,000 (unique users per month) and we want to be double that within the next six months.

    Rival media company Bauer unveiled its lifestyle and home focused magazine brand homes+ in July this year, with specialist division publisher, Brendon Hill, telling AdNews at the time there was a gap in the market in the home and lifestyle space for people who wanted to see how real people live in real homes.
    Reece fortunes connected to housing
    Sales at Reece passed the $2 billion mark for the first time last year
    The Australian
    It introduced new products from product manufacturers in Europe and the US
    Reece offers 3D bathroom design for its customers
    Subscribe to HNN weekly e-newsletter
    Alan Wilson has turned his directorship of a small ASX-listed hardware and plumbing supply merchant HJ Reece (Holdings) Limited in 1969 into a $2 billion plumbing business. This probably would not have happened without the help of his team.

    Teams have always been important to Wilson. When asked by News Corp. about whether Bunnings can ever be beaten. He replied thoughtfully:
    Hmm, it's very hard now, they have such a platform and footprint. But then again, if they f..k up management, they can be beaten. That is the key to it.

    And the Wilson family patriarch, whose son Peter now runs Reece, believes the Masters chain has been bereft of good-quality management and people for too long. He believes Masters was doomed from the start. He said:
    They went into it for the wrong reasons. We all know the reasons they did it. If you don't know what you are doing, you can waste a lot of money trying to knock someone off their pedestal.
    They are (also) trying to be all things to all people and that is very difficult. It shows the American model doesn't quite work here. Bunnings have adjusted what they have seen with Home Depot to Australian culture, which is different.

    Wilson will be one shareholder cheering if Woolworths chairman Gordon Cairns and his board pull the pin on Masters. He said:
    I could imagine the new chairman and CEO doing it because if they can't turn it around quickly they will be saddled with it. It is logical they cut it off and say we had nothing to do with it and move on.

    As Reece managing director and chairman for several decades, Wilson has had to make a hard call or two during his storied career. But he has never deviated from the recipe that made Reece the nation's biggest bathroom and plumbing-supply retailer and the largest trade supplier ahead of Tradelink. And a highly profitable business.

    Sales passed the $2 billion mark for the first time last year as net profits rose 23.3% to a record $227.9 million.

    In the first quarter of 2016, the company's sales rose 9% to $571 million, and Reece's half-year net profit is now expected to be 15% higher than 12 months ago. When asked for Reece's secret, Wilson replies instantly:
    Have great teams...We all have similar goals and work really hard at it. There would not be any of the leaders here that don't share the same culture.

    Wilson agrees that Reece has also been lucky. He said:
    We have been fortunate it has been a good industry to be in. The building and renovation industry has been good in Australia. The plumbing industry has also been strong and healthy.
    Housing market

    Reece believes the country's housing boom has peaked but the market is likely to continue to remain active for the next year, at least. Its assessment comes after Morgan Stanley Morgan Stanley analysts said a tighter regulatory environment, slowing immigrations and frothy prices were likely to rein in the powerful growth momentum in the sector.

    Chief executive Peter Wilson told Fairfax Media the number of homes that were beginning to be built had dropped slightly from the peak of 210,000 hit in 2015. But the market was likely to remain strong for the next 12 months, considering the time it took for construction on a home to start and finish. He said:
    We really like to look at housing completions because they really are an indicator of what's happening in the housing market. In FY16 housing completion is expected to grow 3.5% to 193,000, which is a record for Australia.
    We have never produced more houses, so it is a buoyant time from a housing perspective. [But] completions lag commencements, so you can see the growth rate is levelling off.
    Product ranges, tech upgrade

    Reece has also been an innovator. It recently underwent a major technology refresh to help service its 571 retail outlets, and introduced a raft of new products from product manufacturers in Europe and the US. Last year it acquired refrigeration and air-conditioning parts business Actrol for $280 million. Alan Wilson said:
    A lot of technology changes have taken place in plumbing. They have helped Reece. We have taken them and run with them.

    His son, he says, always wanted to follow in his footsteps and at the age of 15 asked for his first job at Reece. Wilson said:
    Very early on when he was a teenager I told him to get the best education he could, and to follow his dreams. He always wanted to come into Reece. But we were advised he had to spend a minimum of five years outside the company and then come back in.
    He did what he was told to do. He got a commerce degree and did marketing. And the idea was he went out to work away from the family and when he returned he brought experience from the outside.
    And I think you find in family businesses if the people do that, it seems to work better than bringing them straight in...There is no substitute for getting your hands dirty outside. And then really you need to start at the bottom in the business and work your way up.

    The deeply private Wilson family's wealth grew to $2.6 billion this year, largely off the back of the rising value of their 70% shareholding in Reece. Alan and Peter Wilson are assisted by directors John and Bruce Wilson in the day-to-day running of the business, while accounting legend Ronald Pitcher - a director since 2003 and chairman of the audit committee - was re-elected at the AGM for another term.

    There are six men on the board which Wilson puts down to hardware being largely a "male-dominated industry''. He said:
    We do keep our eyes open to see if there is a woman who understands our industry that we can bring on board for obvious reasons. We say it relates to merit, ability and what they can bring. It is not easy to find someone who understands it.

    While Wilson says he now has only a "superficial'' role in the day-to-day running of the business, he says he still enjoys "the property part and the product part". He has every confidence that with his son Peter and the Wilsons that will follow (Peter's sons are teenagers), the business is in good hands. He said:
    I am very confident it is running properly...It is very satisfying.
    Reece Plumbing acquires Actrol for $280m - HNN
    Fashion plumbing for drains
    Sink Skin brings colour to cleaning the drain strainer
    It comes in an array of bright prints and patterns, and disposable
    Sink Skin is also a "green" product boasting a small carbon footprint
    Click to visit the HBT website for more information
    A pair of Israeli entrepreneurs has managed to bring colour to cleaning the drain strainer in the kitchen, bathroom and laundry. The "fashion plumbing" product Sink Skin is disposable after a week or two of use, and comes in an array of bright prints and patterns. The product is printable so that companies or hotels can add their logo and use it as a promotional item.

    The patented, made-in-Israel product is available in North America, Finland and Israel so far.

    Co-founder Nir Eylon said that because Sink Skin is thinner and wider-rimmed than typical strainers, it more easily catches all the food particles and hair that shouldn't get into the drain. It also has a "finger lifter" feature for easy removal.

    Eylon said that though Sink Skin is disposable, he and partner Sharon Ychie consider it a "green" product with a small carbon footprint. The strainer is recyclable, while the package is made from recycled materials and optimised to save on raw material and shipping weight. A year's worth of Sink Skins adds up to 200 grams of plastic.

    Eylon, formerly in high-tech sales and marketing, and Ychie, a graphic designer with a degree from the Bezalel Academy of Art & Design in Jerusalem, are both in their 40s. They started the company in 2011 and received seed funding from Israel's Office of the Chief Scientist of the Economy Ministry.

    They introduced Sink Skin at a Las Vegas trade show in 2013 and immediately signed their first distributorship agreement. Now they are seeing a lot of repeat orders, according to the pair.

    In addition to individual customers, Sink Skin is focusing on the hospitality industry. Eylon said:
    In hotels, it has already been proven that our products decrease drainage repair expenses. At the same time, hotel guests feel the management's concern for a particularly high level of hygiene and aesthetics.
    Lowe's names top 2015 vendors
    Kobalt 80-volt outdoor power equipment has been recognised at Lowe's
    PR Newswire
    The Rockwell Bladerunner has been singled out for its innovation at Lowe's
    Skydrop has been acknowledged for its Smart Sprinkler Controller
    Click to visit the ITW website for move information
    Lowe's Companies Inc. has announced Hitachi, Pergo and Sunrise Global as its 2015 Vendor Partners of the Year. The companies have been selected for their commitment to product quality, development and customer service.

    Hitachi's exclusive relationship with Lowe's provides a broadened selection of best-in-class products. Pergo developed several exclusive programs to differentiate the flooring experience by offering stylish yet affordable options.

    Continued collaboration with Sunrise Global has set the industry standard for 40-volt and 80-volt cordless outdoor power equipment. Mike McDermott, Lowe's chief merchandising officer said:
    We celebrate our vendor partners who are committed to putting the customer first, drawing on their team's creativity to find new and modern ways to help people love where they live.

    In addition to the overall vendor partners of the year, the following vendors have been honoured for setting the highest bar in innovation at Lowe's:
  • All Strong Industry for the Style Selections and allen + roth cordless blinds
  • Blue Rhino for refined technology to minimise environmental impact
  • GE Appliances for the Cafe/Keurig refrigerator and Edge-to-Edge Freestanding Range
  • Nicolas Holiday for technology improvements to the Trim a Tree program
  • MasterBrand Cabinets for style and DIY-friendly options
  • MTD for the Troy-Bilt FLEX line and Troy-Bilt Pivot Zero Turn Mower
  • PLI Pak Lite for Pergo Gold and Floor Comfort XPS foam underlayment
  • Positec for the Rockwell Bladerunner and the WORX Switch Drive 20V Drill and Drive
  • Samsung for the ActiveWash washing machine and the Flex Duo
  • Skydrop for the Smart Sprinkler Controller
  • Stanley Black & Decker for the DeWalt line of 40V Lithium outdoor power equipment
  • Sunrise Global for the Lowe's-exclusive Kobalt 80-volt outdoor power equipment
  • Teknor Apex for the Neverkink MAX garden hose
  • Lowe's exclusive deal with Hitachi Power Tools - HNN
    Smart sprinkler controller at Lowe's - HNN
    HI Weekly Vol. 1 No. 9
    Download the latest HI Weekly, issue number nine
    HI Weekly No. 9
    Storage could be the next retail frontier in home improvement
    An impact driver test: Bosch, Milwaukee and DeWalt
    Click to visit the HBT website for more information
    Each week, the HNN weekly e-newsletter can be accessed in one convenient PDF. Easy to read onscreen, or print it out.

    Just use the following link to download the PDF:

    In this week's edition, we explore the storage category and examine the potential opportunities as Bunnings (and Masters) expand their product ranges. We also test impact drivers from Bosch, Milwaukee and DeWalt.

    Stanley Black & Decker's third quarter results are included as well as a story about the company taking Positec to court in the US.

    Other news stories include Lowe's going into space and the focus on sustainability at Kingfisher and IKEA.

    Also in this edition: a new, occasional series on rumours in the Australian home improvement industry called PoS (Point of Speculation).

    Plus all our regular features: big box updates; HNN Home Improvement Index; new products; and hot links.
    SmartBurner gets Home Depot deal
    The patented SmartBurner is engineered to help prevent cooking fires
    It also helps reduce energy consumption and improves cooking performance
    The product is now available through Home Depot's website
    Click to visit the HBT website for more information
    Canadian company, Pioneering Technology Corp. (Pioneering) says its SmartBurner product is now available through The Home Depot's website.

    Pioneering's patented SmartBurner is engineered to help prevent cooking fires. It also helps reduce energy consumption, improves cooking performance and enhances the aesthetics of electric coil stoves and kitchens. Since its introduction in early 2015, the SmartBurner has found success in the US selling into multi-residential business to business channels.

    For the first time, the product is available to consumers through The Home Depot. SmartBurner provides a safer environment and peace of mind for those with ageing parents who continue to live independently, for young double income families, university students and/or people who have just started living on their own.

    The latest SmartBurner offers similar temperature limiting control (TLC) technology as the company's flagship commercial product (Safe-T-element) to help stop stove top cooking fires. Pioneering's TLC technology has been installed in over 130,000 multi-residential housing units across North America to date, without a single cooking fire being reported. Until recently, the technology has had to be professionally hardwired into the stove.

    The new, consumer version of SmartBurner has the technology built right into each of the burner elements, so anyone can install the technology in seconds.

    Pioneering is based in Ontario, Canada and is an "energy smart" consumer goods company.
    SmartBurner launches in US market at NHS - HNN
    Impact driver test: DeWalt, Milwaukee and Bosch
    The Milwaukee M12 FUEL (12-volt) Impact Driver
    HNN Sources
    The Bosch GDR Professional 18-volt Impact Driver
    DeWalt 18V XR Li-Ion Brushless Impact Driver
    Click to visit the HBT website for more information
    HNN is gearing up to offer a regular test of tools and accessories. Testing lithium-ion powered tools requires special techniques, and we are still in the process of developing these.

    In particular we want to provide details of battery life in terms of usable measures. An example of the types of questions we would like to answer would be: how many screws can you drive with an impact driver on a single battery charge?

    As the tool scene is rapidly developing in terms of technology, we are a little less interested in "head-to-head" comparisons, and more interested in comparing how different tools might cope with similar tasks. This is the kind of thinking that has driven our first tool test.

    We've decided to take three quite different impact drivers, and to see how they measure up performing their basic tasks. The three tools we are using are as follows:
  • Bosch GDR Professional (18-volt)
  • Milwaukee M12 FUEL (12-volt)
  • DeWalt 18V XR Li-Ion Brushless Impact Driver (18-volt)

  • These are three very different approaches to the same tool. The Bosch GDR uses a standard DC electric motor, but Bosch has developed this to get the maximum out of it. The Milwaukee is a 12-volt impact driver taken to the maximum. The DeWalt is the most expensive and powerful of the three, with both a brushless motor and 18 volts.

    There are going to be wide differences in their performance, but how much do those differences matter? How cost effective are the cheaper models, and how much more capable are the expensive ones?

    Just to add some additional interest, we'll be testing out a few more advanced technologies with each of these as well. With the Bosch we'll be continuing to test its wireless inductive charging system. We'll also be using a Bluetooth-enabled battery on the DeWalt to test out its management features.
    Early impressions

    We have one very strong early impression to share: if you want to make friends, buy a Milwaukee! Walking out of our tool supplier in South Melbourne and catching a tram into the city, we instantly found ourselves in a conversation with three guys, all wanting to know what tool we had bought and what we planned to do with it. Everybody wanted to hold the box, and everybody had an opinion.

    HNN has to say that neither the Bosch nor the DeWalt attracted that much attention - or any attention at all, actually. So one thing is for sure - Milwaukee really has done something special with its marketing, at least in a certain marketplace.
    Initial test results

    While we are still developing the tests, we did run a couple of initial runs on the Milwaukee FUEL 12 and the Bosch GDR. Using plain pine board, we tested both impact drivers by driving in two different types of self-drilling screws. Each test consisted of screwing in five screws. We discarded the highest and lowest readings, then averaged the remaining three.

    The first screw we used was the Otter BBEG14503, which is a 50mm 14g screw. The second screw we used was a Zenith type 17 Batten screw, 75mm 14g. Both screws make use of an internal hex drive.

    To test the impact drivers accurately, we video recorded the drilling of each screw. By daubing some orange paint on one face of the bit, we can see accurately when the screwing begins.

    The wood is slightly less thick than the screw length, so we can see when the tip of the screw breaks through the wood. Editing the video recording gives us a good indication, then, of exactly how long each screwing task took.

    The test with the Otter actually gave the edge just slightly to the Milwaukee Fuel. It recorded an average time of 3.2 seconds, while the Bosch recorded a time of 3.4 seconds.

    On the longer Zenith screw, the positions were reversed. The Bosch recorded a time of 6.4 seconds, while the Milwaukee took 6.6 seconds.

    These are just preliminary results, and we are still working to get our testing to be as scientific as possible. Nonetheless, even as preliminary numbers, this does show how far the impact driver technology has come. It would have been unthinkable just a couple of years ago, that any kind of 12-volt (max) device could keep up with an 18-volt one.

    Hopefully we will have a more complete set of results ready in a week's time. We'll be trying out different types of wood and different sets of screws. Our battery duration test will consist of screwing and unscrewing 200 of the Otter screws.

    We will also do a separate decking screw test, screwing and unscrewing 300 of an as yet unspecified decking screw. These two tests should give us a useful comparison of how much energy the impact drivers consume.
    Storage and the new frontier
    Clever Closet Clever Pants Rack
    HNN Sources
    Flatpax trouser rack
    Komplement with pants
    Give to Amnesty International
    Bunnings, despite how it is often portrayed, is something of a vulnerable business. Bunnings is also an excellent business.

    For much of Australian business analysis and opinion, those two statements just don't seem to go together. Over many generations now the big business ideal in Australia has been, first, to get big, and second, to make the business as invulnerable as possible.

    The Wesfarmers-owned Bunnings hasn't done that. This can be seen in its rapid expansion into new stores, even as it faced a serious competitive threat from Woolworths. Now, beyond its geographic expansion, it will likely continue to expand into new categories of products and services. It will explore, to borrow a word from the company's managing director, John Gillam, the $60 billion "runway" of its potential markets.

    For the foreseeable future, however, the company will also remain balanced on the hair-thin edge of its competence and ability to execute. If it performs well, it will generate very good returns. If it doesn't - well, there is not that much of a safety net.

    Which is, one suspects, how not only Mr Gillam, but also Richard Goyder, the managing director of Wesfarmers, want it to be.
    The deep dive

    In coming to grips with this kind of business model, it is easy to be daunted by a company's size and its diverse strategies. One way to overcome this is to find a single, complex data point to explore. If you pick the right one, and you look hard enough, you can sometimes find your way deeper into the internals of the company.

    Storage is one place worth looking at, especially in-home storage. This is not only a growing market, it is also a very obvious expansion market for home improvement retailers to move into. For one thing, it's a good DIY category. Few skills are needed, it solves a common problem, and it benefits everyone in the family. It's also a growing market, as more families move into multi-family dwellings, and an older generation starts to downsize.

    In particular, wardrobes have become a substantial part of the "2.0" stores that Masters Home Improvement is rolling out, as seen at the new Cranbourne store. At Bunnings, this area is receiving considerable shelf space in some stores as well, especially in the mid-size urban stores, such as those in Collingwood, just outside the Melbourne CBD.

    One of the slightly more complex parts of these storage systems is the sliding rack. These are used to make compartments such as baskets more accessible, converting them into a drawer-like arrangements. They are important to the storage of trousers and slacks. These "pant racks", which seem simple at first, are really an interesting challenge in design, construction and manufacturing.

    Bunnings offers two main types of pants rack for wardrobe inserts. The difference is interesting, because these sources of supply represent two of the main paths through the company's supply chain.
    Clever Closet Clever Pants Rack

    This is part of the Handy Storage line that is distributed by Sales Force National (SFN) directly to Bunnings. The Clever Closet Clever Pants Rack (CCCPR) is actually quite a standard product.
    Clever Closet Clever Pants Rack
    Clever Closet Clever Pants Rack

    It is similar to (if not derivative of) pants racks that are made by, among others, Elfa, ClosetMaid and Rubbermaid in the US.
    Rubbermaid pants rack

    In examining the CCCPR, it seems evident that cost of construction was one of the main constraints in its design. The rack consists of two parts, an outside frame which is attached to the Clever Closet by means of two brackets, and an inner frame which actually holds the pants on eight 10mm poles spaced 54mm centre-to-centre, with a useful pants-hanging length of 345mm.

    The area where most cost-savings seem to have been realised is in the sliding mechanism. There are three key elements to this on each side of the frame: two hard plastic, convex wheels, and a single hard plastic guide. At the back, one of the white plastic wheels is attached to the inner frame, and slides in a channel made by the outer frame. At the front the other white plastic wheel is attached to the outer frame and runs in the channel made by the inner frame. The white plastic guide is attached to the inner frame, about 70mm in front of the first wheel. It prevents the slide being pulled too far out by (a little inelegantly) running into the front plastic wheel.

    For reasons that will become clear in the section about the construction of the CCCPR, HNN was not able to fully test the action of this sliding mechanism. Our impression was that it was a bit rough. Marking the plastic wheels with a red marker and moving the mechanism under load indicated the back wheels did not always turn as much as they should, introducing friction. When loaded with pants, pulling the frame out by either of the ends rather than the middle sometimes caused it to jam slightly.

    Perhaps the biggest design flaw, however, is simply that there really is not adequate room between the rails for clothing such as blue jeans. The edge-to-edge gap for the central pants poles is 47mm. The gap between the end poles and the inner frame is 64mm. Pulling pants off works fine, but putting pants on a pole between two other pairs of pants is fiddly at best.

    When HNN first unpacked and examined the CCCPR we spotted a flaw, and at first assumed that the rack had been damaged when packed, or in transit to the Bunnings store. On closer inspection, however, we realised that something else had happened.
    Wheel bent on pants rack

    As the photos illustrate, the flange at the end of the right hand side of the outer frame is bent inwards by about four degrees. This doesn't seem to have been caused by careless packaging. It may be caused by a mismatch in lengths between the inner and outer frames. What could have happened is that when the frame was fully retracted at the factory, the stop flange on the inner frame hit the white wheel on the outer frame. This would have bent the flange and the wheel inwards.

    Whatever the cause, the wheel runs at an angle, and is likely responsible for some of the extra roughness in this mechanism. It is, of course, unsightly and less functional, so any customer would have to make the long journey back and return this item to Bunnings. Even straightening the flange won't help, because it will likely become bent once again, if our speculation is correct.

    It seems likely this design is not really optimal. The wheel could have been seated a further 5mm back. In that case it would not work as a stop for the inner frame when retracted, and would be less likely to be so badly bent.

    It is generally a mistake to depend on tolerances that cannot be reproduced accurately by the manufacturing process.

    It also needs to be added that HNN has no information as to how common this problem may be. This could be the only CCCPR made with this flaw, or it could be quite common. Such flaws usually happen, however, because the design has made the device open to them.

    Another design difficulty is that the brackets which hold the rack to the vertical tracks are attached by the rack with short, self-tapping screws. Using that type of screw through soft sheet metal to support a load-bearing arm would indicate that if it were assembled and disassembled a few times, it would cease to work well.

    HNN would not say the manufacture of the rack is shoddy, but it is not great, either. There are two principal joint welds on the rack. These fix a supporting beam to help support the pant poles. On the left side the weld is just adequate, covering the top, bottom and back of the joint. On the right side the weld only covers the bottom and about three-quarters of the way up the back. This could be structurally questionable in the long term, and the gap left is unsightly.

    The "satin" finish is very slightly marred in some places, and the plastic plugs fitted to the ends of the inner frame have curls of plastic spoilage.

    Bunnings retails the CCCPR for $60.
    Flatpax Slide Out Trouser Rack

    The Flatpax Slide Out Trouser Rack (FSOTR) is part of Flatpax's wardrobe system. Comparing this item to the CCCPR is really a major study in contrasts. The vertical rack mounting system of the CCCPR makes for a very simple installation - just attach the brackets and click them into the vertical rack.
    Flatpax trouser rack

    The FSOTR is a different matter altogether. Some eight screws and plugs are required to secure the wooden side plates to the basic Flatpax Wardrobe frame. Then a further 16 screws are needed to secure the FSOTR to the side plates. This is definitely a semi-permanent installation, whereas the CCCPR could be easily moved from one location to the next.

    There are three main elements where the design of the FSOTR differs from the CCCPR. The first is in the materials used. The CCCPR is almost all metal, with a few plastic accessories. The FSOTR is mostly moulded plastic with some metal accessories.

    The second difference is that where the CCCPR is an open front design, the FSOTR is a closed box design. While this means that pants cannot be slid off and on from the front, the FSOTR takes advantage of the box design by having its pants hangers freely moving in a track at both ends. This means they can be slid further apart when hanging or fetching a pair of pants, making access much easier.

    That said, there are only four pants poles in this unit, though it is three-quarters the size of the CCCPR, which has eight poles. However, the box design means that there is 440mm of active pants hanging length on each pole, versus 345mm on the CCCPR. This is just enough in our tests to hang two pairs of pants per pole, so it can provide attractive compact storage.

    The really big difference, however, is in the sliding mechanism. Where the CCCPR uses hard white plastic wheels, the FSOTR uses a metal-to-metal lubricated ball-bearing race. There are 24 small ball-bearings used on each side of the FSOTR, and the sliding action is, as a result, really silky-smooth.
    The Flatpax bearings

    While it is plastic, the construction of the FSOTR is excellent. The plastic bars that make up the box are thick and heavy, and the brackets at each corner have an integrated brace as well. The only real concern with the construction is the four brackets, each of which take four screws, which hold the pants box to the wooden side plates. These do seem just a little lightweight, though they will likely do their job if not unduly stressed.

    The metal sliding bars are really very good, with Flatpax no doubt using some of the experience it has gained through Kaboodle to source a good solution.

    Despite intense scrutiny, there really do not seem to be any faults with the manufacturing of the FSOTR. The seams can be seen in some of the plastic construction, but they are universally tight and sealed, with no gaps. It is, in general, a very well-made and well-designed wardrobe component.

    Bunnings sells this item for $49.
    IKEA Komplement

    The two above designs are each quite competent in their own way, whatever quibbles there may be about small design and manufacturing issues. The IKEA Komplement pants hanger is, however, in an entirely different class. You could say that it manages to combine the best of both the above designs.

    IKEA's design approach is often a little difficult to understand until you begin using its products. What you frequently discover is that beneath a bland exterior, there is a surprising depth of product thought. What looks simple, and sometimes just a little inelegant, conceals a great deal of unexpected functionality.
    IKEA pants hanger

    Take, for example, the doubled over, wire-based hanging poles on the Komplement. These can seem just a little clumsy, until you consider them more closely. First, the doubled over design means that the secondary support bar on the CCCPR is not needed, making the entire 540mm length of the poles usable space. Yet like the CCCPR, pants can be slid on and off the poles from the front.

    Secondly, by doubling over the pole, IKEA also doubles this hanger's storage capacity. In fact, while it has only five pole hangers, it could support up to 20 pairs of pants. The pants on the lower rail would, of course, not be easy to access, but it is a good storage solution for out-of-season, or rarely worn clothes.
    Komplement with pants

    Installation? That's nearly as easy as on the CCCPR. There is a pair of rails that fit flush against the side of the IKEA's standard deep PAX wardrobe. Four screws in total to secure the sliders to the wardrobe frame, and four more to secure the Komplement to the sliders.

    Of course, the sliders use ball bearings, ten in total for each side. The action is just as smooth as it is on the FSOTR.

    Manufacture? It is nearly perfect. The Komplement uses 43mm by 16mm thick box metal for the back of its frame. The two side pieces, of similarly thick open channel metal are welded onto the frame back. The welds are obviously machine-made, so perfect as to be almost invisible. The white enamel finish on the metal is almost flawless. The only flaws are a small paint drip at the base of one of the pants poles, as well as a small gap at the base of another pant pole.

    The price? $40.

    Why does this matter? It matters because this example illustrates the kinds of challenges both Bunnings - and also Masters - will face as they consider stretching and growing their product ranges.

    Let's also be quite frank about this: what has been illustrated above is, quite frankly, a "fail" for Bunnings. If Bunnings is about providing lower prices than expected for better quality than expected, when it comes to pants racks, it isn't doing that. Not even close, actually.

    The fact is that entering these expansion markets, Bunnings - and others - may need to take a different approach. It will not be enough to duplicate previous approaches if they are to make use of more of that $60 billion "runway".

    One way to see this more clearly is to contrast entering the wardrobe storage market with entering the lighting market. Bunnings fought really, really hard to enter lighting. It had to take on quite a few industry specialist heavyweights, such as Beacon Lighting, to even get a foothold.

    However, it was aware there were significant margins to be had in this area, and it was worth the fight. Bunnings has certainly won its place in lighting today - as has Masters.

