USA Market for Storage Products
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Report on storage market from 2013
Men’s Shed Photography Project
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This is the first of a series of white papers HNN will publish on prospective export markets for Australian products.

Our goal in publishing this series is not to provide definitive guides to markets, but to give business a simple what to take a "first look" at an export market, so as to determine if it is worth considering. Hopefully, these documents will also provide a solid basis to future research.

This first paper is on the storage market in the US market. While this is a very competitive, and quite crowded market, it is also one that has good growth prospects. While there are a number of long-term incumbents in this market, it is also one that will respond directly to new and innovative products.

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Doing business in the USA

As this is the first of this series, it is perhaps worth mentioning some of the mistakes which HNN staff have observed Australian businesspeople making when they do business in the USA.

The following is in no ways comprehensive. It's based on having listened to the bewilderment of some Australian businesspeople when they come back from business trips, often befuddled by how Americans do business.

Some of these points are very basic, but they perhaps bear repeating. Others are seem like small and even trivial points, but we know from stories we've heard that they have disrupted flourishing business relationships.
Business first, friends later

In Australia it is not uncommon to try to become a little friendly first with people before doing business with them. Throughout most of the USA that pattern is reversed: you do business first, and might become friendly later.
It's their country, learn their ways

It is not uncommon for Australian businesspeople to think that there is one single way of conducting business correctly, which happens to be the Australian way. Americans have different standards as regards email, telephone calls, meetings and business arrangements. As you are selling something to them, most of these matters are going to be done their way. If you don't understand something that has happened, or if you feel insulted in some way, find a friendly American you are not doing business with, and ask them to explain what has happened. You will usually be surprised at the explanation. This particularly applies to email etiquette. Americans treat email very differently to Australians.
Language, spelling

It's acceptable to use English/Australian spelling in correspondence, but not in more formal documents that will be used in America. Note that some of the differences are quite complex.

If you are preparing documentation such as instructions for use or assembly of a product, be aware that it is regarded as courteous and proper to provide these in Spanish as well as English.

Also be aware that Australian English is littered with a great many colloquialisms that Americans will not understand. Sometimes there is a direct translation - for example "Joe Blow" is pretty much equivalent to "John Doe". If you speak about "telling porkies", however, most Americans will have no idea what you are referring to. Be very careful with words that might seem like mild swearing in Australia, but will be interpreted as being more profane in the US. Examples would include the frustrated exclamation of "Bugger!" and the use of the word "bloody". The use of the word "mate" is simply puzzling to Americans, and seems mildly parodic.

Equally, it is probably not best to try out American lingo you may have learned via TV shows.
Don't insult America

This seems so basic that it shouldn't need to be stated. However, time and again HNN staff have witnessed Australian businesspeople come up with blatant insults when dealing with Americans. American businesspeople are really not interested in the opinion of Australian businesspeople about their food, culture, sports, political system, international politics and/or history. They may be interested in doing business, and it might be best to stay on that subject.
Be aware of regional diversity

Australia is actually a quite homogenous country. There are differences between, say, a Sydney city executive and a sheep farmer in Western Australia, but they are nothing like the difference between a Maine fisherman and a Silicon Valley tech entrepreneur. In America, everyone sees themselves as coming from their individual State first, and America as a whole second.

Try to have some awareness of climatic differences, such as whether it snows in winter. For example, It does snow, but quite rarely, in Portland, Oregon, while Seattle, Washington usually gets about 20cm of snow a year, but it is not uncommon for it to not snow at all.

Then there are the cultural differences. Someone from the Mid-West will have radically different assumptions to someone from the South-West or someone from the South. There are vast differences between people from northern California and southern California, even.
What "coffee" means

Having coffee with someone in the US is different to having a coffee with someone in Australia. In America its quite common to, for example, drop in on a neighbour you are friendly with for coffee. When someone moves into the apartment or house next door, an American might commonly invite them over for coffee.

In business when an American asks "Do you want to grab a coffee?" it is not usually, as it often is in Australia, an invitation to a further business discussion. It is usually more of a "sideways" move. Quite often it is offered because the American has a question they need to ask that they feel they can't ask in a formal meeting. What you might hear over coffee, for example is: "See, the thing I'm really worried about is..." So going for coffee can be important.
Big box update
The Masters Albion Park in NSW store will open soon
HNN Sources
Strong bidding is expected for the upcoming sale of Masters stores
There are limitations on trading hours for Masters in WA
Click to visit the ITW website for move information
Woolworths will officially open its Masters store at Albion Park Rail (NSW) in early July; Woolworths is also expected to offload at least $100 million in Masters stores over the next year; and limitations on trading hours for Masters' WA stores.
Illawarra covered by Masters

The soon-to-open Masters Albion Park store will be the first of three outlets it plans to open in the Illawarra (NSW) region. Another store at South Nowra is under construction and plans have been lodged for another at Fairy Meadow.

The 13,000sqm Albion Park Rail location will have between 120-140 staff when it opens and led by an all female leadership team. Store manager Jade Howieson and assistant store manager Lina Sharma have both worked at various Masters stores, and compliance manager Anita Gynn recently worked at the Gregory Hills store. Across the Masters chain around half of all employees in its 60 stores are women, a ratio that continues at Albion Park.

Sharma, who left BBC Hardware in 2000, said being a young female manager in the hardware industry was a challenge in those days, but times had changed. She told the Illawarra Mercury: "We have a female electrician who is brilliant [and] we have some really good females in hardware and trade. At Masters opportunities have been one has ever treated you different because you are female."
Return on Masters stores

Strong bidding is expected for the upcoming sale of Masters stores in the commercial property market. Sales this year of Masters stores indicates how much investors are willing to pay.

A $36 million Masters Home Improvement store at Williams Landing in Melbourne sold in April on a record of 6.04% yield. A $38.5 million Masters at Penrith west of Sydney achieved a 6.67% yield and a $31 million Masters at Dandenong (VIC) achieved a 7% yield.

Soon there will be 59 Masters stores nationally and market sources - according to the Australian Financial Review - estimate that at least $100 million in sales are likely to transact over the next month. A spokeswoman for Masters told the AFR: "Our approach to Masters stores is no different to other divisions. Our preference is to enter long-term leases for our retail premises rather than holding property assets."

JLL director for retail investments Sam Hatcher said freehold Masters stores were being keenly sought and in some instances targeted by private investors, syndicators and even institutional investors around the country.
Bureaucracy binds Masters in WA

Bayswater councillor Chris Cornish claims limitations on trading hours for Masters are unfair and restricts competition. Cr Cornish said the big box retailer had been operating in Bayswater since 2014 on an unfair playing field that disadvantaged customers. He told Community News: "To limit Masters to opening at 11am on Sundays and public holidays and 8am other days is unfair because Bunnings can open at 6am every day of the year. It just doesn't make sense that Masters does not fit the definition of a 'hardware and home improvement shop', which would allow them the extended trading hours."

A Woolworths spokeswoman said the regulatory anomalies were a result of inconsistencies in the type of goods that a 'domestic development shop' could sell under the Retail Trading Hours Regulations 1988. She said: "As a result, Masters is faced with a major competitive disadvantage as our competitors, who stock a smaller range of products, are able to open earlier and later..."

Commerce Minister Michael Mischin said the state government had already made significant progress in freeing up retail trading hours. However the current restrictions on what domestic development stores, such as Bunnings, could sell were onerous. He said: "The restrictions also prevent similar stores such as Masters from fully competing in this sector. This is an issue that the government would like to fix and I am already working on legislation to address this issue."
Forecasting: Housing, Construction & Renovation in 2015/16
Change in numbers, value and approvals
HNN sources
Percentage change in median price to number Sydney
Gross fixed capital measure for renovations
Click to visit the HBT website for more information
Predicting Australia's housing market has become a somewhat fraught occupation.

As the joke currently goes in the housing industry, there are now a number of analysts who have managed to call seven of the past three housing recoveries.

While most of the numbers coming out of the housing construction industry seem rosy, it's difficult to shake the sense that they are not quite as rosy as they seem. It's just the odd anomaly that seems to keep cropping up in the data. For example, here is a graph of the number of dwelling units completed:
ABS Dwelling units completed

It is that kick right at the end that seems worrying, because it is anomalous to the rest of the series.

Likewise the usual HNN graph of the percentage change in number of dwelling, valuation and forward building approvals seems slightly disturbing:
Change in numbers, value and approvals

Will 2016 end up being like 2011, which saw a steep decline?

Elsewhere, in the Sydney market, there are signs of various sorts of instability. It's not just that the median price is increasing, it's the way it is increasing:
Sydney median house price

Again, that sudden uptick right at the end, above the trendline.

