Companies
Techtronic Industries powers ahead with Milwaukee
Milwaukee tools are a big part of TTI
Techtronic Industries
Jobsite Backpack
South China Morning Post interviews Stephen Pudwill
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Hong Kong-based Techtronic Industries (TTI) has reported good results for 2014. TTI is the manufacturer of leading power tool brands including Milwaukee and Ryobi. It also manufactures AEG branded products under a licence granted by AB Electrolux, and is expanding its floorcare offerings under the Hoober, VAX and Oreck brands.

Reporting results in mid-March 2015 (the company's financial year coincides with the calendar year), TTI indicated that revenue grew by 10.5% to US$4,753 million. Earnings before interest and taxation (EBIT) grew by 15.4% to US$351 million.

Most of the company's earnings come from the North American market. However, during the report event with financial analysts, the company's chairman, Horst Pudwill, and its CEO, Joe Galli , both called out Australia as one of TTI's best growth areas.

As Mr Galli explained in an interview with Bloomberg TV, while the company earns over 70% of its revenue in North America, it sees Australia as a prime growth market. Mr Galli claims the company has moved from number five in the market to become number one. As he explains, Australia and New Zealand are the only markets in the Asia region the company is targeting with DIY products, though sales of industrial-level tools are more viable throughout the region.
Interview with Joe Galli
The cordless opportunity

Mr Galli is very enthusiastic about TTI's cordless tool development program, claiming that this market represents "a once in a lifetime opportunity". He claims that the company's Milwaukee FUEL brand and range is so far ahead of competitors, that many of them are only now duplicating tools marketed by TTI in 2013.

Milwaukee has a particular focus on its "subcompact" line of tools in 2015. This line combines the compact features of a 12-volt cordless tool with the efficiency of brushless electric motors.

One of the products in this area that Mr Galli pointed out in particular is a new cordless "trim saw". This seems to be a reference to the Milwaukee M12 FUEL circular saw. This features a 5-3/8" blade, ad is able to cut material such as two-by-fours in their trim size. The saw weighs 2.43kg.
M12 FUEL saw

Other Milwaukee products that were highlighted included a six-battery concurrent charger, which can charge all the batteries at the same time, further developments in the Milwaukee hand tool line, especially pliers, and tool backups designed to appeal to the under-25 market.

In TTI's Ryobi line, Mr Galli drew attention to its new AirStrike range of tools, which provided compressed air actuation without the need for a separate compressor.

The Hoover brand is leveraging the company's cordless expertise in a range of vacuum cleaners, and a cordless hard surface scrubbing machine that is named the "Handmaid".

TTI recently acquired the US premium floorcare brand Oreck. Mr Galli indicated that this brand was to be relaunched, and make use of what are essentially upgraded Hoover products.
Stephen Pudwill interview

The South China Morning Post has interviewed Stephen Pudwill, the son of the founder and chairman of Techtronic Indudustries (TTI), Horst Pudwill. The younger Mr Pudwill is president of strategic planning at the firm.

Like Mr Galli, Mr Pudwill emphasised that the main drive at TTI is the development of new products. He indicated that the budget for research and development was between 2% and 2.5% of the annual revenues. He said that new product launches accounted for up to a third of TTI's revenues each year.
Pearl River Delta area

TTI does most of its manufacturing the the Pearl River Delta area of China. While this area boomed in the years immediately following the launch of China's reform program in 1979, in more recent times it has seen growth diminish. Stronger environmental controls have been brought in, wages for workers have risen, and consequently commodity good production has fallen.

However, TTI is oriented more towards high-value, high-design goods, and seems set to continue to take advantage of the skilled workforce and stability available in this region.
Pearl River Delta area
Products
Gerber's 3-in-1 sledgehammer
The Ding Dong is a sledgehammer, ram and pry bar
Gerber
Its hammerhead features machined cross-hatching that bites into surfaces
The tool measures 68cm in height and weighs 5.55kg
SpotOn is your source for laser levels and other tools
It is part of the range of multi-tools, survival knives and military-focused gear

Gerber's Ding Dong is a lightweight tool for getting through doors quickly. It's a sledgehammer, ram and pry bar combined into one sturdy, unbreakable piece of equipment.

It has uses for law enforcement and military personnel and many other applications for every day citizens in need of a mighty sledge hammer with serious impact.

The Ding Dong's hammerhead features machined cross-hatching that effectively bites into surfaces, minimising slip and maximising impact. While the opposite end of the tool has a forged pry bar for deconstruction projects and demolition work.

Developed and built in Gerber's home town of Portland, Oregon, the Ding Dong is fitted with a reinforced fiberglass handle with moulded rings to create a mechanical stop for operator's hands.

Measuring 68cm in height and weighing just 5.55kg, the Ding Dong is compact enough for users to take with them on the move but big enough to produce huge power when needed.
Products
DIY home automation range
The WeMo Maker enables users to control or monitor gadgets from iOS or Android devices
IT Wire
WeMo Insight Switch plugs directly into an electrical outlet
Appliances or gadgets can be managed and monitored using Belkin's WeMo
SpotOn is your source for laser levels and other tools
Belkin's WeMo Maker, Insight Switch and Home Sensors are now available in the Australian market. They can be controlled from smartphones or tablets.

The WeMo products have long part of the Internet of Things (IoT) revolution but Belkin is taking things a step further with its new WeMo Maker platform.

WeMo Maker is a "build-your-own" solution that enables users to control or monitor any low-voltage electronic gadget or appliance from iOS or Android smartphones and tablets, via a free WeMo app.

It uses triggers from a variety of sensors and works with IFTTT technology for endless connection to web services and apps. IFTTT connects to email, SMS, Facebook and Twitter.

It has seamless integration with other WeMo products too. However users need some knowledge of electrical wiring which should be easy to learn. Andrea Bruno, senior product marketing manager international for WeMo said:
We believe that WeMo will play a key role in connecting consumers to the IoT, delivering what might otherwise be a complex or daunting situation in a very approachable and cost-effective experience.

Belkin believes the ability to "WeMo" almost anything outside of the existing WeMo range without having to know how to code will appeal to many DIYers, and is at the heart of the WeMo Maker.

Through its ability to connect to nearly any gadget or appliance controlled with a low-voltage DC switch, users are able to turn them on or off or put them on schedules via smartphones or tablets and the WeMo app.

WeMo Maker also enables users to connect to a wide range of 5V sensors for remote monitoring and automated control. Sensors that will work with WeMo Maker include sensors for light, motion, moisture, temperature, flame and carbon monoxide, to name a few. Bruno said:
WeMo Maker allows almost anything to be 'WeMoed', from a pet feeder or motorised windows to garden sprinkler systems or pool pumps. It brings the IoT to practically any product, without having to know how to code.

The WeMo Insight Switch is also coming to Australia in July. It is a Wi-Fi enabled compact plug that lets users control and manage the energy usage and costs of home electronics from anywhere through an iOS or Android device. They can be placed on a schedule and receive notifications any time a connected unit is turned on or off.

WeMo Insight Switch plugs directly into an electrical outlet, and users simply hook it up to a home Wi-Fi network. The free WeMo app can be downloaded and users will instantly be able to turn any product plugged into the unit on or off using an iOS or Android device.

Electronics can manage the time, energy consumption and costs of specific appliances or gadgets. The Insight Switch also works with IFTTT that creates triggers using different Internet-based services such as email, weather and social media.

Also coming later this year is Belkin's range of WeMo home sensors that were showcased at the 2015 International CES.

The range features a window and door sensor, personal keychain sensor, room motion sensor and alarm sensor. They are designed to make the entire home smarter and more intuitive.
Regions
Ausbuild takes on Redlands site
Ausbuild has paid $10.8 million for an 8.78ha site at Redland City (QLD)
Courier Mail
Kinross Estate at Thornlands (QLD) is another residential development by Ausbuild
Ausbuild has approval to create a residential land subdivision for 83 lots
Give to Amnesty International
Queensland developer Ausbuild has paid $10.8 million for an 8.78ha site at Thornlands in Redland City, and has approval to create a residential land subdivision for 83 lots, ranging between 450sqm and 785sqm.

Ray White Special Projects' Mark Creevey, who marketed the property with Tony Williams, said they received 12 offers to purchase and 55 inquiries during the campaign. He said:
We generally find that the market has a strong appetite for development sites in Redlands. This property is in a highly sought after Brisbane bayside location close to existing infrastructure and major shopping, education, transport and recreational facilities.

The property is next to the Moreton Shores Retirement Community and surrounded by established housing.

It was marketed with a development permit for retirement use, incorporating 81 independent living units and 62 independent living apartments plus community facilities. But Creevey said most interest in the site came from residential development companies. He said:
There was interest from aged care providers but the majority of interest was from development companies seeking to use the property for residential land subdivision.

Williams said most groups who looked at the site said they liked its general location and its flat nature which ultimately would save development costs. He said:
There is generally strong depth in demand for completed product in the Thornlands area for both land and retirement product. But there is continuing demand for residential sites such as this in the Brisbane bayside area and a lack of supply.
Reports
Reno spending remains sluggish: HIA
HIA forecasts an 8.2% lift in renovations activity between 2015 and 2018
The Bull
The popularity of TV shows such as The Block has not translated into recovery in the renovations market
The majority of renovations is being done by professional builders
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The home renovation market should enjoy a modest recovery over the next few years, but that will follow another decline in 2015, according to the Housing Industry Association (HIA). It rose by a meagre 0.8% in 2014.

The popularity of television shows that focus on home renovations, such as Channel Nine's The Block and Channel Seven's House Rules, has not translated into recovery in the home renovations market. HIA senior economist Shane Garrett told the Australian Financial Review:
People think these shows are making a difference, making home renovations more fashionable and more glamorous, and that it has an effect on the home renovations market. But if you look at the figures it's a fairly small proportion of people who do it themselves. The majority of it is done by professional builders.

HIA's latest renovations report forecasts an 8.2% lift in renovations activity between 2015 and 2018, due to continued low interest rates, a recovery in economic activity and an increased number of detached houses at prime renovations age.

But it expects a 2.8% drop in 2015, with activity weighed down by a weak labour market, below trend economic growth and decelerating home price growth.

The renovations market - valued at $29.7 billion in 2014 - accounts for more than one third of all residential construction activity, compared to almost half in 2009/10. Garrett said:
Big ticket expenditure items like home renovation jobs tend to suffer disproportionately at times when economic growth is slow and when unemployment is drifting upwards. The deceleration of wages growth to its lowest rate in almost two decades has also challenged the renovations sector.
Spending on renovations
  • $29.66b in 2014, up 0.8% from 2013
  • Forecast to fall 2.8% to $27.35b in 2015
  • Forecast to rise 8.2% to $29.6b between 2015 and 2018
  • Reports
    Woolworths/Masters Investor Day Downloads
    Download report PDF
    Woolworths Investor Day Special Report
    Sample page of report
    Graph of available home improvement market
    Subscribe to HNN weekly e-newsletter
    To download the PDF Special Report on the Woolworths/Masters Investor Day from 6 May 2015, please click on the link below:
    Download report PDF
  • Download link
  • Woolworths Investor Day Special Report
    Bigbox
    Homebase builds up digital offering
    Video interview of Siobhan Fitzpatrick of Homebase
    CoreMedia
    CoreMedia LiveContext details
    Wallpaper made from customer images
    Click to visit the ITW website for move information
    Homebase, the UK-based big-box home improvement retailer, has made a move to grow its online retail operations. As part of a general plan to transform the Home Retail Group-owned retailer, the company is moving to make the experience of its online customers more personal.

    Earlier this year Homebase announced that it was revamping its mobile applications. The basic app it provides runs cross-platform. It provides product selection filtering, store in-stock checking, and the ability to reserve products for later purchase.

    This redevelopment was in part a response to Homebase's growing popularity of the mobile access points, with mobile phone and tablet visits reported to have grown by 40% in the 2014/15 financial year (which begins on 1 March).

    For its worldwide web access points, the technology Homebase has decided to deploy is the IBM developed WebSphere product, which is part of IBM Commerce. It is a platform that provides advanced analytics on a customer basis. The system has been built to interact with Homebase mobile apps, and to aid in ensuring the backend logistics operations work correctly to fulfil online demand.

    As the marketing director of Homebase, Jo Kendrick, stated in a press release:
    Our business is changing rapidly. It's not just selling wood, nails or screws, it's about helping our customers live in a home they really love. By standardising our platform on IBM Commerce, Homebase has transformed its digital presence into an interactive inspirational showroom that guides them through all their home improvement needs.
    CoreMedia LiveContext

    The expansion product for WebSphere that Homebase has chosen to deploy is CoreMedia LiveContext 2.0, produced by the German-based company CoreMedia. This software enhances many of the core offerings of the base IBM product.

    In a press release the director of multi-channel at Homebase, Siobhan Fitzpatrick, is quoted as saying:
    With a growing number of Homebase customers either shopping online or going to our website for ideas before visiting one of our stores, it s essential that our website provides our customers with as much inspiration, advice and support for their home and garden projects. Combined with IBM WebSphere Commerce, LiveContext provides the flexibility to respond to our customers with richer and more engaging online experiences. It also allows us to dynamically adapt our online presence to meet evolving customer requirements.

    The attraction of the LiveContext product is that it seeks to provide a more emotional context to online shopping. CoreMedia sees this as another stage in development, after e-commerce websites have enabled the basics - efficiency, searchability, ease of purchase and security. In terms of the industry jargon, it is the move from UI to UX - from user interface design to user experience design.

    Among the advantages the CoreMedia claims for LiveContext is the ability to simply design and deploy rich visual experiences, as well as integrating live data with page design (such as stocking information). The company claims that its design interface is simple and powerful to use.
    Digital-based products

    Homebase has also announced a new, digital based product, timed to commence with the Northern Hemisphere summer vacation time. Homebase customers can now upload digital photographs, and have these converted into wallpaper for their rooms.

    The online software enables the user to preview how the wallpaper will look, and, after the wall size is provided, will estimate the cost of the project.

    Prices begin at Stg 23.99 per square metre.
    Statistics
    Home improvement revenue set to increase: BIS Shrapnel
    Frank Gelber, chief economist BIS Shrapnel
    The Australian
    RBA: The Domestic Outlook and the Role of Mining
    AMP/Shane Oliver post on house prices
    Click to visit the HBT website for more information
    Writing in The Australian, BIS Shrapnel chief economist Frank Gelber has predicted spending on home improvement retail is set to increase in the near term.

    Mr Gelber sees the end of the resources boom and the consequent fall of the Australian dollar's value to the US dollar as causing a regional shift in the vitality of the Australian economy.

    He predicts mining investment will decrease by 50% before 2020. Resource-based regions will thus experience a decline.

    The falling Australian dollar exchange rate will, meanwhile, benefit regions geared towards tourism, education of international students and manufacturing.

    Mr Gelber sees the retail industry in general as continuing to experience overall lower levels of growth than those of past decades. Some sectors will suffer more than others, and there will be regional differences in retail spending.

    It is his belief that retail spending on home improvement has been somewhat suppressed in past years, due both to a move to increased savings, and the overall weakness of the economy. However, that may be set to change this calendar year.