    Yet lights are not all that sophisticated, really. They are design/fashion objects as much as anything, but their elemental function is pretty easy to understand. There is also a wide range of designs from the past that can be easily copied and reproduced. In terms of function and safety, certifying bodies and past practice really look after that.

    Storage is an area of surprisingly intense design - as are many of the other expansion areas Bunnings is likely contemplating. Companies like IKEA have been working in this area for some time, and they have long ago moved to incorporate designers into the centre of their merchandising process.

    The thing, when it comes to storage and many other expansion areas, is this. If Bunnings is going to actually succeed in those markets, it's going to have to do something it really hasn't done that much of so far in its product area. It's going to have to innovate, and innovate by producing the new, the different, the specialised, the unique. It is going to have to learn how to produce the original.

    Of course, Bunnings has already been original. It's been original in its business models, in its supply chain, in its store management, in its store design, in its staff relations, in its community engagement, in its property development, in the way it has blended and melded its executive team.

    Yet not in its products, not really. The company has frequently found the best idea, or worked out how to combine a number of half-right notions to come up with a great selling product. But the really original idea, something culled from 50 or 60 years of history and related to the needs of its markets now, today - no, it hasn't done that.

    All that is very hard to do. To seek out the original, and yet retain the simplicity, the agility, the eagerness that has driven the company.

    And, yes, that is really a tough thing to do.

    And it is not just Bunnings that needs to do this, either.

    Until next time,


    You can contact me directly via email or Twitter @HNN_Australia

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    Lowe's is going galactic
    Made In Space and Lowe's are launching a 3D printer for the International Space Station
    The space project is the newest work to come out of Lowe's Innovation Labs
    Made In Space hardware is already aboard the ISS
    Click to visit the ITW website for move information
    California-based startup Made In Space is partnering with home improvement retailer Lowe's to launch a commercial 3D printer to the International Space Station (ISS) early next year, according to representatives from both companies.

    Made In Space built the 3D printer, which is called the Additive Manufacturing Facility (AMF), and will retain ownership of the machine. But the AMF sports a Lowe's logo, and the company will use it to make branded tools.

    Starting next year, astronauts will be able to print Lowe's branded tools like ratchets and bolts. The printer is meant to save room while also helping astronauts get access to equipment they need in a pinch.

    Here's how it works: When astronauts want to print something, they call a team headquartered in California. The team then sends an email, which triggers the 3-D printer to print the part.

    The galactic partnership is part of Lowe's bigger push in 3-D printing. The brand is testing a printer at a store in San Francisco where people can bring in old parts and get them replaced. The space project is the newest work to come out of Lowe's Innovation Labs.

    Kyle Nel, executive director of Lowe's Innovation Labs, told
    It is the first hardware store in space. Lowe's sells tools on Earth, and this way we're going to be able to provide tools in space as well.

    One Lowe's store in the San Francisco Bay Area will also feature a replica of the AMF, as well as the section of the ISS that houses it, after the 3D printer gets to orbit, Nel added.

    Made In Space hardware is already aboard the ISS; the company built a technology-demonstrating 3D printer for NASA that was installed aboard the space station in November 2014. That machine has worked well in microgravity conditions, paving the way for the AMF, which will be a fully operational, commercially oriented machine available to a variety of customers.

    Space-based 3D printing has the potential to help humanity extend its footprint out into the solar system, by making us far less dependent on supplies from Earth, advocates say. NASA has high hopes for the technology, which creates products layer by layer out of metal, plastic or other "feedstock" material. (Eventually, such feedstock could be sourced on the moon or Mars, aiding efforts to colonise those bodies, proponents of the technology say.)

    NASA has also been testing 3D-printed rocket parts, and it also recently awarded a US$125,000 grant to a scientist who aims to build a prototype 3D printer that makes food.

    Made In Space's long-term goals focus on helping to open the heavens to crewed exploration, and the collaboration with Lowe's represents a step along that journey, said the company's president, Andrew Rush.
    We see this relationship as a great validation of that path from space-technology development to terrestrial spinoff, which I think is crucial to the growth of the industry, and also crucial to people's awareness of the industry.
    Paint Shield line kills bacteria
    Paint Shield kills hard-to-treat, infection-causing bacteria, two hours after contact
    Cleveland Business
    It kills infectious pathogens on painted surfaces
    Sherwin-Williams' paint has become available in Australia through Masters
    Click to visit the HBT website for more information
    Sherwin-Williams' latest paint, a patented product called Paint Shield, is the world's first interior paint with the power to kill infection-causing bacteria two hours after contact.

    Tested by and registered with the Environmental Protection Agency (EPA), the microbicidal paint was developed by more than 350 chemists, coating scientists and microbiologists at the company's Breen Technology Center in Cleveland.

    Paint Shield has been proven to kill 99.9% of Staph (Staphylococcus aureus), MRSA (Methicillin-resistant Staphylococcus aureus), E. coli (Escherichia coli), VRE (Vancomycin-resistant Enterococcus faecalis) and Enterobacter aerogenes bacteria on painted surfaces two hours after exposure.

    That means it offers a new way to help prevent the spread of some of the most common bacteria that can trigger hospital-acquired infections.

    Once applied, EPA tests show that it keeps killing germs for up to four years, as long as the surface is covered with Paint Shield paint.

    Senior vice president of product innovation, Steve Revnew said the secret lies in its active ingredient. He said:
    A well-studied and highly regarded quaternary ammonium compound called Alkyl Dimethyl Benzyl Ammonium Chloride, or 'quat'.

    Not only did Sherwin-William chemists successfully suspend the compound in the paint, they found a way to add it to the paint without compromising the paint's integrity. Scientists had to create a now-patented formulation to ensure that the ingredient remained stable in the coating.

    Paint Shield glides on like regular paint, and can be applied on hard, non-porous interior surfaces, including ceilings, walls, doors and trim. It doesn't require any special tools to apply, and "it was designed to meet the most stringent VOC [volatile organic compounds] regulations in the country," said Revnew.

    The company said Paint Shield is ideal for healthcare facilities, athletic facilities, schools, day care centres, senior care communities, residential housing, hotels, cruise ships or anywhere else large numbers of people congregate.

    Paint Shield will be available in 590 colours and will come in the company's eg-shel finish for interior surfaces. It will be sold exclusively in Sherwin-Williams' 4,000 US paint stores starting the first quarter of 2016.
    Kingfisher, IKEA discuss sustainability
    Kingfisher's B&Q has explored alternative business models such as product hire and repair
    Sustainable Brands
    IKEA has launched an R&D project to encourage its UK customers to live more sustainably
    Both companies may become more involved in tool-rental initiatives
    Click to visit the ITW website for move information
    Richard Gillies, group sustainability director at Kingfisher - parent company of B&Q, Screwfix and other European home improvement brands - has mentioned the possibility of offering more skills-based solutions combined with tool-rental schemes. This followed the popularity of a recent instructional video on laying vinyl flooring on B&Q's website that has received almost 900,000 views. He said:
    If 900,000 people want to know how they can lay their own vinyl flooring, we need to be looking at the products, services and solutions we can offer to make that easier.
    There clearly is a big opportunity for rental schemes for the big tools that customers use very infrequently, but there probably is another route to the sharing economy model which involves skills - and from that route, there may be equipment and tools that might fall under a rental model.
    The purpose of our organisation is to enable people to improve their homes and lives - that means healthier, warmer, dryer, cheaper to run, low-carbon, and safer. Ultimately, the domestic housing stock needs to be improved, but what are the enablers to achieve that?
    It may be that the straight line might not be the direct one. Some of it is the sharing economy in terms of the physical products; some of it will be the sharing economy in terms of skills. It's something we're thinking of and working on at the moment.

    Kingfisher's 2015 Net Positive Report includes a 2016/17 target to explore and trial alternative business models such as product hire and repair and the sharing economy, which encourage a perpetual reuse of products. The company previously trialled several rental and repair services across its portfolio - including B&Q's 'Rug Doctor' and a rental and repair service by French DIY chain Castorama, which carried out over 205,000 repairs last year.

    Meanwhile IKEA's UK sustainability director Joanna Yarrow shared details of a new R&D project to trial a behaviour-change program with its customers. She explains:
    There are three key aspects we need to focus on to be a sustainability leader: the sustainability of our own operations; the sustainability of our products and supply chain; and - the most exciting bit - the sustainability of our customers' lifestyles. We have billions of visitors to our stores and websites and empowering them to live more sustainably has got to be the holy grail because the net impact of that is going to be so much bigger than any impact of our operations, however big we are.

    Yarrow explained that IKEA has just launched an R&D project to encourage customers across the UK to live more sustainably. In partnership with the University of Surrey, the company is working with 250 households that are experiencing a variety of life changes such as moving house or having a baby, and offering them a portfolio of lifestyle changes that will help them live out those scenarios more sustainably.

    The selected households will be given a GBP500 IKEA voucher to purchase a selection of its "sustainable life at home products" which offer significant reductions in energy, waste and water use. Yarrow hopes the three-year project will give IKEA a better understanding of its customers' sustainability needs. She said:
    This is the natural progression of our business model. If we want to continue to grow as a business, we have to accept that the linear model of take, make and sell has its limitations. We'll be acting upon the results of this project and looking a lot more at the circular economy, take-back, leasing and the sharing economy.
    We have to have a pretty transformational business model in order to address the sustainability challenge in the right way.

    According to IKEA's 2014 sustainability report, the company sold more than 1 billion euros (US$1.13 billion) of sustainable products in 2014, a 58% increase over the previous year, and aims for a fourfold increase in sales of these products by August of 2020, from the 2013 baseline.
    Big box update
    The Masters store at Everton Park (QLD) to be sold to a Singaporean real estate company
    HNN Sources
    John Addis from Intelligent Investor argues against the closure of Masters
    Business owners are concerned over the new Bunnings Claremont location
    Click to visit the ITW website for move information
    A Singapore-based real estate investment group is set to buy Masters at Everton Park (QLD); the Intelligent Investor website believes it is too early to conclude that Masters has been a failure; a local business owner says she feels "crushed and beaten into submission" after "a lack of consultation" about the new Claremont Bunnings location in WA; and Bunnings has been acknowledged for its community work.
    Selling Masters Everton Park store

    Rockworth Capital Partners is close to signing off of the $70 million plus purchase of the Woolworths Shopping Centre and Masters Home Improvement store at Everton Park in Brisbane's inner northern suburbs.

    Sources told the Courier Mail that the Singaporean company will buy the Everton Park shopping precinct. It is understood the deal will be completed on a yield of around 6%.

    The 5.6ha shopping precinct is 9km from the CBD and comprises a 5687sqm Woolworths-anchored neighbourhood shopping centre of which Woolworths has a 20-year lease. The 13,570sqm Masters store comes with a 15-year net lease.
    More time for Masters?

    John Addis from the Intelligent Investor argues against the closure of Masters. He says it might not have been around for long enough for the numbers to reveal much at all. He writes: "It takes time to get the model right and adapt to changing conditions...It might be premature to conclude it's a failure just yet.

    "Second, whilst Woolworths has admitted that it got Masters wrong at the start, stocking unpopular products, underestimating seasonality and setting too ambitious a budget, it is improving.

    "All companies make mistakes; the question is whether they learn from them. After refurbishing its early format stores, sales have risen 30%. Analysts have said an increase of 50%-100% is needed to break even but who's to say that won't happen in years to come?

    "Third, major shareholder Lowe's seems unconcerned by the weak start. In a recent earnings call chairman Robert Niblock said he was 'very impressed with the progress that I see the team making down there'. These are not the words of a disgruntled investor that's just blown his dough.

    "Fourth, imagine for a moment that Masters is abandoned and that in a few years' time the market obsession has moved from dividends to growth. Will those same analysts now demanding the closure of Masters be clamouring for a growth engine, the kind of thing that Masters could in time become? And what might Woolies do then to satisfy these calls - open a new supermarket chain in Indonesia perhaps?"
    Worries over Bunnings Claremont

    Proprietor of Heaven Wrapped, Gabrielle Oldmeadow said the construction of the new Bunnings Claremont store had affected patronage to the Old Theatre Lane precinct. She told Community News: "The loss of access and the closing of the public car park for the 11-month duration has crippled foot traffic to the area with many long-established businesses seriously weighing up their ongoing viability.

    She said Bunnings met her concerns with reassurances of increased foot traffic: "I think we in Old Theatre Lane collectively are at fault for not being more creative about putting a case to Bunnings for what we wanted, such as signage, but we feel a little crushed and beaten into submission through these construction phases. It would be nice to think the council would have consulted us on possible impacts and then acted or advocated on our behalf."

    Bunnings WA operations manager Shelley Begley said staff had made a concerted effort to minimise disruption to other businesses. She said: "It's disappointing to hear negative feedback because we're very...happy to be there and we want to be part of the community...I'm confident (Old Theatre Lane) will be busier than ever once we open - there will be more traffic and it is exciting for the area."

    Town of Claremont chief executive Stephen Goode said the development application did not fall within its jurisdiction for approval. Final approval came from the Joint Assessment Development Panel.
    Bunnings gets tick for community work

    The Age and Disability Discrimination Commissioner, Susan Ryan has welcomed the latest Community Report Card from Bunnings. The report card details Bunnings' activities in areas of community involvement and sustainability during the previous financial year, which includes over 62,000 activities in Australia and New Zealand. The events - from sausage sizzles, community workshops, financial and product contributions - raised over $35 million for local communities.

    Commissioner Ryan said: " one of Australia's best employers when it comes to supporting the community and recognising the value of mature workers. It's one of the few companies in Australia that sees older workers as contributing greatly to the service it provides to customers."

    Bunnings held over 4,000 activities which directly contributed to the well-being of older members of the community including seniors groups, aged care facilities, RSL, legacy, Men's Shed and Meals on Wheels.
    HNN Index week ending 30 October 2015
    HNN Home Improvement Index for week ending 30 October 2015
    HNN Sources
    Panacea Investment Group has acquired Gliderol UK from GWA Group
    Woolworths' new loyalty card
    Click to visit the HBT website for more information
    The HNN Home Improvement Index for the week ending 30 October 2015 fell by 22 points to end at 958.58 points. The underlying ASX Index fell by 21 points on the comparative scale to close at 974.8 points. In actual points, the ASX 200 fell by 112 points to close the week at 5239.4.

    The HNN Index seems to be establishing a base level of around 950 points, indicating that the market's view of the industry's value is down by 5% over its potential value at 1 July 2014.

    The three major grocery/hardware companies were among the most active stocks. Woolworths fell by 13.3%, Metcash fell by 10.5%, and Wesfarmers went down by 5.4%.

    UGL and Downer EDI also fell. UGL went down 5.8%, and Downer EDI fell 5.3%.

    The two major gains came from Bluescope Steel and Harvey Norman Holdings. Bluescope rose by 9.6%, and Harvey Norman climbed 9.0%.
    Brambles optimistic for 2016

    Brambles, parent company of pallet business CHEP, has reported a slight drop in revenue in the first quarter of 2015-16, with sales two per cent down. According to the ASX-listed company, sales revenue for the period was US$1.3 billion (AU$1.9 billion).
    Brambles optimistic for 2016 - Trailer Magazine
    CIMIC Group
    CIMIC Group maintains profit guidance

    CIMIC says it remains on track to meet its full year profit forecasts. The company, formerly known as Leighton Holdings, has posted a 25% jump in net profit from continuing operations for the nine months to September, to $393 million. CIMIC confirmed it expects to achieve its full-year net profit guidance in the range of $450 million to $520 million.
    CIMIC Group maintains profit guidance - Fairfax Media
    Fletcher Building
    Fletcher Building wins SkyCity build

    Fletcher Building's construction unit has won the NZ$477 million (AU$446.59m) contract to build SkyCity's national convention centre, five-star hotel and associated infrastructure in Auckland, New Zealand. The two companies have entered a binding commitment and expect to sign actual building work contracts in November.
    Fletcher Building wins SkyCity build - Business Spectator
    GWA Group
    Investment group buys garage door business

    Yorkshire-based Panacea Investment Group has acquired Gliderol UK, a manufacturer in the UK garage door market, which was set up by its Australian parent company some 29 years ago. The deal will see all 40 Gliderol staff and its management team remain with the business, and Panacea has expansion plans for the company.
    Investment group buys garage door business - Yorkshire Post
    Metcash online onslaught shows how to think China

    Metcash will sell through China's Alibaba's online marketplace for international imports, Tmall Global. This online world means exporters don't require a physical presence in China and avoids the need for complicated quarantine and testing procedures as well as the import taxes imposed on those selling through conventional bricks-and-mortar stores.
    Metcash online onslaught shows how to think China - Financial Review
    Stockland off to solid start but warns boom will fade

    Property group Stockland say it's on track to meet its forecast for underlying earnings per share growth of between 6 to 7.5% this financial year after a "robust" first quarter. It said 1557 net deposits in the quarter had it on track to achieve its target of around 6000 residential settlements for the fiscal year.
    Stockland off to solid start but warns boom will fade - The Australian
    UGL wins $50M in contracts

    UGL Ltd announced it has $50 million in new contract wins and extensions during the first quarter of FY16. Projects include the delivery of the system, design, supply, installation and commissioning of earthworks, storm water drainage, access roads, solar modules and other components associated with a new solar project in the Northern Territory.
    UGL wins $50M in contracts - Northern Territory News
    Another door opens to dumping

    Wesfarmers has quietly closed Australia's last remaining PVC resin plant and instead will look at importing the product. The company said in a statement that Australian Vinyls Corporation (AVC) will cease manufacturing polyvinyl chloride (PVC). AVC was a regular visitor to the Anti-Dumping Commission and AVC's closure will now mean imports will roll in unimpeded.
    Another door opens to dumping - The Australian
    Woolworths' new loyalty scheme a better deal, but unlikely to win new customers

    Woolworths' new loyalty scheme is a better deal for existing shoppers but is unlikely to win the supermarket new customers, according to industry watchers. Under the new system, shoppers receive "Woolworths Dollars" when they buy products with orange price tickets, earning about 15% of the value of those products on their loyalty card.
    Woolworths' new loyalty scheme a better deal, but unlikely to win new customers - Fairfax Media
    PoS: Point of Speculation
    Panasonic gets top billing at Masters
    HNN Sources
    Slide from Lowe's investor presentation January 2015
    Hard workers at Bunnings
    Click to visit the ITW website for move information
    In this edition of PoS: Bunnings staff do a great job, is Panasonic going to go Masters-exclusive, and a lot of talk about Masters, but not a lot of proven facts.
    Retail shot of the week

    Location: Bunnings, Collingwood (VIC)

    While doing a quick store survey, HNN saw this: four of the young women from the Bunnings team scrubbing up the floor after a customer (probably) dropped a tin of paint on the polished concrete.

    It was surprising how good-spiritedly they tackled the task, with obvious care. Scrubbing, scraping, using solvent, they were working hard, with the occasional sound of cheery laughter.
    Staff clean up paint

    As we walked by, one of them interrupted her task, half-stood, and said, "Hello, is there anything I can help you with?"

    Outstanding. A level of customer service not often seen.
    What's with Panasonic?

    Seeing a retailer had most of the store's Panasonic tools on sale, we asked if there was a new range coming out. He told us that if there was, you wouldn't be seeing it in his store. He was not certain, but was working on the assumption that Panasonic would limit its distribution to Masters Home Improvement in the future.

    Not that this really mattered, he told us. In recent times the Panasonic sales people he had dealt with seemed to know more about televisions than power tools, in his opinion. He also said he felt that the "grey tools" had not been as good as most Panasonic tools in the past.
    Matt Tyson's tenure at Masters

    Fairfax Media, among others, has been suggesting that the managing director of the Woolworths-owned Masters Home Improvement, Matt Tyson, may have only a limited tenure in his position.

    This seems to be based on some remarks made by Mr Tyson in response to a question during the presentation to financial analysts of Woolworths' first quarter FY 2015/16 sales results. HNN has learned that Mr Tyson does tend towards being a little reticent at these presentations, though it is always worth paying close attention when he does really answer a question.

    Without nominating any specific journalists, much of Fairfax's recent coverage of Woolworths has seemed to repeat, in different forms, the rumour that the company may seek to exit from the Masters business. Only after running that story for a week did it occur to the journalists that it is unlikely a retailer would announce the closure of its stores right before the Christmas/summer sales surge.

    HNN would expect the first real news about Masters to appear at the announcement of the half-year results on 26 February 2016. This will likely describe some aspects of how the business will be evaluated. It seems likely that Woolworths will present an "Investor Day" in 2016 as well (though this has not been announced), probably in early May 2016. Masters' future will likely be announced at that time.
    Will Mitre 10 and HTHG get together?

    A rumour has been reported in the Australian Financial Review that the Woolworths-owned Home Timber and Hardware Group and the Metcash-owned Mitre 10 might end up being combined during 2016, and sold as a single entity.

    While it seems likely that some dealmakers have suggested such a move, there are probably a number of other alternatives as well.

    One interesting factor that tends to be forgotten is that US home improvement retailer Lowe's Home Improvement's joint venture covers not only Woolworths' Masters Home Improvement, but HTHG as well, as clearly indicated by this strategy slide from Lowe's investor presentation in 2015:
    Slide from Lowe's investor presentation January 2015

    This point is made clear in an AAP story from 2009, which states:
    The ACCC on Wednesday approved the takeover of Danks by Carboxy Pty Ltd, a joint venture vehicle between Woolworths and US hardware giant Lowe's - the world's second biggest home improvement retailer.
    AAP via Sydney Morning Herald

    Carboxy was later made part of the joint-venture vehicle between Lowe's and Woolworths, Hydroxy Holdings. Danks became the basis for HTHG.

    The joint-ownership would be a complicating factor for any combine-and-sell arrangements.
    Hot links
    The Good Guys has won a major award at the Retail Asia-Pacific Top 500 Awards
    HNN Sources has acquired home services site Fountain is one of the best online shops according to a UK-based consumer survey
    Click to visit the HBT website for more information
    The Good Guys has been recognised as a top retailer in the Asia-Pacific region; a kitchen island, made using Corian, has been honoured at the Corian Design Awards 2015; US home-improvement startup has acquired home services site Fountain; and is one of the best online stores according to a major new survey of UK customers.

    For further information, simply click on the images provided.
    The Good Guys named "Best-of-the-Best"

    The Good Guys has won the Best-of-the-Best Retailer Award 2015 at the Retail Asia-Pacific Top 500 Awards ceremony for the second year in a row. The awards recognise the region's top performing retail companies across a wide number categories including electrical, fashion and beauty.
    The Good Guys wins another major retail award
    Kitchen island wins award

    The 2015 Corian Design Awards has recognised an island bench made of Corian designed to look like an iceberg. The kitchen island application was used at the Wynnstay House, home to architects Rob McBride and Debbie Ryan of McBride Charles Ryan. Corian is a composite material made using acrylic polymer and alumina trihydrate. It is best known for its use as a surface on benches and counters.
    The kitchen island bench made of Corian
    Porch buys Fountain

    Following its acquisition of Fountain, will use the smaller company's technology to help refocus its business. Porch will concentrate more on connecting customers with resources to finish home improvement projects, rather than providing in-home services. Fountain created an app that allows users to enter their home improvement problems and connect with experts for advice.
    Fountain created an app for home services popular with customers

    UK-based is one of the best online shops according to the latest Which? consumer survey - and is one of the worst. The survey involved over 10,000 members of the public. They were asked to rate online retailers on factors including price, deliveries, quality, ease of finding products, satisfaction with the product or service and the likelihood of recommending the product or service to someone else. rates highly with consumers
    Upgraded internet streaming to jobsites
    Bosch's Power Box PB360C can bring entertainment to the jobsite
    Builder Online
    The unit can run on either a 120V AC outlet or a Bosch 18V li-ion battery
    The Power Box PB360C leverages 360-degree speakers with Bluetooth technology
    Click to visit the HBT website for more information
    Bosch's new Power Box PB360C leverages 360-degree speakers with Bluetooth technology, allowing building crews to stream internet radio, stored music, and more from their smart devices.

    With a connection range of up to 150 feet, the Bluetooth technology allows users to move freely around the construction zone without being tethered to a cable, and without fear of losing sound quality. Others can also enjoy the crisp and clear sounds. And it can all be controlled on the free Bosch Power Box smartphone app.

    The Power Box's digital media bay has a secure, weather-sealed storage area for electronic devices while delivering sound via an auxiliary input port.

    The PB360C model features an AM/FM radio with advanced digital tuning that locates 20 FM and 10 AM pre-set stations. There are four pre-set equalisation mixes and the user can customise the bass and treble as desired.

    The unit can run on either a 120V AC outlet or a Bosch 18V li-ion battery. When powered from a 120 V AC outlet, the Power Box can be used to charge Bosch cordless 18V li-ion batteries. In addition, users can power other 120V AC devices by plugging them into one of the four-way power outlets on the unit.

    The Bosch PB360C also has a USB port to plug in and charge electronic devices, whether it is powered through an outlet or by a Bosch li-ion battery. It comes in the distinct and rugged aluminium and rubber roll-cage design that suspends the radio and its 360-degree speakers inside the cage.
    SKILSAW enters metal cutting category
    The 8-inch OUTLAW Worm Drive Saw for Metal
    SKILSAW 14-inch Abrasive Cut Off Saw
    SKILSAW 12-inch Dry Cut Saw
    Click to visit the HBT website for more information
    SKILSAW is bringing its expertise to metal cutting with three professional grade saws, including an 8-inch worm drive metal saw, a 12-inch dry cut saw and a 14-inch abrasive chop saw.

    The SKILSAW 8-inch OUTLAW[tm] Worm Drive Saw for Metal (model SPT78MMC) is available with a Diablo Cermet blade (SPT78MMC-22) or a SKILSAW Carbide blade (SPT78MMC-01). OUTLAW is the first worm drive saw specifically for cutting through metal, according to the company.

    The worm drive design and left-side blade offers superior ergonomics and ease of use, and a Dual-Field[tm] motor provides power, precision and durability.

    As the industry's first metal cutting saw to feature a blade window for added visibility, jobsite professionals will also value OUTLAW's chip tray which holds 33% more material.

    The SPT62MTC 12-inch dry cut saw is also available with a Diablo Cermet blade (SPT62MTC-22) or a SKILSAW Carbide blade (SPT62MTC-01) for fast, clean cuts and precision. Weighing-in at 38.2 pounds (or 17.3kgs not including the blade, cord and wrench), the SPT62MTC is one of the lightest weight saws in its class. Made for easy transportation.

    It also has a 15 Amp motor, a soft-start to reduce torque and extend the motor life, and a 4-1/2-inch cut depth in a compact frame. Other key features include a depth-of-cut stop which easily adjusts for materials of different sizes and shapes, and wrench storage for convenient blade changes.

    The SKILSAW SPT64MTA-01 14-inch abrasive cut off saw has a stamped steel base that is 11-inches x 18-1/2 -inches and a total weight of 33.9 pounds (15.4kgs not including the blade, cord and wrench). The SPT64MTA-01 offers stability when cutting large loads and maintains a lightweight frame for portability.

    Professionals have the ability to perform +/- 45 degree mitre cuts and can adjust for different sizes and shapes of materials. Additional features include heat treated ball bearings which are mounted on the motor gearings for longer life under heavy loads. It is constructed with a chip deflector and guards.