If we look at the percentage change in median price and numbers of property transfers for the entire state of New South Wales, the graph seems quite positive:
Percentage change in median price NSW

However, the graph of the same data for Sydney shows some real instability:
Percentage change in median price to number Sydney

In the end, it is just too difficult to tell what is going to happen. The anomalies could just go away in the next set of data, or they could indicate a departure towards more instability.
Alterations & Renovations

Surprisingly, some of the best information on alterations and additions (renovations) comes from the numbers the ABS compiles when calculating Australia's gross domestic product (GDP). These are the most comprehensive numbers the ABS compiles on this area. This is how the ABS describes them:
The value of alterations and additions to existing dwellings is estimated using data from regular surveys of building activity, and from the periodic Household Expenditure Survey. The Building Activity Survey provides estimates of the value of work done on alterations and additions with an approval value of $10,000 or more. As a significant part of alterations and additions activity is not covered in the Building Activity Survey, estimates from the survey are used only as an indicator to move forward benchmark estimates of expenditure on alterations and additions obtained from the Household Expenditure Survey.

The chart of these numbers is quite revealing:
Gross fixed capital measure for renovations

Two things are immediately noticeable. The first is that the numbers for the past three years - 2012, 2013 and 2014 - are below the longer term trendline. The overall pattern is trending back to the numbers for 2009.

The second, and as interesting observation, is that since 2005 the seasonality of demand has been steadily increasing. The figures show that the March quarter is always the lowpoint, and the December the high, but the gap between the two demand levels keeps growing larger. A number of factors could be behind this, including a greater emphasis on outdoor-based renovations, such as decks and the "outdoor room", or a greater emphasis on completing renovation work immediately prior to Christmas.

The weakness that seems indicated in these numbers is also echoed by the estimations of the Housing Industry Association (HIA), with predicts the renovations market for all of Australia will remain weak from 2015/16 through to 2017/18, with only a moderate gain in 2018/19. New South Wales, Victoria and Queensland will, in the HIA's estimation, fare better, but not really by much.

Like much of the current Australian economy, the housing industry is showing signs that demand exists, but that demand is far weaker than many analyses indicate. As HNN has indicated elsewhere, the housing market itself is creating some problems for the economy, and making it difficult for the Reserve Bank of Australia and other institutions to apply stimulus.
Mecca Events Melbourne: 14 July at the Sheraton
Kim Hawtrey interview from 2014
Mecca Events
Kim Hawtrey's profile
Housing stress distribution in the USA
Visit the Mecca Website
Just in time for the new financial year, Mecca Events is hosting a function in Melbourne featuring one of Australia's foremost construction industry forecasting experts.

Kim Hawtrey, the event's main speaker, has been an associate director at business consultants BIS Shrapnel for the past three years. He is noted for his views on the building industry as being an economic multiplier.

While Dr Hawtrey does make frequent media appearances, this is a rare and very useful opportunity to gain unique access to one of the better thinkers about the building and construction industry, its role in Australian society, and what it needs to do to help secure future growth.

Dr Hawtrey has a balanced view of the building industry, seeing it as being in a quite slow recovery - as he has said in an interview, some commentators have by now "called seven of the past three housing recoveries".

The event will be held at Melbourne's Sheraton Hotel, located at the top ("Paris End") of Little Collins Street on Tuesday, 14 July 2015. It gets underway at 6pm, and will finish up after 7:30pm. As always, Mecca Events is providing complementary drinks and canapes. This is going to be a popular one, so you need to send an RSVP to:
About Kim Hawtrey

Dr Hawtrey has a wide-ranging background in economics. He's worked for the Reserve Bank of Australia, as chief economist at the Colonial Bank, as an associate professor at Macquarie University, and most recently was Professor of Economics at the US liberal arts university Hope College, based in Michigan.

Most notably, Dr Hawtrey was also chair of the Affordable Housing National Research Consortium, which published a series of well-regarded papers on housing in 2001. These influenced housing policies implemented by the Labor Government in 2008.

Among his published works, Dr Hawtrey has contributed to the development of the sixth edition of the textbook "Financial Management: principles and applications", published by Pearson in 2012.

In 2009 Dr Hawtrey published a book, "Affordable Housing Finance". This is a well-written, compassionate account of how better ways could be found to finance housing, reducing the level of housing stress. In this work, Dr Hawtrey emphasises the role of "social capital". He defines this as "the mutual trust and civic behaviours that facilitate communal engagement". He goes on to suggest:
Housing plays a key role in the formation of social capital through a complex process involving both form and function. Architecture, for instance, can act as an important determinant of social cohesion. If the social cohesion role of housing is weakened by housing exclusion and housing instability, then civic equity and urban connections are likely to suffer, in turn hampering the promotion of a sustainably compact socio-urban form. Where social capital disintegrates, so does social cohesion.

Dr Hawtrey is an interesting and engaging speaker, and this promises to be a great evening for people from across building-related industries to get together and take a peek at what is going to happen over the next 24 months or so. The HNN team will be attending, and we would certainly love the chance to chat with readers.
Generous sponsors of Mecca Events

HNN would like to thank the companies that are sponsoring the event with Mecca, including:
  • Grohe Tapware
  • Porta Mouldings
  • Kenbrock Flooring
  • Akzo Nobel
  • Weathertex
  • Bamstone
  • Conform
  • Furphy Foundry
  • Cabots
  • Shotton Lifts
  • Careers
    Training update
    The Green Tradies program is run by the Green Building Institute
    HNN Sources
    The masters in building training e-learning system offers training for tradies in regional NSW
    (l&r) Councillor Tom Antonio and councillor Rob Schmitza. Photo credit: Whyalla News
    Visit the Mecca Website
    A new training program aims to improve subcontractors' sustainability expertise; an online training tool allows apprentice tradies to study on the job, without having to travel long distances to finish their course; and Whyalla City Council in South Australia is developing a policy to put trained staff back into the community.
    Online sustainability course

    The Green Tradies program is designed for carpenters, plasterers, floor sanders, tilers, bricklayers, carpet layers and other tradespeople wanting to work on projects that comply with Green Star or HIA GreenSmart guidelines. It is run by the Green Building Institute.

    This course is nationally-accredited and will cover topics such as choosing and recommending sustainable materials, cutting resource use and recycling. It is focused on practical green building processes including how to conduct an on-site sustainability audit. Topics on greening a trade business will be covered such as developing a sustainability action plan. It explains key green building principles such as embodied energy in materials. The course content is streamed directly onto laptop, smartphone, tablet or PC with 24 hour availability.
    Integrating work and study

    The masters in building training (MIBT) onsite e-learning system offers training for tradies in remote and regional NSW. MIBT head of training and apprenticeships, Mark Goodchild told the Daily Liberal: "Traditionally apprentices would have to travel to colleges to finish their theory work, and through this program they can stay on site. It's a win-win for apprentices and employers."

    Goodchild has been in the building industry for more than 40 years, and is a former TAFE teacher. He said: "Apprentices can lose up to six weeks on the job because they're away doing theory work. This program allows them to get the hands on experience while still completing their course."

    More than 1200 multimedia video lessons were created, including animation and 3D modelling to make the lessons engaging and fun, and difficult concepts easier to grasp. Over 4500 questions were designed, with over 50 subjects covering six qualifications. The courses meet the requirements of the Australian Quality Training Framework, and result in nationally recognised qualifications. They are funded by the NSW Department of Education's Smart and Skilled program.
    Training tomorrow's tradies

    Whyalla City Council will investigate its capacity to offer apprenticeships and training as part of its workforce development and succession planning processes. Councillor Tom Antonio raised a motion at a recent meeting calling on the council do its bit in training the city's youth.

    The motion was carried unanimously and a taskforce consisting of deputy mayor Tom Antonio, mayor Jim Pollock, chief executive officer Peter Peppin, manager - people and performance Dean Ezzy and councillor Robert Schmitz will oversee the policy implementation.

    Cr Schmitz said the council had to set a standard for other businesses and the policy change was an example of the elected body's increased activity. He told Whyalla News: "We at city council are proactive, we are going to be forever-changing and evolving with our community. Obviously there are a lot of job losses around at the moment and we are endeavouring to be at the forefront of providing apprenticeships and traineeships."
    Masters after O'Brien
    "It's a bit like watching a sinking ship": former Woolworths CEO Paul Simons
    HNN Sources
    AFR: How Woolworths lost its way
    Comparison between Woolworths, Wesfarmers and Metcash
    Give to Amnesty International
    Masters has come in for a lot of criticism over the past year, much of it deserved. Now that it stands to lose its primary corporate champion, outgoing Woolworths CEO Grant O'Brien, its fate seems to hang in the balance.

    Of course, part of what has happened is that Woolworths has sneezed, and Masters has come down with pneumonia. Paul Simons, who led Woolworths from 1974 to 1994, is reported by Richard Gluyas writing in The Australian as describing Woolworths' fall from grace like this:
    I was in the merchant navy and it's a bit like watching a sinking ship. But the situation is retrievable. After all, they're not losing money; they're just losing respect.