    Mr Gelber reports that expenditure on household goods has increased by 10% over the past year. He sees this as the beginning of an overall spending increase, with the effect of increased house prices just beginning to take hold in the home improvement retail sector.
    Anecdotal support

    There is some anecdotal support for Mr Gelber's analysis. The Gladstone Observer published an article by Chris Calcino on 12 May 2015 which outlined a change in spending habits in the northern New South Wales town of Yamba. The Yamba economy depends on fishing and tourism.

    Mr Calcino reports an interview with the owners of the Yamba cafe Irons and Craig. According to these businesspeople, there has been a shift in the economy, with the holiday peaks now moderated, but the subsequent troughs more active, resulting in an overall increase in revenues.
    The Observer
    Economic forces

    This article provides further clarity for the home improvement retail industry on some numbers released by BIS Shrapnel in late 2014. As this graph published in Property Observer indicates, household disposable income is set to remain lower than in past decades, according to BIS Shrapnel:
    Property Observer article on income growth for shopping centres

    The BIS Shrapnel analysis echoes to some extent remarks made by Bunnings managing director John Gillam to the Australian Financial Review (AFR) in January 2015. He was quoted by Simon Evans of the AFR.
    [Mr Gillam] believes the soaring house prices in Australia s two main cities of Sydney and Melbourne, along with the steady population growth across the nation, will help underpin a new round of spending in hardware. "House values are huge; it s actually less affordable now than it s ever been," he says.
    ...
    [Mr] Gillam also says economists often miss the impact of the ageing of existing housing stock and the likelihood of those dwellings getting a serious makeover.
    AFR
    Retailers
    Egypt store for Ace Hardware
    Ace Hardware now has a store in Egypt
    Ask Magazine
    It is located at the Sheraton Heliopolis in Cairo
    A ribbon-cutting ceremony at the opening of Ace Hardware in Cairo, Egypt
    Click to visit the Globel Industries website for more information
    Ace Hardware has officially opened its first store in Cairo, with plans to expand all over Egypt in the near future.

    The doors were opened at the Sheraton Heliopolis in a neighbourhood known for its diplomatic and presidential addresses. Egyptians can now purchase home and hardware supplies from the new, supermarket-sized Ace Hardware store.

    Hossam Talaat is CEO of Masader for International Trading and Ace Hardware Egypt. He said:
    [The store] covers the entire product range for home-based needs including glassware/dishes, home appliances, electronics, paints, power tools etc. It saves a lot of time for the customer who usually has to go from one place to another to buy each item.

    The American home improvement retailer seeks to promote and serve the growing, local DIY market. The Egyptian store is multi-level and has a similar layout to its US stores.

    The ground floor displays kitchen supplies, tableware, utensils, grills, as well as painting tools and accessories. The first floor features power tools from Bosch and Ace Hardware's own brand.

    In the basement floor, there is an outdoor section including furniture, bicycles, fishing rods, and sports equipment. There are also billiards tables, exercise equipment and ping pong tables.

    Other supplier brands that are part of the store include Schneider Electric, along with bathroom products from Ideal Standard, wooden flooring materials from Parador, Jotun paints, Graham & Brown wallpaper, and Nespresso machines.

    Ace Hardware's franchise was acquired by Egyptian company Masader for International Trading which has worked extensively in the real estate and hardware sector.
    NHS2015
    @NHS: Show traffic down, quality up
    Betty Tanddo reports on the NHS (video)
    Just one of the endless rows of Chinese booths
    Part of the floor at the NHS
    Click to visit the Globel Industries website for more information
    Editor-in-chief of HNN, Betty Tanddo, provides a brief summary of what the show has been like.


    It's bigger than past NHS shows, and has expanded into an additional hall, but is still not as big as the Cologne show was during its most successful period.

    One source of the expansion would seem to be he 100+ small booths occupied by Chinese factory representatives. These aren't exactly bustling booths, though their model in attending is likely to make a few high quality contacts.


    Australian exhibitors we've spoken with have indicated that there has been low volume, but high quality activity.

    HNN will be providing a more comprehensive overview of the show and the trends we noticed over the next week.
    NHS2015
    @NHS: National Hardware Show App
    Sherpa helped provide location services in the app
    The day's events
    Custom access
    Click to visit the Globel Industries website for more information
    As part of the services it is offering, the National Hardware Show has made available a custom app for iOS (Apple) and Android devices.

    The app provides an overview and specific guides to what is happening each day, as well as access to an index of exhibitors. It also features a Bluetooth-based facility that can provide information about booths that are near to your current location.
    Home screen of app

    The Exhibitors button provides access to exhibitors who have been specially featured and to exhibitors by product category.
    Exhibitor button access

    For attendees staying at the Hard Rock, LVCC or Bally's, the app also keeps track of the shuttles travelling to and fro from the show, making it easy to anticipate and catch a service.
    Shuttle schedule tracking

    One of its most useful function is the ability to keep track of all the events that are coming up for the day, as well as special offers that become available.
    The day's events

    A custom facility enables you to choose those aspects of the show you are most interested in, providing quick access and a simple reminder.
    Custom access

    Overall, it is a well-designed and very useful app, that should make it easier for attendees to find what they want to find, and not miss much of the rich content put on by the show organisers.
    Statistics
    HNN Index for week ending 1 May 2015
    HNN Index for 1 May 2015
    HNN sources
    Comparison of Woolworths, Wesfarmers and the ASX 200
    The Australian Financial Review on Woolworths
    Click to visit the HBT website for more information
    In a week of mixed trading on the Australian Stock Exchange, the retail-based HNN Index fared better than the overall market, coasting down by just 3.11 points to reach 1010.85. The underlying ASX 200 index fell by almost 43 points, and by 25.7 points on its comparative basis.

    The market seems to be waiting for results from Woolworths, as well as its first strategy briefing for four years, before deciding which way to invest in retail overall. Myer Holdings did surge somewhat, but this seems based on takeover speculation rather than underlying performance.
    Boral
    Boral & CSR brick joint venture starts up

    On 1 May 2015 the brick making joint venture between Boral and CSR commenced operations. The companies indicated that the it would take a further 12 months for the venture to become a full integration between the two companies. The companies say as much as $10 million in operational costs will be saved by the venture. Several market analysts believe the savings will be greater than the estimated amount.
    Joint venture starts - Sourceable
    Charter Hall Group
    Acquisition of Wetherill Park property

    Charter Hall spent $33 million to acquire an eight hectare site from GWA Groups in Sydney s Wetherill Park area. GWA Group once used the site for manufacturing, but no longer requires it for this purpose. GWA will lease back the site for three years, using it for warehousing. Settlement on the property will be finalised in June 2015.
    Charter Hall buys property from GWA - Fairfax Media
    Goodman Group

    Goodman leases space in property in Hamburg, Germany

    Aerospace companies Airbus and Diehl Comfort Modules have signed leases for space at Goodman Group s Goodman Interlink Hamburg park in Germany. Airbus will make use of an existing 10,000 square metre facility, while Diehl will see a new 13,000 square metre facility constructed to meet its needs.
    Goodman leases space to aerospace companies in Germany - Property Magazine
    Lend Lease
    Lend Lease and Victor Homes file plans to build in New York

    Lend Lease and Victor Homes will build a 52-storey condominium building on the corner of Fifth Avenue and East 30th Street. The building will contain 141 units.
    Lend Lease to build condo in New York
    Metcash

    :Former Lion CEO to become chairman of Metcash

    Rob Murray is set to join the board of retailer Metcash, and will become the company s chairman after its annual general meeting in August 2015. Mr Murray was previously CEO of supermarket supply company Lion.
    New chairman for Metcash - The Australian
    HBT2015
    @HBT: The spread of corporatisation - and hope
    Tim Starkey, group manager of HBT, at the podium
    HBT
    Membership numbers at HBT (HNN numbers)
    Tea break at the conference
    Click to visit the HBT website for more information
    Tim Starkey, group manager of buying group Hardware & Building Traders, is one of the gems of the industry.

    In a thoughtful, thought-provoking speech to open the Annual Trade Show for the HBT at the Melbourne Exhibition Centre, Mr Starkey took the many members who are attending that event on an interesting tour of the industry as HBT sees it.

    More than that, though, Mr Starkey helped to articulate for this diverse and interesting group of retailers why it is they do what they do, and why so many of them are set to continue doing it, whatever the odds may be.

    It is possible to disagree with Mr Starkey, to take issues with some of his interpretations of the facts and general direction of the industry, but anyone who heard him speak would be grateful for such a clear articulation of the issues in the industry, the consequences of the trends we are observing, and for his ability to grasp and communicate the passion so many feel in this retail sector.
    The change

    Mr Starkey began by discussing the single biggest issue the industry currently faces: change.

    He introduced it like this:
    We have probably never seen change happen on such a broad scale and so quickly as we've seen particularly in the five years in our industry and I think you could go back and say even 10 years.
    It has been an extraordinary pace of change across so many different facets of the industry. It is very difficult to see that it won't continue for some time to come.

    Mr Starkey suggested that there were three major drivers behind the change:
  • The corporatisation of our society. This includes the general displacement of smaller retailers with companies, but he included the gradual privatisation of formerly government functions. His suggestion is that this represents a single stage in the still-developing nature of capitalism. As such, not everything that emerges from this stage is positive or developmental, he suggested, but instead a mixture of benefits and costs.
  • Rationalisation of the industry. As part of the move towards corporatisation, larger companies are sweeping aside smaller businesses. It is interesting to note that by including this as a separate element, Mr Starkey is suggesting that corporatisation would not necessarily have to include rationalisation.
  • Decreasing participation by baby-boomers. As this generation continues to age, the economy is finding itself weakened. Mr Starkey listed their contributions as including capital, expertise and a strong work-ethic.
  • Industry analysis

    Mr Starkey went on to describe how these changes have come to affect the economy and particularly the retail sector. His suggestion is that a trend was started by the major supermarkets, which moved to eliminate many of the smaller independent grocers, the independent liquor stores, and many of the independent service stations.

    What he really wished to highlight about this kind of change, is the disadvantages it can bring. In the first instance, his suggestion is that for certain types of business, the corporate model will simply not work well.

    The example Mr Starkey gave to back up this claim is the Dick Smith electronic stores that were acquired by Woolworths. His analysis of what happened was that Woolworths worked to eliminate small business franchisees from that chain, which resulted in its rapid deterioration, and eventual sale.

    Followed, of course, by a resell less than two years later, on which the new owners gained close to $300 million.

    Mr Starkey sees a direct parallel between the Dick Smith experience and what is being done to hardware stores. In part he said:
    Firstly I will observe to you that hardware and building products and tools and fasteners and timber are not groceries. They are not groceries because they take skill, they take knowledge and they take relationships to sell them. Just as in the same way as Woolies couldn't run Dick Smith because they didn't get that, and they couldn't manage for it.
    And just as anecdotally today we hear again, I have no proof that many of the larger trade home stores that HTHG acquired start to go into significant decline once the original owner/managers have worked out their transfer contract, which is usually a two-year period... I have heard that from quite a number of people in communities where this has been observed to occur and they go into other shops and talk about it.

    Mr Starkey wanted in particular to highlight the way in which corporatisation and the elimination of smaller retailers had a negative impact on smaller communities. His suggestion is that that small communities which experience the impact of large retailers see a general decline in their prospects.

    This is because, he believes, they lead to a net loss of jobs in those communities, and that the profits generated by the businesses are not directly distributed back to the communities.

    In what is without doubt something of a "Tim Starkey classic", he produced this interesting insight into what he called "all the dumb mayors":

    The other independents

    While admitting that companies such as Metcash, the owner of Mitre 10, have done some things for their independent members, he also pointed out that those organisations have an inbuilt conflict of interest. While the overall group is and should be geared around supporting those businesses, the supporting company is also intent on selling goods and services to those retailers.

    Later in his speech Mr Starkey seemed also to underline a trend he sees with the Home Timber and Hardware Group as well as Mitre 10 towards doing more store acquisitions, or at least obtaining controlling interests in more stores.
    There's hope

    While all this might seem somewhat filled with doom, in fact Mr Starkey remains hopeful, and believes that there is a significant role for independent retailers in the future. In this portion of this speech, he used the mid-Western and South Western regions of the US as an example of what Australia could likely achieve.

    Further coverage

    Mr Starkey's speech is deep enough that it warrants further coverage, and HNN will be further exploring some of the issues he raised in the future.
    Companies
    Stanley Black & Decker reports good organic growth
    Conference call slide presentation
    Stanley Black & Decker
    World market for Stanley Black & Decker
    Stanley Black & Decker contributes to ToolBank
    Subscribe to HNN weekly e-newsletter
    US-based tool and security company Stanley Black & Decker (SBD) reported modestly good results for the first quarter of 2015. Net sales for the quarter were US$2.63 billion, an increase of 0.5%. Earnings before income tax were US$221.3 million, an increase of 1.6% over numbers for first quarter 2014.

    The company says that overall organic revenue (revenue not related to acquisition activity) grew by 8%, but was impeded by the 7% of foreign currency exchange rate variations. SBD says that the gross operating margin rate grew by 0.5%, and the operating margin rate grew by 1.2%.

    Its tools and storage division reported net sales of US$1.632 billion for the quarter, an increase of 3% over the previous corresponding period (pcp). The security division net sales fell by 6% over the pcp, to US$0.51 billion. The company's industrial division also saw decreased net sales, which fell to US$0.488 billion, a decline of 6% over the pcp.
    International markets

    Australia returned an organic revenue growth of 7%, up from 4% in the fourth quarter of 2014. The country's contribution to SBD remained stead at 2%. The US contribution grew slightly, from 50% to 51%, and organic growth was 12%. The Japanese market saw its organic revenue growth surge to 13%, after organic revenue contracted by 9% in fourth quarter 2014.

    In Europe, SBD reports market gains in both its tools and storage division, and in security. SBD talked up its prospects in the European market, suggesting that there is a liveliness to that market that is not quite reflected in results as yet.
    Tools and storage

    The tools and storage division is a newly created division, made up of the previous construction/do-it-yourself division, with additions from other areas of the company's business.

    For this division, North America returned organic growth of 15%, while Europe provided 9%. Latin America, Russia and China markets returned disappointing results.

    Professional power tools showed 13% of organic revenue growth, while consumer tools grew a more modest 10%. Accessories grew by 13%. Hand tools and storage grew by 7%. These increases come against a background growth rate that SBD estimates as being 5% for tools overall, and a slightly higher 7% for power tools.

    SBD believes the major source of growth in this area is coming from residential and non-residential construction. It sees the industrial market in the US slightly weaker for 2015 than it was in 2014. The company also stated that it believes it is making substantial market share gains in this area.

    In response to a question by an analyst, SBD also affirmed that moving some production back into North America had proved a good strategic move, in especially in light of currency exchange fluctuations. SBD flagged further growth of US domestic production.
    Stanley fulfilment system

    SBD commented that it sees much of this growth as originating with the continuing benefits of the merger between Stanley and Black & Decker, and that much of that benefit is driven by the Stanley fulfilment system (SFS), its supply chain solution.

    The company sees further growth opportunities in this area, and is at work on what it calls SFS 2.0. SBD says the revised system will aid organic growth and further margin expansion through cost savings.