    The SKILSAW metal cutting saws will be available in March 2016.
    Stanley Black & Decker 2015 Q3 results
    Stanley Black & Decker results for 2015 Q3
    Stanley Black & Decker
    Global map of results for Stanley Black & Decker
    Stanley and DeWalt impact drivers
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    Tools, security and industrial fastener company Stanley Black and Decker (SBD) has reported its results for the third quarter of 2015. The company reported that net sales revenue fell by 1.72% compared to the previous corresponding period (pcp), which was third quarter 2014, coming in at US$2,829 million.

    Overall sales increased by 5% in terms of volume, and gained 1% in terms of price. These gains were offset by an 8% decline due to fluctuations in currency exchange rates.

    Gross margin declined by just 0.1% to 36.3% for the quarter, while operating margin climbed 0.7% over the pcp, to reach 14.8% - the strongest margin result since Stanley and Black & Decker merged.
    Stanley Black & Decker results for 2015 Q3

    Australia returned growth of 3%, indicating a softening market for the company, though year-to-date growth remains high at 9%, trailing only the US market, which has year-to-date growth of 10%.

    The CEO of SBD, John Lundgren, did note in his opening remarks at the presentation of the results to investment analysts that there had been "softness" in the markets of Russia, China and Australia during the quarter.

    In light of what were strong results offset by unfavourable currency exchange rates, SBD has raised its forecast for 2015. The company is now projecting an earnings per share (EPS) rate of between US$5.80 to US$5.95, up from the previous estimate of US$5.70 to US$5.90. The company's chief financial officer, Donald Allan Jr, stated in the earnings press release:
    Our revised 2015 EPS outlook reflects the impacts of a stronger operational performance combined with incremental commodity deflation which are expected to more than offset a slower growth outlook for the industrial portions of our businesses and slightly higher currency headwinds.

    During the company's presentation of the results to financial analysts, Mr Allan identified some of the underlying causes to the lift in expected earnings for 2015:
    In particular we are starting to see stronger than initially expected benefits from steel, resin and other base metals that manifest themselves in our income statement's results. However, these benefits are partially offset by foreign exchange headwinds that are now expected to be at the high end of our previous US$200 million to US$220 million range when you use current rates.
    Most of that impact is related to the weakening of the Brazilian real over the last two or three months. The net result of these changes is US$0.07 to US$0.08 increased to our midpoint outlook range that I just provided.

    The improved outlook was reflected in the current results, where Selling, General & Administrative Expense (SG&A) fell to 21.5% of sales, down 1% on the SG&A for the pcp.

    Mr Allan called out the tools and storage division as a particular growth area:
    We continue to expect high single-digit organic revenue growth within Tools & Storage. This is slightly better than compared to our July outlook.
    We also expect solid operating margin rate expansion year over year in the segment due to volume leverage, cost actions, price and commodity deflation I just mentioned which will more than offset the impact of currency.
    Global map of results for Stanley Black & Decker
    Tools and storage division

    In the overall category, revenue grew by 2% over the pcp to reach US$1,838 million. Profit climbed 8% to US$308 million, returning a profit rate of 16.7%, up by 1% on the pcp. Growth overall was 9%, with North America outperforming other regions with growth of 11%.

    Overall, the power tool segment grew by 10%, and the hand tools and storage segment grew by 8%. Breaking these results down further, SBD's chief operating officer, Jim Loree, stated during the results presentation to analysts that professional power tools grew by 9%, consumer power tools grew by 12% and accessories by 9%, in net sales. Hand tools and storage grew by 8%.

    The company grew this area through increased volumes, stronger pricing, productivity improvements and lower commodity prices in some areas. These advantages more than offset the negative influence of declines in foreign exchange rates against the dollar.

    Much of the company's success in the market has come through the continuing roll-out of its mid-price point products, which slot in below SBD's premium DeWalt offering.

    In Australia, for example, the Stanley Fatmax 18V Impact Driver with 2.0Ah Battery kit retails for around $190, while the DeWalt equivalent retails for $380.

    Mr Loree emphasised that the mid-price products has sold well in some emerging markets:
    The mid-price point product rollout led by Stanley branded power tools continued to be timely and effective as end-users tend to be more value oriented in economies under economic duress.

    Mr Loree also pointed out the performance of the company's automotive tools, MacTools:
    Mac Tools growth continued at impressive levels continuing to outpace the healthy North American automotive aftermarket on the strength of new product and a growing franchisee base.

    Mr Loree added a note of praise for the efforts of the management team at the tools and storage division:
    I would like to take just a moment to recognise our global Tools & Storage management team in both the developed and developing markets. The results speak for themselves: organic growth averaging 10% over the last five quarters, margins up 130 basis points year to date and at record levels despite about 150 points of FX pressure expected for the year.
    Product development

    During the results presentation to investment analysts, Tim Wojs of Robert W. Baird & Company asked:
    What inning do you think we're in around some of the adoption of some of the new technology development that's been going on whether it's brushless or just improved battery performance? And I guess would you characterise this as maybe a technology step function that's similar to what lithium-ion was a few years ago, was several years ago?

    Mr Lundgren replied:
    I would say Tim - it's a really good question - I would say no.
    Lithium-ion if you think about it relative to NiCad was a better mousetrap, more power, longer runtimes, better for the environment and the only issue was cost. And like any technological breakthrough when you can get the cost in line it is going to displace its predecessor.
    What we're seeing now and I don't think it's a step function. I think the answer to your question which is a very fair one and it's only one person's opinion that you're getting. That being said, the leverage for us is going to come from what I think we do best.
    We weren't the inventors of brushless. We obviously didn't invent it and we were a slow follower on the application of lithium-ion and things of that nature.
    Where I believe we've excelled and I give tremendous credit to our global tools and storage team both in the product development perspective, commercial execution, etc., is just the application of all of those technologies. The application of brushless, lithium-ion, the way we've been able to get more power, more runtime combined with the DeWalt brand, good programs to support it, those are all I would argue incremental as opposed to step functions. And that's where our success has come the last two or three years.
    Is there more on the horizon? Yes I think we can see we're cautiously optimistic about what our team has in the pipeline in terms of further advancements of those existing technologies but I don't see anything in the application of those technologies.
    But I don't see another lithium-ion, if you will, breakthrough per se in the foreseeable future. But that doesn't mean we're not going to push those hard and get more than our fair share of the market growth by applying the technologies.

    SBD's security division did not perform as well as tools and storage. Sales fell by 8% to US$512 million. Price contributed a 1% gain, but this was offset by volumes falling by 2%, and negative currency effects of 7%.

    The European market strengthened by 4%, the North American market was flat, and emerging markets returned lower results. The profit rate of 11.9% was downy by 0.3% on the pcp, but up 1.5% on the prior quarter.

    Net sales for the industrial division fell by 7% over the pcp to US$479 million. There was a 1% increase through price, while volume fell by 1%, and exchange rates were negative to 7%. Profit for the division was US$85.4, and the profit rate was 17.8%, an increase of 0.1% over the pcp.

    The automotive products continued to perform well. This was particularly true of the Japanese market. Mr Lundgren mentioned this in particular in his opening remarks:
    Interestingly, Japan grew 8% driven by strong Stanley Engineered Fastening performance in the automotive markets.

    Engineered fasteners in general grew by 3% over the pcp. Infrastructure, however, fell by 10%.

    SBD's success at introducing the Stanley FatMax brand into the UK and Australian markets should be acknowledged. While SBD has actually made this look quite easy, we need only look at the difficulties Bosch is experiencing with its Bosch green and Bosch blue brands to see it is actually quite complex.

    In SBD's case they have built a positive relationship between Stanley FatMax, the well-respected DeWalt brand. Consumers see FatMax as being something like a "baby" DeWalt brand, and thus associate it with quality and reliability. This is in part due to the brands' shared basic yellow/black colour scheme.

    Equally, it is likely this association will also build-in a clear upgrade path for these consumers. They will be inclined to lean towards DeWalt products if they need to upgrade to higher-performing products.

    It will be interesting to see how SBD roll-out brushless technology into the Stanley tool range. One possible strategy will be to see the company - as Techtronic Industries has done with its Milwaukee brand - use brushless to boost the power of the 10.8/12-volt power tool range.
    Stanley Black & Decker seeks injunction
    Packaging from Rockwell and DeWalt
    Rockwell drill compared to DeWalt
    Another area affected by trade dress
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    In a one-week jury trial that came after nearly four years of litigation, US-based Stanley Black & Decker (SBD) has been awarded US$54 million in damages against the China-based Positec.

    The case is about Positec's use of a black and yellow colour scheme on its packaging of power tools. SBD sued Positec in 2011. It claimed the company had infringed four different patents for lawncare products, as well as its DeWalt trademarks and trade dress.

    The patent cases were not pursued, but the issue of trade dress infringement continued. (Trade dress refers to aspects of the visual appearance of a product or its packaging that signify the source of the product to consumers.)

    As part of the evidence, Raymond P. Niro Jr. of Niro McAndrews, counsel for Stanley Black & Decker, presented survey evidence showing that most professional tradespeople and DIYers could identify DeWalt by name on being shown a black and yellow power tool. He also presented evidence that SBD spent over US$100 million promoting DeWalt's distinctive branding.

    In opposition, lawyers for Positec argued the trade dress was not protected by law, and that even if it were, Positec's packaging design would not infringe.

    The jury decided in SBD's favour on 5 Octovbr 2015, and awarded the company US$54 million in damages. Positec is expected to appeal.

    Meanwhile, on 6 October 2015, SBD has applied for an injunction against Positec. According to the injunction motion:
    Defendants' [Positec's] continuing use in the marketplace of confusingly similar power tool products, packaging and accessories will be harmful to plaintiff's goodwill and reputation and will provide no adequate legal remedy to plaintiffs.

    The injunction would permanently enjoin Positec from making, using, offering to sell, selling, importing, promoting or advertising in the United States any power tools, power tool accessories or packaging that has a yellow-and-black colour scheme.
    Zero turn means zero effort
    The Cox Cruiser is proving to be very popular with end-users, according to the company
    Cox Mowers
    Cox Mowers' zero turn mower is one of the company's bestsellers
    Cox products are backed by quality service, parts and accessories
    Click to visit the HBT website for more information
    Zero turn means swinging this machine around trees and garden beds with a single pass is easy, because that is exactly what the zero turn is designed for. Twin hydro-gear transmissions mean the ride-on mower from Cox Mowers will turn around in its own length.

    Engineered and built in Australia to handle tough local conditions, Cox Cruiser is proving to be very popular with end-users and there is good stock for the green season ahead.

    Cox products are backed by attentive service, as well as parts and accessories, according to the company.

    Every Cox ride-on mower is engineered to the same exacting standards of quality, and its after-sales service has been developed to a high standard within the industry.

    The latest Cox mower is backed by a two-year conditional warranty, and a network of over 300 dedicated dealers throughout Australia, New Zealand and Asia-Pacific.
    HI Weekly Vol. 1 No. 8
    Download the latest HI Weekly, issue number eight
    HI Weekly No. 8
    A visit to the Bunnings Epping store to gain retail insights
    A comparison between the Bosch and Makita wireless battery chargers
    Click to visit the HBT website for more information
    Each week, the HNN weekly e-newsletter can be accessed in one convenient PDF. Easy to read onscreen, or print it out.

    Just use the following link to download the PDF:

    In this week's edition, we visit a number of Bunnings stores in Victoria including its new store in Epping. We analyse some of the elements that contribute to the way the big box retailer boosts sales. A story on Bunnings' first quarter results is also included.

    We also examine the Bosch and Makita brands and why their technology offerings may be currently lagging in the power tool category. A comparison is also made of their wireless charging units.

    Also in this edition: regular updates on big box retailers; the new Total Tools sore in Toowoomba (QLD); the Australian Construction Industry Forum has a new executive director; TreeHouse is the hipster hardware store; and paint company Sherwin-Williams elects a CEO.

    Plus all our regular features: HNN Home Improvement ASX Index; new products; and hot links.
    The outsiders: Bosch and Makita
    Makita brand colours
    HNN Sources
    Bosch Blue wireless charging battery
    Wireless charging of Bosch Blue impact driver
    Click to visit the HBT website for more information
    While power tool manufacturers such as Techtronic Industries (TTI) and Stanley Black & Decker (SBD) seem to dominate the industry, the market really remains quite diverse. Two of the more individual, significant players in the market are Japan's Makita, and Germany's Bosch.

    With both TTI and SBD offering increasingly advanced "Internet of Things" services with their power tools, what moves are these other companies making to stay in technological touch? What can we expect from these companies in the future? What niche markets have these companies found?
    Makita: a special destiny

    In considering Makita, it is perhaps best not to apply the standard metrics applied to other power tool companies. In the past HNN has looked at the markets in which power tool companies work in terms of the dimensions of occupational use (DIY, builder, construction) and size of tool fleet. Makita seems to have a third dimension to its market as well, which relates specifically to the reliability, toughness and repairability of the tools it makes.

    In fact, a number of Japanese words suggest themselves in terms of describing what Makita does with its tools. Certainly the idea of "shibui" comes to mind. Shibui doesn't have a direct translation, but it refers to a certain austerity in things, the elements of an object that somehow define it, and continue through generations, an essence stripped of ornamentation.

    While other power tool makers have gone down a pathway that is sometimes described as "developed Mattel" - after the toy maker - featuring bright colours and chassis detailing to make their tools seem exciting and modern, Makita design has remained for the most part more subdued.

    The exception to this has been with some of Makita's 10.8-volt (sometimes referred to by its maximum voltage as 12-volt) power tools. These have been made in both the standard teal livery, and a black-and-white livery.

    Where it gets very interesting in considering Makita is where and how the company has applied modern technology to its tools. It's important to remember that Makita was actually the pioneer of using brushless motors in power tools, beginning with its aerospace line in 2003, and then in its standard power tools in 2009 with its 18V LXT Brushless Motor Impact Driver.

    This followed on from a proud tradition of firsts in power tool development. In 1969 Makita developed the 6500D battery-powered drill, the first rechargeable power tool. This was followed in 1978 by the first NiCad drill, the 6010D. In 2005 Makita released the TD130D, the first lithium-ion battery tool.

    More recently, however, Makita seems to be falling behind. While TTI is bringing whole-of-fleet management through advanced tool network connectivity, and SBD is solving major battery management issues with its Bluetooth-equipped battery range, Makita has yet to offer anything in the "Internet of Things" (IoT) field.

    It is also, if you read the latest reviews, losing out on the core technology, with TTI's Milwaukee Tools M18 FUEL tools producing better performance in a range of measures.

    Makita has also been slow to respond to market demand in some ways as well. For example, it is only this year that the company has begun to equip both its 10.8-volt and 18-volt batteries with charge gauges, making it easier to work out the charge state of a specific battery.

    The company has also struggled to clearly define its sub-brand, Maktec. As this is cheaper than the main Makita brand, it is presumably not as well made. Is it still targeted at trade professionals, perhaps for tools that are not highly stressed? Or is this going to be developed into more of a consumer-oriented brand?
    Still the one to beat

    Most of what is outlined above really reflects the difficulties Makita may face over the next two to three years unless the company finds new ways to develop its tools systems. Today, it remains one of the premier brands, offering an almost unrivalled combination of quality, trustworthiness and value.

    One area where Makita has succeeded well is in offering a comprehensive range of tools. Its 18-volt range virtually defines what wide coverage of tool types can be (especially for those in specialty areas such as concrete), and the 10.8-volt range is rapidly catching up.
    Singing the Bosch Blues

    The situation of Bosch has some similarity to that of Makita, but it is also quite different. Bosch suffers from some of the same technical lag problems as those that are developing at Makita, but it has an additional problem which relates to its brand presence.

    The difficulty that Bosch faces is in the relationship between its "consumer", Bosch green brand, and its "professional", Bosch blue brand. Bosch has gone out of its way over the years to clearly distinguish between these two. Bosch had to do this to establish its reputation as a tradie/pro tool supplier.

    Unfortunately, the result of this has been the wrong kind of what can be called "brand flow". This describes the relationship between "cousin" brands made by one manufacturer, and how one brand comes to influence customers' perception of closely related brands.

    An example of a very good brand flow is that which exists between SBD's Stanley FatMax brand of power tools and its premium DeWalt brand. If you look at an image of a drill from the two brands, you can clearly see the similarities, both in the yellow and black livery, and some design features.

    SBD has developed these brands so that, in effect, to the DIY consumers the Stanley FatMax brands looks like a "baby" DeWalt. This is positive brand flow. The association is likely going to help sell the FatMax products.

    Furthermore, if and when the user of a FatMax drill decides to upgrade to something more "serious", it is highly likely that upgrade will be to a DeWalt. The similarity in appearance and the brand ownership makes the DeWalt brand seem familiar and a good choice.

    With Bosch, the brand flow between its green and blue branding is mostly negative. The blue brand is perceived as being a quality brand, but the green brand is seen, in comparison, as not being a good brand at all. In fact, it seems to occupy one of the least enviable brand positions there are, as a somewhat expensive "cheap" brand.

    This is not at all fair. Many of the Bosch green products are actually of reasonable quality and offer good value for money. For example, the Bosch green line of corded jigsaws priced between $90 and $130 are good quality and likely the best in that category. But the consumer perception persists.

    Meanwhile, one of the real losses of this situation is that the extreme branding between "pro" and consumer means that Bosch is missing out on a really viable market for its blue brand: the "prosumer". The Bosch blue tools in general fit into the market just below the DeWalt and Makita tools.

    It is an ideal price-point for more casual DIYers who want to move up a notch in their tool purchases. In this case, however, the "pro" branding of Bosch blue can be a little off-putting.

    If and how Bosch can extricate its brands from these problems is difficult to say. One aspect of the problem is likely that attitudes in continental Europe are somewhat different to those in Australia, the USA and Britain. As Bosch is committed to singular, worldwide brands, this makes it a little difficult for specific, regional solutions to be implemented.
    The tech problem

    While the brand situation is an understandable legacy, it is something of a surprise to find that Bosch power tools have slipped behind in comparison type of technology TTI and SBD have developed with their Milwaukee and DeWalt brands. The Bosch company has great technical resources, and in fields such as automotive systems development is a world leader.

    In 2015 Bosch has attempted to overcome this problem by offering a new technology of its own. This is what it refers to as "wireless charging", known more broadly as "inductive charging". The technology has been offered commercially for four or five years for mobile phones, but Bosch is the first power tool company to incorporate it into its battery systems.

    HNN has purchased one of these wireless charging units (available only for Bosch blue in Australia) and we are currently in the process of testing it. The charging system consists of just two components: a special Li-ion battery, and a small charging "sled".

    The battery is attached to the power tool in the usual manner. To charge, the battery (attached to a power tool usually) is slid onto the sled. A series of green LED lights across the back of the sled indicate the state of charge of the battery, and a flashing LED indicates that charging is in progress.

    For tools such as impact drivers and drills, the charger can be used horizontally, and the power tool simple rested on the sled. The charger can also be mounted vertically, with power tool slotted into the sled, making it possible to charge jigsaws and other such power tools.

    HNN has only just begun testing, but we should have full results available within a week, including data on how long the charger takes to charge a battery from 10% to 80%, and how effective it is at maintaining a charge in a power tool during moderate to heavy use.
    Wireless charging of Bosch blue impact driver

    The "use case" for this particular kind of charging system does seem to have been something that has troubled Bosch itself a little. Perhaps the ideal use is where a user is working in a workshop, but wants to use a cordless tool for its convenience. The charger can be easily plugged in, and the tool returned to the charging plate whenever it is not in use.

    The other good use case is for industrial/assembly type of work taking place in a factory building or yard with available 240-volt power. The safety, speed and convenience of working with cordless tools is for some workplaces outweighed by the sheer effort needed to manage a fleet of batteries, keeping them charged and regularly distributed. This inductive charging system could help make cordless tools in such a factory setting a much more feasible option.

    Beyond that, the use case gets a little more difficult to imagine. For the average tradie/builder, it is difficult to see how there would be much of an advantage to this system over buying a couple of extra batteries and a series charger.

    To help bolster its potential, Bosch has come out with a range of additional accessories (though these do not seem to be available in Australia at the moment). The first was a "holster" that could be fitted to, for example, the back of a van which had a 240-volt outlet. The tradie/builder could then "holster" the tool before driving off, and have it recharge on the way to a new location, or overnight while the van was parked.

    One difficulty with this is that each tool requires its own "insert" in the holster, which adds a certain level of fuss and bother if more than one tool needs to be regularly charged.

    More recently Bosch has added an LBoxx docking station. This works in conjunction with a specific LBoxx for the Bosch tool. The tradie/builder simply "docks" the LBoxx containing the tools into the docking station, and it will charge both the battery attached to the tool, and a spare battery as well.

    For professionals who spend a good deal of their time on the road driving from one job to the next, that could prove a good solution.
    Not entirely caught up

    While this is an interesting addition to the arsenal of charging systems available today, it is quite different to the kinds of tech development that both TTI with its Milwaukee-based One-Key fleet management system, and SBD's DeWalt Bluetooth-enabled batteries offer. Those are both networked, IoT systems that help extend power tools into a whole new set of potential management controls.

    It will be interesting to see if Bosch develops an IoT solution of its own in the near future.
    Dewalt, Milwaukee make smart tools - HNN
    Bunnings produces strong quarter
    Bunnings sales results for FY 2015/16 Q1
    Bunnings sales chart for FY 2011 to FY 2016
    Bunnings' vision for its trade-related business
    Click to visit the ITW website for move information
    Wesfarmers-owned big box home improvement retailer Bunnings reported strong results for the first quarter of FY 2015/16. Sales revenue is reported as $2,476 million, up by 11.63% over the previous corresponding period (pcp), which was July to September 2014.

    Total stores sales growth (included in overall sales) grew by 11.6% for the quarter, up from 10.9% in the pcp. Store-on-store (comp) sales growth was 8.2%, the same as for the pcp.
    Bunnings sales results for FY 2015/16 Q1

    Wesfarmers released good results for its other retail operations as well. Sales at Kmart grew by 12.5%, with same-store sales up 8.6%. Its Target operations reported a sales revenue increase of 3.1%, with same-store sales up by 3.2%. Supermarket chain Coles reported sales of $7.6 billion, up by 4.7% on the pcp. Its same-store sales grew by a reported 4.0%.

    In the press release accompanying the results announcement, the managing director of Bunnings, John Gillam, is quoted as stating:
    Our work creating more value, improving experiences and extending our brand reach is resonating well with consumer and commercial customers.

    The press release indicates that three Bunnings Warehouses and one smaller format store were opened during the quarter, while 14 further sites are in various stages of construction.
    Presentation questions

    The teleconference presentation to investment analysts was quite low-key, with most analysts using the opportunity to ask questions about the retail operation of Coles, Target and Kmart.

    David Thomas of CSLA (the CITIC Securities-owned brokerage group) asked whether the possible slowdown in the Australian housing market will have a negative impact on the growth prospects of Bunnings. The managing director of Wesfarmers, Richard Goyder, responded:
    We would expect Bunnings to be pretty resilient. But we have made no secret of the fact that the housing sector through housing construction and house pricing, and the wealth effect of house pricing, and churn, have been tailwinds to Bunnings. The business through the consumer and the trade has taken real advantage of that.
    But we would expect it to be pretty resilient. We have seen that now through a couple of cycles, certainly in my time as CEO. So, it is pretty hard to keep 8% comps going and 12.5% total sales increase going ... We have a strong store rollout program, but the percentage space increase will probably come off a bit in the years ahead.
    The housing market will do what it does, but this business has been a champion of innovation in terms of its product range and its offer. I think the stores now are in as good a shape as they have been for a long time. Customers are responding really well to that. We would expect it to be very strong.

    Later, in response to a question from Citi Group's Craig Woolford about store cannibalisation in Wesfarmers' retail operations, Mr Goyder explained that this did not seem to be much of an issue:
    What we are seeing in terms of our review of open stores is pretty consistent and pretty strong at the moment across al businesses. So Terry called out Target, Kmart has a strong programme in front of it and the new stores in Kmart are performing well. Bunnings is consistently strong on new stores in terms of sales and return on capital, based on our projections. So we are seeing that in general the outcomes are lining with the business cases.

    What both analysts' questions are pointing towards is the next challenge that Bunnings is seen to face: while it has demonstrated its performance in the current strong market for home improvement, how will it fare in a flat or declining market?

    As Mr Goyder has pointed out, Bunnings has proven to be a terrific innovator on a number of levels, and it seems likely the retailer will be able to find an answer to most market shifts. Already the company can be seen making moves to expand into adjacent markets in a few product lines.

    Kaboodle, for example, is successfully presenting a case for expansion into a kitchen market that is one notch higher than the market it started in, while retaining its low-cost foothold. Bunnings has ventured into more expensive outdoor furniture this summer, and has revealed a sharp, fashion-conscious eye in some of its stock selections.

    HNN also has seen indications that Bunnings is expanding in areas related to storage, particularly wardrobes. Its standard, not very modern range has been supplemented by a wider range from Flatpax (owned, along with Kaboodle, by DIY Resolutions), and Bedford (a South Australian company that provides a working environment for people with disabilities) in some stores.

    These expansion markets are likely planned to broaden Bunnings' market base, making it easier for the retailer to adjust to changes in the overall market. They are also, of course, viable and strong markets, part of the expanded, $45 billion-plus retail opportunity that Bunnings plans to access.
    Kitchen trends to affect big-box revenue in 2015 - HNN
    HNN Index for week ending 23 October 2015
    HNN Home Improvement Index for week ended 23 October 2015
    HNN Sources
    On an adjusted basis, USG's net sales increased by US$20m in Q3
    The Habtoor Leighton Group will build the first phase of a hospital and research centre in Dubai
    Click to visit the HBT website for more information
    The HNN Home Improvement Index for the week ended 23 October 2015 gained slightly over 20 points to close at 981.8 points. The underlying ASX 200 index gained 15.5 points on the adjusted scale to close at 995.6 points. This rise continues the pattern for the previous three weeks, as the indices recover from their low period between 28 August 2015 and 2 October 2015.

    In direct terms, the ASX 200 rose 83 points to close at 5351.6 points. Both indices remain below the 1000 point level, their score on 1 July 2014.