    Mr Simons sees a number of cultural failings in the modern Woolworths, including a lack of contact with market realities, and the huge pay disparity between executives and line workers.
    Woolies sacrifices retail knack - The Australian

    That said, there is a sense among investment analysts and others that Woolworths will manage to recover its previous status as a good company and a good investment. As Jemima Whyte and Sue Mitchell writing in the Australian Financial Review put it:
    Investors are confident Woolies will restore its blue-chip status, and although many believe it represents value, at the moment they are waiting to see what a new CEO will do.

    The article quotes Alphinity Investment Management fund manager Bruce Smith as saying:
    It's the biggest operator in a not very competitive industry that's essential for people - the potential is still there for it to be a massively profitable company again.
    How Woolworths lost its way - Australian Financial Review

    In an earlier AFR article, Sue Mitchell quotes an uncharacteristically upbeat assessment of Woolworth's future by Bank of America Merrill Lynch senior analyst David Errington. He has changed his price target for the company from $24 to $40. Mr Errington explains this move:
    The basis of the change is our increased confidence toward Woolworths changing its strategic direction and management structure. The company has significant upside - it needs to find the right strategy.
    Merrill Lynch on Woolworths - Australian Financial Review
    The real Masters story

    While Masters is being portrayed in much of the general press as a big mistake that was hopeless from the start, it is a much more complex story than that. Most commentators are looking for the sources of failure in the wrong places.

    While there are a range of reasons and causes as to why Masters has not done well, there is one, single factor that has contributed more than any other.

    That factor is the home improvement retailer's obsession with scale. In particular scaling up its store numbers as fast as possible.

    It seems a somewhat evident fact that if you can't do something well in half a dozen stores, expanding that to 60 stores is not going to improve the situation.

    Scale was used by Woolworths in a number of ways in its business planning. It was necessary, in the main, so as to provide some force behind Masters' competition with rival home improvement chain Bunnings.

    Scale was also used to excuse current failings with future possibilities. For example, at one results announcement an investment analyst criticised Masters' very poor advertising for the past months, especially around events such as Father's Day.

    The answer Woolworths gave was that advertising would be better developed when Masters achieved the scale necessary to generate a return on ads.

    The task, though, was not to sit around waiting until another two dozen stores were built. The task was to develop advertising that would work in the current context of the business, so as to make it successful.

    This is still a "live" issue. If Masters is to continue in any form into the future, it is a key issue it must tackle. Until it does, it will not be able to make progress.

    But more about that later. Let's look at what is happening immediately with Masters. There are the usual three choices facing any incoming CEO: shut it down/sell it, shrink it down/combine it, or continue with its development.

    First, to understand those options, we need to get a clear view of Masters as it is today, and how it developed.
    What Masters got right

    Whatever you think, there were a few things that Masters did get right.

    The primary thing that Masters did get right was its market timing. There has been a steady and ongoing growth in the retail market for home improvement products.

    Many commentators look at the turnover, earnings before interest and taxation (EBIT), and profit numbers that Bunnings - Masters' main rival in the Australian market - has been able to produce, and decide that Masters has had little if any impact on the market.

    That might not be the case. The sales that Masters has reported have had to come from somewhere, and that "somewhere" is most likely from Bunnings' market share. It's just that the overall growth in the market concealed any impact (and actually rendered it irrelevant).

    The potential of the partnership with US-based big-box retailer Lowe's Home Improvement could have been very good for the company. Lowe's is renowned - in its most recent incarnation - for high levels of customer service, a savvy approach to the profession (trade) market, and strong supply-chain resources.
    Market concept

    While this remains an item of dispute, the idea of approaching the Australian home improvement market with stores that featured a higher amenity level made sense. This could have provided a telling market differentiation from Bunnings.
    What Masters got wrong

    We'll touch on the highlights.
    Confusing supermarkets and home improvement

    Home improvement retail was not seen simply as an end in itself - a profitable business that it made sense to get into. Instead, it became an element in the "turf war" between Woolworths and Wesfarmers.
    Thinking real estate was an answer

    In line with the above point, Woolworths equated building more stores in the best possible position with success. It seemed to confuse the goals and ambitions that might work for its established supermarket business, with those required for a fledgling home improvement business.
    Under-investment in staff

    The best hint as to how under-invested in staff Masters has been at times is revealed in a legal case published on Austlii, Joseph Ciampa v Master Home Improvements (WorkCover) [2015] VMC 3 (17 February 2015).

    HNN makes no comment whatsoever on the case itself, or the nature of the case. The sole item of interest is what it seems to reveal about staffing issues at Masters stores in late 2013 and early 2014.

    The summary of the case as provided by Austlii is as follows:
    Psychiatric injury alleged to have arisen out of or in course of employment as a result of being; "overworked, bullied and harassed by management" - causation - employer conducted investigations and suspended worker as a consequence of two incidents on 10 September 2013 and 9 January 2014 - "management action" - s 82 (2A) relied on - management action taken on reasonable grounds and in a reasonable manner. Claim dismissed.

    The claim was dismissed, which means Masters Home Improvement was not held liable.

    This is one quote from that case:
    Mr Ciampa gave evidence that when he became manager of the garden department in 2013 he was contracted to work 40 hours per week, Sunday to Thursday, but "did way more" because of the volume of work as the garden department was the biggest part of the store and accounted for 40% of its turnover. He said that by September 2013, he was run down and felt exhausted because in the previous eight weeks he was required to manage not only his department consisting of 11 staff but also two other departments and he was preparing for the Spring launch.

    Elsewhere, Mr Ciampa goes into further details of his employment:
    Mr Ciampa gave evidence that he continued to be extremely busy, regularly worked through lunch and attended on his days off and continued to manage his 11 team members. He also said that he was required to open the store at 6 a.m. two to three days a week or earlier if tradesmen were attending. He said it was not unusual for him to still be at work at 5.30 p.m. or 7 p.m. on occasions.

    Commenting on the evidence presented in the case, the presiding magistrate, S. Garnett, did indicate that he had difficulty in accepting all of it. However, he also indicated he found Mr Ciampa credible as regards the evidence relating to staffing issues:
    I do accept the evidence given by Mr Ciampa that he was under stress in his role as department manager due to staffing issues. I accept that he was frustrated by the lack of support given to him when he complained of being short staffed and became angry when his requests for assistance were not met by his employer. I accept that he reported his frustrations to management as confirmed by the evidence given by Ms Dagastine and Ms Paras.
    Austlii: Case No. E12079805

    The period described is one before Mr Tyson became the CEO of Masters, but it does describe some of the pressures that Masters staff found themselves faced with. It also shows a surprising degree of dedication by staff such as Mr Ciampa, and a real identification with the retailer.

    How general this possible understaffing might have been is impossible to tell, nor how long it might have lasted. For a fledgling retail enterprise that wasn't growing all that fast, however, it's the kind of factor that could severely inhibit further growth and market acceptance.
    Poor management

    This began with relying on management from the US partner Lowe's. As was revealed by a comment by a senior Masters executive, some management projections were based on US models and ignored factors such as having Christmas occur in the middle of the Southern Hemisphere summer.

    At the recent Woolworths strategy day in May 2015, the current Masters CEO, Matt Tyson, revealed a bit more about this problem. Asked to describe some of the new talent he had brought into Masters, he described only one position, someone who knew how to package up an attractive offer for customers. As Mr Tyson remarked, that wasn't something Lowe's really had expertise in, as their offer has been established for a decade or more.

    One of HNN's staff members remembers conducting an interview with a very senior Masters executive in 2012. One of the questions asked was how the retailer would counter IKEA as a competitor.

    The executive just laughed, and indicated this was ridiculous: IKEA wasn't a competitor. This seemed to indicate a real lack of market awareness at the senior level. Masters today does formally acknowledge IKEA as a competitor.
    The future of Masters

    There are three basic options Woolworths can follow as regards Masters.

    While this is the option that much of the general press seems to think is likely, on a more thorough analysis it seems the least provident. In either case, the company would not realise much value on the residual assets in the current market.

    That said, over a year ago HNN mentioned that it seemed possible Mitre 10 and Woolworths would end up combining forces. That's a thought that's now been picked up by others, including the AFR. As an item in its "StreetTalk" column of 18 June 2015 states:
    The combined entity would also provide greater buying power with suppliers and provide critical mass. Metcash has about 5.1 per cent of the market and Masters about 8.1 per cent. Bringing the businesses together could create a serious rival for Bunnings and the merged group could concentrate on one brand.
    StreetTalk - Australian Financial Review

    An incoming CEO could pick 10 or 12 of the better-performing Masters stores, and then move these over to the other home improvement operation of Woolworths, the Home Timber and Hardware Group. This would still leave a large amount of assets to be disposed, but would help Woolworths benefit from both the tangible and intangible assets.
    Continue development

    This remains the most likely option for Woolworths to follow with Masters. However, if it is going to continue, it will need to change the business.