    The president and chief operating officer of SBD, James Loree, went into some detail about SFS 2.0 in response to analyst question during the company's earnings call:
    The four initiatives, Digital Excellence, Breakthrough !Innovations, Commercial Excellence, and Functional Transformation, we ll start with functional transformation is an approach that we are taking to reduce the cost of our staff functions if you will, so increase their efficiency while maintaining their effectiveness, which is very high. The functional transformation will yield benefits over a multi-year period, but really at the moment we are investing in this... The other three are intended to drive growth and they all require some investment, but the functional transformation is a way to fund that investment without affecting our day to day operations in a negative way.
    Digital Excellence, we are doing a fair amount of work in that area to prioritise where we re going to make our investments... I think the one that has the most near term impact is Commercial Excellence because commercial excellence includes several different elements. One of those element is pricing effectiveness and you probably have noticed over the last year or so that we have been averaging about a point in price as a company and that is about a point higher than we have been doing historically. I would say virtually a large portion of that differential impact is associated with the Commercial Excellence initiative.
    ...
    The Breakthrough Innovation is basically taking, going beyond Incremental Innovation and really looking for those breakthroughs that can change the whole competitive framework of the industry and give us a competitive advantage. So we have studied competes in the best pockets of breakthrough innovation in the world, primarily in the US. And we have deployed some of the practices that you ll see in the [Silicon] valley and so forth. And we are doing some experimentation with that and we are hopeful that we can create some breakthrough innovations.

    SBD's chairman and CEO, John Lundgren, added to those comments by saying:
    [I]mportantly, it is all designed to embed a growth culture, first establish an embedded growth culture within the company.
    Acknowledgement

    HNN would like to sincerely thank the investment website Seeking Alpha for allowing us to use extracts of its transcripts of SBD's analyst earnings conference call. It's a generous way of helping boost better company analysis on the internet.

    To read the full transcript of the earnings call, please visit the Seeking Alpha website:
    Stanley Black & Decker earnings call on Seeking Alpha
    NHS2015
    HNN going to National Hardware Show
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    National Hardware Show
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    Click to visit the Globel Industries website for more information
    HNN is leaving this Sunday for the National Hardware show in Las Vegas, and you're invited!

    Just sign up to our special edition international email, and you will receive (free, as always) five email newsletters from the day before the show, every day of the show, and a follow-up newsletter after the show. Plus, a special show analysis in PDF form a week after the show is over.

    We'll be bringing you all our usual great show coverage. Exclusive video interviews daily, right from the show floor, new products, new companies, new ideas - with a dash of the "crazy" that makes Vegas so very Vegas.

    Don't miss out - it will put a dash of fun in your day, and you'll stay up to date with the latest and greatest in the world of hardware and home improvement.

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    HBT2015
    HBT National National Conference 2015
    HBT website
    Membership growth at HBT by financial year
    A quick video history of HBT
    Click to visit the HBT website for more information
    This year HNN is excited to bring you direct coverage from the Hardware & Building Traders National Conference 2015.

    It's set to be a great event, with HBT continuing to grow at a rapid pace throughout the past year.

    We look forward to meeting those members we've chatted with in the past, and hope members we haven't had a chance to catch up with will get in touch.

    HNN will be bringing you video coverage of the event, as well as some video chats with the sponsors themselves, and a few interviews with the people who have helped to make HBT what it is today.

    Stay tuned for more!

    Statistics
    HNN Index for 10 April 2015
    HNN Index chart 10 April 2015
    HNN Sources
    Jim Clayton, new CEO of Breville
    Rod Sims believes Wesfarmers deserves to be sanctioned
    Click to visit the HBT website for more information
    The HNN Home Improvement Index managed to marginally outperform the ASX 200 during the week of 6 April to 10 April 2015. The index rose by 17 points to 1036.47, while the ASX 200 rose by 13 points on the adjusted score, and in its original form by 70 points to 5968.4.
    Adelaide Brighton
    Adelaide Brighton CEO predicts slowing sales in SA

    Adelaide Brighton chief executive Martin Brydon has indicated he expects sales of pre-mixed concrete may fall by as much as 6% in South Australia for the 2015/16 financial year. However, he also believes residential housing will remain strong, securing much of the company's revenue in that state.
    Housing boom misses SA: Australian Financial Review
    Breville Group
    New CEO appointed

    Breville has appointed a new CEO. HIs name is Jim Clayton and he will assume the post on 1 July 2015. Trained as a lawyer at the University of Texas, his background includes management consultants McKinsey, private equity firm Symphony and LG Electronics. His salary is reported to be $800,000 a year, plus incentives.
    Breville's new CEO: Appliance Retailer
    Breville's new CEO and the Internet of Things: BRW
    DuluxGroup
    DuluxGroup faces $NZ15.2m provision in tax case

    New Zealand's Internal Revenue Department and DuluxGroup have settled a tax dispute, with DuluxGroup taking a $NZ15.2 million provision. The dispute involved the use of convertible notes by DuluxGroup subsidiary Alesco NZ. New Zealand courts quashed an appeal by DuluxGroup and declared that the principal use of the notes had been to evade paying taxes. Other Australian companies, including Qantas and Telstra will face similar charges.
    Downer EDI
    Downer EDI refreshes branding

    The contracting company is to no longer use its familiar tyre-tread logo. Instead it has an abstract logo in blue, white and green. This is accompanied by the slogan: "Relationships creating success". The rebranding is seen as a part of the company's repositioning as a problem solver for its customers.
    Downer EDI gets a makeover - Fairfax Media

    A video about the new brand:

    Fletcher Building
    Fletcher shares may be re-rated due to $A exposure

    The strength of the New Zealand dollar versus the Australian dollar could see several New Zealand companies receive downgrades, including Fletcher Building. The company is also suffering from downturns in mining and infrastructure spending.
    Fletcher re-rating: Otago Daily Times
    Leighton Holdings
    Leighton awarded $160m contract

    The company has won a contract to extend the Mitchell Freeway in Perth, Western Australia by six kilometres. Design of the extension will begin in April 2015, and construction will commence in mid-2015.
    WA contract win: Perth Now
    Leighton wins contract in Qatar

    A Leighton subsidiary has secured a US$608 million contract to build five water reservoirs in Qatar. The reservoirs will be the largest of their kind in the world, each holding 100 million gallons of water.
    Leighton wins Qatar contract: Commonwealth Bank MyWealth
    Lend Lease Group
    Lend Lease reaches settlement over botched job in US

    Lend Lease has agreed to a US$50 million settlement with the Lower Manhattan Development Corporation. The settlement relates to a civil dispute over the demolition of the Deutsche Bank building, near Ground Zero in Manhattan. The original contract was for US$82 million, but blew out to US$266 million.
    Myer Holdings
    Speculation about takeover spikes up stock

    Speculation that the Solomon Lew-owned Premier Investments might seek to acquire a controlling interest in Myer sent shares in the troubled department store retailer higher. Private equity house Archer Capital is thought to also be considering a takeover bid. Analysts do not believe Premier would benefit from such a takeover.
    Myer shares surge: Courier Mail
    Wesfarmers
    Wesfarmers' Coles to pay $2.5 million fine

    Wesfarmers will pay a $2.5 million fine after its supermarket division, Coles, falsely advertised that it had freshly baked bread that had in fact been "par-baked" some months previously. A spokesperson for Wesfarmers claimed the deception was not deliberate, but the result of poor communication.
    False fresh bread claim: The Australian
    Woolworths
    Woolworths to sell 10 petrol stations

    Woolworths will sell and then lease back 10 petrol stations located in New South Wales and Queensland. The goal is to free up funds invested in the properties to fund development elsewhere in Woolworths.
    Woolworths sells 10 petrol stations: Sydney Morning Herald
    Statistics
    ABS retail statistics for February 2015
    ABS retail revenue statistics for February 2015
    Australian Bureau of Statistics
    NAB Online Sales Index:online versus ABS retail sales
    Monthly growth numbers for online versus bricks retail
    Click to visit the HBT website for more information
    The Australian Bureau of Statistics (ABS) numbers for Hardware, building and garden supplies were positive for February 2015. In contrast with February 2014, all states showed some growth in turnover. South Australia was the leader in terms of gains. Turnover rose from $53.5 million in 2014 to $65.4 million in 2015, an increase of 22.24%. Queensland and the ACT also performed well, showing growth in turnover of close to 11%.

    The statistics indicate three basic groupings of states: those with strong growth, those which are recovering to past levels of turnover, and those which have mild growth.

    The first group consists of New South Wales, Victoria and Queensland. Both South Australia and Tasmania belong in the recovering group. South Australia still has some ground to cover before returning to its turnover levels of 2008, while Tasmania is almost back to those levels. Western Australia continues to grow, and has recovered past 2008 levels, while both the Northern Territory and the Australian Capital Territory continue to climb.

    The ABS reports that in trend terms overall Australian retail showed an increase of 4% for February 2014 contrasted with February 2015. Household goods, cafes and restaurants, and clothing and footwear recorded the sharpest rises.
    Online retail

    The NAB Online Sales Index reports that sales rose 1.7% for February 2015. Online sales for the 12 months to February 2015 are estimated to be $16.7 billion.

    Sales for goods in the Daily Deals and Personal Goods categories slowed, while Groceries and Homewares increased activity in February.

    However, overall growth continues to decline in comparison for performance pre-2013.
    Editorial
    Grant O'Brien bets on customer focus
    Grant O'Brien speaks about his background
    Woolworths webcast
    Grant O'Brien answering questions at the Investor Day
    The team of divisional leaders at Woolworths
    Give to Amnesty International
    Respect was one of the more surprising outcomes from the Woolworths Investor Day briefing held on 6 May 2015. Specifically, increased respect for the managing director of Woolworths, Grant O'Brien.

    The O'Brien who emerged at the Investor Day reminded one of a boxer who has been knocked down early in the fourth round, but has come back, and is determined to fight his corner. The biggest surprise that gradually emerged throughout the course of that day was that Mr O'Brien was determined to fight clean.

    There were no excuses offered. No external or formerly internal parties were blamed for what had happened at the company. Mr O'Brien, in fact, went out of his way to ensure that the new team he had appointed to roles at the supermarkets and Big W were not held responsible for the past. That was a burden only he himself would accept. And this was not done with any bravado, but rather with a set determination.
    O'Brien fights back

    In the announcement of results for the first half of Woolworths' 2014/15 financial year, Mr O'Brien revealed several slightly shocking changes of direction. The previous head of supermarkets, Tjeerd Jegen, had resigned from the company.

    Targets were lowered for the supermarket division, as the company sought to find funds to reinvest in that business. The former head of the liquor division, Brad Banducci, along with the head of Woolworths' New Zealand supermarkets, Dave Chambers, would replace Mr Jegen. Further details, we were told, would be upcoming at the announced Strategy Day.

    What resulted was an event that ran to nearly six and a half hours in its recorded version. The leaders of the supermarket, Big W, liquor and, of course, home improvement divisions all had their time on stage, as well as some of the people responsible for the back end operations.
    Home improvement

    The managing director of Masters Home Improvement (Masters), Matt Tyson, did reveal quite a lot about the future plans for Masters, and provided some insights into its past as well.

    At the heart of the plans for Masters is what the company is calling "Masters 2.0", the roll-out of the new format store that has been pioneered at Rouse Hill and elsewhere. The promise of the new format is that it will deliver the sales per square metre and the margins needed to lift Masters into profitability - though that is more than two years away.

    Elsewhere HNN has probed more deeply into what he had to say. We have summarised this in a brief article that mentions the highlights, and we've also provided a PDF version of a longer analysis readers can download.

    The results for Woolworths' third quarter 2014/15, which were part of the event, are covered in a separate article.

    One of the core issues that did emerge was that, while at the prior announcement for the half-year 2014/15 results Mr O'Brien suggested Masters was somewhat sequestered from the rest of the company, this is evidently no longer the case.

    Investment in Masters has been cut in half over the next three years, from $1.2 billion to $600 million. The allocation of capital expenditure (capex) has increased sharply for the supermarkets and liquor business, from the former 50% of the total to as much as 67%.

    Not that Woolworths is backing away from Masters. David Errington, the senior retail analyst at Merrill Lynch in Australia, played a consistent role throughout the day of presenting a very strong case that Woolworths needed to focus more on shareholder value. In doing so, through intelligent and well-researched questioning, he helped to clarify a wide range of issues.

    At the very end of the day, Mr Errington presented the case for closing Masters:
    Can you cut Masters? What would it take for you to say "Enough's enough". It's costing the company too much. It's costing too big a distraction. And the same for Big W.... You have some outstanding businesses, but you are being brought down because of this millstone around your neck called "Masters". And all due respect to Matt [Tyson] and the team, but it has been tough - that's polite. And Big W has been tough. Why don't you just cut them? Because in terms of generating returns to shareholders, that would give you an enormous kick-up to shareholder return, if you were to make those tough decisions.

    Mr O'Brien replied:
    We are committed to Masters. That doesn't mean that we are committed no matter what, but that's not what we've said, either. We said very clearly in July and August [2014] that we reviewed the business, and that there were four key things that we were going to work on that would provide the level of sales intensity in the business that we needed to get the line of sight to profit.

    !
    Now, Matt [Tyson] has been really careful today, and rightly so, and I'm not going to contradict what he said, but what we've seen in the new stores is really encouraging. I'm not going to do anything over the course of the next while until we see the results of that....

    !
    It is a really big market, whether you measure it at $30 billion or $45 billion, it is a very profitable market, it is a fast-growing market, all of those things are attractive, and it is therefore a genuine growth engine for us. But we are not going to blindly continue with something that doesn't work. We will have 22% of our fleet [the Masters stores] by the end of this financial year in the new format.... We want to see the results of that.

    !
    I'm committed to it. Not just me, we are committed to it. We think Matt and his team are doing a fantastic job. It's tough. There is a really big competitor out there that is making it hard. But it was never about knocking them out. This is a very fragmented business that we have the opportunity to consolidate. I think with the new format it is more focused on that than it has been before.
    Deeper difficulties

    While a number of likely culprits - such as low rates of supermarket store refurbishments - were mentioned, it seems likely that Woolworths' problems are quite deep-seated. In the words of Stephen Bartholomeusz, writing in the Business Spectator:
    When a supermarket operator as sophisticated as Woolworths admits to significant issues of price-competitiveness, on-shelf availability and customer service and says it will take three years and a very substantial reinvestment in price to turn things around, it is an admission of fundamental and quite basic failings.
    Stephen Bartholomeusz in Business Spectator

    Most of these substantial difficulties seem to relate to Woolworths really understanding what becoming more customer-centric might mean. Take, for example, this chart which appeared on one of the Woolworths slides:
    Woolworths slide 21: Customer spend

    The issue with this slide is that it appears Woolworths believes this is a description of its customer base. It isn't. It's actually a rough description of ranging segments.

    Customer segments today are far more nuanced that this diagram illustrates. To give one example, there is an interesting study out of the Queensland University of Technology, published in 2012 entitled, "Toward a shopping typology of primary male grocery shoppers".