    Outstanding performers included Super Retail Group, which rose by 7.4% during the week, Breville Group which rose by 6%, and Pact Group Holdings, which rose by 5%. Metcash led the stocks that declined, losing 6% after recent strong rises.
    USG Corporation reports third quarter 2015 results

    On a consolidated basis in the third quarter of 2015, USG's net sales were US$972 million, consistent with the third quarter of 2014. On an adjusted basis, USG's net sales increased by US$20 million or 2%. Operating profit improved by US$80 million to US$102 million. USG generated US$76 million in net income in the third quarter of 2015, compared to a net loss of US$12 million in the third quarter of 2014.
    USG Corporation reports third quarter 2015 results - BusinessWire
    CIMIC Group
    Habtoor Leighton to build new "smart" hospital in Dubai

    The Habtoor Leighton Group has won a US$127.4 million contract to build the first phase of a cutting-edge hospital and research centre in Dubai, intended to boost medical tourism. The Fakeeh Academic Medical Centre will be the first "smart hospital" in the Gulf region, with robotic surgery and automated medication dispensing.
    Habtoor Leighton to build new "smart" hospital - Global Construction Review
    Brambles raises $US500m in US bond market

    Logistics giant Brambles has raised US$500 million in the US 144A bond market. The notes will have a tenure of 10 years and a coupon rate of 4.125%. The proceeds from the notes will be used to repay borrowings under its existing bank credit facilities and for general corporate purposes, the company said.
    Brambles raises $US500m in US bond market - The Australian
    Fletcher Building
    Fletcher Building weighs NZ buy

    Fletcher Building is poised to buy the privately-held New Zealand aggregates company Higgins, according to sources. The value of the business is not known but it is not thought to be more than $100 million, and Fletcher is understood to be looking at examining a potential purchase without using an adviser. The Kiwi company manufactures aggregates, concrete, bitumen-based products, road signage and bitumen equipment.
    Fletcher Building weighs NZ buy - Business Spectator
    Goodman Group
    Goodman Group to build Quest hotel in Sydney business park for Vikings Group

    Goodman Group will develop a 111-room hotel at its Macquarie Park business park in Sydney for accommodation group Quest. The six-level Quest Macquarie Park hotel will be acquired by Canberra club operator Vikings Group, when it is completed in December 2016. Vikings has entered into a contract to purchase the development for $34.5 million from Goodman, with Quest entering into a 21-year lease and paying annual rent in the first year of $2.44 million.
    Goodman Group to build Quest hotel in Sydney business park - Financial Review
    Lend Lease
    Lendlease construction chief: 'I don't get the fascination with revenue'

    Having taken over at the tail end of 2013, Lendlease construction chief Neil Martin has turned a GBP13 million loss in EBITDA (earnings before interest, tax, depreciation and amortisation) in 2013/14 into a GBP12 million profit last year. Turnover also grew by 10% to hit GBP667 million the same year.
    Lendlease construction chief: 'I don't get the fascination with revenue' - Construction News
    Grocery price war to intensify: report

    The supermarket price war is expected to intensify as Aldi and Costco expand, with shoppers to be the big winners. Aldi's cheap private labelled products and its aggressive expansion into South Australia and Western Australia will fuel the war, according to an IBISWorld report.
    Grocery price war to intensify: report - The Australian
    Super Retail Group
    Super Retail Group's first quarter sales bounce back

    Super Retail Group kickstarted strong sales performance in its first quarter as the company works to bounce back from a sharp slide in full year profit. The owner of Supercheap Auto, Rebel Sport, BCF and Ray's Outdoors announced sales had climbed five per cent across the board in the 16 weeks to October 17 at the company's annual general meeting recently.
    Super Retail Group's first quarter sales bounce back - Courier Mail
    Big box update
    Masters should benefit from the change in shopping hours in Perth
    HNN Sources
    The 15,972sqm Bunnings Springfield store will be sold
    New-look Aldi store trials have been rolled out around Australia
    Click to visit the ITW website for move information
    Masters should benefit from the change in Perth's shopping hours; the building that houses Bunnings Warehouse at Springfield (QLD) will be sold; and Aldi's new store layout is designed to lure cashed-up customers.
    Masters win in WA trading hours

    Masters is expected to be one of the biggest winners from a West Australian government decision to expand shopping hours in Perth. It has been less able to compete with rival Bunnings because of anomalies in the trading laws, which allow the Wesfarmers-owned chain to open earlier and snare lucrative trade traffic.

    But a decision by the West Australian government to allow shops to open earlier will pare back the shopping hours gap between the two big box home improvement retailers.

    The Barnett government will introduce changes to the Retail Trading Hours Act 1987 next month that will allow general retail stores to open from 7am on weekdays and Saturdays, or one hour earlier than the current 8am opening time. They will be allowed to close an extra hour later on Saturdays at 6pm.

    Masters managing director Matt Tyson told Fairfax Media: "The extended hours assist in creating a more level playing field and we welcome the opportunity to better compete in the home improvement market." Masters owns nine stores in WA.
    Bunnings Springfield building to be sold

    The 15,972sqm Bunnings Springfield store with parking for 325 cars will be offered for sale through a national Expressions of Interest campaign being conducted by Peter Tyson and Jon Tyson from real estate agency, Savills. The new store commenced trading in August 2015 and will be offered with an initial 12-year lease with eight six-year options. The store was developed on a prominent 37,110sqm site situated opposite the Orion Springfield Central shopping centre.

    Peter Tyson is Savills' national director of retail investments. He said: "Assets of this pedigree do not often come to market in Queensland. Given the ultra-prime bond style nature of the offering, we anticipate strong investor interest. A Bunnings lease is one of the most highly prized covenants in today's market."
    Aldi experiments with store layout

    Discount supermarket Aldi (which stocks a growing range of general merchandise including hardware and tools) plans to expand a rollout of new-look stores in a bid to capture middle-income earners who shop at the big chains. A handful of stores across Australia have already been transformed into posh-looking shopping spaces, giving customers better access to fresh fruit and vegetables, meat and dairy, and offering better product display, lighting, large silver freezers and check-outs. It was the first makeover to the retailer since it set up in Australia 14 years ago.

    The New Daily reported that Aldi was able to keep its overheads low by employing a handful of staff, operating easy-to-stock stores and using shelf-ready packaging which can be wheeled into place rather than being unpacked by hand. Aldi trialled the renovations in four stores during the past six months, with four more set to have the changes installed.

    According to News Corp, executives said it would be quite some time before the new format was rolled out through the entire network of 372 Aldi stores, which produced annual revenues of $6 billion-plus.
    Has Aldi out-Bunningsed Bunnings? - HNN
    Aldi having an impact on appliance sales - HNN
    Trade centre in Toowoomba
    The new Total Tools store will be one of the largest in Australia
    The Chronicle
    Wilsonton industrial estate in Queensland
    Plans for the project have been lodged with Toowoomba Regional Council
    Click to visit the ITW website for move information
    Toowoomba developers are building a trade centre as part of the Wilsonton industrial estate in Queensland. Plans for the 5000sqm project have been lodged with Toowoomba Regional Council for approval.

    National franchise Total Tools has already secured half of the property. Total Tools Toowoomba franchisee Stef Hlaca said the business, which he owns with Dave Bosman, had outgrown its current premises, located across from the proposed trade centre. He told The Chronicle:
    Toowoomba has been really supportive of us over the past 10 years, for which we're really grateful. Every premises we've opened, we've outgrown. This new store is more than double the size of our current store.

    The store will be one of the largest single Total Tools locations in Australia.

    Colliers International Toowoomba's Markus Eames said expressions of interest were open for the remainder of the 2500sqm area, which could be cut into 700sqm tenancies. Eames said construction would start as soon at approval was received. He said:
    The developers want to start digging yesterday, but we obviously have to go through the correct council process. But we're confident it is consistent with current uses (in the area) and will be approved.

    Eames said the design included the use of shipping containers to create the "trendy" drive-through coffee shop. He believes the project represented ongoing optimism in Toowoomba's property market.
    Makita expands outdoor tool range
    Makita's XBU01Z blower delivers 30 minutes of run time
    Total Landscape Care
    Makita says it created the first 4?stroke engine power cutter
    GIE+EXPO is the Green Industry and Equipment Expo
    Click to visit the HBT website for more information
    Makita is starting its 100-year anniversary by introducing its tools to 4-stroke engine technology. Many industries have already switched from 2-stroke to 4-stroke engines due to their longer lifespans and fuel efficiency, but Makita is now introducing 4-stroke engines to its outdoor power equipment, such as blowers and trimmers.

    Along with this switch is a focus on cutting the cord and transitioning over to 18-volt lithium-ion batteries that are interchangeable across over 100 different Makita tools. Using its history as an electric motor company, Makita designs its own motors that are compatible with the batteries and promote efficiency.

    Professional users need not worry about a long charging time either as the 3 amp battery can charge in 30 minutes while the 4 amp battery pack charges in 40 minutes.

    Along with the 4-stroke technology, Makita also boasts of extremely low emissions and noise. Weighing in at around 3.6kgs, its XBU01Z blower delivers 30 minutes of run time.

    Another big change that Makita is making is the removal of Dolmar's name on its products. While the company has owned the brand Dolmar since 1991, Domlar's 2-stroke chainsaws will now be known as Makita as well.
    GIE+EXPO 2015

    Makita had a presence at the 2015 GIE+EXPO, the Green Industry and Equipment Expo for outdoor, lawn and garden power equipment, light construction and landscaping. It takes place in Louisville, Kentucky (USA) each year.

    The company demonstrated its 4-stroke engines and other outdoor equipment products at the event.
    MM4 4-stroke engine technology

    Engine seizure due to improper fuel and oil mixing is one of the most common failures of 2-stroke power equipment. Makita is delivering a solution with MM4(r) 4-stroke engine power equipment, including backpack and handheld blowers (model BBX7600N), a mist blower, string trimmers, brush trimmers, hedge trimmers, edgers, telescoping pole pruners and couple shafted products.

    For hardscape applications, Makita created the first 4-stroke engine power cutter with the 14" EK7651H. These 4-stroke engines require no fuel mixing so users only need one petrol can for all their power equipment.

    In addition, Makita MM4 4-stroke engines run quieter, idle smoother, have lower emissions, and give users quicker starts.
    MM2 2-stroke engine

    The integration of Dolmar power equipment will result in an extended range of 2-stroke engine chain saws including entry level 32cc saws, 45-50cc mid-range (model EA5000PR) and larger saws - as well as an expanded line of 2-stroke concrete cutting saws.

    Select models feature Easy Start technology, which is a spring-assisted starter combined with a low-spark ignition coil to significantly reduce pull-starting force for easier starts.
    More 18V LXT lithium-ion cordless power equipment

    Makita 18V X2 (36V) tools are powered by two 18V lithium-ion batteries, so users get 36V power, speed and run-time without leaving the 18V battery platform. Makita offers 18V X2 (36V) blowers (model XBU02Z), as well as a hedge trimmer, string trimmer (model XRU07Z), and two chain saws.

    Makita also offers several cordless power equipment products that run on single 18V LXT lithium-ion batteries including 18V 2.0Ah, 3.0Ah and 4.0Ah batteries, as well as the 18V 5.0Ah battery which gives users 65% more run time than 3.0Ah batteries.
    Anti-vibration technology

    Makita's anti-vibration technology, AVT(r) is more than just a padded or spring-loaded handle. It is an internal counterbalance system engineered into the tool that reduces vibration for user comfort and productivity. Makita offers AVT in every major hammer class, from 1" rotary hammers to a 70lbs (almost 32kgs) breaker hammer.
    Husqvarna launches new products at GIE+EXPO - HNN
    DeWalt battery-powered outdoor tools at GIE+EXPO - HNN
    Hot links
    Habitat has unveiled the first phase of its new flagship store design in London
    HNN Sources
    Both amateurs and professionals are on board with the idea of virtual home design
    Tech-enabled store staff are a priority in 2015
    Click to visit the HBT website for more information
    UK homewares retailer, Habitat has evolved its Mini Habitat concept stores into a new flagship store; sustainable home goods company Bambeco plans Home Depot partnership; millennials are embracing the ease of digital home decor; and technology lessons retailers have learnt in 2015 so far.

    For further information, simply click on the images provided.
    Habitat makes new home in London

    Habitat has unveiled the first phase of its new flagship store design on London's Tottenham Court Road, as part of a multi-million pound refurbishment project. The redesigned 17,000sq. ft. store is based on the rollout of 82 Mini Habitat stores over the last three years and includes an expanded furniture and upholstery floor alongside a new lighting department.
    Habitat will have a new flagship store
    Eco-friendly goods at Home Depot

    After raising US$20 million, online eco-conscious retailer Bambeco plans to use the money to grow its product lines, produce its first (environmentally friendly) catalogue and embark on new corporate partnerships including Home Depot. The company, founded in 2009, has been growing revenue by more than 100% year-over-year thanks in part to about 150,000 loyal customers, according to CEO Susan Aplin.
    Sustainable goods company, Bambeco plans a partnership with Home Depot
    Millennials take on virtual home design

    The present generation of movers and shakers defers to the screen of their mobile phones to procure whatever their hearts' desire. A simple tap or two delivers the next meal of the day, a swipe of a finger results in meeting the love of their life and the pressing of a button supplies a chauffeured car. The same mentality applies for decorating their homes.
    Millennials are comfortable with online home design
    Seven tech lessons for retailers

    Savvy retailers know that in order to compete in a fast-paced landscape of demanding customers looking for shopping Nirvana through smartphones and social media, they need to keep up with constantly evolving technology at every turn. From tech-enabled store staff to same-day fulfillment to personalisation, retailers have had a lot of valuable tech lessons this year.
    Store staff need to be tech-enabled in 2015
    Osram, Google create smart LED lamps
    Osram smart LED lamps are compatible with Nest thermostat
    LEDs magazine
    One of Osram's biggest competitors is Hue from Philips
    Osram's Lightify range includes lamps, light strips and outdoor garden lights
    Click to visit the HBT website for more information
    As Osram seeks new owners for its lamp business, it has smartened up its product offerings, making its Lightify range of smart LED lamps compatible with Google's Nest home control system.

    Osram said the Lightify line has joined the "Works with Nest" program in the UK and Ireland, with other countries to follow soon.

    Lightify is Osram's offering in the "smart bulb" market that do things generally not possible with conventional lighting. Users can tap apps on their phones and tablets to turn lights on or off, brighten or dim them, or change colours to suit moods - all from the same room as the lights, or from around the world via the internet (to, say, deter burglars).

    Consumers can also program them in advance to do those things at certain times of the day, or to flash as security alarms, smoke detectors, sports or stock price alerts.

    With the new deal in the UK and Ireland, Osram users now have the option of tying those smart LED lamps into Google's Nest thermostat and home automation device, which wirelessly connects to boilers, fire places, doors, lights, washing machines, and phones, among other items.

    Nest is potentially a key hub in the fledgling Internet of Things (IoT), allowing people to program and operate appliances from afar, and to set up "if-then" scenarios (if an intruder walks in, flash the lights and sound the alarm, for instance). Osram said in a statement:
    Nest users can use any product within the Lightify family to create scenes and integrate them with the 'home and away' scenes of Nest. When using the 'home and away' functions, users can choose from any of their existing Lightify scenes.

    Lightify requires a small gateway box that plugs into a wall socket and serves three purposes - it receives instructions from the app, transmits instructions to the light, and sends and receives instructions to and from the Internet via a wireless connection.

    Osram announced in April that it "intends to transfer the general lighting lamps business into an independent structure". The transaction could include selling the US$2.5 billion general lamp business.

    Lighting giant Philips is attempting a similar move. Some observers also expect GE to sell off its conventional lighting and home LED operations in the wake of its recent reorganisation in which it moved commercial LED lighting into an energy services division called Current, Powered by GE.

    Osram is placing its focus on components and automotive lighting.
    Shades of grey central to bathroom range
    Raymor's latest bathroomware features several shades of grey
    Architecture and Design
    Tradelink is one of Australia's major plumbing retailers
    Northern's Plumbing Supplies services tradies
    Click to visit the HBT website for more information
    Raymor has introduced a new collection of bathroomware using several shades of grey alongside wide panels of white. It is teamed with a vanity, bath and tapware in a streamlined design.

    The extra-large Aruba drop-in bath measures 1790mm in length, and has a low profile moulded headrest and sculpted lumbar support.

    Matching the basin mixers to ensure overall cohesion within the design, Projix bath tapware are in a simple, unembellished design with a four star WELS (7 litres per minute) single lever pillar mixer and corresponding wall mounted bath mixer with pin lever. The tapware comes with a solid brass body in a durable chrome plated finish.

    The Wentworth double wall hung vanity is sleek and understated in its aesthetic with a unique ceramic top and double bowls that have an integrated overflow. It also has premium soft-close drawers with a white interior.

    Bathroom accessories from Raymor's Ceduna collection complement the look of the rest of the bathroom fittings with their pared back styling. The pin lever of the Projix tapware is reflected throughout the profiles of the towel rails, robe hooks, toilet roll holders and soap dispensers.

    Each are made from a solid brass construction in bright chrome finish and supplied complete with brass four-point fixings.
    The hipster hardware store
    TreeHouse recently raised US$16 million in a second round of funding
    Inc. magazine
    Jason Ballard is the youthful CEO of TreeHouse
    The store has lots of space for consumer education about its eco-products
    Click to visit the ITW website for move information
    In its tour of small businesses across the United States, Inc. magazine visited Texas-based, eco-conscious home improvement store TreeHouse. It has labelled it the "hipster hardware store" that is loved by fans of Nest and Tesla as well. The magazine writes that TreeHouse has Home Depot "scared".

    CEO, president and co-founder Jason Ballard tells Inc. the time a group from Home Depot visited his store. They were wearing suits and trying to act nonchalant, a ruse undercut by their questions to Ballard's employees. How much of this does the business keep in inventory? How much of that did it sell last week?

    "So I marched up and said, 'Hey, I'm Jason! How can I help you?'" Ballard recalls. With a little small talk, he got them to say they were in town from Atlanta. Then he asked where they worked. They admitted they'd come from the big box home improvement giant. Ballard wished them well and cautioned his employees to say nothing more.

    A thin 33-year-old with a boyish grin, Ballard doesn't look like a threat to Home Depot. So far, TreeHouse has only the one location. It is on track to do about US$10 million in sales this year, compared with Home Depot's US$83 billion.

    But many of the most innovative brands in smart home technology and sustainable design have embraced TreeHouse in a big way. TreeHouse is reportedly the largest single retailer of Nest products, for instance. It was among the first retail partners and is by far the largest of the much-admired company Big Ass Fans.

    Perhaps most impressive, TreeHouse will be Tesla's sole retail partner for the launch of that company's highly anticipated Power Wall home battery.

    TreeHouse's biggest investor, Container Store co-founder (and fellow Texan) Garrett Boone, is fond of telling Ballard:
    If TreeHouse doesn't end up working, there is no truth in the universe.

    Boone, Tesla, and TreeHouse's other fans like its earth-friendly mission; creating a Whole Foods store for the DIY set. (Whole Foods is an American supermarket chain specialising in organic food.) They are also impressed by an innovative approach that turns the superstore model inside out.

    Instead of a huge, warehouse-like facility with a vast product assortment, the company operates in a highly curated showroom with lots of space for consumer education, collaborative planning, and project management. It's less do-it-yourself than let's-do-it-together. And TreeHouse's prices are increasingly competitive with the big box guys.

    Like some of the disruptive brands it carries, TreeHouse harbours world-changing ambitions. Austin, with its wealthy neighbourhoods and progressive politics, is a natural origin city for the business.

    But it is just ground zero for what Ballard envisions as a much larger company. He said:
    We will either be a multibillion dollar business or we will go bankrupt. Just like Tesla is not looking to be a boutique car company, we don't want to be niche. This should become the new normal.
    A change in plans

    Ballard is the first to admit that his business philosophy is built on idealism and naivete. It is those traits, he says, that have made him successful so far, despite long odds and high hurdles.

    Ballard's family comes from "the kind of poverty most Americans don't know exists," he said.
    There are lots of people in my family who, part of their regular dinner involves possum and raccoons.

    The biggest influence on Ballard growing up was his grandfather ("Paw-Paw"), a lifelong oil-refinery worker. Paw Paw lives simply -- "like Moses". A kind of default conservationist, Paw-Paw has electricity and running water but otherwise lives largely off the land.

    The first in his family to attend college, Ballard studied biology and ecology at Texas A&M University. After graduating, he became preoccupied with the wastefulness of standard building practices.

    Homes in the United States are responsible for more energy and water consumption, landfill waste, and human exposure to toxins than almost any other source. With no idea what to do about the issue, Ballard started working construction for sustainable builders in Colorado -- just "swinging a hammer," as he puts it. He thought about becoming a builder. Then another possibility presented itself. He said:
    Everyone I worked for had the same problem. There was no one-stop marketplace for everything you need. It took a lot of time and diligence to find a good product. And then it would arrive and the colour on the wall would look different than it had on a computer screen.

    In addition, buying sustainable materials was expensive because builders often buy for one project at a time.

    Ballard lacked formal business training or experience. But he saw the solution clear as day. Why not start a company that does a ton of product research, sources the materials, buys them at sufficient scale to bring down prices, and educates homeowners and builders?

    He sent his idea to a close college buddy, Evan Loomis, who had worked on Wall Street. Loomis ran it past some colleagues, and they deemed it a no-brainer. If Ballard didn't do it, someone would. Loomis quit his job, signed on as a co-founder of TreeHouse, and set out to raise money for the launch.

    This was 2009, and the US home building industry was in shambles. It took more than two years to get traction; several times they almost gave up. Ballard seriously considered going to seminary and becoming a priest. But when he consulted his bishop, the bishop told him to finish what he'd started.

    Investors told Ballard and Loomis repeatedly that they didn't want to back two twentysomething upstarts with no experience in the industry. Eventually, the pair recruited a pair of industry veterans -- formerly of Home Depot -- to become co-founders as well.

    Treehouse finally opened in late 2011 with Ballard as a vice president and Loomis as CEO. It promptly missed all of its sales targets. From there, things got worse. Ballard's wife was diagnosed with cancer and his daughter with epilepsy. Then the board let all the co-founders go, including Loomis, and installed Ballard as the new CEO.

    As Ballard turned 30, his entrepreneurial dream and his family's health were failing. On the line to save his business, he turned to his faith. He said:
    It helped me keep fear under control. I just knew that, even if the worst happens, in the ultimate sense I was going to be OK. That allowed me to make some decisions that were very unorthodox.
    Bye hammer, hello smart products

    The original strategy, honed with the help of Ballard's more experienced co-founders, was to be a kind of green Home Depot or Lowe's, with long aisles of light bulbs and hammers and power tools stocked deep on tall metal shelving units. But "there was too much Home Depot influence in the beginning," said Boone. The industry veterans on the team "were great guys, but we need to be a totally different kind of store."

    Boone, who is TreeHouse's chairman, said it was Ballard's vision that turned around the company. Rather than organising the store around types of equipment, Ballard split TreeHouse into three "lands" based on performance, design, and the outdoors.

    Performance includes things like smart home technology and solar power; design comprises flooring and paint; and outdoors is everything from organic fertilisers to rainwater barrels.

    More important, most of the tall shelving is gone. The TreeHouse experience is now less about wandering the aisles looking for that one thing you need and more about discovering new things by interacting with the staff and products.

    Borrowing a page from the next-gen menswear company Bonobos, TreeHouse mostly avoids inventory in the store. It keeps only the bare minimum on hand: small items like light bulbs that customers need immediately. Everything else ships from the supplier. That frees up room for spacious product displays and explanatory placards, tables, and chairs for design or project management consultations, and lots of natural light.

    Emily Tanczyn, Big Ass Fans' vice president of residential sales and marketing, explains that her company traditionally has relied on direct-to-consumer sales because it allows the kind of close contact with customers that ensures a deep understanding of the products. TreeHouse comes as close as it gets to replicating that relationship through a third party. As a result, "they sell tenfold what we find with other partners," she said.

    Boone said:
    Jason has this wonderful ability to simplify complex buying decisions for customers. That's the biggest barrier to buying home solutions.

    He points to solar panels as an example. When TreeHouse opened, solar panels were stocked on a shelf in the traditional style. Customers failed to notice them or relied on installers to find the right products.

    Ballard switched things up, including in-store consultation and home installation in the price of the panels, plus simple financing and help with permitting. Now customers see not an intimidating product but a smart, simple way to save money. Boone said:
    He made it as easy as buying a refrigerator.

    Another big change was product mix. Ballard dropped most of the basic tools and hardware -- the hammers and nails -- and focused on curating his ideal assortment of energy-saving, resource-conserving, and toxin-reducing products.

    Nest, the maker of smart home devices like intelligent thermostats and smoke detectors, was exactly the kind of brand TreeHouse should carry. But Nest -- started by an Apple veteran and now owned by Google -- worked with just four retail partners: Apple, Amazon, Best Buy, and Lowe's. It wouldn't even return Ballard's calls.

    Relishing the challenge, Ballard put a recurring notice on his calendar to call Nest the second Tuesday of every month at 9am. After more than a year of rejection, he sent employees to buy Nest products at chain stores and document their experiences.

    Most of the chains' salespeople knew almost nothing about the product or why it was worth US$249. Ballard sent Nest a Power Point documenting those results and closed with a proposal for how his store would do it differently: He would work with Nest to tell the company's story in full, provide project management to demystify the installation process, and turn TreeHouse into Nest's largest volume retailer.

    Within a year, he had done just that. This success led to the Tesla relationship and others. Overall, store sales have grown an average of more than 40% a year since Ballard took charge.
    Going large

    Ballard points out that his early options -- to start TreeHouse or go to seminary -- were more alike than one might think. Both were about doing good for people. And both were somehow "transcendent." He said:
    We just have got to find a way to shelter ourselves without permanently harming the world around us and ourselves. It's an existential problem.

    Ballard likes to say he doesn't have a business but a goal. Building a business happened to be the best way to achieve that goal.

    But a single-store, lifestyle business is not enough. To achieve a goal so ambitious, Ballard needs TreeHouse to be huge. Over past few months he raised US$16 million in a second round of funding, led again by Boone. He said:
    We avoided venture capitalists altogether. I was very honest. I told people that if they needed their money back in three years, they should not invest. I said, 'You are investing in a company whose CEO is more interested in achieving his goals than getting a quick exit for investors'.

    The money will fund the launch of at least two more stores in the next two years, in Texas and elsewhere in the West. To grow even faster, the company is considering hiring project managers in other cities, establishing networks of installers, and building a digital home improvement platform.

    Ballard is determined to avoid a Whole Foods-like reputation for high prices. That won't be easy. Green products are often more expensive than traditional ones. And even when TreeHouse sells the same products as big box chains, it can't command the same prices from suppliers because its volume is so much lower.

    To compete, Ballard has opted to take slimmer margins, making up some of the difference by launching smaller stores, which his lean inventory model makes possible. Still, retrofitting a home tends to involve big projects, and that favours customers with means. An affluent clientele undercuts TreeHouse's mission to be a store for everyone. The work continues.

    TreeHouse is also "developing relationships with manufacturers and convincing them the only way we can all establish higher volumes is by being price-competitive", said Boone. He points to Ballard's doggedness with Nest as evidence of his effectiveness in such negotiations.
    He's incredibly persistent and fearless. He'll call anyone. He'll call the president if he has to.
    TreeHouse, green home improvement retailer - HNN
    ACIF has new executive director
    The Australian Construction Industry Forum's website
    Outgoing ACIF director, Peter Barda is retiring
    ACIF provides research, forecasts and consultation
    Visit the Mecca Website
    Australian Construction Industry Forum (ACIF), the building and construction industry's peak collaborative body, has announced the appointment of its new executive director, James Cameron.
    James Cameron, newly appointed ACIF director

    With the imminent retirement of Peter Barda after eight years at the helm, ACIF's Board sought an industry professional experienced in policy and research, with detailed understanding of the issues facing the building and construction industry in Australia. It believes Cameron brings expertise in policy formulation, most recently from Australian Institute of Building, with good depth of knowledge of the industry's key issues and many participants. ACIF's chair Ian Pedersen said:
    On behalf of the Board and members, we welcome James Cameron as ACIF executive director.
    We have worked with James over several years and are already aware of his high quality work and his vision for a successful and productive building and construction industry. We are pleased to see him pick up the reins from the insightful Peter Barda, to leverage ACIF's impressive achievements to date to foster a stronger industry into the future.