    After the Woolworths strategy day, HNN commented that there were at least six stores in the existing Masters network that needed to be shut down. If Woolworths really set about changing the business, it should consider closing 10 to 12 stores - basically any store that cannot reach its full potential by the end of calendar 2017.

    Such a scaling back would have a number of positive outcomes. It would take stores which will continue to be drain on resources off the books. It would also make available a deeper and perhaps improved pool of staff to take up positions at retail locations.

    Of course, this means abandoning the drive towards scale - at least for now. Woolworths should require Masters to reach breakeven with a limited network of less than 60 stores. Until it achieves that, future expansion plans should be put on hold.
    The bigger picture

    We seem to be reaching a moment when the forces that drive retail may be changing. This isn't the first time that scale has come up as something that doesn't really convey much of an advantage.

    For example, in comparing the two major home improvement chains in the US, Home Depot and Lowe's, the investment website Seeking Alpha found that Home Depot had better numbers, but a lower share price than Lowe's based on price to earnings ratios. In commenting on why Lowe's trails Home Depot in areas such as gross margin, Seeking Alpha commented:
    Again, this difference is most likely related to online sales and inventory turns. It's unlikely that scale can solve for this problem. Typically, scale would help with gross margins as the larger purchaser would receive some form of bulk discount.
    Home Depot vs. Lowe's - Seeking Alpha

    Over the past fifteen years or so, scale has been a key element for retailers seeking to reduce prices. Much of that has to do, indirectly, with the operations of the supply chains that link Australian markets with low product cost regions, such as China. As those production sources continue to grow and evolve, scale will begin to have less of an effect on wholesale costs.

    It's possible that such a change will alter the way the Australian home improvement market works. In that case we may see competition shift from direct price comparisons to more complex areas.

    Until next time,


    You can contact me directly via email or Twitter @HNN_Australia

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    ABS hardware retail turnover April 2015
    ABS retail turnover for April 2015
    Domestic versus international growth in sales
    Growth in online retail April 2015
    Click to visit the HBT website for more information
    The April 2015 Australian Bureau of Statistics (ABS) numbers for Hardware, building and garden supplies retail show a surprisingly mixed group of results. New South Wales (NSW), Queensland (QLD), South Australia (SA) and the Northern Territory (NT) all showed strong growth. SA produced the best growth in percentage terms, lifting by nearly 16% over the previous corresponding period (pcp) of April 2014. In volume terms, NSW topped the list, adding $28 million over the pcp.
    ABS retail turnover for April 2015 using variable scale

    Tasmania was the only state to show a decline, falling from $33 million to $32 million, a decline of around 3.6%. Surprisingly, Victoria (VIC) was the second worst performer, returning growth of only 2.8%.

    The two most interesting features of the graph are how QLD has recovered from the slight slump of 2014 to get back on track with the growth it showed from 2010 to 2012, and the convergence/divergence/convergence of results for WA and SA. The two States had a difference of less than $12 million between them in 2010, which grew to nearly $100 million in 2013 as SA declined sharply. The gap is now around $92 million.

    The graph does support the pattern of investment we have seen from big box chains Bunnings and Masters, with growth allocated to NSW, SA and QLD.

    It will be interesting to see if the result for VIC turns out to be a blip, or if the strong growth shown from 2012 to 2014 resumes.

    The ABS reported that the trend estimate for hardware increased by 0.3%, while the seasonally adjusted estimate fell by 0.9%.
    General retail

    Year-on-year growth in retail sales came in at 4.1%. Household goods (which includes hardware) rose by 8.5%, clothing was up 7.5%, food was up 3.5%, restaurants up 3.3%, and department stores up 1.4%. The ACT, SA, NSW and VIC all reported growth of over 4%. Only the NT declined, by 0.7%.

    Both clothing, footwear and accessories, and cafes and restaurants reported rises in seasonally adjusted terms, of 1.3% and 0.8% respectively. The ACT and VIC reported the strongest rises in seasonally adjusted terms of 0.6% and 0.5% respectively.
    Online retail

    Online spending growth for the 12 months to April 2015 outpaced traditional retail, returning growth of 9.6%. This was an increase over the 7.6% reported for April 2014, but slower than in earlier years, when growth frequently exceeded 20%.

    Online seasonally adjusted growth was 1.5%, while the trend estimate was 0.6%.

    Total online spending came to $16.9 for the year to April 2015, and represents 7% of traditional retail spending outside of cafes and restaurants.
    Metcash full year 2014-15 results
    Mitre 10 results for FY 2014/15
    Metcash results for FY 2014/15
    Burson Group details
    Click to visit the ITW website for move information
    Metcash released its results for the full financial year 2014/15 on 15 June 2015. Group sales came in at $13,626.7 million, a modest increase of 1.7% on the prior financial year.

    Earnings before interest and taxation (EBIT), however, was reported as $325.1 million, down 16.7% on the $390.3 million earned during the prior financial year.
    Metcash results for 2014/15

    The company chose to write down $638.8 million of assets, which has an after-tax impact of $577.2 million. Subsequently, Metcash has reported an overall loss of $384.2 million for the 2014/15 financial year. This contrasts with a profit of $169.2 million for the prior financial year.

    While Metcash's EBIT number was within guidance from the previous results announcements, Metcash has also cancelled all dividend payments to its shareholders.

    The company's Metcash Food and Grocery (MF&G) division contributed the most to the decline, with its EBIT falling to $216.8 million, a drop of 26.1% over the prior financial year.

    The company had earlier on 15 June 2015 announced that it had sold its automotive businesses to Australian automotive specialists, Burson Group Ltd for the sum of $250 million. Net proceeds after tax are estimated to be around $210 million. This followed a process in which it also contemplated listing the automotive unit separately on the Australian Stock Exchange.
    Mitre 10

    The company's hardware division, Mitre 10, produced its usual very good performance. The single presentation slide devoted to this division indicates that sales were $1,048.4 million for the year, up by 11.3% on those of the previous corresponding period (pcp).

    EBIT for Mitre 10 and Automotive combined came in at $57.9 million, an increase of 16% over the pcp. Elsewhere, the presentation slides revealed that EBIT for Automotive came in at $27.8 million, which means that Mitre 10's EBIT for 2014/15 would be $30.1 million.
    Mitre 10 results for 2014/15

    Like-for-like (comp) sales grew at the rate of 3.3%, only slightly down on the 3.4% for the pcp. Hardware trade sales were called out as giving a significant boost to sales figures. Profits in hardware were reported to have grown by 7.5%. The slide indicates this is due to:
    ...higher sales, focus on supply chain costs and higher contribution from joint ventures.

    (Joint ventures refers to hardware stores partially owned by Mitre 10.)

    Though the managing director of Mitre 10, Mark Laidlaw, was present at the earnings call, he was not heard from, nor was much said about the hardware business. Almost all the attention was instead focused on MF&G and the sale of the automotive business.

    In the midst of this, no specific mention was made of a goodwill impairment (write-down) charge of $19.5 million which was made against the hardware business. Without any further information on this, there would be a number of possibilities. One would be that this write-down is a response to the increase in competitive pressure within the home improvement industry.

    In general, though, the write-down does encourage a sense that Mitre 10 is unlikely to see an increase in investment in its operations by Metcash through the 2015/16 financial year.
    Metcash Food and Grocery

    Sales revenues from supermarkets fell by 0.2% to $7,653.3 million. Convenience stores saw sales increase by 11.3% to $1,564.5 million. The 26.1% fall in EBIT to $216.8 million was put down to a decline in sales, and the investment of around $40 million in "transformation initiatives".

    The company continues to support its "Diamond Store" initiative, which promotes significant upgrades to key supermarkets, along with competitive price-matching. Metcash reports that overall results for these stores saw both basket (ticket) size and numbers increase, as well as retail sales increasing by 16% and warehouse sales increasing by 16% as well. Metcash plans to complete an additional 100 Diamond-level stores in 2015/16.

    The company reports that it remains uncompetitive when it comes to its "fresh" offering for goods such as fruit and vegetables, and meat. This is despite its declaration in its financial year 2013/14 presentation that it had a new general manager with 30 years experience, a quality improvement and range optimisation program running, and had started on supplier optimisation.