    This suggests that male grocery shoppers can be divided into four main segments: Convenience/busy, Equitable, Apathetic and Economic/budget. The first group, it turns out, are high-margin shoppers, as they tend not to price check, and are most concerned with rapidity of shopping, which they usually perform at the end of the business day.
    Toward a shopping typology of primary male grocery shoppers

    The reality revealed by this and other studies is that the categories of budget, mainstream and premium mentioned in the diagram no longer typify individuals, they typify the passing moods and attitudes of all shoppers.

    The fear is that Mr O'Brien will not be able to drive changes deep enough into the big corporation that Woolworths has become. The changes mentioned so far seem to be about taking the existing corporate structure and redirecting it towards enhanced goals.

    The real task may involve making changes to the corporate structure itself. This may prove difficult.
    The remaining question: what really happened?

    The question of exactly what caused Mr O'Brien to embark on his own private study of Woolworths at the start of this calendar year and so uncover many of these problems remains something of a mystery.

    Mr O'Brien attempted to provide answers to this question three times during the Strategy Day: first in his opening remarks, then when indirectly responding to an analyst's question, and, finally, during the question session at the very end of the day.

    The one detail that Mr O'Brien did let slip was that, at least when it came to looking at the out-of-stock performance numbers, he was seeing those metrics for one particular time of the day.

    What this might indicate was that somehow the metrics he was viewing had been to some extent (to use an American expression) "juiced". That is, that some managers, even potentially quite senior managers, might have been managing their part of the company so that they delivered good statistics, which hid an underlying erosion of other key aspects of the business.

    For example, if the metrics on stocking were set to be measured at 2pm every day, the stocking levels would assure that measure was met, even though regular out-of-stocks might occur as early as 6pm later in the day.

    If that were the case - and HNN has no verifiable information that it is, this is purely inference and speculation - no doubt whoever was responsible would have been sanctioned in some way by the company.
    A tough fight, but a good one

    As we said at the beginning, while HNN might continue to have some concerns about the Masters business, and Woolworths overall, this was, without doubt, a really impressive performance by Mr O'Brien.

    HNN would not be willing to say that Mr O'Brien won the day with the kind of knock-out punch he might have wanted. But we would say that, in the end, he might just have scraped home on points.
    The full report

    To read the full report on the Masters Home Improvement part of the Investor Day, please click on the image or link below to download the HNN Special Report PDF.
    Link to report PDF

    Download link
    Download PDF report

    Until next time,

    Betty

    You can contact me directly via email betty@hnn.bz or Twitter @HNN_Australia

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    Bigbox
    Woolworths-Masters third quarter 2014/15 results
    Woolworths results for the third quarter
    Woolworths media release
    Motley Fool analyses Woolworths and Coles
    Movement of Woolworths shares
    Click to visit the ITW website for move information
    As part of the Investor Day on 6 May 2015, Woolworths released its third quarter results. As an introduction to the more detailed analysis of the divisional briefings, the CEO of Woolworths, Grant O'Brien spent only a few brief moments outlining the sales results for this quarter.

    Home improvement overall returned sales of $455 million for the quarter, up by 21% from the result of $374 million in the previous corresponding period (pcp).

    Sales for Masters Home Improvement came in at $217 million, up 21.2% from the pcp sales of $179 million. The Home Timber and Hardware Group (HTHG) reported sales of $238 million, up 22.1% from pcp sales of $195 million.

    Two new stores in the new Masters format were opened during the quarter, in New South Wales and Western Australia.

    For Woolworths overall, total sales were $14,956 million, a decline of 1.6% on the figure of $15,192 for the pcp. Much of this decline was due to changes in the circumstances surrounding petrol sales. Excluding petrol sales, sales were $13,775 million, an increase of 3% on sales of $13,370 for the pcp.

    Mr O'Brien commented that sales in the supermarkets division had picked up during February and March, but declined somewhat in April, indicating that changes he had announced earlier in the year had yet to achieve a sustained effect.

    For a more in-depth analysis of the prospects of Masters, please download HNN's Special Report on the Woolworths Investor Day.
    Link to report PDF

    Download link
    Download PDF report
    Bigbox
    Woolworths-Masters Investor Day 6 May 2015
    Download HNN's PDF report
    Woolworths webcast
    A sample report page
    The new Masters 2.0 layout
    Click to visit the ITW website for move information
    The following is a brief summary of the presentation given by Matt Tyson, managing director of the home improvement division of Woolworths at its recent Investor Day briefing on 6 May 2015.

    A more complete and thorough review and analysis is provided in a PDF document. You can download this instantly by clicking on the image or link below:
    Link to report PDF

    Download link
    Download PDF report
    The story to date

    Masters Home Improvement (Masters) as it was originally conceived was simply unworkable. Aside from the logistical difficulties of obtaining land on which to build, and permission to build on that land, the format of the stores, the range they stocked, and the general proposition offered to the market were all wrong.

    As analyst David Errington of Merrill Lynch has pointed out, every store that was built has simply resulted in worse performance, and growing costs.
    The future story

    Masters under the guidance of Matt Tyson may have found a format that works. This is best represented by the Rouse Hill store near Sydney in New South Wales. However, Woolworths are being cautious, and have yet to release any results for stores operating under the new format.
    The story today

    So far, only a very limited number of stores operate under the new format, dubbed by Woolworths Masters 2.0. The real test, as Mr Tyson has himself stated, is whether when the new format is retrofitted to older stores it will result in a near-immediate boost in "sales density" (sales measured on a per-square-metre basis).

    Until that is completely proven, Masters will exist on a substantially geared-down capital expenditure (capex) budget of just $600 million over the next three years - half of what was originally budgeted.
    The mid-term future

    While the Masters exercise has been extraordinarily expensive and apparently unproductive, its lasting legacy at Woolworths is likely to be a new capacity to do the one thing large, well-established companies find very difficult to do: start new businesses from scratch.

    It's a capability that even very well-managed conglomerate businesses like Wesfarmers have not really demonstrated, and could prove crucial to ongoing success in the 2020s.
    Bigbox
    Big box update
    The plan for a Masters store in Bundaberg (QLD) has been lodged
    HNN Sources
    A legal battle over a Bunnings development in Doncaster (VIC) has been averted
    Ikea is building a new 29,000sqm store at North Lakes (QLD)
    Click to visit the ITW website for move information
    The company building the Master store in Bundaberg (QLD) has lodged its operational works plan with the regional council; a legal battle over a Bunnings store in Doncaster (VIC) has been avoided; and Ikea to open a 29,000sqm outlet in North Lakes (QLD).
    Plan for Masters Bundaberg

    Bundaberg Regional Council has received plans from Hydrox Nominees, builder of the Master store in the area. Council planning and development spokesman Ross Sommerfeld told Bundaberg NewsMail the operational works plan covered aspects such as roads, sewerage and footpaths on the site of the store. Once the operational design plan has been approved by council staff, building work on the site can begin.

    Hydrox Nominees have to start work by the end of June to qualify for a $1 million discount on infrastructure charges. Cr Sommerfeld said the development was eagerly awaited by many people in Bundaberg.
    Bunnings still in Doncaster

    Bunnings announced its store development in the Melbourne suburb of Doncaster with great fanfare in 2013, promising several hundred construction and retail jobs. Manningham Council gave the green light to Bunnings' initial plan, which would have included 385 apartments and a two-level warehouse.

    While Westfield initially objected to the store on the grounds it would limit expansion of Westfield Doncaster, Bunnings' general manager of property Andrew Marks said a legal battle between the two retail giants has been avoided.

    However there was no explanation why it appeared as though no construction had taken place at the Bunnings location in Doncaster Hill. Marks told the Herald Sun: "Bunnings has been reviewing the current development permit and is working with Manningham City Council on how the development can be delivered. We hope to make further announcements in the near future."
    Ikea North Lakes store

    Swedish retail giant Ikea says it will build a new 29,000sqm store at North Lakes, in the Moreton Bay region, which would be open in the second half of next year. A company spokeswoman told Fairfax Media the North Lakes Ikea would be "very similar" to the existing Springwood store in Logan.

    Ikea Australia country manager David Hood said 1500 solar panels would provide about a quarter of the energy needed to supply the store, which would also have 10,000 LED lights that consumed about 85% less energy than other electricity-based light sources.

    The North Lakes store, which will have a 1000-space car park, will be Ikea's eighth on Australia's eastern seaboard.
    Retailers
    Martin Smith nails online at Investor Day event
    The Martin Smith recording
    Woolworths webcast
    Online strategy for Woolies' liquor business
    The Dan Murphy website
    Click to visit the Globel Industries website for more information
    One of the highlights of the Woolworths Investor Day on 6 May 2015 was the brief, ad hoc response Martin Smith gate to a question posed by an analyst about online retail.

    Recently promoted from his position as head of Dan Murphy's to head up all of Woolworths liquor business, Mr Smith unexpectedly summed up everything a larger retailer needs to know about online retail and why it is more important to the business than just the direct online sales would indicate.

    Below is a transcript of what Mr Smith had to say, or you can click on the following link to listen directly via the SoundCloud website.
    Martin Smith recording
    Martin Smith transcript

    The Dan Murphy website has over half a million customers a week going on to it. The vast majority of that half a million customer base are shopping in our stores. So they are using that website to research, discover, check the prices, make sure they are getting the right value.

    Some of them are using it to shop with, many of them are checking to make that we've got product because you can check stock on hand. It is not unusual for me to find when I'm on the shop floor for a customer to walk in with his telephone and say, "This product is available in your store, I've just checked it online, so where would it be?"

    So if you just measure the success of online purely on how much do you sell online, you could argue is the investment worthwhile? But it is addressing the modern customer. I would suggest there is an expectation.

    I can remember when my grandson turned 14. I said congratulations Lachlan, in three years time you will get your driver's license. And he said to me, in four years time I'll be able to shop at Dan Murphy's. And I said, hang on a minute son. Maybe not. We wouldn't let you in. And he said to me, "I'll just shop online". This is a few years ago. And I said, "We don't have online".

    This is a fourteen year-old boy probably five or six years ago. He said to me, "How do people shop then?"

    I said, "Well, what do you mean, how do they shop. They just come to the store and they shop."

    He said, "That's no good. That's not cool."

    Bear in mind that generational change is happening. We are dealing with people who are over 18 years of age today who have grown up shopping online. Those 18, 19 year olds, their expectation of what a good shopping experience is has changed.

    In fact today, in the Sydney market there are websites available where you can phone up and have liquor delivered within an hour. I don't know how commercially viable they are, I don't know if they will be around in a year or two, but that's not the point. The point is what that type of business does, it changes customers' expectations.

    We are all customers. If you've shopped somewhere where you can phone up and have your liquor delivered in an hour, and then you go somewhere else and you have to wait three days to have it delivered, or you have to stand in a queue, that's not cool.
    Products
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    Rover Australia
    The 21 Ton Log Splitter offers a log capacity of 64cm in either horizontal or vertical operation
    The 33 Ton Log Splitter has a 277cc Rover engine
    SpotOn is your source for laser levels and other tools
    Rover's range of log splitters is tough, efficient and powerful enough to get the job done on just about any scale.

    The 8 Ton Log Splitter has a 123cc Rover engine and a ram pressure suited to smaller logs. The ram cycle is 24 seconds and with its horizontal operation, the splitter is capable of handling logs up to 48cm in length. All of this means the 8 Ton unit is ideal for domestic use, especially in the lead up to winter.

    The 21 Ton Log Splitter is a step up from the 8 Ton in terms of grunt, offering a log capacity of 64cm in either horizontal or vertical operation. A 160cc GCV Honda engine is powerful and reliable, and a 19 second ram cycle will see wood piles disappear quickly.

    Finally, the big dog of the range is the 33 Ton Log Splitter. A 277cc Rover engine obliterates logs right up to 64cm in either vertical or horizontal operation. A rapid ram cycle of 16 seconds ensures highly efficient working conditions, and like the rest of the range, the 31 Ton comes with a two year non-commercial warranty.
    Bigbox
    Big box update
    Bunnings Glenorchy store in Tasmania is set to open in June 2015
    HNN Sources
    Bunnings Maitland staff are searching for alternative sites to operate
    Bunnings Toowoomba developers have submitted an application to demolish a heritage place
    Click to visit the ITW website for move information
    Bunnings store in Glenorchy (TAS) is a month away from opening; Bunnings is also looking at alternative sites for its Maitland store in NSW; and the big box retailer applies for a development application to remove heritage buildings in Toowoomba (QLD) for its new store.
    Bunnings Glenorchy opening preparations

    The Bunnings store that is part of the $100 million Royal Hobart Showground redevelopment is set to open next month. The 100 workers from the Moonah store are in the process of transferring to the premises and will be joined by 80 new employees.

    Complex manager Brad McArthur told the Daily Telegraph: "Our new team members come from a wide range of backgrounds from young people looking for their first job, to mature-age workers looking for a fresh opportunity."

    Glenorchy Mayor Kristie Johnston said the development would reinvigorate the showground space. She said the council also had policies to encourage locally owned businesses to get established or to grow.
    Bunnings seeks new Maitland site

    Bunnings' Maitland store remains closed after suffering substantial structural damage in the April storm. Managing director John Gillam said that Maitland store staff had been temporarily moved to other Bunnings stores in the region. He told The Newcastle Herald: ''Engineers continue to assess our Maitland warehouse, which suffered erosion to part of the building during the recent extreme weather conditions...We are hopeful we can partially reopen the store in some capacity soon and, as a back-up, we will consider temporary alternative sites.''

    Maitland mayor Peter Blackmore said the warehouse site had been developed according to conditions laid down by the council and other government departments more than a decade ago.
    Toowoomba buildings targeted

    The developers of a planned Bunnings Warehouse in Toowoomba have submitted an application to demolish a heritage place. The Railway Hotel and sawtooth sheds currently sit at the site of the former Toowoomba Foundry. The two historic buildings need to make way for the development.

    The application must be approved by council before any demolitions can take place. The Toowoomba Foundry site is on the Queensland Heritage Register and Bunnings will also need to apply to the state government to demolish the buildings. The foundry was established in 1871 and the site has been derelict since operations ceased in 2012.

    Conservation group Brisbane Heritage has started a campaign to stop the demolition of the heritage buildings. The group says Bunnings should incorporate the heritage buildings in any plans for the site.
    NHS2015
    Fiskars' Striking Tools wins at NHS
    Fiskars IsoCore range has won an award at the National Hardware Show
    Business Wire
    The Fiskars x25 axe splits medium-sized logs easily
    Fiskars prides itself on delivering consumer-inspired innovation
    Click to visit the Globel Industries website for more information
    Fiskars has been recognised for its innovation and design with a Bronze Most Innovative New Product Launch Award at the National Hardware Show (NHS) in Las Vegas recently.

    The award was received for Fiskars' new line of 15 IsoCore[tm] Striking Tools including hammers, sledge hammers, mauls and picks scheduled to launch in 2016.

    The range was selected among 54 entrants judged on product differentiation, uniqueness, filling a consumer need, overall value, aesthetics, packaging and merchandising support. Entries were judged by a panel of 13 distribution and retail vendors. Fiskars Americas president Paul Tonnesen said:
    Fiskars prides itself on delivering consumer-inspired innovation and we're thrilled to have our newest line recognised at NHS as a top product launch for the year. We're setting the standards for testing and performance to deliver striking tools that stand up to tough use and truly make projects easier.