    Cameron explains his plans at ACIF. He said:
    I am looking forward to joining ACIF to tackle both the opportunities and challenges that the industry faces. Australia should be the world leader in the built environment. While the industry has many strengths, in terms of its economic viability, quality, safety, sustainability, innovation, design, skills and research, there is room for improvement. This will be my mission while at ACIF.
    It will be an honour and a privilege to work with ACIF's member organisations, as well as industry and government, as together we make a positive difference in Australia's built environment.
    I wish Peter Barda all the best in his retirement, and on behalf of ACIF, thank him for all the magnificent work he has done for the organisation since 2008.

    Cameron will commence as executive director of ACIF in January 2016.
    Home Depot colour app
    A new Home Depot app lets consumers to see how a paint colour looks on walls
    Mobile Strategies 360
    Shoppers can download the iOS or Android Project Colour app
    Consumers cannot purchase paint directly in the Project Colour app
    Click to visit the ITW website for move information
    The Home Depot has launched a new app that lets consumers to see how a paint colour looks on walls in their house.

    Shoppers can download the iOS or Android Project Color app, which is separate to the Home Depot app, and take a picture of a room in their house. In the app, consumers can select any colour in Home Depot's colour catalogue and tap a wall to paint it on. Samara Tuchband, Home Depot's general manager of online said:
    One of the biggest pain points when attempting a paint project is helping the customer to imagine the colours in their 'own' space.

    The app can adjust the colour in the room to reflect different lighting conditions, such as daylight, incandescent or LED lighting. This means shoppers can see how the colour looks at different times of day or in various kinds of lighting. Tuchband said:
    One of the biggest wins in this experience is that the technology can retain the integrity of all room shadows to give an accurate reflection of how the colour will look in a space.

    Consumers can also tap any item in the picture, such as a decorative pillow or a couch, and the app will recommended two colours that best match that item.

    However consumers cannot purchase paint directly in the Project Colour app. Once a consumer selects a colour she will be redirected to Home Depot's mobile site where she can specify her brand preference, sheen and container size, and then check out.

    Home Depot decided to build the app to give customers more confidence when they are choosing their paint colour, according to Tuchband. Home Depot's in-house team led development on the Project Colour app while working with a technology vendor that Home Depot has not discloses. The teams delivered the app in less than six months, said Tuchband

    Home Depot was named the 2015 Internet Retailer of the Year in June, the top honour among the Internet Retailer Excellence Awards presented at the Internet Retailer Conference & Exhibition.
    Home Depot tops Internet Retailer awards - HNN
    Kiwi tech in US home improvement market
    NZ company ikeGPS set to launch in the US DIY and construction markets
    Scoop NZ
    Stanley Smart Measure Pro in action
    The new Stanley product will be sold through Lowe's
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    Technology developed in New Zealand is set to make an impact in the US construction and DIY markets, thanks to relationships between NZX-listed ikeGPS and two US Fortune 500 companies.

    Smartphone measurement technology created by ikeGPS is powering the new Stanley Smart Measure Pro product, which is being sold through Lowe's and the Stanley Tools website.

    Smart Measure Pro users can take measurements from images using their smartphone and the Smart Measure Pro mobile app. Users can also view, edit, export and map images from their desktop.

    ikeGPS CEO Glenn Milnes said working with two of the best known brand names in the home improvement and retail business creates tremendous opportunities for future hardware and mobile app sales. It will also drive increased subscriptions to its cloud-based software services.

    Milnes said the launch order alone of the Smart Measure Pro product will generate approximately NZ$2.5 million in revenue during the current financial year, compared with forecast revenues from sales to other manufacturers of NZ$1.4 million. He said:
    Increasing sales will also generate ongoing subscription revenue, and create a platform for further potential growth in the US and in other markets, particularly Europe and the Asia-Pacific region.
    While this is only a pilot launch, we are very focused on making it a success and building on the opportunities arising from it.

    Milnes said the Smart Measure Pro is based entirely on ikeGPS intellectual property. He explains:
    ikeGPS manufactures and delivers the hardware units, builds and delivers the smartphone app into Apple App stores and Google Play stores, and hosts the cloud-based software and subscription product.
    The Smart Measure Pro is another significant step in ikeGPS' strategy to deliver high volume mobile hardware and mobile apps, and, on the back of this, to provide high value subscription software products to end users via our cloud-based measurement platform.

    The hardware unit and smartphone app is expected to retail in the US for US$149; an annual subscription to the cloud software service will cost US$119.
    Tree pruners a tall order
    Fiskars Telescopic Tree Pruner in action
    The Fiskars Telescopic Tree Pruner
    The Fiskars Universal Tree Pruner
    Click to visit the HBT website for more information
    The Fiskars Universal Tree Pruner is a premium tool for ground-cover jobs or higher pruning work that usually requires a step ladder. The device gives the user a pruning height of around 3.5 metres while keeping their feet safely on solid ground.

    The Telescopic Tree Pruner is ideal for tall trees or overgrown bushes and hedges. The length-adjustable tool helps to avoid potential ladder dangers, with a shaft that can swiftly change from 2.4 metres to four metres to enable a reach of up to six metres.

    Both pruners are designed to make the job easier and safer. The efficient PowerReel[tm] mechanism makes cutting 12 times easier compared to standard mechanisms. The pruners also has an adjustable cutting angle up to 230-degrees for a more effective action time after time.

    The blade is durable and stays sharp due to its special CrMov steel construction, and is finished with a PTFE coating that makes it corrosion resistant and non-stick. The bypass blade is suitable for cutting fresh, living growth with ease. The locking mechanism means users will always be able to access that tricky overhead branch and bring it down safely and without too much fuss or trouble.

    When tackling thicker branches, the Universal Tree Pruner can cut through with its 32mm cutting diameter. It goes further with the ability to attach a saw to the end of the shaft, for removing bigger branches or dead wood.

    These functional qualities coupled with a lightweight and hardened aluminium construction makes the Fiskars Universal Tree Pruner a must-have tool for every gardener.
    Sherwin-Williams announces new CEO
    Sherwin-Williams has elected its ninth CEO
    Cleveland Business
    John G. Morikis joined Sherwin-Williams in 1984 as a management trainee
    Current chairman and CEO Chris Connor becomes executive chairman (Photo credit: Keith Berr)
    Visit the Mecca Website
    A 31-year veteran of US paint manufacturer and retailer Sherwin-Williams, John G. Morikis, has been elected its ninth CEO in nearly 150 years. Morikis is the company's chief operating officer.

    Morikis joined Sherwin-Williams in 1984 as a management trainee in the Paint Stores Group. He has been president and COO since October 2006, and is now also a member of Sherwin-Williams' board. Morikis is the company's first management trainee to rise to CEO. He said:
    I think that gives me terrific perspective and the ability to relate well to employees at all levels, as well as vendors and customers. I'm not asking anyone in the company to do anything I haven't done.

    Sherwin-Williams, which requires all of its store managers to have university degrees, recently welcomed 1,400 into its newest group of management trainees, an accelerated career path for those interested in business leadership. Morikis said:
    That's the beauty of our company. I didn't come here expecting to be the CEO.

    Yet there was a career path for him and other promising candidates to take on greater roles and responsibilities within the company.

    While some of his predecessors became CEO in the midst of challenging financials, Morikis said he is taking the reins after "four consecutive years of record sales and three years of record earnings" from Chris Connor. He said the past nine years he has spent working closely with Connor taught him the importance of surrounding yourself with a really solid team.

    With nearly 4,100 stores in North America, including 182 stores, 5,000 employees, Morikis said his priority is to be the best CEO he can be.

    Connor called the recent announcement "the successful culmination of a multi-year organisational succession plan to identify the absolute best candidate to assume leadership of the company". He added:
    John has been an important member of our senior leadership team for many years and is one of the key architects of the company's current organizational structure and strategy. His success over the years is a direct result of focusing on customer needs, his in-depth knowledge of the coatings market, and his dedication to hiring and developing terrific people.
    He is the right leader, and he is surrounded by the right team, to take Sherwin-Williams to the next level. John and I have been together a long time and have worked together for more than 30 years.

    They, along with Sean Hennessy, senior vice president of finance and chief financial officer, have been the key C-level executives running the company over the last nine years, he said.

    Connor said he was staying on at the board's request during the transition, but that there is no timetable for when he will retire from the company. He noted that when he became CEO in 1999, his predecessor John Breen stayed only seven months as executive chairman.

    During Morikis' nine-year tenure as president and COO, which included the US housing recession of 2008-09, the company grew from US$7.8 billion in revenues to more than US$11 billion in revenues.

    As president of the Paint Stores segment, he led the group through one of the most aggressive growth phases in company history. Under his leadership, Paint Stores Group grew from approximately US$3 billion in sales via 2,400 company-operated paint stores to nearly US$5 billion in sales through more than 3,100 stores, according to the company.

    When asked how his administration would differ from Connor's, Morikis said: !There's a lot more similarities than there are differences.

    Morikis serves on the board of Fortune Brands Home & Security. His professional and community board engagements include the Joint Center for Housing Studies Policy Advisory Board at Harvard University and the Board of Directors of the University Hospital's Ahuja Medical Center.
    Before & after: the newest and oldest Masters
    Masters moves to a premium brand strategy
    HNN Sources
    Masters has plans for storage
    Braybrook: perhaps not the best display
    Give to Amnesty International
    While the main business press continues to talk up the possibility of Lowe's Home Improvement exiting from its arrangement with Woolworths to fund Masters Home Improvement, HNN has gone on the road again.

    This time we decided we would use the recent opening of the latest Masters store in Cranbourne (VIC) to take a look at how far the company has come in its retail design.

    What better way to do that than to compare the most recent store with the very first one? So after we had taken a good look at Cranbourne, we set off for the Masters store at Braybrook (VIC).
    Masters Home Improvement - Cranbourne

    The Cranbourne store is the first one HNN has visited that was conceived from the beginning to make use of what Masters calls its "2.0" format.

    First impressions of the store are of a very well-lighted, bright, pleasant space, albeit one that still has a few rough edges, as HNN visits on opening day. It is also a very colourful store. A common feature of many displays is to provide different coloured versions of a single item in quantity.
    Coloured buckets in a shelf display

    Another element that only came clearly into focus as the HNN team was leaving the Cranbourne store was that over half the staff were actually women in the age range of between 25 years and 45 years. This really added to the refreshing, welcoming feel of the store - something genuinely 21st Century.
    Design elements

    Many of the design elements that HNN has written about previously that appeared in the retro-fitted Northland Masters store are present in this store. However they have often been tweaked a little.

    The light section was very well designed. Lights that were designed for outdoor use are displayed against a faux-brick background.
    Wall lights displayed against brick background

    The approach to the lighting section makes good use of end caps, and overall lighting.
    Lighting endcaps

    Ceiling fans are displayed on a "false" ceiling of perforated metal - which is quite common across Masters stores. In this case a two-tier approach is used to fit in more fans.
    Fans displayed two-tiered on false ceiling

    Good use of pictures in background of fan display.
    Picture in background of fan display

    Clear graphic quality in this layout of floating shelf elements.
    Floating shelf display

    Much better than the "wall of cushions" approach at even revised Masters stores, this creates an approachable display.
    Cushion display

    The kitchen consulting cubbies are very much like those at Northland, with only the addition of a 25cm pane of frosted glass along the top of the wall to provide more privacy.
    Kitchen consulting areas

    The kitchen appliance display units use multiple shelves to provide display space for a range of stove tops.
    Stove top displays

    Paint area features a simulator to show how much different lighting can affect paint colours.
    Lighting simulator

    Much improved display of microwaves over most Masters stores.
    Microwaves on display

    Excellent way to display premium furniture - in the entrance atrium. HNN saw several groups of people actually sitting down and using the furniture.
    Furniture display in entrance atrium
    Strategic elements

    In addition to some good design elements, the store also offered some real insights into Masters' future strategies.
    Premium brand strategy

    The first thing HNN became clearly aware of was that Masters is definitely going to pursue a premium brand strategy. This makes sense of some of the brands it has pursued, such as Honda and Panasonic. One clear piece of evidence of this are the "brand banners" the Cranbourne store is flying:
    Brand banners

    Masters is definitely making a big play into the storage area. This incorporates both a major "garage" storage area at the front of the store (this is likely a seasonal area), and a comprehensive wardrobe storage area at the back of the store.
    Garage storage area

    Cute display of Hills Hoist.
    Hills Hoist display

    Comprehensive display of indoor storage.
    Masters Home Improvement - Braybrook

    Braybrook was the first Masters store to open, in early May, 2011. It took HNN some time to really come to terms with the Braybrook store. It was actually difficult to see how this store and the Cranbourne could belong to the same retail chain.

    The overall impression was one of a very industrial place, and the dominant colour seemed to be brown - the brown of goods still uncartoned.

    For example, there was this discounted settee - on display but still wrapped in its cardboard.

    More boxes.

    And even more boxes.

    The fabled McDonald's at the Braybrook store:
    McDonald's instore

    It's an unfair comparison, of course. The real issue this raises is, however, can Masters/Woolworths afford to retrofit all the stores that would need to be changed? Are these stores, given their locations, even necessarily worth this kind of retrofit?

    What is clear, whatever does happen with Masters in its uncertain future, is that its new stores represent an achievement. The managing director of Masters Home Improvement, Matt Tyson, and his able team, are to be congratulated for what has obviously been some very hard, and very thoughtful work. They have developed a new and welcome concept for hardware retail in Australia.
    Masters Home Improvement, the road trip - HNN

    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
    Mark Laidlaw: Mitre 10 strategy to 2020
    Mark Laidlaw, CEO of Mitre 10, at the podium
    HNN Sources
    Mitre 10 hardware market/retailers
    The newest Sapphire store at Paddington, NSW
    Click to visit the ITW website for move information
    The CEO of Australian cooperative hardware retailer Mitre 10, Mark Laidlaw, provided a presentation on his company at the 2015 National Hardware Industry Luncheon on 16 October 2015.

    The overall purpose of the presentation was quite clear. After describing some details of his past five years running Mitre 10 with this team, Mr Laidlaw said:
    Of course that is done now, that five years is finished, and we've got to reinvent ourselves for the next five. For the oncoming competition.

    The presentation, which echoed in many respects the "operational" report provided to some investment analysts at the end of September 2015, is really about outlining the company's strategy out to 2020.

    This presentation seemed to portray two hardware retailers, rather than one. The most recognisable Mitre 10 is the retailer dedicated to the trade business, aimed at tradies and professional builders. In his comments about this business Mr Laidlaw was exact, precise and very interesting. It is obviously a business that he, and Mitre 10 as a whole - including its senior management team and the store owners that operate under the Mitre 10 banner - know very well.

    The other Mitre 10 is engaged in retailing outside of the trade business. This includes the retail, DIY business, and Mitre 10's online store. The strategies outlined in these areas seem less convincing and possibly not as well considered.
    Selling the co-op

    Of course, in any speech of this type, to an audience that includes unaligned and non-Mitre 10 retailers, there is bound to be an element of salesmanship - part of Mr Laidlaw's mission is, after all, the conversion of more retailers to the Mitre 10 banner.

    This is similar to what one would expect from the general manager of the Home Timber & Hardware Group, James Aylen or the group manager of the Hardware Building Traders, Tim Starkey.

    Mr Starkey in speaking at HBT's annual national gathering in May 2015 spoke of the difficulties independent stores face as being as much cultural (and, indirectly, governmental) as commercial. His vision is of independents functioning to make smaller communities better.
    HBT: The spread of corporatisation - and hope - HNN

    Mr Aylen, speaking earlier this year at HTHG's own annual gathering, suggested that the strength of independents rested in their ability to provide a good level of advice and service, and that they should direct their efforts where those capabilities would be most rewarded - which meant trade, but also more complex, "tradie-like" areas of retail DIY.
    The soul of a new enterprise - HNN

    While both Mr Starkey and Mr Aylen made some reference to Bunnings, concerns about Bunnings came close to dominating much of Mr Laidlaw's presentation. One of the centrepieces of this approach was a chart which was intended to illustrate the market position, store numbers and floor space of the participants in Australia's hardware retail market.
    Mitre 10 hardware market/retailers

    HNN has puzzled for some time over this chart, but we have failed to really make perfect sense of it. It can be assumed, perhaps, that the size/area of the various circles indicates the floor space each retailer provides. Except that, given the scale, for the smaller retailers it does not, and they are represented instead by minimum dots. The other question this raises is what the total area of the graph represents. It seems likely this wasn't considered.

    There are other parts of the graph that are difficult to reconcile with its apparent intent. For example, Bunnings Trade is placed on a line that indicates it is only 50% trade-focused. In fact, these operations are at least 95% trade, and this circle should be up near the top of the graph, near Bowens.

    What appears to be the real purpose of the graph is revealed in Mr Laidlaw's speech:
    Woolworths and Bunnings, they talk about a $45 billion hardware market, home improvement market. Of course, it suits them to say that, because they say, certainly Bunnings has about 18% of that market. And they throw everything in there, IKEA, Harvey Norman, Barbecues Galore, the whole lot is wrapped up into that $45 billion.
    We define our market at a $27 billion dollar market. The lay of the land is something like [this chart]. You've got your big-boxes in one corner, you've got your specialists up in the other. And then you've got this incredibly fragmented marketplace in the middle which are all these "planets". Blue is Mitre 10, red is Woolworths. Yellow is large independents.
    That's $27 billion, and you have a look at that big green moon there, which is Bunnings, we know there number is at $9 billion so certainly in that sector Bunnings has 33% of the market. It is important we don't lose sight of that.

    This is, of course, in large part somewhat inaccurate. However, it does also contain an indication of the truth of the situation. Basically, Bunnings and Masters do not service the same market that Mitre 10 does. The circa $45 billion market that Bunnings refers to would seem to be drawn from the category the Australian Bureau of Statistics refers to as Household Goods Retailing. This includes:
  • Furniture retailing (4211)
  • Floor coverings retailing (4212)
  • Houseware retailing (4213)
  • Manchester and other textile goods retailing (4214)
  • Electrical, electronic and gas appliance retailing (4221)
  • Computer and computer peripheral retailing (4222)
  • Other electrical and electronic goods retailing (4229)
  • Hardware and building supplies retailing (4231)
  • Garden supplies retailing (4232)

  • This added up to around $50 billion in FY 2014/15. Bunnings subtracts around $5 billion from this, it would seem, as it is not overly involved in categories such as manchester and computer retailing.

    Mitre 10, in contrast, likely builds up its estimated market size of $27 billion based on the $17 billion (for FY 2014/15) market for hardware and garden supplies, with the addition of several outside categories. Plugging the Bunnings sales number of $9 billion into Mitre 10's smaller market to come up with a one-third market share is not really that accurate.

    What Mr Laidlaw may be communicating indirectly is that Bunnings does have market power that exceeds its apparent 18% overall market share in some areas. For example, in the area of DIY workshop and outdoor power tools costing between $45 and $90, it would not be surprising to find it held a market share that was greater than 30%.

    To his credit, Mr Laidlaw also supplied one of the most concise and clear explanations of why Bunnings is such a formidable company to compete with:
    ...remember Bunnings is a powerhouse, and a competitor to be respected, because they are a corporate that is loved by a community, and that is very unusual. Most of the community hates Coles and Woolworths, but they have to shop there. Bunnings is a corporate that people love going to, and shopping at on weekends. Taking the kids there to the playground, enjoy the sausage sizzle that is out the front.
    They are a corporate that is much loved, so we have to understand that and co-exist with them. They are not going to go away. So we have to do it better, do something better, find our niche, be famous for something else.

    Followed, of course, by the key selling point for Mitre 10:
    So at some point all those planets in the middle - and we desperately try to do this - we need to get together, we need to mount a campaign against Bunnings.
    The trade business

    In many ways for Mitre 10 - as for HTHG as well - trade is the answer to the dominance of Bunnings. In speaking of trade, Mr Laidlaw's expertise, and that of his team, is clear to see.
    Trade, we want to dominate that, we want to be the big player in that. No one dominates it at the moment. It is all about that relationship piece, having the relationship with the tradie at every touchpoint. For the tradie, time is money, you have to have a good system, you have to be getting that product out on site on time. That is what it is all about for the tradie. So a lot of our time and focus will be going into that.
    And then other amazing simple things. Like at your store having clean toilet facilities, and getting a coffee and an egg and bacon roll. They are really important to the trade.

    This is a description filled with interesting, quick insights. As Mr Laidlaw said earlier in the presentation:
    We are all trying to do the same things, but ultimately it all comes down, you can write as many strategies as you like, but it all comes down to how you execute those strategies, in the end you know that. The winner will be the team that executes the best.

    What this quick overview of trade amply illustrates is how good Mitre 10 really is at executing in trade.
    The retail business

    Trade, however, is not going to be enough.
    So we believe that in our stores we can't be all trade, we certainly need a DIY element. Retail is important to our Mitre 10 members. It is just hard if there is a Bunnings down the road to complete on that, you lose your weekend trade to Bunnings. But in country towns are stores [that] would cater for everything. Excellent garden centres, good outdoor, DIY, but we think they need to have trade as a point of difference, because that is something Bunnings doesn't do. Our split is 51% trade, 49% DIY.

    In the main, the retail portion of the business is to be boosted by Mitre 10's "Sapphire" concept, which is, Mr Laidlaw tells us, "the store of the future".
    So it is early days for us on Sapphire. The plan is for us to do 10 stores this year, with the full store of the future layouts, we have completed four, and to be honest the results are very good. We are looking for a 15% sales uplift in those stores. They don't have to be big stores, so of those four we have completed, yes, one was Sebastopol. I encourage people if you haven't been to Sebastopol, go and have a look. We are very happy with the way it has turned out, it is a larger store with trade.
    We have also completed a beautiful little store in Paddington in Sydney...That store will match up against any Bunnings. So if you think about it, we have to have a store like Sebastopol in every country town, and we would like to have a little convenience store like Paddington in every suburb. That would be our dream. And the stores make sense.

    The Sapphire concept underpins Mitre 10's entire approach to growing its retail business.
    Of course, it is only when you get all those elements of your store right that being local makes any difference. So it is no good saying to everyone, "Oh we are local come and shop with us". If your standards are poor and your price is not right and your staff are not trained properly, being local doesn't mean anything.
    But if you can get those things right, the localness of the ownership is very important. And you will see when you walk into that [Sebastopol] store, Ross and David Gay, their faces hit you in the front, much to Ross and David's embarrassment as they are very shy men. But once we got the standards right we wanted to promote it as being local owners in their community, and that worked well for us.
    The challenges for Mitre 10 - analysis

    Mitre 10 really faces two severe challenges over the coming five years. The first is the standard challenge for most of the good independent stores: how to translate good sales in the trade and professional business into good sales at the retail level. The second relates to internal difficulties at Mitre 10's parent company, Metcash.

    Despite a good deal of thought and consideration, HNN simply cannot completely understand the Sapphire store concept as part of Mitre 10's coming five-year strategy. While we do plan to visit the Paddington, NSW store as soon as we can, our visit to the Gay's Sapphire store near Ballarat was thorough. This store is a good store, perhaps even an excellent store, and it does have some up-to-date features. However Masters and Bunnings have already improved on some of these elements.

    What is really lacking in the Mitre 10 strategy is a means to leverage its great success in its trade market in the retail area. HNN has been privileged to be shown a letter from a HBT retailer to the local council detailing all the work it had given to the community over the years. The list included items like repairing playground equipment, for free. Contributions like that really do count, in the long run.

    Likewise, the advertisements from HTHG emphasise that group's approach to grow retail by making use of its expertise in trade. They show individuals being challenged to do a little more DIY, harder DIY, and to rely on HTHG to get them through the challenges.

    In contrast, Mitre 10's Sapphire concept puts it firmly in the path of both Bunnings and Masters. The store of future is likely to owe much more to Bunnings at Alexandria (NSW) or Masters at Cranbourne (VIC) than Gay's at Sebastopol.

    Mitre 10's other set of problems really relate to the situation inside Metcash today. The "big green moon" most affecting Mitre 10 is not actually Bunnings, it is the food business of Metcash, which is progressively sapping all the company's resources as it attempts to reach a kind of escape velocity of market share that will lift it out of the eclipse created by the recent alignment of Coles, Woolworths, Costco, Aldi - and perhaps in the near future, Lidl as well.

    The pity of this is that Mitre 10 really does have a very strong management team. Instead of spending their time doing what they could do best - expand market share - they have to continuously work out how to do much more with much less. Mitre 10 with twice the capex it has today would be something to really see.
    Hardware Australia anoints rising star
    Jeremy Symonds, winner of the Rising Star award
    HNN Sources
    Mark Schmutter, general manager and Glenn Watkinson, client services manager from SYM-PAC Solutions
    The attendees at the event
    Visit the Mecca Website
    At the 2015 National Hardware Industry Luncheon, Hardware Australia (formerly Hardware Federation of Australia) gave an award to one young retailer in the hardware industry who has given evidence him/herself of ambition, drive and ability in hardware retailing.

    This year the judges had a particularly difficult task choosing a winner, with three very strong finalist contenders. In the end, they chose to give the award to Jeremy Symonds, who works at the Coopers Home Timber & Hardware Group store, located in Bundaberg, Queensland.

    Though young, Jeremy has already put in six years of work in hardware, beginning his career by working part-time while still at high school. He has become adept at sourcing parts for older machinery, ranging as far afield as the US in his quest to help customers. Jeremy is keen to one day run his own hardware store.

    Tim Peters from Muswellbrook Home Timber & Hardware in New South Wales has only been in hardware for two years, but has already proved his mettle. With a trade background, he has found it easy to build rapport with many customers. He has helped boost business at his store by holding trade nights. Tim has already been runner-up to the Home Timber & Hardware Group's Young Retailer award.

    Jesse Grogan who works for Crameri's Home Timber & Hardware Group store in Maryborough, Victoria has worked there for five years, and is highly regarded by his workmates. He has come close to winning other awards in the past, including being a finalist for this award in 2013 as well. Jesse sees his career in management.

    Hardware Australia will be a new association that replaces the HFA with all the state to become part of the single body. Details are still being finalised at all levels and official announcements will be made in the coming months.

    HNN would like to thank Scott Wiseman, secretariat - Hardware Associations, National Retail Association and his team for organising the event.
    HNN Index for week ending 16 October 2015
    HNN Home Improvement Index week for ending 16 October 2015
    HNN Sources
    Goodman Group has put $350 million worth of Australian logistics assets up for sale
    Analysts expect Coles to have a slower start to the financial year
    Click to visit the HBT website for more information
    The HNN Home Improvement Index for the week ended 16 October 2015 rose slightly by six points to close at 961.64. The underlying ASX 200 index fell by 11 points to close at 5268.2, or 980.1 points on the adjust scale, an adjusted fall of 2.2 points. As a result the HNN Index marginally outperformed the ASX 200.

    Metcash and Myer both managed strong performances, with the former gaining by 11.9% and the latter by 11.2%. UGL also increased by 5%.
    Brambles Q1 sales dip

    Supply-chain logistics company Brambles has posted a slight fall in first-quarter sales revenue, due to the impact of a stronger US dollar. Brambles earned sales revenue of US$1.322 billion in the three months to September 30, a 2% decline on the previous corresponding period. Constant-currency sales revenue rose 8%.
    Brambles Q1 sales dip - Business Spectator
    Goodman Group
    Goodman Group puts $350m of assets on sales block

    Goodman Group has put $350 million worth of Australian logistics assets on the block, as more portfolios hit the market. The move will see the group look to offload about seven assets in Victoria, Queensland and South Australia. Goodman had already sold about $650m worth of property to the Charter Hall Group, as well as several large individual properties.
    Goodman Group puts $350m of assets on sales block - The Australian
    Can Myer CEO Richard Umbers can turn the retailer around?