    In response to a question from Andrew McLennan as to whether Metcash needed to acquire companies to help in this area, chief executive Ian Morrice replied:
    At a broad level we have taken the same approach to fresh as we have to packaged groceries in terms of the trade model that we've tried to implement. That is not the way the fresh industry works, particularly in produce, our competitors work on the basis of driving volume into stores...Whereas, we have taken a more traditional approach to distributing produce that doesn't optimise the outcome for the retailer or ourselves. So we are taking a fundamentally different approach to buying produce.
    Automotive division sale

    Perhaps the best question about this sale was made by analyst David Errington of Bank of America Merrill Lynch. He asked Mr Morrice:
    What are you planning to do with the funds? The $210 million. Is that just to be parked onto the balance sheet to shore it up, or is it to be reutilised to reinvest into higher growth generating, or higher growth-returning businesses?

    When Mr Morrice more-or-less implied the question had already been answered, Mr Errington suggested it really hadn't, and laid out his question in more detail:
    Not really, Ian, because a business that was generating well over 10% return, and your debt I think you only at four and a bit per cent, so you are selling a business that had growth, and you are giving up a higher returning business and just sitting it on a balance sheet, that's earnings dilutive.

    Mr Morrice responded:
    Well, it's not as high earnings a business as the food and grocery business when it is invested in and working. And actually any capex we would invest going forward with that business would generally be less return on invest that we had achieved with the early acquisitions.... Brad also talked about how the organic growth level was at a fairly low level, and not just this year, but with the future years in mind.

    Mr Errington further expanded on his views:
    Just following up, Ian, it is hard to believe that you are taking money from auto, which is a solid, stable business, and putting it into food and grocery, where the business is down 25% in EBIT, and you yourself highlighted that it is really going to get tougher.
    It is just hard to understand the rationale as to why you would sell a business that is giving you the diversification of at least stability in a very low interest rate environment unless the debt - the banks - [have] basically forced you to do it...I suppose my question is: to what level of debt do you have to be at in the next little while to satisfy the banks?

    Mr Morrice replied:
    It's not about the banks, David, it is simply strategic choices that one has to make. We felt that we needed to have a stronger balance sheet, that we needed to ensure that we had the cash and the funds to continue to invest in the core businesses, and in the other pillars, and we had some choices to make. That is the choice we made...
    There are implications to it, as you've pointed out. On day one, it has that dilutive impact, but we still believe it was the right decision to make.

    In another context Mr Morrice pointed out that the acquisition and sale of the automotive businesses had resulted in a profit of around 40%.

    There are two questions that get raised about Metcash's strategy. Firstly, will the investment in the Diamond Store concept yield returns that will justify the current and ongoing extent of investment? Secondly, over what time period will this investment be required?

    Just as these questions are linked, so are the answers. It has become increasingly evident that Metcash is not exactly swift when it comes to execution. This time in 2014, Mr Morrice set a time frame of 12 months for the initial Diamond Store initiatives to be in place.

    In December 2014, he indicated it would take a total of 18 months instead. Now the only time frame that receives regular mention is "three to five years".

    The simple fact is that the roll out of the Diamond Stores is taking far longer than expected, and still faces a range of hurdles. Mr Morrice mentioned, for example, that the only way to get stores to adopt the diamond store initiatives was to essentially loan them the money to make those changes. That's not exactly a strong vote of confidence.

    As the time period it takes to put the initiatives in place grows longer, so do the expectations for the extent of eventual returns. HNN mentioned when the strategy was first released in March 2014 that a two-year timeframe seemed more reasonable than the single year Mr Morrice suggested was necessary. That remains, in HNN's view, a sensible timeframe.

    It could be said that Mr Morrice's management of Metcash has become increasingly more like the management of a business owned by private equity. Private equity businesses typically use moderate capital investments deployed over the long term (five to ten years) to develop unique market advantages.

    While this works well for many of them, and even might succeed were Metcash privately owned, it is not a good strategy for a publicly listed company. This is especially the case during a period of very low interest rates, when investors are desperate for yield.

    Allied with this concern is one that Metcash seems to have begun to develop something of a Captain Ahab complex. It is in pursuit of its White Whale, the grocery business, and has ceased to see other opportunities. This is reflected in a new emphasis in its language on its "core" business - groceries - which is aided by its supporting pillars - including Mitre 10.

    To shareholders, the purpose of Metcash is not to succeed in the grocery business, but to make money. This direction seems to be dimming somewhat in the minds of the Metcash management.

    It's worth noting that while the Metcash share price did increase by $0.02 to reach $1.13 on the day of the earnings release, just seven months previously, on 14 November 2014, it was worth $2.90. That is a fall of over 61%.

    Given this, there seems little doubt that, unless the Diamond Store concept succeeds to the best expectations of Metcash, Mitre 10 could well find itself on the market in the second calendar half of 2016.

    While this might be disruptive for its able staff, it might also be the best thing. It is a business that deserves better investment, and it is clear that this is not going to happen with its current owners.
    Three theories on home improvement market growth
    Growth pattern in hardware and garden supplies retail revenue since 2000
    HNN Sources
    Percentage change in in hardware and garden supplies retail revenue
    Morgan Stanley outlines spending habits of Millennials in a recent report
    Give to Amnesty International
    Home improvement retail has gone through a period of relatively steady growth over the past five years. While this is a boon, certainly, it has raised the issue of how long this growth might continue.

    The following two graphs illustrate the extent of the growth. These are taken from the latest Australian Bureau of Statistics (ABS) data, and use year-to-date April as their basis:
    ABS Retail Revenue
    ABS Retail Revenue Percentage change

    It is a particularly pertinent question at the moment, as now is the time of year when many in the home improvement industry become engaged in forecasting their retail market for spring/summer 2015/16.

    We can break down that forecast into a series of issues and influences. These would be:
  • Macro economic issues, such as the Australian economy, interest rates, Australian currency exchange rates, demographics
  • Housing trends, including house prices, building approvals, home financing
  • Retail sector economics, such as consumer sentiment and debt levels
  • General retail trends, such as spending patterns and shopping habits
  • Home improvement trends, such as active segments, cultural values
  • Delayed purchases
  • Disruptions

  • In the weeks to come, HNN will be doing something of a "deep dive" into many of these statistics. Hopefully - if nothing else - we'll be able to supply better access to some of these statistics (in graphical form), and so make it a little easier to work out a forecast. HNN will also contribute some thoughts on what the numbers might mean.

    For the moment, however, we would like to concentrate on just one issue. What that issue comes down to is: why is the home improvement/hardware retail industry performing so well, and is this a trend or a lasting shift in consumer spending?
    The theories

    When you look at the various explanations offered for why home improvement spending seems to be increasing, three theories stand out: the investment theory, the enhanced demand/supply theory, and the cultural shift theory. Let's take a look at each of these.
    The investment theory

    At the Home Depot first quarter FY 2015/16 results report, the analyst Peter Keith of Piper Jaffray asked:
    I'm just wondering about this overall retail wallet share shift that seems to be occurring. Obviously home price appreciation helped, but you guys are comping high single-digit in [US]$900 mowers and water heaters. I guess I'm wondering if you have a view on why the consumer seems to be allocating so much money to your industry relative to other parts of retail right now?

    Home Depot CEO Craig Menear replied:
    I would say that's a tough one to call out. There is the theory of the case that in some cases there was a delayed spend. Clearly during the economic downturn and people focused strictly on maintenance of their homes. If you recall our maintenance categories were strong throughout the economic downturn. And when a home moves to a positive growth in terms of value, what was once an expense now becomes potentially an investment.

    Home Depot chief financial officer Carol Tome followed that up with her own views:
    It's pretty easy, if you look at your own personal balance sheet. It's easy to put a value on your home. It's easy to put a value on your stock investments or your bond investments or even just the cash that you have in the bank account. Harder to put value on softgoods. Harder to put value on other consumables. So that could be one reason if you think about wealth creation putting money into where you want to create wealth.

    These responses illustrate the basics of the investment theory of home improvement spending increases. As growth in house prices accelerates, people become more inclined to make home improvements, as they see these improvements as being not just value additive, but value multipliers (ie., they increase the value of a home not by a set amount but by a percentage).
    Altered demand/supply theory

    In the same Home Depot earnings call, Ms Tome also gave an example of one element of the altered demand/supply theory:
    And so home price appreciation is a big driver. Home prices are up 5% year-over-year. That's higher than our plan. The other driver is household formation, and it looks like there'll be one million households formed this year, which should be awesome. In fact I'm always fascinated by this statistic. If you look at people between the ages 18 and 34, nearly a third of them are at home with their parents. And if they were all to leave their home nest, like my nephew just did, thank goodness, that's four million households that would be created. So I'm just really excited about what the future may be for our business.

    In this case, the comment is more forward-looking than an explanation of current performance. Ms Tome is pointing to the pent-up demand that has been created by many Millennials remaining at home for longer than usual. As they finally leave home to form their own households, there will be increased demand across the real estate spectrum.