    Fiskars' patented IsoCore shock control system absorbs strike shock and vibration, greatly reducing the impact on the user. The development was a joint effort between the Fiskars Americas and Fiskars EMEA engineering teams, and the tools have been scientifically tested in collaboration with industry experts including Sims Vibration Laboratories.

    Fiskars' IsoCore hammers have proven to deliver three-times less shock and sledge hammers deliver five-times more demolition force than competitive tools. All tools are backed by a full lifetime warranty.
    News
    Hot links
    ASSA ABLOY has signed an agreement to acquire a Belgian sectional door company
    HNN Sources
    Praktiker ended the first quarter of 2015 with a 12.4% increase in sales
    Sika has just released SikaBond Ultimate Grab in the US
    Click to visit the HBT website for more information
    An additional roundup of home improvement stories. ASSA ABLOY acquires a Belgian manufacturer of sectional doors; Sika launches an extreme grab adhesive; a US patent has been awarded to kitchen supplier Glideware; a new Bluetooth bath fan from Home Netwerks is being sold through The Home Depot; and Praktiker experiences a 12.4% increase in sales. More stories below.

    For further information, simply click on the images provided.
    ASSA ABLOY purchases L-Door

    ASSA ABLOY has signed an agreement to acquire Belgian company L-Door, a maker of sectional doors. L-Door was established in 1997 and has around 120 employees. The head office and factory is located in Liedekerke, Belgium. Sales for 2015 are expected to reach 19million euros. The acquisition will be accretive to Earnings Per Share from the start, according to the company. The transaction is expected to close during Q2 2015.
    ASSA ABLOY acquires Belgian company L-Door
    Extreme adhesive from Sika

    SikaBond Ultimate Grab is the latest product from Sika. It is a one-component, moisture-cure, instant grab, polyurethane adhesive used to bond a wide variety of interior and exterior construction materials. Ideal for vertical applications, the adhesive eliminates the need for nails and screws. The product is currently being rolled out at The Home Depot and other retailers throughout the US.
    SikaBond Ultimate Grab has been released in US stores
    DIY speaker boxes

    Rockler Woodworking and Hardware's DIY Bookshelf Speaker Kits allows DIYers to have their own custom-built speakers. The kits include the audio and electrical components needed to wire a pair of speakers. Options range from solid wood to manufactured material like MDF that is painted or faced with a different veneer. Rockler also sells jigs that make it easy to add joinery details like splines, keys or dovetails.
    Rockler Woodworking and Hardware has launched a DIY Bookshelf Speaker Kits
    Patent for Glideware

    Glideware, inventor of the extendable cabinet organiser, has been awarded its first US patent. It secures the design feature that has been recognition as the first authentic revolution in cabinet storage since soft close drawers. The company's "Hang. Don't stack." design ingenuity eliminates unruly piles of stored items, increases useable cabinet space, improves accessibility, and liberates users from endless restacking and disorganisation.
    Gildenware has been awarded its first US patent
    Bluetooth bath fan

    The newest version of the Bluetooth bath fan from Home Netwerks features two stereo speakers, and LED lightS. It has a wall switch and a waterproof remote control with a suction cup wall mount so the user can skip or replay songs and adjust the volume of the speakers while in the shower.

    It includes the same Bluetooth connectivity as the original version and will automatically pair with a smart phone, tablet or laptop when in 30 feet of the speaker, after initial set-up.
    The newest version of the Bluetooth bath fan from Home Netwerks has been released
    Praktiker 12.4% sales increase in Q1

    Romanian DIY retailer Praktiker ended the first quarter of 2015 with a 12.4% increase in sales. In 2014, it grew total sales approximately 3.2% compared to the previous year. This was the first year the retailer had a sales increase after four consecutive years of downward trends. There are currently 28 Praktiker stores throughout the country.
    Praktiker seems to be at the start of an upward trajectory
    Home Centre expands UAE footprint

    Home Centre, a leading home retailer in the United Arab Emirates, has opened a new store in Ajman. Spanning 41,000 square feet, it is the retailer's 16th store in the UAE and 81st in its network across the Middle East, North Africa, Levant and Indian subcontinent. The latest showroom is the third opening in the UAE in recent times, following new stores in Al Ain and Yas Mall, Abu Dhabi in late 2014.
    Home Centre opens a new UAE store
    Simplify shopping for contractors

    Bestimators is a US-based start-up that helps homeowners find home improvement contractors. It's a service that makes it easier for homeowners to shop for big ticket home improvement projects. For contractors, it provides an easy, low-cost way to bid and win new customers.

    The homeowner schedules an appointment and a Bestimator comes out to answer questions and take measurements. The specs are placed online so contractors that have been vetted can see them and bid. The site reviews bids and deliver them to the homeowner, who picks a winner. It captures a deposit until the job is complete.
    Bestimators helps homeowners find home improvement contractors
    NHS2015
    SmartBurner launches in US market at NHS
    Pioneering Technology Corp. has unveiled its SmartBurner product at NHS
    Stockhouse
    It has been engineered to help prevent cooking fires and reduce energy consumption
    The Safe-T-element product has found success in the commercial industry
    Click to visit the Globel Industries website for more information
    Pioneering Technology Corp. has unveiled its SmartBurner product to the US consumer market at the National Hardware Show (NHS) in Las Vegas.

    SmartBurner is the new easy-to-install version of the company's Safe-T-element temperature limiting control technology that has enjoyed success in the business-to-business channel for years.

    The consumer version has been engineered to help prevent cooking fires and reduce energy consumption. It has also been designed to enhance the aesthetics of any kitchen, provide a better cooking experience and can be easier to clean and maintain.

    The SmartBurner product was featured in the Inventor's Spotlight section and in the New Product World area at NHS. Pioneering CEO Kevin Callahan said:
    This is the perfect event to launch the SmartBurner to the US market. It gives us exposure to some of the largest retailers in North America. The product's success in the commercial market will make for a very compelling product story at retail - consumers constantly ask us for it.

    The SmartBurner offers a similar patented, temperature limiting control (TLC) technology that is incorporated in Pioneering's flagship Safe-T-element product which was developed to help prevent stove top cooking fires and reduce energy consumption. The TLC technology is now installed in well over 100,000 multi-residential housing units across North America without a single cooking fire being reported.

    For the first time, the technology is available to end-consumers in the United States.
    Retailers
    Rona narrows loss in first quarter
    Rona's overall revenue was up 1.9% from a year ago in Q1
    Globe and Mail
    The result was offset by a decline in dealer-owners, poor weather and higher marketing expenses
    Rona's investors are not keen on a merger with Lowe's
    Click to visit the Globel Industries website for more information
    Canadian retailer Rona says its network of home-improvement stores showed improved sales in the first quarter of 2015. However this gain was partially offset by a decline at its distribution arm due to fewer dealer-owners, poor weather in Quebec and higher marketing expenses.

    The company's overall revenue was up 1.9% from a year ago, rising to C$778.8 million in the quarter ending March 29. This is typically the company's slowest three-month period.

    Rona continued to record losses but they were smaller than in last year's first quarter. Net loss was C$11.7 million, down from C$16.5 million. Adjusted net loss was C$11.2 million, down from C$14.4 million.

    The results missed analysts' estimates that Rona's revenue would be C$799.8 million, according to Thomson Reuters.
    Not hopeful for merger

    The home improvement retailer has rejected lingering suggestions that it would be better off in the long run to merge with Lowe's, saying its investors are just glad their stock has recovered under the company's current leadership. Chairman Robert Chevrier told reporters after Rona's annual meeting recently:
    Honestly, unless it's a real knockout price [that we're offered], I think people are satisfied that the stock price is climbing.

    Shares have come back since hitting a 10-year low of C$8.70 in late 2011. He said:
    What I'm hearing from people is, 'Don't get too worked up. You'll get there.'

    Lowe's made a non-binding offer of C$14.50 per share for the Quebec-based Rona in July 2012, just as a provincial election campaign began in Quebec. The bid became politicised, with the incumbent Liberal government vowing to prevent the takeover, and it died before Rona shareholders could have a say.

    Since then, Rona has implemented a turnaround plan under chief executive Robert Sawyer in which it scaled down operations, repositioned banners and became more aggressive on marketing. The company generated a profit for 2014, and same-store sales growth has been positive for three straight quarters.

    Meanwhile, Lowe's is speeding up its expansion plans for Canada, announcing plans to buy a distribution centre in Milton, Ontario, and up to 13 store leases given up by Target Corp.

    But the idea of joining the two companies lives on. Desjardins Capital Markets analyst Keith Howlett wrote in an April 9 note:
    We continue to be of the view that Rona and Lowe's Canada would be much more competitive with Home Depot Canada if they were to combine forces. With both companies now much healthier than when the nascent courtship blew up over two and a half years ago, the probability of a marriage appears, in our view, slightly higher.

    Chevrier said no one has approached Rona seeking to do a takeover transaction. Such a deal is not in the company's plans, he said, adding that the greater scale of a Rona-Lowe's alliance would not necessarily provide a boost in competitive power against small, independent hardware retailers, which still control most of the market.
    Products
    Point and click measuring from Stanley
    Stanley's laser distance measurer makes job estimates quick and easy
    Construction Equipment Guide
    The handheld, battery-powered device uses modern electronics and LCD screens
    It was featured at the 2014 National Hardware Show
    SpotOn is your source for laser levels and other tools
    Stanley's TLM65 laser distance measurer has a variety of functions in an easy-to-use design. It is small enough to fit in a pocket and provides a resource for professionals such as real estate agents, contractors, landscapers and painters. DIYers will also find it useful.

    With its automatic calculations, the laser distance measurer makes job estimates quick and easy, instantly calculating square footage of a room or space.

    The TLM65 laser distance measurer has a range of 65 ft. (20m), and is accurate to within 1/8 in. (.3cm). A simple two-button design makes measuring distance, calculating square-feet, and even cubic-feet quick and easy. Finding a target distance is fast and efficient with continuous measurement.

    The handheld, battery-powered device uses modern electronics and LCD screens that make the process of taking long measurements or performing complex calculations very simple. This accelerates both estimates and execution of jobs for builders and renovators, painters, installers, appraisers and architects as well as homeowners.

    One person can measure 65 ft. without assistance. The laser measurers' addition and subtraction features offer convenient calculations in English or metric, fractional or decimal modes.
    Retailers
    Super Retail Group reveals lift in sales
    Super Retail Group has announced a lift in overall sales across its eight brands
    News.com.au
    All 13 New Zealand-based FCO stores will be closed by the end of this month
    The company intends to grow its network to over 800 stores
    Click to visit the Globel Industries website for more information
    Super Retail Group announced a lift in overall sales across its eight brands, as the financial year is coming to a close.

    Its revamp of its Rays Outdoors brand will involve closing four out of its 56 stores and cost $9 million this year. As a result it has forecast spending $27 million on restructuring costs.

    The leisure division, including Ray's Outdoors and BCF, was its weakest performer in the latest market update. A company statement said:
    Work is progressing on plans to develop the new Ray's business with a full review of retail brand, store design and fit-out, product ranging and marketing.

    The new format will be tested from September. It has also dumped its FCO (Fishing, Camping Outdoors) brand, with all 13 New Zealand-based stores to be closed by the end of this month at a cost of about $16.5 million.

    Like for like sales in leisure declined 1.3% for the 44 weeks to May 2, but have improved to be up 4.1% for the second half of the fiscal year.

    The bigger auto accessories and sporting goods divisions did better with rises in sales. Sporting goods, including the Rebel, Amart and Workout World stores increased like for like sales 7.4% for the 44 weeks.

    Auto, comprising Supercheap Auto and AutoTrade was up a more modest 2.0%.

    Gross margins fell in the leisure and sports divisions, which was blamed on competition and discounting, but were up in auto as the dollar fell and a loyalty program performed well.

    The company's number of stores have fallen below 650 with the FCO closures, but it intends growing that to more than 800, it said recently in a presentation to the Macquarie Australia conference.

    That was part of plans to hit 15% annual earnings per share growth, it said. The stock is up 50% since last Christmas.
    Retailers
    Growth and loss for True Value in Q1
    True Value Company reported revenues of $353.8 million in the first quarter
    Business Wire
    Retail comparable store sales were up 5.3% in the quarter
    It recently announced that Deborah O'Connor will join the company as CFO
    Click to visit the Globel Industries website for more information
    US hardware cooperative True Value Company has reported revenues of $353.8 million in the first quarter, an increase of 6.7% or US$22.3 million from the same period a year ago.

    Retail comparable store sales were up 5.3% in the quarter, with increases in eleven of twelve regions of the US and in all of the cooperative's nine product categories, led by seasonal, farm ranch, auto & pet and lawn & garden.

    During the first quarter, True Value also continued to expand its square footage and retailer base. In the three-month period, the company added 256,000 square feet of relevant retail space.

    Despite its growth, the cooperative planned for a loss in the first quarter of 2015. It posted a net loss of US$1.7 million, down US$2.6 million compared to net margin of $0.9 million from a year ago.

    The net margin decrease was driven by investment expense incurred in relation with the implementation of the strategic plan and was partially offset by the sales increase. President and chief executive officer John Hartmann said:
    Our first quarter sales performance shows solid year-over-year improvement, reflecting our intense focus on relevant product assortments and brand building. Not only did our company's revenue increase, we saw an uptick in nearly all of our product categories.

    Today, True Value includes approximately 4,500 independent retailer locations worldwide operating under the store identities of True Value, Grand Rental Station, Taylor Rental, Party Central, Home & Garden Showplace and Induserve Supply.
    New CFO installed

    It recently announced that Deborah O'Connor will join the company as senior vice president and chief financial officer, succeeding David Shadduck.

    Shadduck was instrumental in guiding the cooperative during significant periods of challenge since he first joined in 2001. Most recently, he played a critical role in restructuring the cooperative's financing so it can execute its strategic initiatives.

    O'Connor comes to True Value with a wealth of retail experience having worked in various finance roles over the last 25 years. Most recently, O'Connor spent seven years at OfficeMax, where she was the senior vice president of integration and finance, contributing to the OfficeMax/Office Depot merger.

    Since 2008, she has held a number of finance leadership roles, including interim CFO and senior vice president and chief accounting officer.

    Prior to joining OfficeMax, O'Connor was with ServiceMaster for over 15 years, most recently as senior vice president and controller where she oversaw numerous acquisitions, including Terminix, TruGreen/ChemLawn, American Home Shield and Merry Maids.

    She was also an accountant with Arthur Anderson for seven years working in the firm's commercial division while also receiving her CPA certification.
    Reports
    The "living small" trend hits Australia
    The "living small" trend is beginning to take off in Australia
    News.com.au
    The small living trend is fuelled by housing supply issues and a growing focus on sustainability
    Few companies provide furniture and homewares designed for small homes - except for Ikea
    Subscribe to HNN weekly e-newsletter
    A number of Australians have abandoned the pursuit of large family home and two-car garage.

    Micro apartments have existed for some time, particularly in population-dense cities like Paris and New York. However, the "living small" trend is beginning to take off in Australia.