    According to Citi, linking Myer CEO Richard Umbers' pay to sales growth per square metre is a smart move and reflects how serious the company is about expanding its focus in that area, although Myer hasn't disclosed its total square metres since it listed. Umbers has to grow sales per square metre by 30% from the 2015 financial year to 2018 to receive 100% of his total shareholder return target.
    Can Myer CEO Richard Umbers can turn the retailer around - Financial Review
    Coles sales growth tipped to slow

    While the supermarket giant is faring better than its rival Woolworths, analysts expect Coles has had a slower start to the financial year. Deutsche Bank research analyst Michael Simotas expects like-for-like sales growth at Coles of 3.1% in the three months to September, down from 4.3% in the first quarter of 2014/15.
    Coles sales growth tipped to slow - SBS News
    Big box update
    A Bunnings store will be built as part of Kaiela Business Park in Yarrawonga (VIC)
    HNN Sources
    Bunnings will be part of the homemaker centre in Keperra (QLD)
    Masters will be able to open an hour earlier in WA
    Click to visit the ITW website for move information
    Bunnings is expected to be open in Yarrawonga (VIC) next year; a Bunnings store will be built in Keperra (QLD); and Masters will be able to open from 7am in Western Australia. Initial ground works have also started at a Bunnings site in Berri (SA), with construction of the warehouse expected to take place in coming weeks.
    Bunnings in Yarrawonga

    Developer Matt Judd said a Bunnings store will be built as part of Kaiela Business Park in Yarrawonga (VIC) in 2016. He told the Yarrawonga Chronicle: "Planning permits are now in with council and we are also in the middle of the tendering process."

    Judd said the new Bunnings site will include 115 car parks and a 6,800sqm building. He said: "It will be a warehouse site bigger than Wangaratta's but similar in size to the Echuca Bunnings Warehouse."

    The Kaiela Business Park is being developed by Judd & Sons and the Pellicano Group. It is is zoned B2 and B4 offering potential use for bulky goods, display yards, car dealerships and showrooms.
    Work on Bunnings Keperra site

    A Bunnings store will be part of a homemaker centre in Keperra (QLD) that is set to start construction in the new year.

    Bunnings Warehouse general manager - property, Andrew Marks said the company had invested $40 million into the retail project, which was expected to generate more than 140 jobs. He told the Courier Mail: "Bunnings has received planning approval. We are working with authorities to obtain final technical approvals to commence construction..."

    Reflecting the mood of many retailers, Ray White Keperra agent Adrian Thompson said the development would be positive for the area. He said: "It's very good for Keperra. It should help prices in the area and with the nearest (homemaker stores) in Everton Park, which is hard to get to, it should be pretty good." Plans allow for 800 carparks as well as restaurants.
    7am opening for Masters in WA

    Under changes to trading laws that were put to the State Liberal party room recently, Masters will be able to open from 7am, Monday to Saturday.

    According to The West Australian newspaper, Liberal MPs were asked to support a Bill that would allow general retail stores - those defined by WA's trading laws as having more than 25 staff, six owners or four locations - to open one hour earlier. The changes would also see general retail hours extended one hour on Saturdays to 6pm.

    It is understood the changes are in part aimed at levelling the playing field in the hardware retail market, where Bunnings, which is classified as a special retail shop, is allowed to open from 6am.

    Masters tends to stock a broader range of products, including whitegoods, so it falls foul of the special retail shop category and can open at 8am at the earliest under the existing law.

    A Government source told The West Australian that, under the proposed changes, Masters would be able to open its doors at 7am six days a week, allowing it to compete with Bunnings for early morning business from tradespeople.
    Mark Laidlaw speaks at industry event
    Mark Laidlaw accepts a gift after his speech
    HNN Sources
    Chloe Thomson was the MC
    Attendee bags wait while outside the MCG display shows sponsors names
    Subscribe to HNN weekly e-newsletter
    The following is an edited transcript of the speech given by Mark Laidlaw, CEO of Mitre 10, on 16 October 2015 at the 2015 National Hardware Industry Luncheon. The speech has been edited for purposes of concision and clarity only.

    Thanks for the opportunity to come and talk to you all today. My aim today is to talk about where we see the industry, the hardware industry, and where we see a little about Mitre 10's journey, and what we need to do in the future. I'm very happy to take some questions as well.

    I just went over and said g'day to the Danks guys and it was very nice to meet them. We do have to be aware that we are competitors in this room, so I probably do have to tailor some my normal comments, and I'll do that. It is important.

    [Introduces the Mitre 10 senior executive team.]

    Culture is very important. These are tough jobs. Whenever you are up against big corporates, you rely on your team. These guys come from small business backgrounds, Carl's dad ran a milk bars and greengrocers, Chris' dad owned butcher shops.

    It has to be in your DNA. The thing about us is we fight for small business every day. That is the difference between us and other companies. Yup, Metcash is a corporate. But we are a wholesaler. We don't want to get involved in the retail side. We want to provide solutions for our members, but we don't want to run the stores.

    It is a big difference to our competitors. When you get a job at Mitre 10 you have an induction, and the first thing we say is, just remember your customers, the Mitre 10 stores, they are putting their houses on the line each and every day. They are not getting a wage or drawing a salary every month, they have the bank to pay every month. Once you understand that, you realise the importance of the independent sector.

    All good.

    So, we have some charts here. I know a lot of you in the room, and a lot of you have been on this journey with us since 2010, and you know our strategy. So this is really, in many cases, an update on where we see the strategy going. It is still the same strategy, because we are fighting for survival as an independent sector. But it is a very interesting state of play at the moment.

    As I said to the Danks guys over there, there is no body in hardware that actually records market share, category shares. We come from a background in grocery where every week AC Nielsen would give us the categories. How much market share Coles had, how much Woolworths had, in soft drinks or deli or whatever.

    That does not exist in hardware, so you are reliant on the numbers from what you read. So these numbers, this is our best estimate. It is a busy chart. I will just give you two or three take-aways from that chart.

    The reason it is important, yes, Woolworths and Bunnings, they talk about a $45 billion hardware market, home improvement market. Of course, it suits them to say that, because they say, certainly Bunnings has about 18% of that market. And they throw everything in there, IKEA, Harvey Norman, Barbecues Galore, the whole lot is wrapped up into that $45 billion.

    We define our market as a $27 billion dollar market. The lay of the land is something like [this chart]. You've got your big-boxes in one corner, you've got your specialists up in the other. And then you've got this incredibly fragmented marketplace in the middle which are all these "planets". Blue is Mitre 10, red is Woolworths. Yellow is large independents.

    That's $27 billion, and you have a look at that big green moon there, which is Bunnings, we know their number is at $9 billion so certainly in that sector, Bunnings has 33% of the market. It is important we don't lose sight of that.

    The rest of us are much smaller players. There is no other real dominant player in that marketplace. In the years ahead to really survive, and to co-exist with Bunnings - remember Bunnings is a powerhouse, and a competitor to be respected, because they are a corporate that is loved by a community, and that is very unusual.

    Most of the community hates Coles and Woolworths, but they have to shop there. Bunnings is a corporate that people love going to, and shopping at on weekends. Taking the kids there to the playground, enjoy the sausage sizzle that is out the front. They are a corporate that is much loved, so we have to understand that and co-exist with them. They are not going to go away.

    So we have to do it better, do something better, find our niche, be famous for something else.

    So at some point all those planets in the middle - and we desperately try to do this - we need to get together, we need to mount a campaign against Bunnings. It will be a very sad day the day that Bunnings buys up all the timber in this country. Could happen. We are famous for timber, we sell a lot of timber and we need to keep it that way.

    So, the split of it is, and again I'm happy for the Danks guys to put their hands up and tell me whether I'm right or wrong, but there is a different spectrum in there in the middle of the map.

    There are guys who are fighting for trades businesses, and we certainly want to enter that market. We have about 130 trade centres, and in recent years we have formed some very good alliances with groups such as Banner that came from Natbuild, with the Dahlsens Group, with the Chambers Group. We certainly are focused on going out there and getting those trade businesses.

    Danks have done the same. They have gone a different way, they have corporatised them, they have bought out those businesses. I understand that. Suppliers would love that, because you get compliance very quickly. So they've got 44 stores there that are company operated, and then they've also got the independent stores. And they have some very good independent stores, as we have.

    Then down the bottom, there are a lot of small stores. Thrifty-Links and small Mitre 10s as well. The challenge is for those stores to survive. There is no question that the next couple of years a lot of small independents will disappear. It is a sad thing.

    They can survive. If they are prepared to differentiate themselves they can survive, but it will be a challenge. And there will be a number of independents exiting the business, that is for sure.

    So, in saying that it is important to work out how can Mitre 10, how can we as a wholesale business really work, to make sure everyone is viable? Remember our mission statement is to build successful independents, to make them vibrant. So for the rest of the time I would like to talk about the things we are doing.

    Before I go there just the history, we came in in 2010, Mitre 10, I know Gary is over there. We had our challenges, and again it is very interesting when the previous CEO of your business - so the guy you take over from - goes and works for the competition, being Woolworths, then spends the next six months of his life targeting your stores and offering them big dollars to switch. That is a challenge.

    But we withstood that challenge, and I'm proud to say that over the five years we have built our sales. In the marketplace where Bunnings is dropping 20 big boxes a year, and Masters was certainly dropping a large number (they have cut back now) but in that environment we have managed to continue to grow. We hit a billion in sales last year, and that is wholesale sales.

    Over the journey over the five years we have averaged about 7% annual sales growth. So we are pretty proud of that. In a dynamic and competitive marketplace.

    Of course that is done now, that five years is finished, and we've got to reinvent ourselves for the next five. For the oncoming competition.

    Like most businesses, and I've read the Danks presentation, James Aylen presentation - it is a good one. The presentations are all very similar, we are all trying to do the same things. Not sure if he copied me or I copied him, but you can check that out.

    We are all trying to do the same things, but ultimately it all comes down, you can write as many strategies as you like, but it all comes down to how you execute those strategies, in the end you know that. The winner will be the team that executes the best.

    So on this slide are set out the five prongs of Mitre 10: retail and trade excellence, shopper led range and competitive pricing; trade; digital; data; insights; and supply chain.

    So if I go through the group, retail and trade excellence, the next one is shopper led ranging and the pricing and the trade, Carl's team heads that. We have a very dynamic marketing manager, she is not here today, she runs the digital strategy.

    She was instrumental in getting us the Block, there is a lot of good luck that comes along the way. We picked up Scott Cam in 2010. It was one of the first things we did in 2010 was to look for brand ambassador. We were presented with two or three.

    You have to understand at that stage, Scott was the second guy on the show. We thought Scott appealed to the broader audience, to tradies to kids, to the female shopper, so we grabbed Scott and it ended up he was given his own show, The Block. In its reincarnation, as it had an earlier version.

    We were fortunate with that, and we have been nationally running that series of The Block ever since. It is probably coming to its time, as people get sick of DIY programs. I am certainly sick of DIY programs - and singing programs. But it is probably coming to its time, but it has served us very well for five years. And our relationship with Scott Cam is going to continue in the future.

    Supply chain is the other part of that under 25% of our volume goes through a DC. So a lot of the product goes direct to the store, which is exactly how it should be. We have three DCs in Australia, in QLD, VIC and WA.

    So, touching on that in a bit more detail. Retail and trade excellence, we call it the Sapphire program. It really can be translated into "the store of the future". What does the store of the future look like? We learn as we go. We have had five years in this now, for grocery guys, a lot of the disciplines are the same, but we certainly had to learn about hardware and trade.

    And so over five years we have done about 90 conversions, so we have converted stores from other places to Mitre 10, and we have learnt along the way. And we have a very good, albeit overworked store development team, that has come up with some pretty good store designs on what we think is the best store of the future. And it has to be driven by what the consumer thinks is the best store of the future.

    Again we use the example. Supermarkets, Coles, Woolworths, milk at the right aisle and bread far left of the shop. You have to walk through the store, and it's not exactly setup for the consumer. I still get some argument from my "Mitre Tenners", but hardware was done a little similar, with paint all at the back, so as to pull consumers through to the back of the store.

    We think being a consumer-driven business paint should be at the front and centre of the store and that should become your hub, and should have a very experienced customer service team operating out of that hub to service any questions the customers might have.

    So that is one of the main standards under the Sapphire. Other things that we think are very important are to get your power tools right, to certainly have a trade drive-through, all elements that make up a Sapphire store.

    We have developed our own paint counter for the colour centre, and I think we have that placed in six stores. So it is early days for us on Sapphire. The plan is for us to do 10 stores this year, with the full store of the future layouts, we have completed four, and to be honest the results are very good.

    We are looking for a 15% sales uplift in those stores. They don't have to be big stores, so of those four we have completed, yes, one was Sebastopol (VIC), I encourage people if you haven't been to Sebastopol, go and have a look. We are very happy with the way it has turned out, it is a larger store with trade.

    We have also completed a beautiful little store in Paddington in Sydney. Where is Richard from Valspar? Go and have a look, tell me what you think. It is a beautiful little store, convenient. That store will match up against any Bunnings.

    So if you think about it, we have to have a store like Sebastopol in every country town, and we would like to have a little convenience store like Paddington in every suburb. That would be our dream. And the stores make sense.

    So there are a number of the other elements that make up a Sapphire store. That is Sebastopol there with the colour centre and the power tools. Of course, it is only when you get all those elements of your store right that being local makes any difference.

    So it is no good saying to everyone, "Oh we are local come and shop with us". If your standards are poor and your price is not right and your staff are not trained properly, being local doesn't mean anything. But if you can get those things right, the localness of the ownership is very important.

    And you will see when you walk into that store, Ross and David Gay, their faces hit you in the front, much to Ross and David's embarrassment as they are very shy men. But once we got the standards right we wanted to promote it as being local owners in their community, and that worked well for us.

    E-learning: Once you have set the store up, and again, preaching to the converted, it is so important that your staff are adequately trained so they can continue to maintain those very high standards. So we have a good e-learning program. I know it is a good e-learning program because our members pay for it. So that means there is some value to it. So if you put it out there and the members pay for it, you know there must be some value. It is not a freebie, it is not a giveaway.


    But e-learning is serving us very well, and it is so important to train your staff.

    It is all about a point of difference as we have talked. Bunnings is the competitor. We need a reason for people to drive past a Bunnings store and come to a Mitre 10. That is not easy, that is hard.

    There are some things that consumers will go past a Bunnings store and Stihl is one of those reasons. How many stores, I think we have Stihl in about 80 stores. Eighty-six stores. It is a real point of difference for us, it is a good product.

    Same with Weber, we all know Weber sells. And we are trialling at the moment a couple of other alliances, with Beaumont. We are excited about those alliances, and there will be others to come. Because Stihl and Beaumont won't ever go into a Bunnings. It is important.

    Carl, thing about Carl, he will fight hard, I'm sure a lot of you guys in the room know that. He has the respect of the Mitre 10 members because they know he will fight hard on their behalf. If you went out there and asked the public about Mitre 10 pricing compared, or any independent pricing compared to Bunnings, they will say that Bunnings is cheaper. Not actually true.

    Bunnings spends millions every year telling everyone about how cheap they are. So we independents get a bit of a bum rap on our price perception. So we realised we needed to do something about that.

    So we set up a private label program, Buy-Right frontline private label program as an entry-point product, and it sells, it is going well. So it matches the Bunnings price, head-to-head.

    It is interesting if you price check a Mitre 10 store, we have checked the whole store, and a number of them, particularly when Bunnings has come to town. In many cases, they had to put as many prices up as they had to drop prices. Hard to believe but it is true. You just have to make sure you have the right prices on the right products. So the private label program works well for us, and it has good take-up.

    Ranging. Preaching to the converted again. But believe it or not, Mitre 10 in all its years, probably had a go with the Mega, but when we got in there, simple retail things such as core ranging weren't in place. Take my hat off to Danks, Danks were way ahead of us in this area. So we played catch-up in that, and we are getting some results here where we have actually defined the range.

    It is probably our big program at the moment on those three categories where we can provide solutions for our Mitre Tenners. Again, the biggest challenge for independents, our suppliers tell us all the time.

    You can agree something with Carl and his team in head office, and you can agree with the store owners, and then suppliers will get out to the store, and the guy in the store at that time, the store manager, has all the control, and has let a half dozen reps from foreign companies come in and fill the shelves.

    It is an ongoing battle for us getting that discipline in the stores. It is a real focus for us now, making sure the core range is put in the Mitre 10 stores. So every Sapphire store that gets done, we don't invest into those stores unless the core range is in place which is important.

    Trade. We are all fighting for this space as the planets showed. We have done our research, Natbuild has done its research, John Bowen has done his research, everyone has done his research about the trade customer, and the same things keep coming out.

    I think it is important, it will be harder for Bunnings to do some of these things, but they will get there. They will get there eventually. So we have to beat them to the punch.

    Trade, we want to dominate that, we want to be the big player in that. No one dominates it at the moment. It is all about that relationship piece, having the relationship with the tradie at every touchpoint. For the tradie time is money, you have to have a good system, you have to be getting that product out on site on time. That is what it is all about for the tradie. So a lot of our time and focus will be going into that.

    And then other amazing simple things. Like at your store having clean toilet facilities, and getting a coffee and an egg and bacon roll. They are really important to the trade.

    Who would have thought after seeing how comfortable those dunnies are on the site that they would have wanted clean toilets! Of course they want clean toilets. And not many stores provide them. And we now have clean toilets at Faggs, haven't we?

    Makes all the difference. So simple things that get overlooked time and again. So that is the space we want to get better at. If you asked us who does trade well, we would say Bowens do trade well, in Victoria. They cross off on most of those touch-points.

    Tait's is a powerhouse. Tait's is an amazing business, but Bowens have really picked up their game in trade, and we want to replicate that.

    And the last part, digital. Of course in any retail business these days you've got to have a digital programme. You've got to do it right, it can be very expensive, it can get away from you.

    We've learnt that through Metcash, Metcash has spent a lot of money on digital. In the end we ended up doing our own thing, on a cheaper basis and we've had some good results. It is called "omnichannel", it's a bit of a "wank" title, but it means you have to get across all the channels in digital.

    We've got some things there, we've set up our own loyalty card, Mighty Rewards. We now have a lot of our stores on Mighty Rewards. It took a while for our members to understand what Mighty Rewards really was.

    Of course it is all about getting to know what the consumer buys and what insights you get. It is so important to us now, we know when Bunnings do come to town and drop a big box near to you, you are absolutely reliant on the data that comes back from your Mighty Rewards programme.

    We had it in Gympie, I think the Bunnings was 100 metres away, dropped a big box. We were able to know exactly what our customers were buying, and to target offers to those particular customers, and they have not gone to Bunnings those ones that were on the Mighty Rewards programme. It has been a very good result for us, so you should never undersell the importance of a really good loyalty programme.

    Click and collect is also good, because of the convenience of the Mitre 10 stores, it is very convenient to go and pick up from those locations, particularly in regional towns. Click and collect is great, because it means the store owners don't have to carry stock. So if they order something, the order goes straight to the DC and we deliver it overnight, and the customer can pick that up within 24 hours, so the stores don't have to carry the stock, very important.

    Tradies online, it will be the way of the future. It is amazing in trade, but you've got your older tradies, that have never known how to turn on a computer, and then you've got your younger tradies like my son coming through and it is all about the iPhone as we know, and it is that group of tradies that we've got to get ready for. So we certainly need technology and Tradies Online to deal with the trade market.

    That is really all I've got to cover today, except that the key focus for us to go back and get our existing stores up to the store of the future standard, through the Sapphire store programme. It is about getting our range right, it is about getting the digital programme right.

    I'm a firm believer that if we can get these things right, independents can thrive. Seen it, seen it in IGA. A good IGA will always better Coles or Woolworths. Bunnings is a bit tougher, because they are a bit sharper, but a good independent store can beat Bunnings. Firm believer in that. Hope we've got your support on that.

    Thanks very much

    Q: Just wondering if you have a particular demographic that you've isolated that is distinct from Bunnings? You have already spoken about tradies, any gender, or age demographics?

    A: When we came in, the research said we just looked after the old farts, which is probably right. Mitre 10 customers tended to be of the older demographic. I don't mind that, because that is the growing area, of course, the baby boomers they have got money to spend and time on their hands and they love doing DIY, they are weekend warriors. So I don't have a problem with that.

    So we believe that in our stores we can't be all trade, we certainly need a DIY element. Retail is important to our Mitre 10 members. It is just hard if there is a Bunnings down the road to complete on that, you lose your weekend trade to Bunnings.

    But in country towns are stores would cater for everything. Excellent garden centres, good outdoor, DIY, but we think they need to have trade as a point of difference, because that is something Bunnings doesn't do. Our split is 51% trade, 49% DIY.
    Indie store update
    Andersons Hardware in Naremburn (NSW) will close its doors
    HNN Sources
    Margate Hardware is making way for a shopping complex development in Tasmania
    US-based Rocky's Ace Hardware has created a Pinterest site
    Click to visit the ITW website for move information
    True Value store, Andersons Hardware is set to close after 110 years; Margate Hardware in Tasmania is making way for a shopping complex; and a US-based Ace Hardware store further engages with its customers through social media site Pinterest.
    Closure for Andersons Hardware

    Naremburn in NSW will lose one of its oldest stores next month when Andersons Hardware closes its doors. Parking issues and the challenge of competing with chain stores are being blamed for its demise.

    Owner Wes Waldock said that in the past 30 years, 22 hardware stores in the area had closed. He told the North Shore Times: "The only other hardware store that's not a Bunnings between the harbour, The Spit and the Roseville Bridge is in Mosman. It was opened by one of the Andersons, who kept it until about the 1970s and then it changed hands a number of times until 1986, when my father-in-law and I bought it."

    The store was originally a wood, coal and coke shop before it became a hardware store in the 1920s.
    Margate makes way for development

    After 29 years, Margate Hardware owners Allen and Maureen Sculthorpe are being forced into retirement to make way for the Kalis Group's shopping complex development. This will leave a void in the hardware retail landscape between Kingston and Cygnet (TAS), according to The Mercury.

    The Sculthorpes, who have always leased their street front building on the Channel Highway, said that while they accepted the Kalis Group's legal right to evict them, they have taken issue at being given a month's notice to vacate just as all their spring and summer stock arrives. Allen Sculthorpe told The Mercury: "We were told not to panic, that the development was a long-term plan and we would have plenty of time. Then in late September we got a letter from his office asking us to please vacate by October 30.

    "We are stocked to the hilt, so now we have to try and clear it as quickly as we can. It would have been nice to have more time to run the stock down in an orderly manner."

    The Sculthorpes paid tribute to the ongoing support of members of the Margate community, who have been easing the hardware store's stock burden with the incentive of 25% off storewide and more discounts to come. Maureen Sculthorpe said: "Our real concern is for our employees."
    Ace store launches Pinterest site

    Rocky's Ace Hardware, a family-owned business founded in 1926, has created a Pinterest site. The site will create opportunities for Rocky's to demonstrate expertise and credibility in many targeted areas. The social network acts as a digital scrapbook, allowing individuals to "pin" or "like" images of items and projects they have interest in.

    Pinterest will also help Rocky's Ace Hardware reach additional consumers who may not have been exposed to the product assortment offered at their 34 stores and online. President and CEO Rocco Falcone said: "At Rocky's Ace Hardware, we enjoy engaging our customers. Pinterest is a great way to share project know-how. Everyone, including homeowners, craftspeople, the gardener and the home fix-it person will find fun content and helpful project tips here."

    Pinterest will allow Rocky's to use images to help customers discover projects, and find innovative solutions to everyday home improvement issues. Pages or "boards" will feature different projects, tips and advice on how to successfully utilise products found at Rocky's.
    Hot links
    The RH Modern store from Restoration Hardware located in Los Angeles
    HNN Sources
    Ace Hardware's Paint Studio will be stocking the Amy Howard at Home range
    Savant is being sold directly through retail for the first time
    Click to visit the HBT website for more information
    Restoration Hardware has revealed RH Modern; Amy Howard at Home products will be rolled out through Ace Hardware stores; high end home automation system Savant is being sold directly to consumers; and Samsung brings a black stainless-steel finish to kitchen appliances.

    For further information, simply click on the images provided.
    Retail concepts from RH

    RH Modern from Restoration Hardware says it offers a curated and fully-integrated assortment of modern furnishings, lighting and decor under one brand. The multi-channel business has debuted its own 540-page Source Book, a dedicated website and significant retail presence that will house the first RH Modern Gallery in West Hollywood.
    An RH Modern display
    Paint brand launch at Ace

    Ace Hardware will offer Amy Howard at Home products in participating stores across the US. Developed by furniture designer and manufacturer Amy Howard, the artisan quality range includes the signature One Step Paint, a chalk-based paint that allows users to transform existing furniture or cabinetry in a single step -- no stripping, sanding or priming. It is available in 52 shades and can be colour matched.
    The Amy Howard at Home range will be available at Ace stores
    Savant creates DIY system

    Savant, supplier of custom-installed home automation systems for the luxury market, is going direct to consumers for the first time with the launch of its DIY system. It includes a Bluetooth-equipped remote with a 2.8-inch colour curved-lens touchscreen, hard buttons, directional pad, and voice control. The remote's tabletop charging dock features a built-in 360-degree IR blaster, Bluetooth and Wi-Fi.
    Savant home automation system
    Stainless steel is the new black

    Samsung has a new line of appliances with a black stainless steel finish that promises to resist fingerprints better than its traditional silver counterpart. The Samsung Black Stainless Steel Collection includes existing products such as the four-door refrigerator, the Flex Duo Range with dual door, the top-control dishwasher and the over-the-range microwave.
    Samsung's range of black stainless steel appliances
    Preserving paint brushes
    Brushaper fits into a normal garage perfectly
    Traverse City Record-Eagle
    Point-of-sale display
    Front shot of point-of-sale
    Click to visit the HBT website for more information
    Spring is a time not only for the budding of flowers and the arrival of day temperatures suited for purposes other than long-term food storage, but also for widespread outbreaks of the Great Paintbrush Guilt Trip.

    Every homeowner who has surveyed a fence, gate, window-frame or mailbox and concluded that, yes, this is the year it absolutely has to be painted, knows this feeling.

    The creaking box or cupboard where the painting implements are stored is creaked open. Alongside the paint-matted thin plastic drop-cloths, the part-used tins of seven different shades of white paint, and three different kinds of paint stirrer, there lurks the remnants of previous seasons' paint brushes.

    More recent brushes may be subject to the kind of resuscitation efforts more commonly seen in medical dramas - though rather than "stat!" and "code-blue!" rather more earthy and well-worn single word terminology tends to get used. Brushes are soaked in water, in patent products designed to restore lustre and life, washed in detergent, combed with wire brushes.

    Some, it is true, are restored to some kind of life, but many - or even most - don't make it. Guiltily homeowners troop to the local hardware store to purchase new brushes, along with a couple further shades of white paint.