    A similar case is frequently made from a different angle, particularly in Europe. Speaking at the release of Kingfisher's full year 2014 results, the company's new CEO, Veronique Laury indicated how much of a constant market there was in Europe for home improvement products:
    In Europe the average age of property is very old, it's 60 years old in the UK, is 44 years old in France and where is the youngest one if I can say which is in Russia in Europe, 37 years old, which means that because of the state of the household there is a lot of jobs to be done in those.
    Seeking Alpha Kingfisher earnings call transcript

    A similar point has been made several times by the managing director of the Wesfarmers-owned Bunnings home improvement chain, John Gillam. He stated these views during an interview with Simon Evans of the Australian Financial Review in January 2015.
    [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.
    "The quantum of housing stock that is ripe for renovation has never been higher," he says.
    He believes Australians have always had a propensity to spend money on their homes and it is accelerating of its own accord because of a deep-seated desire to make improvements that both enhance their lifestyle at home, and add value to their property.
    Simon Evans interviews John Gillam - Australian Financial Review

    Both of these formulations - increased demand through demographic pressure, and increased demand through the need to develop more adequate supply - rely on subtle shifts in the market that are not immediately apparent.

    The demographic demand created by young people rests in part on the extended active lifetimes of older people, and hence a reduction in available stock on the market.

    Renovation is being fuelled by a range of factors, including the desire to live in or very near the central business district of cities, and the increased technical ease and therefore cost reduction in renovations, through new product developments.
    Market reset theory

    The market reset theory goes a little deeper than the other two theories. It basically sees the spending habits of the Millennial generation (and, by extension, other generations as well) as having shifted radically. There are several data views into their buying habits. Morgan Stanley outlines spending habits in a recent report:
    Morgan Stanley report on Millennials (page 6)

    Data analytics company Neustar reveals more detail on the spending habits of US Millennials. One particular ray of hope is that while they have an increased rate of renting rather than buying homes, home improvement shopping remains important to them:
    Infographic on millennials

    The fact is, of course, that the increased emphasis on the digital actually creates more value for the home. If you are staying home for entertainment, and potentially inviting others to your home to share, home itself becomes more important. In the same AFR interview quoted earlier, Mr Gillam touches on this subject as well:
    Bunnings has been able to pick the popular trends and capitalise on them by stocking the right items. He says the big renovating projects that continue to remain popular are upgrading wet areas such as bathrooms and laundries to make them more luxurious, making kitchens more stylish and functional and overhauling parts of the house to allow for more "screen-based leisure activities". That's essentially computers, iPads and TV-watching.

    Looking at these three theories is more an act of "...and..." than "either/or". In fact, at the moment the number and range of factors that are affecting the home improvement industry make forecasting both difficult and confusing.

    What HNN does believe is that to a large extent all three of these theories represent responses, rather than causes. They are adaptations based on a range of existing factors, and illustrate how those existing factors play out in the day-to-day decisions and behaviours of consumers.

    The prime underlying causes would seem to come down to the way in which Australian cities have come to be valued in the new economy, and the tensions and pressures these new valuations have exerted on their populations.

    HNN plans to delve deeper into these causes in the weeks to come.

    Until next time,

    l-r: Ray Quek, Chris Gobel and Betty Tanddo

    Globel Industries stand at the National Hardware Show in Las Vegas, May 2015: (l-r) Business consultant, Ray Quek, Chris Gobel (Globel Industries) and Betty Tanddo (Hardware News Network)

    You can contact me directly via email or Twitter @HNN_Australia

    To receive a daily dose of HNN, download the free HNNBrowser app from the Apple store:
    HNN iPad App
    Lowes grows well in Q1 2015/16
    Lowe's results for Q1 2015
    Lowe's Home Improvement
    Comp sales slide from presentation
    Seeking Alpha articles on Lowe's
    Click to visit the ITW website for move information
    US-based big-box home improvement retailer Lowe's Home Improvement (Lowe's) has released good results for the first quarter of 2015/16. Sales for the quarter were reported as US$14.1 billion, a 5.4% increase on the previous corresponding period (pcp). Overall comp (like-for-like store) sales grew by 5.2%, while comp sales growth for the US was 5.3%.
    Lowe's results for Q1 2015

    The chief financial officer for Lowe's, Bob Hull, provided details of Lowe's expectations for the 2015/16 financial year:
    For the year, we expect a total sales increase of approximately 4.5% to 5% driven by comp sales increase of 4% to 4.5% and the opening of 15 to 20 stores which include Orchard and two City centre locations. We're anticipating an EBIT increase of 80 to 100 basis points and are targeting 25 to 30 basis points of EBIT expansion per point of comp above 1%.

    Mr Hull also clarified the month breakdown of comp sales growth for the quarter:
  • February: 5.1%
  • March: 6.6%
  • April: 3.8%

  • The softer results for April were blamed on a range of factors. Lowe's assured analysts that the sales for May 2015 were more in line with the comp sales growth for February and March.
    Transactions and tickets

    The average ticket (total cost of transaction) grew by 3% to reach US$66.63, and the number of customer transactions grew by 2.4% to 212.1 million over the pcp. In the over US$500 category, ticket size grew by 7.7%, in the US$50 to US$500 it grew by 4.9%, and in the under US$50 category it grew by 2.5%.

    Categories that returned and above-average performance included appliances, outdoor power equipment and seasonal living. Under-performing categories included fashion fixtures, flooring, home fashions, kitchens, lumber, millwork, paint, plumbing and electrical, as well as tools and hardware.

    Lowe's chief customer officer, Michael (Mike) Jones, called out the company's recent addition of a Frigidaire Pro appliance series. This provides consumers with access to commercial-grade appliances. Mr Jones said it provided consumers with access to commercial aesthetics and quality at an accessible price.

    Also mentioned was the launch during this quarter of the Sherwin-Williams brand, which to some extent forced out some offerings by Valspar. Mr Jones mentioned that Lowe's is heavily cross-merchandising this paint brand, using it in the in-store product vignettes. These vignettes display entire kitchen and bath units, to help customers better visualise the products in their own homes.

    In addition, Sherwin Williams is being promoted through Lowe's online paint visualiser tool, which enables customers to "virtually paint" their own rooms so that they can better judge the effects of a colour transformation.
    Pro (tradie) brands

    Mr Jones commented on Lowe's continuing efforts to capture more of the Pro market:
    We also continue to strengthen our portfolio of Pro-focused brands. We recently finished rolling our brands such as Kobalt masonry tools, GAF Roofing and Owens Corning insulation and we continue to collect feedback from our Pro customers and store employees to identify other local and national brands that best meet the needs of Pro customers. Along with strengthening our brand portfolio, we recently made the new site available to all Pro customers. This foundation includes dedicated service in our stores, inventory depth aligned with the needs of the Pro and our five ways to save value proposition and our field-based Pro account executives and national accounts team make it easy for medium to large sized companies and government entities to do business with us.

    Lowe's claims that its online sales grew by 25.5% compared to the pcp. It also states that overall web site traffic was up by over 10%, and that its conversion rate (visitors who buy divided by overall visitors) rose as well. This was in part driven by increased activity in digital marketing.

    The company worked to improve the site visitor's experience. It added 360 degree product views to 11,500 of the most popular items. It also added video views to a further 214 items.

    For the Pro market, Lowe's has made its "Lowe's for Pros" website open to a wider market, in what the company describes as a "soft launch". It intends to ramp up promotion of this site for Pros in June and July 2015.
    Forecast 2015

    The company sees improvements in the housing market, a better job market and overall economic growth as being positive drivers for its business. It also believes that sustained lower fuel prices will help to encourage consumer spending.

    Lowe's reports that a survey it conducted into consumer sentiment among its current customers indicates that they are shifting a greater proportion of their spending into home improvement projects. The survey indicated that the respondents now had high intentions to commence home improvement projects over the coming six months. Lowe's states this intention has the highest it has been for six years, and that the projects were evenly split between discretionary and non-discretionary (i.e., maintenance and repair) projects.

    Mike Jones called out a number of product lines as offering good growth prospects in the months to come:
    We offer a wide range of mowers to help customers maintain their yards and we continue to provide compelling and exclusive innovations like our home channel exclusive Husqvarna all-wheel-drive mower and a recently launched Troy-Bilt FLEX product.

    He also noted that paint was a category Lowe's intends to pursue vigorously, not just with its new Sherwin Williams brand:
    Combined with the outstanding Valspar and PPG Olympic brand partnerships, we expect to grow traffic to our stores and increase overall market share in paint.

    HNN would like to sincerely thank stock analysis web site Seeking Alpha for its continued provision of earnings call transcripts. Seeking Alpha generously permits other web sites to make use of its transcripts. This is a great aid to overall company reporting on the open internet.