    The move to a smaller living space is often motivated by practical reasons, such as lowering expenditure. People who make the transition spend less money on electricity, maintenance and cleaning, and have less debt.

    According to home organiser Bethany Clayton, once in a downsized lifestyle, people begin to discover that living clutter-free can boost emotional and mental energy. Larger homes and more possessions does not equate to happiness and convenience. Clayton said:
    People are getting tired of huge houses that aren't particularly well-built and cost a fortune in mortgage payments and maintenance. As modern families are getting bigger houses, they are also falling deeper into debt and less satisfied with life.

    Sydney businesswoman Sarah O'Neill opened her store, Small Spaces after she downsized to a 29sqm apartment. She noticed that very few companies provide furniture and homewares designed for small homes.

    Whether for practical or ideological reasons, the trend towards living small does appear to be growing. A rise in demand for convertible furniture, such as the products sold at Ikea, could have an impact on Australia's homewares and hardware retail sector.

    Demand for bulk goods at a low price could wane as consumers look for innovative, convertible products, with a willingness to pay the necessary premium. O'Neill says that when consumers have less to buy, they have more to spend - shifting the focus from low prices to quality and innovative design.

    Some small living enthusiasts are so budgeted with their space that they have redefined "necessities". Micro-dwellings often have no dishwasher or clothes dryer.

    The small living trend, fuelled by housing supply issues and a growing focus on sustainability, has created a small but lucrative opportunity for enterprising designers and retailers to explore.

    Story by Robyn Williams
    NHS2015
    @NHS 2015: Side Track Saw Table
    Mel Koresh at his NHS stand displaying the Side Track Saw Table
    HNN sources
    It is a lightweight, portable saw table that can fold in half
    There are locking positions for every roof pitch
    Click to visit the Globel Industries website for more information
    The Side Track Saw Table is "basically" a lightweight, portable saw table, according to its inventor Mel Koresh. It initially was developed as a way to cut wood on scaffolding and can be used on most construction materials, depending on the thickness. There are locking positions for every roof pitch. Also designed to be specifically cordless and folded in half so that is does not take up too much space.

    Not surprisingly, it has been popular with the contractors who have been using it so far. Mel is currently looking for manufacturers who can make the Side Track Saw Table in larger volumes.
    Invention for cutting building materials

    NHS2015
    @NHS 2015: Ladder-free gutter cleaning
    The EZsmart Gutter Cleaner is true multi-tool that can be used all year-round
    HNN sources
    It was part of the popular Inventors section at the National Hardware Show
    The company behind EZsmart has embarked on a kickstarter campaign
    Click to visit the Globel Industries website for more information
    Cleaning gutters no longer requires a ladder thanks to the EZsmart Gutter Cleaner. Developed by Mark Ramsey and his son, the product gives homeowners a safe and smart option of keeping gutters clean.

    Made form heavy duty durable design with an adjustable front air nozzle for variable output. It provides a smooth movement along all types of gutters. It has a long-lasting, rechargeable lithium-ion battery and a blower motor that generates 120 MPH jet of air.

    A true multi-tool, the EZsmart Gutter Cleaner has a different attachment that allows down spouts and other areas to be cleaned as well. The company is currently running a Kickstarter campaign.
    Constantly clean gutters

    Editorial
    The Vegas show: big but not so inventive
    Amazon sponsored a new products display at NHS
    HNN sources
    The Side Track Saw Table invented by Mel Koresh
    This year's NHS had a large number of small Chinese booths
    Give to Amnesty International
    In the past, bigger shows were always more exciting. There is no doubt that the National Hardware Show (NHS) in Las Vegas has been bigger than ever this May 2015. But more exciting? Probably not.

    That is not to gainsay in any way the obvious success of the NHS. Yet what really drives excitement at events such as this are the inventions, the developments, the possibilities that new things can bring to the market. That wasn't lacking from the NHS, but it also wasn't as present as it could have been.

    This really has nothing to do with how the NHS is organised or marketed. In the end, the best the show can do is to accurately reflect the market, and that is what it did this year. It's just that the market today is not only cautious, it seems extra-cautious.

    As "qualitative easing" - low interest rates - is faded out in the US economy, there are fears it will be a bumpy transition back to "normal" market forces. For example, the consequent upward valuation of the US dollar is already affecting the earnings of the large, diversified companies in the hardware industry.
    The China factor

    One prominent feature of the NHS was the large presence of Asian suppliers, particularly those from China. The "International Sourcing" area had over 700 booths.

    This consisted, for the most part, of small booths lined up in the back section of one of the halls, each occupied by one or two usually bored-looking Chinese people, with some token goods racked up on the wall behind them.

    On a fairly cursory inspection (there were just too many booths to be thorough) it would seem there was not a lot of creativity going on in the goods on offer. What was really being represented here was raw productive power, the ability to turn out OK goods at a low price.

    There is nothing wrong with that, of course. In fact, with some better promotion of this area, the NHS could turn into a prime place for people seeking a Chinese factory to manufacture a known product. That would be a very valuable service, and it seems likely the organisers of the NHS might have that as one of their future goals.
    Where is the invention?

    Elsewhere, the NHS really went out of its way to help promote companies that had new, innovative products. There were 105 tiny booths offered in the "Inventors' Spotlight" area of the show.

    There was also a special set of long tables where new inventive products could be displayed, and Amazon sponsored a large display of new products out in one of the show's foyers.

    While we saw some very clever things in all these areas, there was little that really captured the imagination, or seemed to really represent hard-core invention.

    There were some specific areas of consumer demand that seemed to encourage inventors. There must have been, for example, more than 10 different systems for cleaning leaves from gutters and keeping gutters leaf-free. Evidently this is something of a "pain point" for many home owners.

    Another area of much invention was just about anything to do with pizzas. While I suspect we may be on the downslope of pizza-at-home category sales, it continues to grow in terms of products on offer.

    One upwardly trending category is for containers that help to grow plants either indoors or in very confined spaces. We must have seen over a dozen new products in this area.
    The real deal

    The one real exception HNN found to this lack of inspiration was in a small booth along one wall of a display area. It featured a tool called the Side Track Saw Table. This was invented by Mel Koresh, who was manning that stand.

    Mel is a familiar type of person to both Americans and Australians. Tall, thin, a little laconic, after you've spoken with him for a minute or so, you know two things about Mel: he's a hard but smart worker, and he's one of those really balanced, quiet people you often find working in construction.

    Mel ran his own construction company (mostly siding) for some years, but had to close it down during the GFC, when, he tells us, work just completely dried up for a time. The Side Track Saw Table seems to be the product of that down period.

    The Side Track is a jig that simplifies the process of cutting cladding such as weatherboards. A DeWalt cordless saw attaches to a lateral beam. The beam is easily positioned via ratchet (click) positioning.

    It folds up to a compact size, so it can be easily transported in a car boot, is lightweight, making it easy to carry anywhere on a construction site - including up onto scaffolding, make it less necessary to have one person dedicated to cutting on a job. Cuts of over 500mm can be made.

    As Mel explained the idea of the Side Track grew out of his own daily work. He had built a number of temporary jigs, and could see the need for something more developed and easier to use.

    One organisation where he has sold the Side Track is to Habitat for Humanity. As they use amateur volunteers to build houses, the Side Track helps reduce the workload and a number of errors that get made.

    It's an honest piece of work.
    Anti-invention

    There other forces at work at shows such as the NHS. Some of them we might label as "anti-invention".

    Most of us are aware that it is fairly common practice for big-box retailers and others to invite designers and manufacturers to these shows, where they seek out products that can be easily copied - with enough variation to make them "unique".

    This kind of creative copying has been going on for several hundred years, and is part of the background of modern commerce. While a certain level of this kind of sharing is a good thing, when it reaches extremes, it can begin to inhibit true invention.

    That's because copying provides a second-mover advantage. Companies that invest in developing products have to recoup that expenditure by amortising the costs as part of the margin on the product.

    Companies that copy a design have much lower development costs, and can therefore charge less for the product that has been copied.

    Patents provide some protection, but the costs of obtaining a patent add to the development costs (and therefore increase risk), helping to dampen development. There is also the process of patent enforcement itself, which can be expensive, and, when dealing with countries that have little tradition of intellectual property, often of little effect.
    The inventive cliff

    Aside from these anti-inventive forces at work, there also does seem to be something we could call the "inventive cliff" at work. At the top of the cliff is the industry as we know it today, with the kinds of products we know.

    At the bottom of that cliff are radically new kinds of products that make better use of high technology. The question is: when do you jump?

    Companies are really struggling with this upcoming transition. Moving from low-tech to hi-tech is going to make some of them a lot of money - but it all depends on the timing.

    For example, this year, 2015, was definitely not the "year of the smart home" at the NHS. It seems pretty likely that that will happen, sometime in the next five years - but which year?

    This caution and difficulty in knowing how far to go is not limited to the products shown at the NHS, but to the technological underpinnings of the show itself. The NHS did come out with an OK mobile app this year, but the possibilities of what could be done are dazzling.

    What if, for example, every booth at the show were equipped with a simple $15 webcam? Imagine being able to do a virtual tour of the show by clicking on a floor map.

    Or supposing, in terms of the vast numbers of Chinese booths, that a designer could electronically submit a request for specific expertise, and gain an immediate response from those booths?

    Or if the problem of translation between languages were solved by having a Skype-based service where a pool of translators could participate in a conversation at the click of a mouse?

    Not that HNN intends any of this as a criticism. One sign of a good show is that you don't leave disappointed, but eager to explore more of the potential in the format and the event.

    In that sense, the 2015 National Hardware Show in Las Vegas certainly did one thing better than most shows: it made us hungry for more.

    Until next time,

    Betty

    You can contact me directly via email betty@hnn.bz or Twitter @HNN_Australia

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    Statistics
    Hardware retail turnover March 2015
    Retail turnover for hardware in March 2015
    ABS
    NAB Online Retail Sales Index seasonally adjusted for March 2015
    NAB Online Retail Sales Index
    Click to visit the HBT website for more information
    The Australian Bureau of Statistics reported strong growth throughout most of Australia for hardware, building and garden supplies retailing for March 2015. All regions showed growth of more than 4.9%, except for the Northern Territory, which recorded growth of just 0.6%.

    South Australia improved on March 2014 by 30%, lifting from turnover of $60 million to $78 million. This has returned the state to the turnover level of 2012, following on from two years of lower turnover.

    Queensland also showed strong growth, reaching $288 million in sales, a 15% improvement over March 2014.

    Overall growth for Australia in this category was up 10.9%.

    For all of retail, the ABS reports that in trend terms Australian turnover increased by 4.3% in March 2015 as compared to March 2014. Tasmania and Queensland showed the highest increases.
    Online

    According to the NAB Online Retail Sales Index, seasonally adjusted sales rose by 0.8% in March 2015. NAB estimates that online sales for March 2015 are 8% higher than sales for March 2014.

    Overall spending on online retail in the 12 months ending March 2015 is estimated at $16.8 billion, which would represent 6.9% of the spending at bricks-and-mortar retailers.
    NHS2015
    @NHS: Focus on independents
    Independent retailing is the primary focus of NHS events
    National Hardware Show
    Aubuchon Hardware was part of a panel of independent retailers at NHS
    The North American Retail Hardware Association hosted many events at the NHS
    Click to visit the Globel Industries website for more information
    The line up of speakers at the North American Retail Hardware Association (NRHA) All-Industry Conference at the National Hardware Show (NHS) included a panel that discussed issues facing the next generation of independent owners.

    The panel was moderated by Scott Wright, executive director of the Retail Leadership Institute with NRHA, and included some of the industry's notable young retailers.

    Will Aubuchon, vice president of sales at Aubuchon Hardware in Westminster, Massachusetts, shared his perspective on the challenges the industry and his stores are facing, especially when it comes to changes in customer service expectations for employees. He said:
    Customer service is evolving but you have to start with people first and foremost, so recruiting and training really good people is still highly relevant today. Technology is playing a big role in what customer service means today. Putting the power more in the hand of the consumers.

    Bill Brunelle of Independent We Stand and Dan Tratensek of NRHA, presented the results of a new joint research project called the Home Sweet Home Study that looked at the financial impact independent home improvement businesses have on their communities. He said:
    There's no doubt that supporting local businesses is beneficial to a community. Previous research has shown that independently owned businesses provide substantial, quantifiable economic benefits. Our work with NRHA has produced some exciting results, which illustrate the impact specifically within the hardware, outdoor power equipment, paint and lumber industry...

    Gary Pittsford, CFP (certified financial planner) and president of Castle Wealth Advisors, talked about one of the biggest topics in the home improvement industry: succession planning. Pittsford discussed the current state of succession planning among family businesses and how it will impact the home improvement industry in coming years.

    Creating a succession plan involves not only evaluating a business, but also determining who the buyer will be, and having some difficult discussions. He said:
    You have to look at who's going to be involved in the business and who is going to have control, which can be a touchy subject in some family businesses.
    It's a difficult decision when you have two or three kids in the company and you have to think if one should be a majority stockholder. Sometimes 50/50 works, but not always.
    Different categories

    The number of new categories at NHS are growing in popularity. In the Energy Efficient area, suppliers showcased their environmentally friendly products that can save consumers money on their energy bills.

    A display of Emergency Preparedness & Disaster Recovery products was also part of the show. This category first appeared at the event last year and is a popular one for retailers looking to stock their stores with everything consumers will need in an emergency or natural disaster. Jason McGowin, vice president of sales for San Francisco company Stower, said:
    People are just realising they need to be more prepped for the power to go out. It seems very much to be an emerging category.

    Stower makes fire-powered electronics chargers, which have been very popular in New York City due to recent hurricanes and blizzards, he said. The company's latest product can be connected to a gas stove or inserted into a fireplace, and the heat powers a device that can charge cellphones and other small electronic devices.
    Latest initiatives

    One-on-One appointments were a new feature at the show this year. They're a way to connect independent retailers with exhibitors in 15-minute appointments. Both parties submitted information to NHS (what products retailers are looking to buy, minimum orders required from manufacturers and other pertinent information) to match up retailers and manufacturers that could benefit from a meeting.

    Gutterglove, a manufacturer in Rocklin, California, participated in five one-on-one meetings with retailers. President and CEO Robert Lenney was able to ask questions about what hardware store buyers look for in a manufacturer, and gained some good leads through the meetings.
    Acknowledging the best

    The awards ceremonies kicked off at the NRHA Village Stage, with the Top Guns awards, which recognises four of the industry's most innovative retailers. Dan Tratensek, publisher of Hardware Retailing magazine said:
    The Industry's Top Gun Awards began nearly a decade ago as a way to illustrate that the independent segment of the home improvement industry was not only continuing to thrive, but also the source of broad innovation in retailing and community involvement. We think this year's class of Top Guns truly embodies the principles of innovation, success and community spirit that the awards were intended to recognise.

    Winners include Bobby Fuller of Fuller & Son Hardware in Arkansas, Michael Fujimoto of JPM Building Supply in Hawaii, Jason Haley of Great Lakes Ace in Michigan and Rolando Robles of Anawalt Lumber in California.

    During the session, panelists shared what differentiates their stores and pushes them to be some of the industry's leading retailers.