    It is an obvious commercial opportunity, and one that not a few businesspeople have tried to take some advantage from. The most well-known effort is a product known as The Paint Brush Cover (though this now includes covers for paint rollers as well).

    The product gained some fame through being featured on the US TV show "Shark Tank". It achieved funding that exceeded its initial "ask", and has gone on to enjoy a high degree of success.

    That product is aimed at stopping paint brush destruction at its source, which is often not during the long period between painting jobs, but while the painting job is under way. The cover is made of hard plastic, and fits neatly around different sizes of brush, establishing a water-tight seal that prevents the brush from drying out.
    Paint product inventor gets deal with Home Depot - HNN

    For busy home-owners, who might only be able to put on only one-coat of paint a day, it saves them the lengthy and messing chore (often not done very well) of washing out the paint from the brush.

    Now a new product is entering the same market. Known as the "Brushaper", this product takes a different approach. Instead of using a hard plastic case, it uses a soft neoprene fabric.

    The Brushaper is not designed to prevent evaporation, but to allow the brush to dry slowly and naturally, while hugging the bristles, thus keeping the brush's shape. The Paint Brush Cover might work well for limiting clean-up over a short time, but the Brushaper is designed to aid long-term storage.

    Like many good things, the Brushaper is the invention of one person, Andy Oliver, who lives in the state of Michigan in the US. Mr Oliver is trained as a mechanical engineer, and ran a painting company for many years, so he has a unique combination of qualifications for this task.

    The covers are currently being sold via the website, and range in price from US$7.00 to US$9.00 depending on size.
    IKEA CEO admits online tardiness
    IKEA is planning a dedicated e-commerce site for Australian customers
    By being "late", IKEA has moved straight to mobile and tablet technologies
    IKEA CEO Peter Agnefjall admits the company was late to e-commerce
    Click to visit the ITW website for move information
    IKEA's CEO recently admitted in a television interview that the retailer was late to the proliferation of online retail. However there are plans to grow the e-commerce business significantly over the next five years.

    The privately-owned firm, which records annual revenues in excess of 30 billion euros (US$22.4 billion) and operates stores in 42 countries, currently has an online offering in 13 of its markets. Some 80% of the group's total sales are generated in Europe and it's aiming for 50 billion euros in revenue by 2020.

    This represents an average growth rate of about 10% a year, partly through growing its online business. CEO Peter Agnefjall said:
    Today our e-commerce business is 1 billion euros. It will probably be 5 billion euros in 5-6 years from now.

    Online retail has boomed in recent years, but IKEA's business is still mainly conducted in its vast warehouse stores. Agnefjall said:
    We could have been faster, I could agree to that. But by being late we can skip a step in the technology development, straight to mobile and tablet.

    Although the firm is not immune to the current economic climate, the economic downturn, resulting in a greater demand for value for money, has benefited it, Agnefjall said.
    Overall, from a market perspective it (the downturn) fits us quite well.

    Agnefjall said the fact that the group had never been listed on a stock market allowed it to think more long term. He said:
    For us it has served us very well to be privately held...In our model the money never goes away. It can either be handed out to charity or reinvested in the business.

    That enables the group to invest year after year, even if markets are volatile, he argued.
    Growth in emerging markets

    Although IKEA's biggest market is Germany and its footprint is significant in Europe, it is seeing growth in eastern Europe too as well as China. He said:
    We see that the underlying (Chinese) economy is growing strong. The middle classes are moving into bigger apartments and having more children, all of which offers scope to grow.

    In India, the group has bought its first site in the southern city of Hyderabad and it is looking for sites in Bangalore and Delhi. It hopes to open its first store in the country as soon as possible.
    Ignoring Ikea is bad business - HNN
    Solving storage problems for small spaces
    Spanbilt's Smartlocker 800 is suitable for small spaces
    It is made from heavy gauge corrugated Colorbond steel
    Spanbilt has been making outdoor storage products for over 40 years
    Click to visit the HBT website for more information
    The latest product to enter the premium storage shed market is Spanbilt's Smartlocker(r) 800. It has been designed in direct response to the large number of enquiries received from apartment and townhouse dwellers for a smaller security storage shed.

    The new model has all the benefits of the Smartlocker storage solution in a smaller format to fit into modern urban situations, like car parking spaces and car ports.

    Spanbilt is the manufacturer of the Smartlocker. It is made from high quality, heavy gauge corrugated Colorbond(r) steel. The strength of the framing design is used in steel garage buildings and uses a portal steel frame construction. It highlights security, strength and visual appeal.

    Spanbilt has been making outdoor storage products for over 40 years. The company was known as Spic and Span back in the day and was one of the original manufacturers of the iconic garden shed.

    Spanbilt makes all its sheds in Australia which benefits local communities. Its manufacturing base also gives the business key insights and understanding, to ensure it develops products that meet Australian trends and conditions.

    Specifications of the Smartlocker 800 include:
  • Width: 2400mm x Depth 800mm
  • Height: Front 2305mm / Rear 2315mm
  • Door opening: W1855mm H1680mm
  • Warranty: 20 Years
  • Wind region ratings: Regions A, B
  • Products
    Reviving old furniture and cabinets
    Valspar has created two new products: Furniture Paint and Cabinet Enamel
    Its Furniture Paint is an oil-enriched satin finish paint
    Valspar's Cabinet Enamel paint comes in a semi-gloss finish
    Click to visit the HBT website for more information
    Two new specialty products developed by Valspar - Furniture Paint and Cabinet Enamel - offer consumers a way for bringing such discarded furniture back to life. According to Russ Neale, director of product management and innovation, the latest Valspar formulations are designed to refinish and reinvent an existing piece that might otherwise get kicked to the curb.

    Furniture and cabinet makeovers account for more than half of the paint projects that consumers tackle on their own. Valspar Furniture Paint and Cabinet Enamel require minimal prep time and yield completed surfaces requiring little to no maintenance over time. Neale said:
    We wanted to be sure we were providing products that would give consumers the confidence to pick up a paint brush and transform something they love...and achieving results they can point to with pride and a sense of accomplishment.

    Valspar's Furniture Paint is an oil-enriched satin finish paint formulated to provide smooth durable coverage that's resistant to spills, scuffs, stains and discoloration caused by moisture.

    It adheres to most surfaces, even laminate, with minimal priming and sanding needed. This makes it an ideal solution for upgrading furniture, whether for indoor or outdoor use. Two coats are required for best results.

    Cabinets found in bathrooms and kitchens typically require a coating that withstands frequent cleaning and exposure to steam, and Valspar's Cabinet Enamel delivers that in one product.

    The paint comes in a semi-gloss finish featuring a non-yellowing formula, and like Furniture Paint, the coating adheres most surfaces with no priming and minimal to no sanding needed. It dries to a smooth factory-finish quality, and one of the added benefits is that doors and drawers will not stick.

    To further boost confidence and inspire, Valspar has produced a series of "Rehab Project" videos, accessible online at Valspar Rehab Project. Spotlighting a variety of mini-makeovers that can be accomplished by using the new paints and completed in as little as one weekend, the step-by-step process is fully demonstrated.

    Also available and echoing these projects are "recipe cards" that not only detail the painting how-tos but also guide on what supplies are required, prepping and clean up.
    Building prefabrication creates opportunities
    Facit's use of a shipping container
    HNN Sources
    Schedule comparison
    Modular can be beautiful
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    One of the pathways to better efficiency for the Australian construction industry is through the more widespread use of prefabrication construction techniques.

    At the moment, prefab is a very small part of the Australian market. It is estimated to be worth around $4.6 billion per year. This means it makes up just 3% of the $150 billion construction industry in Australia. This is in sharp contrast to countries like, for example, Sweden, where prefab makes up over 70% of the residential construction industry, and Japan, where it accounts for over 15%.

    It seems likely that the prefab market will grow over the next ten years. Forecasters estimate that growth may range from four to five times the current size of the market, with it becoming a sector worth around $20 billion annually. As this represents growth in a new market, it is a very worthwhile market for industrial and tool suppliers to explore.

    A sign of that potential change is the investment being made in the research and development of this sector of the construction industry. For example, the Australian government announced in May 2015 that the University of Melbourne will receive $4 million to fund a new Australian Research Council Training Centre for Advanced Manufacturing for Prefabricated Housing.

    One driver behind such investments is the "Productivity Commission Inquiry Report: Public Infrastructure" released in May 2014. The report suggested that prefab could supply one means of reducing government costs in building infrastructure, while also providing better outcomes.
    The expanded use of prefabricated elements (such as curtain walls, modular elements, structural steel and precast concrete) and other off site techniques is seen by many construction industry commentators as having further potential to deliver significant productivity improvements.

    Building on this, the state of Victoria has recently released a discussion paper highlighting the need and potential for advances in construction techniques. On the subject of prefab it states:
    Off-site construction brings manufacturing techniques and disciplines to the construction sector including production line efficiencies, automation and advanced manufacturing techniques, mass customisation and complex systems thinking. This form of construction can offer reduced construction times, costs, project payback times and waste while improving workplace safety.
    The opportunity

    For suppliers to the construction - and manufacturing/construction - industry, this rapid growth in what has been a stagnant industry could represent a real opportunity. This brings up a number of questions. How is prefab likely to grow? What changes will it bring to the supply market? How can suppliers best take advantage of this opportunity?

    To understand what the potential is, it's necessary to look at the drivers behind prefab adoption, the obstacles to adoption, and why it is likely that adoption will start to ramp up in the coming five years.

    Obstacles to the adoption of prefab include the range of participants that need to adapt to change, and the pull of past, "traditional" practices. From the point of view of buyers, prefab continues to have a slight stigma attached to it. Prefab is also difficult for some lenders. Their expectation is to release funds as a build progresses. Prefab requires substantial investment before any on-the-ground results can be seen.

    Despite these obstacles, there are growing incentives for the adoption of prefab. One driver behind the adoption of prefab is the need to limit the excesses of the construction "boom and bust" cycle. Increasing productivity makes it easier to balance supply and demand issues.

    Additionally, with a sharp decline in manufacturing sectors such as automotive, prefab could be a viable, less vulnerable form of manufacturing to provide employment and make use of a well-developed manufacturing skill-set. This is one factor behind the increase in funding and encouragement from the Australian government.

    As well as drivers, there are also enablers to adoption. These are, for the most part, technological. In particular, the rise of building information modelling (BIM) makes prefab a better fit for more complex construction projects. BIM assembles and inter-relates all the information about a project, making it easier to preplan for requirements.

    Further improvements to the manufacturing techniques needed for prefab, such as computer numerical controlled (CNC) systems based on three-dimensional modelling are also likely to boost prefab's acceptance.
    Difficulties in prefab adoption

    An academic paper from the Queensland University of Technology entitled "Reshaping housing - the role of prefabricated systems" has supplied some interesting responses to questions about why the Australian industry has been slow to adopt prefab. Its starting point is:
    Prefabrication is a radical innovation within the housing system because the dominant methods for completing a project are entirely restructured.

    The paper provides a good summary of the role each participant plays in construction, and how they have tended to limit the adoption of prefab in the past.

    The overall thrust of the difficulties relates to the change from a process of custom, individual construction, to one which operates on a manufacturing basis. This means it can have the advantages of economies of scale, but there is also additional risk involved, especially during the startup phase.

    Material suppliers and prefab constructors frequently need to rely closely on each other, especially during the expansion stage of this industry sector. For example, if a supplier is providing a custom electrical harness for a prefab module, it would be necessary to gear up production for a set number of these in order to make use of efficiencies of scale.

    That means the supplier is dependent on the prefab constructor buying a large number of wiring harnesses. Conversely, if the prefab constructor is relying on the supplier for the custom-designed wiring harnesses, he will be in considerable trouble should the supplier go out of business, or suffer other business problems.

    In more standard building situations, both the supplier and the builder would have multiple sources for buying and selling, and thus face less risk.
    Builders and contractors

    Startup risk is particularly strong for this group. Moving to manufacturing of building components means that capital is required for plant and machinery. Given the volatility of the housing/construction market, and the time-lag necessary to setup manufacturing plant, businesses would frequently have to seek investment capital during a down-cycle, so as to prepare for the up-cycle.

    Added to this is an inbuilt resistance to patterns of work and techniques that many builders could find less engaging than familiar practices. Builders often see themselves as craftsmen, and building work as an escape from factory-like work. Turning parts of their craft into production-line tasks could seem to many a difficult adaptation to make.

    Prefab housing continues to carry a stigma for many consumers. In Britain, for example, the end of World War II saw the rapid construction of prefab housing, specifically for returning war veterans, as part of the general repair of many cities that had suffered from civilian bombing.

    In Australia, prefab building has been frequently used in the construction of government-subsidised accommodation. This type of housing focused more on building quickly and cheaply, which led to some comprises in terms of both quality and design.

    Added to this history are present concerns that prefab design will not permit adequate customisation, that it will be bland, unattractive, or somehow awkward.

    For businesses, federal and state governments, as well as institutions such as hospitals and schools, difficulties with prefab relate more to the design and collaboration processes required.

    Studies have shown that prefab construction works best when the designers and building contractors begin working together early in the process. This tends to conflict with the more traditional institutional working model that sees building contractors brought in only after the design has been finalised.
    Drivers of prefab take-up

    For forecast growth in the use of prefab to take place over the next 10 years, powerful incentives will need to be in place. Many of these drivers are key issues for Australia as it transitions from a resources-led economy with governmental support for local manufacturing, to an economy with a broader focus and fewer governmental supports for industry.
    Economics: Inelasticity

    One of the economic fundamentals that will encourage the development of prefab is the "inelasticity of supply" experienced in Australian construction markets.

    This term refers to conditions in a market where increase in price does not lead to an increase in supply. Instead, as increased demand causes a rise in price, supply continues at a constant rate, and price becomes all about distribution.

    This is what is at the core of most "boom and bust" conditions in markets. Under boom and bust conditions the producers of goods, such as construction companies, find their share of the value/income that is generated actually reduced. Instead it is the "deal-makers", those who control distribution, that benefit the most.

    This is not a good situation. While deal-making is an essential part of any market economy, when it becomes central to a market, the real productive parts of the economy suffer. Near the top of a boom, governments and companies no longer pay enough attention to making great buildings that suit the needs of the economy. Instead, they concentrate on financing.

    One way out of this loop for construction is through improving efficiency. More efficient construction processes, enabling buildings to be built more swiftly and with less money, can restore some elasticity to supply. This can help reduce the peak of a boom/bust cycle, and, most importantly, creates a virtuous cycle by triggering more investment in improving efficiency.

    Building design, overall planning, and more effective work by those constructing the building will receive the attention they deserve. All these changes reduce the risk of construction, which leads to easier financing, reducing its role in determining how construction takes place.
    Surplus manufacturing skills

    As industries such as automotive manufacturing begin to fade in Australia, there is a powerful incentive to make use of the manufacturing skill-set the workforce has developed in new areas. The Australian Government's funding of the Australian Research Council Training Centre for Advanced Manufacturing of Prefabricated Housing mentioned above is one sign of this. It is one of a $20 million basket of initiatives aimed at helping build industry in the wake of cut backs in direct government support elsewhere.

    What this means, of course, is that the construction industry may find a number of new entrants whose expertise is not directly in construction, but rather in manufacturing. Companies coming from this basis will be far less influenced by concerns over "traditional" means of construction, or the preservation of building's craftsman culture.
    Increased environmental performance

    The use of prefab has a number of environmental advantages. These relate both to the actual construction of the building, and its performance after construction. According to an article entitled "Prefab revolution? Factory houses are the secret to green building" written by QUT professor Karen Manley and published in The Conversation:
    The building sector globally currently consumes more energy (34%) than the transport sector (27%) or the industry sector (28%). It is also the biggest polluter, with the biggest potential for significant cuts to greenhouse gas emissions compared to other sectors, at no cost.
    Modular or prefabricated green buildings, designed and constructed in factories using precision technologies, can help achieve these standards. These buildings are higher quality and more sustainable than buildings constructed on-site through manual labour. They are potentially twice as efficient compared to on-site building.
    Enablers of prefab adoption

    With the possible exception of more government support, most of these incentives for prefab construction have been in place for the past decade or two. What really makes it more likely prefab will grow market share over the coming decade is that a number of enablers have clicked into place. These help to overcome, or at least blunt, many of the objections to prefab that have been persuasive in the past.
    Building information modelling

    The single biggest enabler is, without doubt, the rise of building information modelling (BIM). BIM is a construction requirement that means that, especially on more complex constructions, a virtual model of the building under construction is built up. Sometimes described as a "three-dimensional database", BIM helps to create a working data model of the building before it is constructed.

    In the past, to make prefab work well, it was necessary to construct something close to such a model, which frequently proved an expensive and daunting task. As many, if not most, complex construction projects today require BIM, that cost equation is now flipped around. Rather than the need for BIM inhibiting the use of prefab, with BIM already in place, a good way to amortise its cost is to use prefab.
    Better manufacturing techniques

    One of the major advantages of using prefab is that constructing building components offsite in a factory site allows the use of more precise construction techniques. For example, the parts of a wooden panel can all be cut using computer numerically controlled (CNC) systems, which can deliver millimetre-perfect results.

    Advances in technology have meant both that the costs of such systems have been reduced, and that the systems have increased their capabilities and reliability. A good example of this is the Enduroframe system from BlueScope Steel. This is a rollformer for light steel that works in conjunction with BlueScope's own software, its Endurocadd system.

    This product helps manufacturers develop framing systems can be easily designed, detailed and manufactured in a factory with reduced material usage, less labour and faster turnaround.
    Customisation options

    As the tools and techniques improve, prefab manufacturers have found it easier to offer multiple options and customisation for their products. In an article entitled "The changing palette of prefab in Australia" which appeared in Architecture & Design, author Nathan Johnson quotes Rob Colquhoun, director of Prebuilt, a builder of prefab units in Victoria as saying:
    Traditionally, kit and transportable homes were constructed using materials such as treated pine logs and conventional plywood or Colorbond cladding products. This palette was driven by the caravan park market and a lower cost mindset. But due to the quiet but firm direction of architectural design, materials that are now used include a variety of proprietary wall linings such as James Hardie Scyon products, Weathertex, Alucobond, high grade timber cladding such as Woodform and even ceramic coated metal cladding called Ceratec Vitreous Enamel Cladding and colour through cladding materials such as Vitrapanel.
    Hickory is at the forefront of prefab development

    As the article mentions, companies that offer prefab bathroom "pods" such as Hickory Group, Interpod, PreFab Bathrooms and Podfirst have also upgraded their materials, and offer a range of finish options.
    Harwyn manufactures prefab office pods to a high finish

    Daiman Otto, chairman of PrefabNZ, sees mass customisation as offering prefab many opportunities to expand its market share. While the capability exists, however, a number of linkages have yet to be made to see it become viable. Interviewed by the website Sourceable, Mr Otto says:
    All of the means and mechanisms are there, all the tools are there, all the digital fabrication know-how is there, all the machinery is there, but what's not there is an interface between all those things to line it all up in a loss-free process.
    If you're undertaking renovations, for example, you can have a designer come to your house, digitally measure it up, then have those figures exported to a 3D model of the house, run an algorithm on your aesthetic preference, and generate a number of options for how you might create that new space.
    That same model can then be sent to a 3D printer or a CNC fabricator or some other process to make the whole thing - so everything is already there, it's just that the interface for getting those things working together hasn't appeared yet.
    It's inevitable that it will happen, and I think there are people already working on aspects of that - there are people working on the interface between software and CNC machinery for example, as well as people working on models that have structural information embedded in them.
    Direct benefits of prefab

    A report from the US entitled "Permanent Modular Construction: process, practice, performance", published in April 2015 by the Modular Building Institute Foundations presents a portrait of the use of prefab. It uses a wide-ranging set of case studies, drawn from a number of countries including Australia to survey the advantages and disadvantages of using prefab.

    The two most interesting graphs from this report are these. The first compares a square footage cost for modular versus conventional construction:
    Cost per square foot for modular and conventional construction

    The second compares schedules:
    Schedule comparison

    It is evident from these graphs that at least in terms of the projects studied, prefab construction produces real benefits.

    The benefits of prefab techniques can extend beyond the building site. In a June 2015 article entitled "Worker Shortage Hammers Builders", the Wall Street Journal outlines how Eckardt Electric, a electrical building contractor located in the US state of Georgia uses prefab techniques to overcome a shortage of skilled workers.
    About 10% of Eckardt Electric's 130 workers are now on the shop floor at any time, rather than out in the field, up from 2% a year ago. When possible, Eckardt uses a computer-generated model to plan the layout of electrical systems going inside buildings, and then assembles as much as it can in its indoor prefabrication facility. For instance, workers can put together conduit runs and make connectors, label the products and ship them on pallets. At a job site, "a guy in the field puts the puzzle together." The ultimate goal is to have about a quarter of the workers inside.
    Eckard Electric takes on complex projects

    The article also details activities at Pivotek, based in the US state of Ohio. The company specialises in prefab bathrooms and kitchenettes. The company stresses that it finds it easier to hire employees than construction companies do, at least in part because the working conditions are so much better. Where construction workers have to deal with snow, rain and wind, at the prefab factory they work inside. The wages may be lower than they are in construction, but the employees feel compensated for this by the more comfortable and much safer work environment.
    Prefab in practice

    As it has developed further in the 21st Century, prefab manufacturing has found ways to overcome some of its inherent inefficiencies as well. One of the major costs, for example, is transportation. Once assembled, or partially assembled at a factory, the units need to be moved to the construction site. As these are frequently bulky and somewhat fragile objects to move, both cost and the need to overcome obstructions can make this part of the process difficult. There are, however, some unique solutions available.
    The flying factories of Slough

    While prefab construction is usually thought of as taking place in a factory, with the components transported to the construction site, modern techniques are altering this relationship. For example, Skansa has developed what it calls "flying factories" in the UK. These make use of short-term factory space rental in close proximity to the building site, eliminating much of the cost of transportation, and making a direct contribution to the local economy where the construction will take place.
    Battersea Power Station redevelopment

    One such development is described in an article entitled "Skanska's 'flying factories' take off in Slough", which appeared in the Construction Manager in October 2015. The situation the flying factories attempt to remedy is described in the article:
    Skansa realised that three major barriers remain for widespread adoption of offsite manufacturing: the large amount of initial capital investment required; the high transport costs associated with delivery; and the financial instability of offsite manufacturers. Both Skanska and Innovate UK believe the temporary nature of the modern flying factory, along with the flexibility it affords, offers the solution to all three of these problems.

    This is a pilot project, which will fabricate fully serviced "utility cupboards for flats in Phase1 at Battersea Power Station. The units use a steel-frame, and contain most of the mechanical, electrical and plumbing (MEP) components for each flat. The targets for the project have been quite ambitious, seeking improvements in both costs and quality.
    The target for the project was to combine the benefits of offsite with virtual-reality-enabled supply chain management and process improvement, to achieve a 28% reduction in cost compared to typical manufacture, and 30% shorter programmes, providing a higher-quality and more predictable build cost.
    Installing this amount of MEP onsite would take at least two weeks, meaning that Skanska expects to see a saving of 50% in labour costs along with an increase in speed of delivery by 50%. Quality has also been increased, with early reports indicating a reduction of first-round process defects by more than 50%.

    By using the "flying factory" concept, Skansa has also been able to reduce risk. While the short-term lease on warehouse space in Slough to house the factory operations is more expensive than a longer-term arrangement, it also means there are reduced commitments once the work is completed.
    Take the factory to the house

    Facit Homes, based in London, England, has developed an onsite digital fabrication system that eliminates the need to transport finished components. The company begins a project by building a three-dimensional computer design of the proposed building. It then delivers a self-contained CNC system housed in a shipping container to the construction site. The CNC router is capable of milling every component of the home. These consist of modular elements which snap together in a way not unlike the Lego toy system to make up the elements of the building.
    Facit's use of a shipping container

    The main construction material is spruce plywood, which is used to construct what Facit calls the house's "chassis". Due to its lightweight nature, the houses do not need complex concrete footings for their foundations, instead relying on steel helical micro piles. Assembly can be performed by just two people.
    The opportunity

    The developing prefab market clearly illustrates one of the coming trends in industrial tools everywhere: integration with computer-based systems. While there will continue to be an ongoing demand for standard tools in construction, the manufacturing-based prefab construction will see more widespread use of CNC and similar machinery.

    Fortunately, Australia has a rich history of developing high-quality CNC router products. For example, Multicam, with offices in New South Wales, Victoria and Queensland, has built a good reputation over the years for both sales and service of its units. Advanced Robotic Technology (ART) is also well-known for both its wood and metal CNC routers.
    Offsite links to articles - Offsite Construction Exp
    Is Mass Customisation the Future of Prefab Building? - Sourceable
    Skansa's Flying Factories - Construction Manager
    Skillpoint new headquarters - My Statesman
    Worker shortage - Wall Street Journal
    Profiling the nature and context of the Australian prefabricated housing industry - QUT
    Reshaping housing - the role of prefabricated systems - QUT
    Prefab, BIM and green materials key to construction productivity - Fifth Estate
    The changing palette of prefab in Australia -Architecture&Design
    'Fight for your right to prefab': Can offsite construction revitalize a stagnant industry? - Construction DIVE
    Barriers to prefab construction in Australia
    Prefab revolution? Factory houses are the secret to green building - The Conversation
    Why build modular? - Modular Building Institute
    Revolution for prefab homes - Architecture&Design
    RoI on BIM - Sourceable
    How building information modelling is changing the construction industry - Computer Weekly
    Is Mass Customisation the Future of Prefab Building? - Sourceable
    Pro Tool Reviews Innovation Awards
    Milwaukee M12 Fuel 2404-22
    Pro Tool Reviews
    DeWalt  20V Max XR Brushless Lithium-Ion Drywall Screwgun
    Makita 18V LXT Makita 18V LXT
    Click to visit the HBT website for more information
    The ProTool Reviews (PTR) website has released its annual list of Innovation Award Winners.

    PTR is a good website for checking out the latest in power tools. Based in the US, it typically is among the first to break stories from the major power tool manufacturers. Its reviews are frequently "use-based" - they don't just look at the tools, but, where possible, actively test them.

    The Innovation Awards are part of the website's "Buying Guide" series. They are not really the place to go if you want to find out what the best cordless drill/driver (for example) is on the market.

    The Innovation Awards instead look at the general market and find products that have some unique features that make them stand out from the crowd. Some of these will be specialty tools, but there are also tools that indicate some kind of emerging market direction.

    From the 38 or tools in the guide, HNN has selected seven that seem influential.
    Winner - Cordless Hammer Drill: 12V
    Milwaukee M12 Fuel 13mm Hammer Drill/Driver

    The 10.8v-12v line of tools continues to pick up the pace not only on the 14.4v category but the 18v category as well. The smaller tools do not have quite the power of the higher voltage tools, but they are ideally suited to a very large range of tasks.
    Milwaukee M12 Fuel 2404-22

    This hammer drill/driver from Milwaukee is designed to get the maximum amount of power out of the smaller form-factor. It essentially takes all the great features available on the Milwaukee M18 18v line, and fits them into a compact drill.

    This includes the brushless motor, which delivers more power/longer runtime, constant power output, cool running, and high-wear internal components. It can use both the standard 2.0 amp battery pack, and the larger 4.0 amp extended use battery pack.