    To read the full transcript of the Lowe's earnings call, just click on the following link:
    Seeking Alpha
    Home Depot Q1 2015/16 results
    Home Depot results for first quarter FY 2015/16
    Home Depot
    Climate zones for Spring 2015, mapped against approximate Home Depot store locations
    Craig Menear talks about his backgroun
    Click to visit the ITW website for move information
    US-based big-box home improvement retailer Home Depot has released strong results for the first quarter of 2015/16. Sales for the quarter were reported as US$20.9 billion, a 6.1% increase on the previous corresponding period (pcp) for both all sales and comp (like-for-like store) sales.
    Home Depot results for first quarter FY 2015/16

    The company attributed much of the good performance to a more "normal" Spring (fewer low-probability weather events across North America). Home Depot had forecast earnings based on GDP growth of 3.0% and a housing recovery bump equivalent to 1.5%. GDP growth proved slower than expected. The company indicates the effect on its business of the recovering housing market exceeded 1.5%. Housing market growth more than made up for the slower than expected GDP growth.

    Spring sales were supported by Home Depot adding an additional 75,000 seasonal staff.

    As an indication of a more "normal" Spring, Home Depot's chief financial officer, Carol Tome, quoted some figures about comparative garden goods sales:
    If we look at our garden department, our garden department in the United States made up 19% of our sales and 26% of our growth. If you compare that to last year, which wasn't a normal spring, our garden department made up about 18% of our sales but only 4% of our growth. This ratio of 19% penetration and 26% of growth is more normal for us.

    The impact of colder than normal weather in some regions meant only 93% of store employees qualified for profit sharing. Ms Tome indicated she believed this situation would reverse itself after the first-half results are determined.
    Temperate zones for Spring 2015, mapped against approximate Home Depot store locations

    As the above illustration indicates, Spring was actually quite mixed for Home Depot meteorologically. While colder than normal temperatures occurred in the north-east, where the company has a concentration of stores, the entire west and much of the mid-west experienced milder weather than normal.

    This might be one reason why Home Depot CEO Craig Menear called out Home Depot's western region as being its best performer during the quarter. However, the company's executive vice president of merchandising, Edward Decker, also noted that special efforts were being made in drought-affected California. Home Depot is stocking more drought abatement products, and conducting courses in how best to make use of these. This has contributed to sales.

    The company has shifted accounting policies to include shipping and handling charges is cost of sales, in line with what is now standard industry practice. Previously these costs were included in operating expenses.

    Home Depot did overrun its budget by US$15 million. This is due to costs associated with a credit card security breach in 2014, as well as higher than forecast costs for snow removal.

    A strong positive contributor to Home Depot earnings were some favourable taxation rulings. These delivered US$71 million to Home Depot's earnings.

    Currency fluctuations inhibited total sales growth by US$234 million, which equates to 1.2%.

    Comp (like-for-like store) sales were as follows.

    For all stores:
  • February: 4.1%
  • March: 6.8%
  • April: 6.8%
  • Total: 6.1%

  • For US stores alone:
  • February: 5/0%
  • March: 7.8%
  • April: 7.9%
  • Total: 7.1%

  • Inventory turns for the quarter came in at 4.7 times, up from 4.4 turns in the pcp.

    The strong performance has led Home Depot to increase its sales and earnings guidance for 2015/16. Sales growth guidance for the current financial year is now set at an increase of between 4.2% and 4.8%, up from the wide 3.5% to 4.7% guidance provided in February 2015. Comp (like-for-like store) sales are now forecast to increase by between 4.0% and 4.6%, up from the previous guidance of between 3.3% and 4.5%. The numbers reflect both higher expectations and more certainty due to their narrower range.
    Transactions and tickets

    Home Depot recorded the highest number of transactions ever for a first quarter during this quarter.

    On a comp basis, the number of transactions grew by 4.4%, while the size of individual transactions (the ticket) grew by 1.7%. Tickets under US$50 (which make up 20% of total sales) grew by 3.2%. Tickets over US$900 (also 20% of sales) grew by 6.8%.

    Ms Tome offered an explanation for the high growth for big ticket transactions:
    Since 2009 spending in high income households has grown faster than low income households, driven in part by higher end homes recovering faster than lower end homes, and when we say higher end homes, we are talking of homes of [US]$200,000 and up. Interestingly as we look at our consumer base, over 50% of our customers have homes of [US]$200,000 or more, and you compare that to the national average, which is more like 40%, so we think just the nature of our customer base is helping drive this big ticket growth.

    An additional driver was Home Depot's services business, which has an average ticket size of over $1500. Among the leading big ticket items sold were riding lawnmowers, water heaters, appliances, windows and sheds.

    In standard products categories that performed well included tools, indoor garden, outdoor garden, decor, lighting, plumbing and appliances.

    For the Pro (tradie) line of products, siding, power tools, commercial lighting, fencing and power tool accessories all sold well.

    In the outdoor category, lawnmowers, chemicals, outdoor power equipment, planters, lawn accessories and grills were the top performers.

    For decor, vanities, special-order cabinets, ceiling fans, bath fixtures, decorative lighting and tile were the most popular items.

    Online and the move to omnichannel continues to be a focus for Home Depot. According to Mr Decker:
    For the quarter, our online sales grew almost 30% and with our digital properties being our virtual storefront, we were pleased with online traffic growing double-digits in the quarter as well. We will continue to invest in mobile, search and creating a frictionless transaction across the different channels.

    Overall, online contributed 20% to company growth.
    Coming quarters

    Mr Decker pointed to two product he was particularly enthusiastic about.
    We are pleased to introduce a new lineup of DEWALT and Makita pneumatic nailers, both exclusively sold at The Home Depot. These are strong national brands that our Pro customers know and trust. The new DEWALT nailers are compact, lightweight and feature innovative True Sight nose technology that allows for faster and more accurate nail placement, saving our Pros' time on the job site.

    He is also optimistic about the prospects for the ECHO line of cordless outdoor tools.
    New from ECHO is a 58-volt lithium-ion battery platform featuring a string trimmer, hedge trimmer, blower, chainsaw and lawnmower. These tools feature a brushless motor for superior power and performance that rival and in some cases surpass corded and gas [petrol] -powered counterparts.

    Thanks to Seeking Alpha for its outstanding transcription provision for company results. To read the full transcript for Home Depot, please go to:
    Seeking Alpha
    Taubmans celebrates creatives
    Taubmans has launched a new campaign named "Off Canvas"
    It was launched at DEN Furniture + Design Fair with TJ Guzzardi, a Melbourne sign painter
    TJ Guzzardi first dabbled in his art at the age of 15 when he started pinstriping
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    To pay tribute to its own history and the revival of traditional trades, Taubmans has launched a new campaign named "Off Canvas" that blurs the lines between art and trade to celebrate the creatives of today.

    The Off Canvas program was revealed at DEN Furniture + Design Fair earlier this year with TJ Guzzardi, a Melbourne sign painter.

    The Taubmans stand at DEN fair was designed to resemble a traditional sign writer's workshop, with Guzzardi commissioned to paint signs throughout the event. He created works of the old and new Taubmans paint colour names such as "Mojo" and "Acid Rock". The resulting art work paid homage to company founder, George Taubman.
    About TJ Guzzardi

    The walls in Guzzardi's workshop in Tullamarine, Melbourne are adorned with his custom hand-painted signs. He has a large collection of vintage objects and furniture on display that feels as though it is still the 1950s.

    Completely self-taught, Guzzardi first dabbled in his art at the age of 15 when he started pinstriping in his father's hot rod shop. Raised by parents that shared a love of vintage 1950s culture, Guzzardi was exposed to the lifestyle from a young age, where he developed his unique style and flair.
    About Stephen Baker

    Stephen Baker is a Melbourne-based artist, best known for his hand painted mural adorning the Fitzroy Pool. Baker's style is distinctive, applying bold lines and colour blocking to create striking illustrations and artworks.

    His versatile approach enables him to produce both large and small-scale paintings that feature bright colour palettes and signature geometric shapes.

    Baker spent many years designing graphic art for various clothing brands in the street and commercial space where he developed an innate skill and love of screen-printing and repeat pattern making.

    Over time, he has simplified his technique and developed a distinctive style of line work that enables him to tell a story with less line work, less colour and fewer shapes.
    About Rone

    Taubmans also announced a new collaboration with acclaimed street artist Rone. Famous for his large-scale paintings of striking women, in particular the recurring image of his "Jane Doe", Rone's work depicts the meeting point between beauty and decay.

    Rone is based at Everfresh Studio in Melbourne and began his career stencilling on skateboards and skate parks. These days, he travels the world to create major commissioned artworks.