    At Fuller & Son Hardware, Bobby Fuller uses a unique price-matching system to remain relevant with thrifty, price-conscious consumers. He said:
    We put a price-match kiosk in every store because customers price-shop and research anyways. The kiosk allows retailers to search for a product and compare Fuller's item price to that of Home Depot and Lowe's.
    Since we've been doing this our sales have exploded. We've finally taken the one thing that people were hesitant about away and now have great products, service and pricing.

    Anawalt Lumber stands out in the community with the fun and creative events it offers. He said:
    We do some unique events such as a garden festival and a tomato tasting. Those special events are what sets us apart in our area.

    The Top Gun Honourees then went on to share their thoughts on the independent home improvement industry and advice they would give to future generations. Fujimoto said:
    We have the ability as independent retailers to get close to our customers and understand their needs. Our independence allows us to work quickly to adjust our business to match those needs much faster than the big boxes.

    Haley spoke to the opportunities available when retailers work together and learn best practices from one another. He said:
    We have a primary obligation to be profitable but also to work better together as an industry. If the independents could band together more and more and think of each other as comrades rather than competitors, that presents a lot of opportunities.

    The Paint and Decorating Retailer's Association and the NHS also teamed up to present the annual US$5,000 scholarship to Kevin Jones, who plans eventually to take over his family's business, Huffman Paint & Wallcoverings in High Point, North Carolina.

    Jones started working in his family's store at age 11, putting barcodes on sandpaper. He is currently majoring in business and marketing, with an emphasis on entrepreneurship, and plans to work full time at Huffman Paint when he graduates in 2017.

    For more than 30 years, Hardware Retailing has recognised the best products by honouring some of the most innovative with its Retailers' Choice Awards. It is a way of retailers providing manufacturers with feedback and recognition for developing products that will help them drive sales. That's at the heart of what Hardware Retailing seeks to do: bring manufacturers and retailers together.

    The products, and their winners, were recognised in a ceremony at the NHS. Listed below are this year's award winning products:
  • Infinity Level, Mosley
  • SureSeal, RectorSeal
  • easystrap[tm], easystrap[tm] Group
  • 3 in One Truck Ties, Profiler, Inc.
  • myLifter, EGI
  • Tiki Toss(r), Mellow Militia
  • Fishbone Knotless Rope Tie, Fishbone Knotless Rope Tie
  • Pizza Oven Box, BakerStone
  • TIE BOSS, TIE BOSS LLC
  • The GunBox[tm], SafeTech Products/The GunBox
  • SOUNDSHIELD[tm] Safety Glasses with earplugs, ReadyMax Tools and Safety
  • BetterVent[tm], ADR Products
  • Screenmend, Fiber Fix
  • Dish Genie, Danco
  • Pioneer Wood Patina, Pioneer Wood Products
  • Fire Pit Pro[tm], Orion Safety Products
  • Joki Hanging Crow's Nest, LA SIESTA
  • NemaGlobe Nemotodes Pot Popper, Environmental Factor
  • Spinning Bulk Driving Display, Task Tool
  • Kneepads, TommyCo Kneepads Inc.
  • trash-ease[tm], trash-ease/JPC products LLC
  • Himalayan Salt Cooking Plate, Salt Rox LLC
  • Gorilla Mounting Tape, The Gorilla Glue Co.
  • CO2 Fridge Tap[tm], Leland Gas Technologies
  • Rain-X[tm] shower door water repellent, ITW
  • Add-a-Handle[tm], We Have it Handled Corp.
  • Airlighter, Bison[tm]
  • Gift Wrap That Grows[tm], Triumph Plant Company
  • Camo Mullet Buster[tm] Suspension Rig, BUCKET BOSS[tm]
  • Flexzilla[tm] Pro, Legacy Mfg Co.

  • Other award winners included the American Manufacturing Awards presented by NHS. These include:
  • Best Packaging: Walters Seed Company
  • Best On-Site Marketing: Rite in the Rain/JL Darling LLC
  • Best Booth Display: New Haven Hardware
  • Best New Product: Adams Manufacturing

  • In addition, Lawn & Garden Retailer presented Lawn, Garden & Outdoor Living Awards:
  • Gold: EcoClear Products
  • Silver: The AMES Companies
  • Bronze: BBQ Dragon
  • Honourable mention: Black Diamond International Forest Group
  • NHS2015
    @NHS 2015: Mix and match sheds
    David Read from Durabuilt gave HNN a tour of the stand at the National Hardware Show
    HNN sources
    Durabuilt is also the maker of the EasyShed range
    Raised garden beds have been added to the lineup
    Click to visit the Globel Industries website for more information
    David Read is a recognisable figure from the Australian hardware industry. And very charming to boot. He showed HNN the EnduraShed that is smaller in size to suit the smaller types of houses being built now. Easy to assemble and fits under the eaves, according to David. It also comes in 25 colours. The packaging serves as merchandising and can be customised for retailers.

    A raised garden bed is also new to the range. It is long-lasting, rust-protected, and comes in may sizes and different shapes. "You don't have to bend too far down to assemble so it can help your back," he said.
    Australian made sheds

    NHS2015
    @NHS 2015: BeefEater and the BUGG
    Peter Woodland has been supplying the BeefEater barbeques to the US market for many years
    HNN sources
    The BUGG is the latest product from BeefEater
    The BeefEater range includes built-in and mobile barbeques
    Click to visit the Globel Industries website for more information
    Peter Woodland's BeefEater barbeques have been in the North American market for just over 15 years. Most recently, his company has introduced the BUGG (BeafEater Universal Gas Grill). A compact and portable barbeque, it can be used with or without its stand and easily fits into the back of the car. Idea for apartment balconies.

    All the pieces that come with the BUGG fit together perfectly and it looks like it can be stored away easily. An important product feature for today's smaller living spaces. Up close on the stand, it's easy to see why the BeefEater range has been successfully sold through major retailers in Australia and the USA.
    Contemporary barbeques

    NHS2015
    @NHS 2015: More than a tinny
    Anthea from SlumberTrek at its National Hardware Show stand
    HNN sources
    The Tinny cooler range has been a best seller for the company
    The Pop Lounge is another innovative product from SlumberTrek's expansive range
    Click to visit the Globel Industries website for more information
    Anthea from SlumberTrek showed HNN its popular Tinny cooler range at its large, open stand. The products are an ideal mix of modern design, functionality and retro cool. They bring a colourful dimension to the stock standard, plastic, blue cooler. The external design can also be customised for any retailer. A very useful option for stores who want to have their own branding on the coolers.

    The Foam Pop Lounge uses shredded foam filling that expands to create funky and comfortable seating. Its packaging allows retailers to display a furniture range with limited shelf space. Different fabrics can also be used.
    Outdoor products with a twist

    NHS2015
    @NHS 2015: Family security device
    Sean Devine developed the Security Doorstopper
    HNN sources
    The Security Doorstopper is a door wedge with a rear foot pad and a handle
    The doorstopper is made of high-tech materials because it is both strong and lightweight
    Click to visit the Globel Industries website for more information
    Sean Devine and his Security Doorstopper are impressive ambassadors for Australian entrepreneurship at the NHS. Designed as a home security device, it is basically a door wedge with a rear foot pad and a handle so people don't have to bend over to pull their door wedge out. Great news for the elderly and people who suffer back problems.

    As Sean explains it: "The main benefit is that it allows homeowners to safely open their doors without the threat of a home invasion because it can stop intruders at the door." A number of merchandising options are available and the company will work with individual retailers.
    Preventing home invasions

    NHS2015
    @NHS: Events for 6 May
    The 2015 National Hardware Show gets under way!
    HNN sources
    Scott Zimmer from Bridgeworks presents the keynote
    Pat Murphy will discuss mobile marketing
    Click to visit the Globel Industries website for more information
    The opening day of the show is set to be an interesting one for people seeking events to attend.
    2015 NRHA All-Industry Conference Seminars
    Keynote: When generations connect

    9:30am to 10:30am

    Presented by Scott Zimmer of Bridgeworks, this seminar focuses on how retailers can build effective teams of employees in their businesses by engaging with the different generations.

    Mr Zimmer presents himself as an aware Generation X person, who understands how to bridge the gap between baby-boomer and millennial generations. The company for which he works, Bridgeworks, is dedicated to understanding this aspect of workforce management, and has published several well-received books on the topic.


    Cam Marston's slightly different take on the generations:


    And TEDx talk "Millennials: Who they are & why we hate them"

    Generational Buying Patterns in the Home Improvement Industry

    11:00am to 11:45am

    Presented by Jim Robisch of The Farnsworth Group, this talk examines the data available that tracks the spending habits of different generations. It promises to provide actionable content about issues such as "path to purchase", and what constitutes a satisfying customer experience.

    The Farnsworth Group is a market research and strategy consulting firm that specialises in the hardware, home improvement and building supply markets.

    Mobile Marketing for the Generations

    1:00pm to 1:45pm

    Pat Murphy of FunMobility will speak on ways to reach consumers through mobile technologies, particularly Millennial consumers. Mr Murphy has served as president of the Hardware Marketing Council and Hardware Group Association.

    FunMobility's most recent product for retailers is a full-service, turnkey mobile shopper marketing program designed to generate foot traffic, boost cart size, and drive in-store mobile engagement.
    Presentation by Pat Murphy
    Top Tips for Generational Target Marketing

    3:00pm to 3:45pm

    Ruth Furman of ImageWords Communications will explore a holistic approach to marketing, including everything that makes for an online "presence", such as social media, online product reviews, and public relations strategies.
    2015 NRHA Awards

    The NRHA is responsible for a range of awards.
    Packaging and Merchandising Awards

    The purpose of this awards program is to encourage and recognise the development of innovative packaging and merchandising aids that will help independent hardware stores, home centres and lumberyards sell more products through their stores. Awards are presented at the NRHA Village stage during the National Hardware Show
    NRHA social events at the NHS

    The NRHA offers specific venues and events where retailers can get to know each other and various experts in their fields. They also provide a range of meeting spots around the show.
    NRHA Village/Village Stage Opening

    9:00am to 9:30am

    The NRHA Village is like a "home" for the NRHA All-Industry Conference. Here retailers, manufacturers and distributors can get to know each other.

    The Village Stage is where the speakers in the seminars will present their material.
    NRHA Independent Retailer Reception

    5:00pm to 6:30pm

    This is a great opportunity for retailers to meet colleagues from a range of different locations and market situations. It opens at the close of the show for the day. Staff from the NRHA will also be there. RSVP to adewitt@nrha.org to attend.
    HBT2015
    @HBT Show 2015: Bahco's "demolition man"
    Ian Moore from Bahco/SNA E Australia is another great spruiker
    HNN sources
    http://www.bahco.com/en/professional_hand_tools/wrecking_knife_1.html
    Its safety and packaging details were also pointed out in the video pitch
    Click to visit the HBT website for more information
    Ian Moore is another person with hidden, on-camera talent that HNN has uncovered. But we are still waiting on our commission cheque. At the HBT show, Ian gave a thorough and entertaining demonstration of the new Bahco Wrecking Knife. Despite its reputation as a "demolition" knife, it seemed very safe in his hands.

    This presentation shows that Ian knows exactly what his customers do in their daily work and how the product is useful for them. To demonstrate the sharpness of the blade, Ian sacrificed some hairs on his arm. All in the name of filming this video.
    "Brand for trades"

    HBT2015
    @HBT Show 2015: Tilling delivers retail solutions
    Sales and marketing manager Leon Quinn gives a polished performance
    HNN sources
    TecBeam has a genuine solution for today's market
    Tilling Group seems to always be thinking ahead
    Click to visit the HBT website for more information
    An enthusiastic (and not exactly shy) Leon Quinn gave a highly professional video pitch of the TecBeam product. It seems ideally suited for hardware and building retailers who service professional end-users. As Leon puts it so clearly, he and TecBeam can help provide store owners with an opportunity to grow their markets. It was great to hear someone explaining benefits that went far beyond the product itself. Smart selling indeed.

    More importantly, the product has applications for the growth in medium-density construction. He said: "More and more builders are doing light framing". Recent housing data can attest to this trend.
    Leon presents...

    HBT2015
    @HBT Show 2015: Durafloor's dual applications
    David Starling, state manager (VIC/TAS) at BGC Fibre Cement
    HNN sources
    BGC Durafloor allows retailers to display one product instead of two
    The product can work well for both internal and external areas
    Click to visit the HBT website for more information
    Before David Starling would begin the product video of Duraflloor, he insisted on doing a few "Dad jokes". The people who heard them can attest to how tragic they truly were.

    Durafloor is a 19ml flooring substrate and goes straight into yellow-tongue flooring. It does not need to be sanded. Ideal for wet areas such as bathrooms and kitchens, or the whole of house if customers are "more discerning", according to David. It is fully supported by brochures and sample boards, and comes all pre-packed for in-store merchandising. Retailers can display one product instead of two.
    Durafloor exlained

    NHS2015
    Storage king
    Chris Gobel, founder and managing director, Globel Industries
    HNN sources
    Globel Industries creates storage systems, not just products
    Globel is now supplying garden sheds into eight different countries
    Click to visit the Globel Industries website for more information
    The futures of nations get made in the strangest places.

    Silicon Valley, for example, was once a wide open space of orange groves, and even after Fairchild, its first tech company, started there, it remained quiet and suburban until the first wave of the tech revolution hit in the 1980s.

    That's the thought in my mind as I drive through the complex intertwined nest of roads that will lead me eventually to the offices of Globel Industries in Port Melbourne.

    I'm driving through an area that has served the city of Melbourne, Australia and its outlying suburbs in many different ways. Close by is the place where post World War II immigrants would first have landed on these shores, and later, from the 1970s onwards, where raw materials and parts came in on ships from many nations to feed the factories.

    Now much of it is changing, once again. The major car manufacturers in Australia, Ford and the GM-owned Holden, will pull out within two years. It is simply too expensive to build cars here, and the government has chosen not to continue the heavy tariffs and protections that propped up these industries for many decades.

    As I twirl the car through the final kick-back twist of an industrial drive to arrive in front of the Globel offices, I pass by the usual clutter of small manufacturers and service companies you would find in any industrial park on the outskirts of Melbourne.

    Chris Gobel greets me at the door. He's of a little above average height, solidly built with close-cropped hair, and a keen, direct gaze that comes out from behind metal frame glasses.

    There is a trace of humour in him you sense immediately, the same spirit of play that made him add a single letter to his surname, "Gobel", to change it to the international sounding "Globel" for his company name, Globel Industries.

    He shows me briefly around the offices, the second-level rooms where his general staff works, and then above, where his own office is separated by a glass wall from a conference table with chairs surrounding it.

    Perhaps it's just from my thoughts on the drive down here, but I can't help feeling the place has something of the feeling of the bridge of a ship about it. And it is very clear from the beginning who the captain is.

    We settle down at the large table, with a view out across the street leading up to the building, and Chris sets about filling in the personal details of the story of Globel's success.
    Behind the scenes

    I already know a fair amount about Globel, though I may be one of the few people of whom that could be said. Globel Industries is part of what are sometimes referred to as Australia's "stealth" companies.