    Other features include:
  • Tool warranty: 5 years
  • Peak torque: 39.5 Nm
  • Chuck: 13mm Metal Single Sleeve - Ratcheting Lock
  • Speed: 0-450/0-1,700 RPM
  • Winner - Cordless Drills/Drivers: 18V/20V Max Compact
    Milwaukee M18 13mm Compact Brushless Drill/Driver
    Australian Model: M18BLDD-0
    US Model: 2701-22CT

    This tool sees Milwaukee introduce a new price/value point in its range. The tool sits in-between the top-level M18 FUEL line and the mid-level M18 line, offering all the advantages of an 18-volt brushless tool in a compact form-factor.
    Milwaukee M18 13mm Compact Brushless Drill/Driver

    Other features include:
  • Tool warranty: 5 years
  • Peak torque: 60 Nm
  • Chuck: 13mm Metal Single Sleeve - Ratcheting Lock
  • Speed: 0-450/0-1,800 RPM
  • Length: 174mm
  • Milwaukee M18 13mm Compact Brushless Drill/Driver in Australia
    Winner - Cordless Drills/Drivers: Collated, 18V/20V Max
    DeWalt 20V Max XR Brushless Lithium-Ion Drywall Screwgun
    Model: DCF620

    The DeWalt DCF620 offers a drywall screwgun in a compact, lightweight package, with all the advantages of cordless. Operating at up to4400rpm with a brushless motor, it delivers the power expected from a screwgun.
    DeWalt  20V Max XR Brushless Lithium-Ion Drywall Screwgun

    The collated magazine attachment is versatile. It can be rotated on the tool, allowing better access to corners, can be easily cleaned of drywall dust, and accepts most collated screws. Its quick release mechanism makes it easy to change. The screwgun also comes with a locking nosecone, for use with non-collated screws.

    Other features include
  • Tool warranty: 3 years
  • Peak torque: 30 Nm
  • Weight: 1.88kg
  • Speed: 0-4400 RPM
  • DeWalt 20V Max XR Brushless Lithium-Ion Drywall Screwgun
    Winner - Cordless Impact Drivers: 18V/20V Max
    Makita 18V LXT Lithium-Ion Brushless Quick-Shift Mode 3-Speed Makita 18V LXT

    This is an impact driver that wins in a number of categories. It is compact, lightweight and powerful. It also features Makita's Quick-Shift technology. Using this, the cordless driver begins driving screws at its highest rotational speed, setting 3. As the torque required to drive the screw increases, the driver "down shifts" to setting 2, providing a slower rotational speed and higher torque.
    Makita 18V LXT Makita 18V LXT

    Other features include:
  • Tool warranty: 3 years
  • Peak torque: 175 Nm
  • Weight: 1.5kg
  • Speed: 0 - 1,100 / 0 - 2,100 / 0 - 3,600 RPM
  • Makita 18V LXT Lithium-Ion Brushless Quick-Shift Mode 3-Speed Makita 18V LXT
    Winner - Cordless Paint Sprayer, 18V/20V Max
    Graco TrueCoat Pro II Cordless

    This hand-held, cordless sprayer uses the same piston pump as is found in corded Graco sprayers. That helps it handle a very wide range of coatings, including decking stain and exterior paint - though it can only be used with water-based products.
    Graco TrueCoat Pro II Cordless

    Graco is careful to point out this is not a sprayer to use on its own for larger jobs - they suggest a limit of around eight litres maximum - it is a great machine for touch-ups and smaller jobs in areas that would be hard to reach with an electric cord.

    The self-contained sprayer can spray a little less than a single four-litre can of paint on a single charge form its 2.4 amp battery. Like all Graco products, the company has made this sprayer a very repairable unit. Most of the parts are easily replaced with new modular units.

    Other features include:
  • Tool warranty: 1 year limited
  • Pressure range: 1000 psi to 2000 psi
  • Weight: 2.95kg
  • Winner - Cordless Sanders: Finish, 18V/20V Max
    Ryobi 18V One+ Corner Cat Finish Sander P401

    This Ryboi sander features a very compact housing that makes it easy to get into tight areas. It is designed specifically for corner sanding, making it ideal for use in finishing furniture.
    Ryobi corner sander

    Other features include
  • Tool warranty: 2 years
  • Orbital stroke rate: 22,000
  • Speed: 11,000 RPM
  • Weight: 0.62kg
  • Winner - Cordless Saws: Circular Saws, 18V/20V Max
    Makita 18V LXT Lithium-Ion Brushless 165mm Circular Saw Kit
    US Model: XSH03Z
    Australian Model: DHS680

    Featuring Makita's automatic speed change technology, which increases torque under increased load conditions, this saw has won accolades for its smooth cutting action and good ergonomics.
    Makita 18V LXT Lithium-Ion Brushless 165mm Circular Saw

    The materials used to construct the saw make use of magnesium to produce a durable and lightweight tool. Two LED lights help to illuminate the cutting area, and a dust blower keeps the line of the cut free of obstructions.

    Other features include:
  • Tool warranty: 3 years
  • Cutting depth: 55mm
  • Cutting depth at 45 degrees: 40mm
  • Speed: 5,000 RPM
  • Weight: 3.42kg
  • Products
    Husqvarna on smart outdoor equipment
    Husqvarna has unveiled its ideas on the future of outdoor equipment
    Yahoo! Finance
    The company also plans to step up cost cuts to boost profitability
    Husqvarna has launched a breast cancer awareness campaign
    Click to visit the HBT website for more information
    Husqvarna has developed a connected battery that can collect and provide real-time data from power tools. This product is currently patent-pending.

    The company has also unveiled a design concept hedge trimmer for the future, with a visor that uses real-time data and augmented reality to support operators.

    During a press event in Antwerp, Belgium recently, Husqvarna showed a prototype of a lithium battery with integrated Bluetooth connectivity - a connected battery. Tools equipped with this battery prototype will be able to share valuable information about themselves to their user.

    The battery prototype can easily be paired with an operator's smartphone or a smart watch, to either provide the operator direct information, or to pass on information to other members of the team. Kai Warn, CEO and president of Husqvarna Group said:
    Battery and connectivity constitute the biggest leap in our industry since motorizing outdoor products. The connected battery and our concept hedge trimmer demonstrate Husqvarna's commitment to pioneer high performing battery products and leverage the possibilities of the Internet of Things.
    Taking advantage of data

    When powering tools with intelligence, landscapers and other professionals can start developing new ways of working. For example, avoiding downtime by shifting from reactive maintenance if a machine breaks down, to proactive maintenance. The tools themselves can alert and prepare managers and technicians when they need service.

    Other examples of opportunities from real-time data provided by the connected battery prototype include:
    Improving skills

    Tools can give direct feedback and guidance on how to use them, helping operators to refine their technique as well as help beginners use the tool in a professional way faster.
    Improving safety

    The new battery creates opportunities to improve user safety, as well as to prevent theft by locking the machine so someone else cannot use it.
    Improving team communications

    Getting an instant overview enables team leaders to go from "how did we do today" to "how are we doing right now". This makes it more flexible in adjusting directives or allocating resources differently if something unexpected happens.
    Improving planning

    With the data and insights provided by the connected battery, managers will have better intelligence to support their planning activities.
    Design concept

    The Husqvarna Ramus[tm] is an intelligent and ultra lightweight hedge trimmer that features technologies such as:
  • Super light cutting blades in carbon fibre and liquid metal, with individual sensors on each blade to govern exactly how much power the battery should provide for the job at hand.
  • An augmented reality visor that uses data to support the operator in real-time with everything from machine status information to projected cutting patterns while cutting.
  • An integrated micro camera that displays the cutting view when cutting high hedges or complicated angles that are out of sight.
  • Fleet Services

    In 2014, the company launched Husqvarna Fleet Services. It is an online platform that provides landscaping professionals with data from smart sensors that have been added on to products. The aim is to integrate the connected battery with Husqvarna Fleet Services when it becomes available to the market.

    The company is also launching a smartphone app version of Husqvarna Fleet Services. This app allows team leaders and operators to access assignment details on the map, record and submit business opportunities identified while working in the field.
    Fastenal's small jump in profit
    Fastenal's third quarter profit rose 2.4%
    Star Tribune
    Fastenal installed 4,689 industrial vending machines during the quarter
    It has also agreed to acquire specific assets of Fasteners Inc.
    Subscribe to HNN weekly e-newsletter
    US-based industrial fasteners and equipment distributor, Fastenal's third quarter profit rose 2.4%, as it announced a new chief executive who will take charge after a management shake-up.

    Its third-quarter profit was US$136 million in line with analysts' expectations. Sales rose 1.5% to US$995 million, which was shy of analysts' forecasts of US$1.01 billion.

    The company said fastener and supply sales slowed this year as manufacturing and construction customers wrestled with setbacks in the oil and gas sector and with the high US dollar, which has hurt exports.

    During the quarter, Fastenal increased its sales force by 5% and installed 4,689 industrial vending machines in factories. It plans to open 60 to 75 new stores while closing about 20 others.

    Fastenal is closing stores in areas where it has two in proximity. The openings tend to be in places where it serves large national customers.

    Daniel Florness, Fastenal's chief financial officer since 1996, will become president and CEO effective at the start of 2016. He will succeed Willard Oberton, the former CEO who returned to lead the company after the surprise move in which Leland Hein stepped down from the top job after just a few months to become Fastenal's chief operating officer.

    Oberton had been CEO from 2002 through last year. He will continue to be chairman after Florness takes over the day-to-day running of the company.
    Fasteners acquisition

    Fastenal also announced it has agreed to acquire specific assets of Fasteners Inc., a regional and construction supply distributor in the US with locations in Washington, Idaho, Oregon, and Montana. The transaction is expected to close by the end of October.

    Founded in 1961, Fasteners Inc. sells a broad range of industrial supplies in addition to its focus on fastener products. It's presence includes 13 store locations, and the company anticipates 2015 revenue of approximately US$36 million.
    Henkel to cut 1,200 jobs in adhesives
    Henkel plans to cut 1,200 jobs worldwide
    It operates one of the world's largest adhesives factories in Shanghai
    Henkel also formed a partnership with a moulding equipment manufacturer
    Subscribe to HNN weekly e-newsletter
    Henkel, maker of Loctite glue and other consumer products, said it plans to cut 1,200 jobs worldwide in its adhesives division, accelerating its cost savings program in response to a tough market environment.

    A genuine leader in adhesives, sealants and coatings for industrial customers and consumers missed expectations for sales growth in the second quarter, mainly due to a slowdown in its adhesives business in North America and China.

    The United States and China are Henkel's biggest markets for adhesives, which include its Loctite and Pattex brands. The division accounts for half of group sales and employs around 27,000 people, more than half of group staff.

    German weekly WirtschaftsWoche reported on the planned job cuts, saying 500 to 600 jobs would be cut in the Asia-Pacific region, especially in China, and 200 jobs in North America.

    Henkel, which has been boosting its presence in emerging markets to accelerate growth, operates one of the world's largest adhesives factories in Shanghai which opened in 2013.

    It is building another site in India that is expected to start production in 2017 with around 500 employees.

    Back in August Henkel said that the Loctite glue business, which is traditionally its most profitable, was facing mounting pricing pressure. China's industrial slowdown meant that demand for Henkel's glues grew less than 5%.

    In a move reportedly designed to offer customers greater access to low pressure moulding solutions and its TECHNOMELT materials, Henkel Adhesive Technologies has formed a partnership with moulding equipment manufacturer LPMS USA. Art Ackerman, Henkel global product manager said:
    Henkel's new relationship with LPMS USA is a very important development for our Americas-based customers. The company's global leadership, in-depth understanding of mould design, broad equipment portfolio and low pressure moulding expertise make LPMS USA a very competent partner.

    The low pressure moulding process is an alternative to traditional potting techniques. Leveraging the capabilities of Henkel's TECHNOMELT polyamide hotmelt products, LPMS USA systems process the materials in a simple operation that melts, moulds, and cools the TECHNOMELT materials around electronic devices to encapsulate them and form self-enclosed, functional assemblies.

    Because the low pressure moulding process is lower stress compared to traditional injection moulding, it has reportedly been successfully used in multiple applications including automotive, LED lighting, medical, wearables and household consumer products.
    Is it too late for Mitre 10?
    Gay's Mitre 10, Ballarat (VIC)
    HNN Sources
    Impression of outdoor furniture
    Shelf display sketch
    Give to Amnesty International
    Smaller hardware retailers have been hard hit by the ongoing expansion of Bunnings and the entry of Masters Home Improvement into the market. Mitre 10, however, while experiencing some setbacks from increased competition, is also battling with continued under-investment.

    Its parent company, Metcash, is struggling to bring its IGA grocery network, to which it is a wholesale supplier, into the 21st Century. Its resources have been drained by the need to implement store refurbishments and finance price cuts in product lines. As a result there has been precious little left to invest in its hardware operations.

    While Mitre 10 has done well under the circumstances, it is not doing all that well in market terms, and this seems set to continue. Though some analysts suggest Metcash may be able to stage a recovery, the odds would seem slightly against this. Facing an uncertain future, Mitre 10 is trying to find new ways to grow its business further, but this is proving a very tough challenge.
    Performing in adverse circumstances

    While Metcash does not disclose much in the way of information about Mitre 10 operations costs, it has been possible to observe a number of circumstances that indicated some under-investment in the hardware operation. In particular, during 2014 there was a lack of original content in TV commercials - overcome through some clever recycling of older material - and fewer ads during peak seasons.

    Fortunately, a strength of the hardware wholesaler/retailer's management team, led by its managing director, Mark Laidlaw, is making clear, bold decisions, with a long-term outlook. This has led it to sponsor Channel Nine's reality renovation show "The Block".

    Mitre 10's key decision was to make the show's star, Scott Cam, its principal media representative. Mr Cam continues to successfully represent the best of the "tradie's" spirit: clever, competent, a bit quirky, with a biting sense of humour, frankly spoken, but also genuine.

    The sponsorship may be expensive, but it has gained Mitre 10 close to equal brand recognition with Bunnings and Masters Home Improvement. That is a considerable achievement, especially given its apparently shrinking media spend.
    Investor Day

    On 29 September 2015 Metcash held an "Investors' Day". According to Metcash, this event would not feature the release of any new financial information, but only commentary on operational matters.

    That turned out to not be entirely the case, as Metcash did release for the first time (as far as HNN can determine) sales figures for Mitre 10 over the past five years. Previously, most of these figures were available only as a composite including Metcash's automotive operations (which were sold in May 2015).

    The following graph shows these figures, and the calculated growth rate for the past four years:
    Mitre 10 Sales Revenue

    While these numbers appear quite positive on the surface, the truth is that the last two years have marked a difficult time for Mitre 10. Faced with dwindling resources and investment, the company has continued to produce acceptable, though not great, results.

    This includes the decent revenue growth noted above, but also borderline growth in performance metrics such as like-for-like (comp) sales.

    In FY 2014/15, for example, Mitre 10 produced 3.3% growth in like-for-like sales. Inflation during the period ran at around 2.2%. Retail sales for the hardware category for 2014/15 as contrasted with FY 2013/14 rose by 9.6%, according to Australian Bureau of Statistics figures.

    It is also worth bearing in mind this data from Roy Morgan, which indicates some of the effect Masters Home Improvement has had on Mitre 10 in recent years:
    Store visits
    Mitre 10 strategies

    Mr Laidlaw took the opportunity of the Investors' Day to outline some of the future strategies Mitre 10 will be pursuing. While the overall goals that were mentioned are broadly inline with those outlined in the December 2014 half-year report, the 2015 Strategy Day, and the May 2015 full-year report, there were some changes in emphasis.

    General mention was made of efforts to expand private label offerings and to improve "core ranging" based on input from shopping data. Digital/online was also discussed, including the relaunched website offering "click and collect", the "Mighty Rewards" loyalty scheme, and Tradies Online, designed to aid the "disorganised tradie".

    For logistics, Mitre 10 is continuing its efforts regarding direct sourcing of product from Asia, and improving its warehouse management system.

    The main focus, however, was on what Mitre 10 terms "Retail & Trade Excellence". The three main features of this were E-Learning, Store-in-Store offers, and Mitre 10's "Sapphire" store concept.

    E-learning is built on systems that were acquired with some of Metcash's (now divested) automotive operations. This extends an opportunity to Mitre 10 members to train-up staff in customer service through the use of online tools.

    The store-in-store concept is something Mitre 10 has been trialling during 2014 and 2015. A narrow range of distributors including Stihl chainsaws, Beaumont Tiles, and Weber barbecues are involved.

    Mr Laidlaw appears to have given the most attention to the Sapphire store concept, which was originally launched in 2014. To date, only four stores have been upgraded to Sapphire status, but Mr Laidlaw announced plans to upgrade a further 10 stores over the coming year.

    The end goal is to upgrade the company's top 50 stores. According to a slide used in the presentation, Mitre 10 is claiming the Sapphire upgrade will improve average sales revenue by 15% in each store.

    Given the apparent importance of the Sapphire concept to Mitre 10's future, HNN decided to take a visit to the original Sapphire store in the group, the Gay's Mitre 10 in Sebastopol, just outside of the Victorian city of Ballarat.
    Gay's Mitre 10 Sapphire

    The first thing that needs to be said is that just about everyone reading this would really enjoy having a hardware store like the Gay & Co Mitre 10 in their neighbourhood. It's a great store. It is clean, well-designed, and has one of those pleasant, attentive, engaged staffs that you really only ever find at independent stores.
    Impression of Gay's Mitre 10 floor

    The range is not as wide as that in a big-box retailer, but what is there is carefully selected and well-displayed. In fact there are a few innovations in display that the big box retailers could learn from.
    Impression of Gay's Mitre 10 floor

    However, much of what the Sapphire format has to offer is now very familiar from big box retailers everywhere.

    The power-tools are neatly display on wall racks. Benches display the bigger tools such as mitre saws in order of complexity, size and expense. You can pick the tools up, and see how they fit your hand, how heavy they are, how easy it is to access key features.

    There is a small "vignette" of a bathroom, complete with shower and sink. A row of sink cabinets provide a good demonstration of their features. There are stacked sliding drawers to let you see a further range of sinks.
    Sketch of bathroom vignette

    The design of the paint counter really is very good, and geared - unlike that of most big box stores - towards discussion and consideration of the paints, with a table and chairs located close by.

    In particular, the display of outdoor entertaining gear, such as furniture and barbecues, is really excellent. The store has a wooden decking material laid down, and that helps to set context and create atmosphere when looking at the furniture.
    Impression of outdoor furniture

    Yes, it is good. But is this format enough to drive Mitre 10 forward, and out of its current stagnation?

    Probably not.

    This is, of course, the first Sapphire-style store to be launched, and no doubt the format has been improved on.

    The fact is, though, that the level of amenity in home improvement stores over the past two to three years has accelerated very rapidly. Not only that, but it is continuing to accelerate, and will develop still further over the next two years. There has been really serious money, really serious thought and experience put into these developments.

    HNN believes this development has gone way beyond anything seen in any other retail sector in Australia - certainly way beyond what supermarkets are currently doing.

    In light of this, Mitre 10 cannot, quite simply, hope to compete with Bunnings and Masters based on amenity.
    Competitive cutting edge

    It seems likely to HNN that Mitre 10 could find better ways to increase its competitive edge. The key to this may lay in what really makes Mitre 10 so unique. Not necessarily the community focus and so forth, but actually the mix of commerce. Because Mitre 10, according to what it tells us, is 50% trade sales.

    The overall market forecast for Australia and much of the rest of the developed world is that the fastest growing sector is in Do It For Me (DIFM). As the overall market is growing, DIY will grow as well, but it will be outpaced by DIFM.

    There are a number of reasons for the growth DIFM. The standard and complexity of home designs have both increased. Demands on time, both from work and family seem to keep increasing. As people move into higher density housing, any kind of renovation work becomes more disruptive.

    The one factor that holds back DIFM in Australia is simply that dealing with tradies remains difficult. Standards of work vary, price depends on how much time you have to get enough quotes and to negotiate. It is a common story to have a job half done, and then not see the tradie for another week, as they go off to start a different job.

    We've seen the growth of some online services to help ease the situation. In Australia there is Home Improvement Pages (, which offers a way for clients to get quote from tradies. In the US there are a growing number of such services, offered by everyone from Amazon to smaller online businesses. Then there are sites such as Porch and Houzz that offer indirect means of finding the best professionals for a job.

    This is really the market where Mitre 10 could excel. The company knows its main customers, the tradies, like no other retailer does. It could expand into services that hooked up tradies with clients, it could guarantee some kind of price structure, and help to maintain quality standards.
    The other alternative

    But Mitre 10 is unlikely to go down that path. It would be a bold business move, and while the team at Mitre 10 might be up for it, Metcash would not be able to make that kind of investment.

    What is likely to happen? For some time now HNN has been suggesting that the most likely final outcome is for Metcash to divest Mitre 10.
    Metcash seeks to expand market share - HNN
    Metcash FY2015 first half results disappoint - HNN
    Metcash full year 2014-15 results - HNN

    Those who disagree with this analysis tend to miss one principal element of such a deal: what would Mitre 10 really be worth to a competitor?

    Imagine, for example, if every single Masters warehouse store had its trade centre rebranded as Mitre 10, run by Mitre 10 management. In many ways, the experienced staff and management skills of Mitre 10 would be worth the investment itself. Add to that the well-established brand and the commercial relationships, and the acquisition price that would be paid just keeps climbing.

    When we first suggested it back in mid-2014, it seemed like a slightly unlikely idea. But over the past six months it has become almost a commonplace with investment analysts - who also see a possible private equity takeover of all of Metcash as being quite likely.

    Given the lack of willingness to invest in the business, HNN would have to say that at this stage divestment might be the best thing for the hardware industry. We just cannot see Metcash giving Mitre 10 the support it really deservers over the next two to three years.

    Until next time,


    You can contact me directly via email or Twitter @HNN_Australia

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    HNN iPad App
    Online home services market grows in US
    Thumbtack asks a series of questions to guide customers
    HNN Sources offers service ordering via text message
    Amazon home services has its own approach
    Subscribe to HNN weekly e-newsletter
    The US market for websites that hook up homeowners with trades and services continues to grow and innovate. The Seattle, Washington-based has done some hooking up of its own, with Facebook and standard texting, to enable "Text-a-Pro".

    Meanwhile, San Francisco startup Thumbtack, which describes itself as like a "dating service" for clients with needs and service providers, has received US$125 million in funding, setting the company's value at around US$1.3 billion.
    Texting for help

    Facebook launched its "Businesses on Messenger" service in March 2015. Initially this service was envisioned as providing additional services to standard e-commerce sites. According to Facebook:
    Businesses on Messenger enables things like the following: during the checkout flow on a business's site, a person can choose to start a conversation with a business, receive updates from that business on things like order confirmations and shipping status updates, and ask the business free-form questions about the order, receiving quick responses. is taking these services one step further. Either through Facebook Messenger, or simply by texting to 776-776, clients can connect to a "home project manager" at This manager can help answer questions about a range of projects, helping customers find the right supplier for the services they need. The Facebook link adds other facilities, such as being able to set up appointments by texting through messages to

    The core feature of the service is that many home services will be offered on a flat-rate basis, so that customers will know instantly how much they will cost, without the need to go through a lengthy and bothersome quoting process. founder and CEO Matt Williams sees this as an issue of transparency.
    We're bringing transparency back to the consumer with Text-A-Pro and our greatest challenge moving forward is to continue to simplify finding a good contractor.
    Investors buy into Thumbtack

    While concentrates on home improvement task, Thumbtack helps to link customers to a broader range of services, including painting, house-cleaning and even dog-walking. It works strictly as a referral service, charges from US$3 to US$20 to provide details of potential customers to professionals who have signed up to the service.

    It is a service that has proved popular. Currently the site helps to set up over five million projects a year, with an average value of US$500 each. Its books carry listings by over 200,000 professionals across a wide range of capabilities.

    Investors such as venture capital firm Sequoia see Thumbtack as tapping into a very large potential market. Sequoia partner Bryan Schreier believes it has potential that is similar to that of Google.
    There was a ton of information online, but it took Google to actually make that information useful and make it easier to connect consumers with what they were looking for. This is a similar approach to solving a very big problem. Thumbtack is a very large business already, when the reality is that they are tapping less than 1% of the available market today.

    Neither one of these companies is, of course, immune from competition. Along with a wide range of smaller players, some very large companies, including the e-commerce leader Amazon and Google itself, have entered into this market.

    US home improvement stores are also not far behind. Home Depot's Red Beacon service, for example, offers similar connections to professional contractors to help homeowners get jobs done.

    One major advantage that these other services offer is a thorough pre-screening of the professionals who are available for contracting. Thumbtack relies instead on a rating and recommendation system, but leaves the onus for securing a good professional on the customer.
    Lowe's reveals US$28m funding of - HNN
    Amazon launches at-home repair/installation services - HNN
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    US home improvement retail researchers The Farnsworth Group have released a study that indicates big-box retailers are losing market share in some areas to speciality outlets.

    The study analysed results from a wide range of channels for purchasing home improvement goods, and examined the motivations and drivers of several audiences.

    The surprising conclusion was that specialty stores were gaining market share in some specific market demographics. In the 44 to 54 year-old group, 44% of homeowners used specialty stores instead of big-box stores in shopping for their flooring needs.

    For the younger generation, aged between 18 and 34 years, specialty paint stores were ranked more highly than for older generations. An analysis of this data by US market communications agency Wray Ward indicates that in the case of paint, younger consumers are less driven by price considerations and more by quality concerns.

    The company sees many US paint brands responding to this by providing tools such as mobile apps to make the paint shopping experience more accessible and engaging.

    On the other hand, speciality areas such as flooring, report that they continue to lose sales to big box retailers. Some of these speciality stores are, as a result, resorting to big-box style tactics to maintain market share in recent years.

    Floor & Decor, for example, based in the US state of Georgia, would buy large lots of flooring to obtain better prices, then sell directly from those lots. This is quite different from the standard practice of buying samples, then ordering on demand.

    Floor & Decor say that having demonstrated demand, they now have better relationships with suppliers. They go direct to those suppliers, but can order smaller lots, and thus keep more products consistently in stock.
    Seeking deals

    While paint may be a slight exception, the data from Farnsworth indicate that consumers of all ages are heavily motivated by finding great deals.

    Younger consumers rely on online shopping to find deals, with an increasing reliance on social media to help them find the best offer. Older US consumers continue to rely on newspaper coupons and catalogues delivered to their mailboxes. However, an increasing focus on online shopping is common across most age groups the study indicates.
    Professionals shop online

    Not only consumers, but US professionals - tradies - have also come to rely more on online services to guide their purchases. Nonetheless, professionals still rank good customer service from knowledgeable employees as a key driver to where they choose to buy their supplies and tools.
    Amazon threatens

    One major source of market loss is the comprehensive online retailer Amazon. Both consumers and professionals nominate Amazon as a major source of purchases. This follows from ongoing efforts by Amazon to make its DIY offer compelling.

    For example, the top best selling offer in power hammer drills for Amazon is a 18-volt Li-ion cordless hammer drill, complete with battery and charger for US$99. The DeWalt DC970K-2 18-Volt Compact Drill/Driver Kit is on sale for US$89 and is its top selling power drill driver.
    Gaining back share

    In August 2015 the underperforming US big box retailer Sears began pursuing a different approach to the home improvement market.

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