    These are businesses whose actual products are well-known to consumers, but whose names have been masked by the companies that distribute those products.

    In Chris' case, Globel's storage products are distributed through Australia's largest big-box home improvement chain, Bunnings. So consumers have for nearly the past decade made use of the shelving, storage units and the closet inserts Globel Industries has made by the thousands, but none of them would recognise the name.

    That is something of a shame, as Chris possesses an unusual combination of talents, even for Australia. On one hand he has a confident and simple design instinct that has enabled him to create storage components that are functional, attractive and - what is really his hallmark - very flexible to use.

    They've proved very popular indeed with the buying public, and helped lift his company into revenue that reaches tens of millions of Australian dollars a year.

    On the other hand, he has what may be even a rarer talent: the ability to take those conceptions and get them made to his exacting specifications in the factories of China.

    Unlike many other people in his position, he has not moved from factory to factory, seeking the cheaper or slightly better deal, but has instead persisted with the same factories and the same people, forging deep relationships which have enabled him to extract better quality and performance.
    The background

    Like many people who end up becoming entrepreneurs, Chris had a bit of mixed background before he found himself working with storage products. Born and raised in a fairly remote outer suburb of Melbourne, his father was a farm manager. As he puts it:
    In a sense you could say I was brought up on a farm. I worked with my father on the farm, and I think that just gave me a natural mechanical ability, and a thought process. So I will look at things and say 'That will work', or 'that will not work'.
    I don't think it is something you can train somebody in. It has just evolved over many years, and I'm sure it is just from the practicality of using my hands.

    It's an ability that took him from his early training as a mechanic to the world of household storage, with a company known as Summit Storage.

    By that time, Chris had moved to Western Australia and was working in the hardware industry. He had been made redundant, and was out of work for four months before he applied for a job with Summit.

    For Chris, this was the break, and the kind of fit to his talents that he had been looking for. He said:
    I fell into a position and a product that was really good for me. It worked. There was that little bit of mechanical interaction, development; I started to get involved with the manufacturing side of it, logistics; it was my first step into the world market. I was exposed to many things around the world.
    I think it would be fair to say that a lot of the success I'm having now is because I learned a lot while I was working at Summit. I learnt a lot more than I even realised at the time.

    In particular Chris developed a talent for coming up with new products and tweaks to existing products that made them more useful and popular. He said:
    Summit was a utility kit-set shelving manufacturer, that was heavily into flat-pack board products. I started to come up with ideas for different shelf units and systems. It was just a gut feeling of mine about what the market was looking for.

    While Summit was a very positive influence on Chris' life, the way his relationship with the company ended was difficult to bear at first.

    After close to nine years with the company, and a job that had developed into a real passion for Chris, the new owners who had taken over Summit informed him his services would no longer be required. That was, in the end, the impetus that Chris needed to go into business for himself. He said:
    I had these ideas, and I decided I would put them to good use. Within 24 hours I had dusted myself and got started. A really good friend of mine said at the time that it was going to be a really hard slog for the first 12 months, but in the end I would wish that I had done this 12 years ago. To a degree, he was right. Where he was wrong was that it took 24 months, not 12.

    Chris got going almost immediately.
    I made contact immediately with China and I said I want some shelf units and this is how I want them made, this is how I want them finished, this is how I want them packed. It was about four weeks later that I had the first samples down here.

    After he had established his business on a more secure footing, Chris needed to find a company to help distribute his product.
    For me to go direct to the retailers wasn't an option. Unfortunately, for a number of reasons it wasn't possible. That is how it started. This company wasn't involved in storage on a national level, so it was a great opportunity for them. So I brought the ideas and concepts to them, and it started from there.
    My business model was always to have someone else look after the wholesale, merchandising part of the business. Really, if you look at what Globel has created in such a short period of time, you can't do that if you have to look after every aspect. Clearly that concept has worked very well.
    Gut driven products

    Where other companies employ teams of designers and engineers, Globel's success has been built on the market instincts of Chris himself.
    From the very day I started this, I never had any doubt that the product would work. Every product I've developed ever since, I've always believed it would work. In fact, people come to me with ideas, and I don't know why, but I can look at it and I can say 'it won't work', or 'it will work'.
    And really, I haven't yet developed a product that hasn't worked. In fact, 95% of the products have been unbelievably successful.

    It's not just gut instinct in the end, however. Chris has an active philosophy that informs his design decisions, a definite direction in which he thinks storage needs to go.
    I'm not interested in producing a product, I'm interested in producing a series of products, everything modular, so that they can all link together.

    It is this "linking together" through components that makes Globel products so unique. Chris introduced this as a requirement early in his product development, and he has since extended it to every aspect of his design work.
    From the outset of the utility kit-set shelving, while the market mostly consisted of stand-alone units, I decided the market needed a system. So I created a system that had a structured profile, and that proved to be very successful.
    From there I introduced a racking product into the Australian market, from a domestic, light-commercial concept, again as a kit-set. I had the vision to offer this as a component system, which did meet with resistance in the early days, but turned out that it is one of the greatest success stories that I know of anywhere in the world. It has been a huge success.

    Once he had established that success, Chris went ahead with bringing that vision to other aspects of the products he was designing and building.
    That inspired me to go ahead with the traditional utility kit-set shelving, and to create a system based on that profile, but again in a component concept, that had no boundaries, so that we could add cabinets into it, we could add wire baskets, wire shelves, MDF shelves, rails to attach the plastic tote system we have, hooks and so forth. So really it was about taking the racking system we had developed, and scaling it down for the everyday household or office use.

    While there is a clear line through these storage products, taking Globel into the metal outdoor garden shed business would seem to be something of a departure.

    However, it turns out that Chris has a long history with garden sheds.
    Well, the idea the decision to make garden sheds was three and half years ago. To get the first prototype took just over 12 months. It wasn't 12 months of constant development, as other products were being developed at that time. It was about 18 months after that we went into production, after developing a number of prototypes.

    Once the sheds were fully developed, however, it didn't take Chris long to build out the complete range.
    When I went to the National Hardware Show in Las Vegas in 2014 all I had was pricing for three garden sheds, and I'd made a couple of prototypes. Today, 12 months later, I have some 120 different SKUs. That is intense development. Now we are supplying garden sheds into eight different countries.
    The heart of the passion

    Chris shows me some examples of all the supporting work he has done around developing the products. There are the assembly manuals in half a dozen languages, including English, French and Spanish.

    He has pictures of how he has helped to carefully engineer the packaging of the shelving and shed systems, building extra-strong, extra-stabilised pallets to make sure nothing gets bent, fitting special internal "bumpers" to the packages so they will be completely protected while in transit.

    Then he takes me down to the "workroom", just before I leave. It's a cavernous space at the base of the offices, a big concrete-floored workshop with eight-metre high ceilings, and the place where he does much of his development.

    It is tidy and clean, but also filled with systems he has developed - the racking, the utility shelving, the closet inserts, and, of course, several sheds.

    It is when Chris is showing me the features he has built into the sheds - the extra bracing, the easily replaceable door bearings - that I find myself glancing around this big creative space, and thinking, if Australia has a manufacturing future then this is probably it.

    Chris and - hopefully - countless other "Chrises" working away like this, creatively, using the manufacturing market in China, exporting knowledge, expertise and a kind of pure savviness, a sense of the market, to countries far and wide.

    As I manoeuvre the car away from the building, I know it is unlikely to be quite the same again; the long lines of cars moving into and out of the factories, some men quiet after a long day's labour, others boisterous as they arrive to begin.

    But maybe what Australia has done is to manage to keep the best part of the bargain, the smart part, the thing that it can do uniquely and well. The Chris part.
    NHS2015
    BernzOmatic blowtorches at NHS
    BernzOmatic Trigger Start Plumbing Torch Kit is useful for household jobs
    BernzOmatic
    BernzOmatic Lawn and Garden Torch is specially designed for outdoor use
    BernzOmatic ST500 Micro Torch can be used to tackle home and outdoor projects
    Click to visit the Globel Industries website for more information
    The BernzOmatic Trigger Start Plumbing Torch Kit has been designed to have everything users need to tackle plumbing jobs around the house. It includes a WT2301 multi-purpose trigger-start torch head, 14.1 oz. propane fuel cylinder, 1.5 oz. lead-free solder wire, 0.5 oz. lead-free water soluble flux paste and flux brush.

    The trigger-start for easy ignition and the versatile webbed flame is ideal light soldering, thawing, melting and heating. The slender cylinder allows for comfortable grip and ease-of-use.

    The kit comes with an angled, durable stainless steel burn tube and for use with propane fuel.
    For lawns and gardens

    The BernzOmatic Lawn and Garden Torch is specially designed for outdoor use, and is a useful tool for burning weeds and leaves (without using chemicals), lighting campfires without bending or crouching and repairing asphalt.

    This torch as a high output jumbo utility flame and a 36-inch extended reach handle. It has trigger-start for quick flaming and cushioned grip handle for added comfort. For use with propane fuel and it is compatible with standard camping cylinders.
    Around the house

    The compact, multi-functional BernzOmatic ST500 Micro Torch can be used to tackle a number of projects in the home and outdoor areas. For example, it is suitable for household electronic repair (including computers), woodworking, leather branding, soldering copper pipe, automotive wiring repair and many other jobs.

    This standard 3-in-1 butane torch has interchangeable tips and easily converts into a micro torch, hot blower or fine point soldering iron. The camouflage torch converts into a micro torch, hot blower or hot knife.

    Both versions include a trigger on/off for easy ignition and protective cap for added safety.

    The pencil point flame is 3/8-inch in diameter, and the refillable reservoir holds enough fuel to run for 12 minutes on high or 25 minutes on low. The continuous flame lock keeps the torch lit for ease of use and one-handed operation.

    The cap disables the ignition switch and protects the burner tip while in storage. It is made for use with butane fuel.
    NHS2015
    Electric pressure washers at NHS
    Briggs & Stratton's redesigned pressure washers use POWERflow+ Technology
    Briggs & Stratton
    The Electric POWERflow+ unit has a fold-down handle for compact storage
    POWERflow+ Technology is a technological innovation exclusive to Briggs & Stratton
    Click to visit the Globel Industries website for more information
    Pressure washers with POWERflow+ Technology give users the ability to clean with both high pressure and high flow. It is a technological innovation exclusive to Briggs & Stratton.

    The company's redesigned pressure washers have an enhanced hose storage system, enlarged detergent tank and improved wheels for easier maneuverability.

    Generating up to 1800 Max PSI and four gallons (just over 15litres) per minute of water flow, the POWERflow+ model currently delivers three times more water flow than standard electric pressure washers. Improvements to the Electric POWERflow+ pressure washer include:
  • An improved hose storage system that wraps by hand to increase ease of use and coiling.
  • A single, larger detergent tank now allows users to complete intensive cleaning tasks without refilling the soap mid-task.
  • The wheel hub and its substructure provides increased strength while making it easy to maneuver from project to project.

  • Dan Roche, director of marketing for Briggs & Stratton Portable Power and Cleaning Systems said:
    Not everything on the upgraded Briggs & Stratton Electric POWERflow+ model required alterations. The unit's reliable electric motor and patented pump design are unchanged...

    The electric pressure washers continue to feature the specially designed 26-foot hose and custom-engineered POWERflow+ gun with soft grip handle. Water then flows into the 7-in-1 nozzle.

    This time saving pressure washer nozzle with one-handed use (similar to a garden hose nozzle) allows users to change from high pressure to high flow, as well as engage the soap-on-demand feature, without changing nozzles. The pump will then propel the stream up to 25 feet.

    In addition, the unit provides the same impact force as a 2200 PSI gas-powered pressure washer at 12 feet. The Electric POWERflow+ model also has a fold-down handle for compact storage.

    POWERflow+ Technology is available on two gas-powered pressure washer models with Briggs & Stratton Professional Series[tm] OHV Engines. They have up to 3000 Max PSI in high-pressure mode and up to five gallons (almost 19litres) per minute in high-flow mode.

    One unit offers a standard recoil start, while the other is equipped with Briggs & Stratton's Push Button Electric Start, making it the company's easiest-starting pressure washer.

    Both models have been tested according to the Pressure Washer Manufacturer's Association (PWMA) testing procedure PWMA 101. They achieved a maximum PSI rating using a 0 degree nozzle tip and maximum flow (or GPM) rating, using either soap nozzle setting.
    NHS2015
    New layout at National Hardware Show
    The 2015 National Hardware Show will have a new floor plan
    National Hardware Show
    It will take place May 5-7 at the Las Vegas Convention Centre
    The National Hardware Show is celebrating its 70th anniversary this year
    Click to visit the Globel Industries website for more information
    Attendees will experience a new show floor at this year's National Hardware Show (NHS) which takes place May 5-7 at the Las Vegas Convention Centre.

    According to show organisers, Central Hall will now include the Homewares section, as well as the Inventors Spotlight, New Product World, International Sourcing Area, Plumbing & Electrical, PDRA Paint & Accessories Show, Lancaster Buying Show and the new three-day Outdoor Auction.

    South Hall will welcome the Lawn, Garden & Outdoor Living section on Level 1, while Hardware & Tools, Pet Products, Farm & Ranch, Made in USA and an additional Lawn, Garden & Outdoor Living area will be on Level 2.

    In addition, the Outdoors, Tailgate & Recreation section has moved to the outdoor area between the Central and South Halls and will provide access points from both halls. The North American Retail Hardware Association (NRHA) Village & Stage has also moved to the show floor, in the Central Hall, near the tailgate area. NHS vice-president Rich Russo said:
    We're looking forward to providing vendors and retailers both a memorable and productive experience at this year's show. We hope that by moving some key categories to new spots on the show floor, it'll be easier for buyers to visit both new and returning exhibitors within their target product categories along with stopping at some of our popular show features.
    Show highlights

    A popular feature of the NHS is new products. The Inventors Spotlight area showcases products that have not been released on the market, making it easier to find products for sale or license. New Products World provides a look at the latest innovations and trends in the industry.

    For exhibitors, there are multiple programs that can get products additional exposure including the Canadian Tire Toolbox Challenge, the NHS Product Review and Vetting program and the DIY Network Product Submission program.

    There are also many educational opportunities for visitors. Independent retailers can take advantage of a variety of seminars on the NRHA Village & Stage. It has a lineup of interesting speakers and presentations. Greg Schlecht of Greg's True Value in St. Francis, Wisconsin said:
    The National Hardware Show invites me to think outside the box. It is enlightening for independent retailers to see what the world has to offer. In today's world, hardware stores, in addition to great customer service, must offer new niches and update our merchandise selection. It opens doors to new opportunities.

    The event provides a lot of opportunities to network with other industry professionals. From the New Product World awards to the NRHA Top Gun awards to the Lawn, Garden and Outdoor Living awards, there are also several programs recognising excellence within the home improvement industry.

    The NHS celebrates a rich history spanning 70 years of serving the home improvement marketplace. From its early beginnings in New York during the post-World War II housing boom and eventual move to Chicago in the 1970s, to today's current location in Las Vegas, the event has continually evolved.

    Today, the NHS is the place for global manufacturers, associations, organisations and media to unveil their new products, ideas and insight to a broad spectrum of home improvement resellers.

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