    After achieving wide recognition in the art industry, some of Rone's works are now permanently housed in the National Gallery of Victoria and he is considered to be Melbourne's most prolific street artist.
    The lure of the smarter home
    The WeMo Maker is coming to Bunnings
    HNN Sources
    Local Projects video for the Target Open House project
    Apple introduces HomeKit in 2014
    Give to Amnesty International
    Smartphones have embedded themselves into everyday life to such an extent over the past eight years that it's almost impossible to remember what it was like before they came along.

    It seems likely that one day, ten or so years in the future, we will be saying the same kind of things about "smart homes". (I use the quotes because, like all things tech, smart homes have undergone a name change, and are now being referred to as "connected homes".) Our homes will be more secure, more comfortable, and consume less power and water.

    As HNN has mentioned before, the problem for retailers with this kind of innovation is that, while we can be quite sure of widespread adoption within ten years, and fairly sure of high adoption rates within five or six years, picking the year when they will become a hot product in the home improvement market is all but impossible.

    Forecast projections that the current US$660 billion market for "internet of things" (IoT) devices will increase by over 2.5 times to reach US$1.7 trillion by 2020 doesn't help all that much with retail market timing.

    That said, over the past six months or so we have begun to see more signs that at least the market is becoming more defined. If these kinds of home connectivity and home automation products are not quite the hottest thing on the market by the end of 2016, it is likely they will start to play a significant role in areas such as home renovation, and perhaps even in new home specifications.

    Another area to pay attention to is a similar transformation happening with retail, as IoT devices begin to aid the ways in which retailers interact with customers.
    The connected home and retail

    A number of retailers are making an early effort to be "cutting edge" when it comes to home automation. Most notably, Target in the US has introduced what it calls its "Open House" experimental retail space at the centre of San Francisco.
  • Target promotional video

  • The retail space features a wide array of connected home devices, connected to each other where possible. In fact, these connections are highlighted by the retail space itself, with the translucent walls of the interior space displaying arcs of light to show how one device will interact with another.
  • Local Projects video
  • Local Projects video

    Open House was developed for Target by New York design studio Local Projects, which describes the retail space like this:
    Triggered by visitors' movement through the space, personality-filled products explain their benefits, then work together to solve household problems, from leaks to burglars. Interactive touchtables bolster the experience by allowing visitors to dive deeper into each product and learn more about each device.
    New York design studio Local Projects

    According to Wired magazine, Open House is not only an experiment in introducing customers to connected home concepts, it's also an experiment in finding the best way to sell these future devices:
    Open House is a retail space, but also a test lab where consumers will learn about products, Target will learn about its consumers, and startups (some of which Target is incubating in-house) will learn what it takes to sell their gadgets to the masses. As Barton explains it, "To reach the scale these startups need to reach they need to almost go through a retail 101." Open House is retail 101. Building out what's essentially a retail laboratory is a smart move for a company that wants to be a one-stop shop for your lifestyle needs. Eventually, Target's goal is to apply what it has learned at Open House to its 1,500-plus stores.
    New Target store takes inside home future - Wired magazine
    Retail signage innovation

    While the US Target experiment might seem both expensive and a little radical, "connected retail" technology is steadily making its way into standard retail operations and having a major impact.

    For example, analytics group IDC has forecast that digital signage use in retail outlets will grow from US$6.0 billion in 2013 to US$27.5 billion in 2018. That equates to a compounded annual growth rate (CAGR) of over 35%.

    In its issue for 27 July 2015, Bloomberg Businessweek reports on the growing use of digital pricing tags on store shelving. The article entitled "Stores Try Fixed Prices That Aren't So Fixed" cites the example of regional retailer Nebraska Furniture Mart, which used the electronic price tags to ensure it matches the best prices at online retailers such as Amazon.

    The article reports that the European firm Pricer claims its US sales for the first calendar quarter of 2015 almost tripled over the same quarter in 2014, reaching US$11.6 million. The digital signage Pricer sells not only displays prices, but also enables interactions with customers' smartphones.
    Beacons in retail

    Apple released its iBeacon standard in June 2013. The iBeacon technology uses a low-energy Bluetooth radio signal (Bluetooth LE) to broadcast a unique identifier (UUID). As the devices have a limited range, Apple's iOS devices can detect the UUID when they are close to a specific iBeacon, and this can trigger actions.

    iBeacons have been used, for example, at airport airline lounges to identify frequent flyers, and in supermarkets to trigger specific ads as shoppers walk through the aisles.

    Despite these capabilities, overall takeup of iBeacons has been relatively slow. Now Google has entered into beacon technology with its own version of beacons, known as Eddystone, released in July 2015.

    The main difference between iBeacon and Eddystone is that the latter can transmit not only the UUID signal, but also a specific internet web address - a URL. This means that unlike iBeacons, which require an app download to make use of them, Eddystone can interact directly with a web browser on an Android or Apple smartphone.

    It remains to be seen whether this additional flexibility is enough to trigger more uses for beacon technology.
    The connected home landscape

    In looking at how the connected home environment has developed, it is clear that there are now three layers at work.

    On the surface layer are connected devices, which operate in a semi-independent way by providing connectivity through their own apps and online systems, and make use of generic and common connectivity through wi-fi and Bluetooth.

    Slightly more complex are systems that offer connectivity through the three or four common legacy systems, such as Zigbee and Z-Wave. Many of these systems offer to connect to anything anywhere. As such they can provide basic connectivity, but tend to be limited in how well they integrate the connected devices.

    The newest and most promising part of the connectivity system is that of the latest semi-proprietary standards that have emerged from the two major contenders in the smartphone market, Apple and Google.

    Apple offers its HomeKit standard, which imposes restrictions on manufacturers of devices in return for comprehensive functionality and network security.

    Google has only recently unveiled its new system, which consists of two interlocked parts, the Brillo operating system (based on its smartphone operating system, Android), which links up with its Weave networking system.

    Let's take a look at these three layers in a little more depth.
    Interconnected devices

    Devices in this area rely on mobile devices to provide connectivity and control functions. They tend to fall into one of two groups: providing very simple functions in a narrow band, or multiple, combined functions in one package.

    A good example of the latter would be the Canary device. This began its life as a Indiegogo project where it achieved backing of over US$1.9 million, with an original goal of US$100,000.

    Only slightly larger than a can of soft drink, the Canary combines motion detection, a video camera, a microphone and an air quality monitor in a single, discreet package. The motion detector can trigger automatic video recording, a siren, or direct notification of the owner via their smartphone. The air quality monitor can detect both smoke and high levels of carbon monoxide. Priced at US$249, it provides a security add-on in one package, making it ideal for use in, for example, apartments.
    Canary security device

    Less functional but still useful devices would include Belkin's WeMo range of simple smartphone-controlled switches and plugs. According to an article in Appliance Retailer, Bunnings will be rolling these products out across 160 of its stores, starting in July 2015.
    WeMo to be ranged in 160 Bunnings stores -

    Appliance Retailer

    Appliance Retailer quotes Belkin ANZ managing director Stephanie Ogden as saying:
    We believe that WeMo is the 'on-ramp' to the Internet of Things, and will play a key role in connecting consumers, delivering what might otherwise be a complex or daunting situation in a very approachable and cost-effective experience.

    The WeMo range has been significantly extended for 2015 with the introduction of two new devices. One of these is the WeMo Maker, which can serve as a hub to a range of sensors and other inputs. The other is the WeMo Insight switch, which provides better energy management option for devices via a plug.
    WeMo maker insight switch and new home sensors launch in OZ - IT Wire
    Legacy connectivity

    Over the past three to four years legacy connectivity systems re-geared for the modern world have provided one of the better options for home owners looking for a simple way to add smart features to their homes.

    For example, US big box retailer Lowe's Home Improvement has had some success with its Iris system. The signs are, however, that this sector of the market is likely to fade away over the next three to four years.

    One of the issues these systems have is with their security. In a presentation at the 2015 Intelligent Defense European Technical Research Conference in June, researcher Craig Young of Tripwire revealed what many have suspected for some time: legacy systems such as the popular Wink hub have glaring holes in their security.

    Some of the security vulnerabilities were complex, but others were obvious and simple, such as not providing the necessary level of security certificate validation.

    Despite setbacks like these, some vendors are continuing to expand in this area. In Australia, Swann Communications launched its Swann One system in July 2015. The range includes indoor and outdoor cameras, a thermostat, motion sensors, door and window sensors, a key fob, smart plugs, and an outdoor siren.

    Other devices can be integrated into the system, such as Philips Hue light bulbs, Kwikset Kevo smart locks, and Chamberlin garage door openers. In addition to the hardware, Swann also sell a range of services, such as cloud-based storage of video footage. Initial distribution is through Officeworks and JB Hi-Fi.

    As one indication of the less than healthy nature of this segment, Australian startup company NinjaBlocks, which offered one of these integrating systems, went out of business in May 2015, despite having raised over $1.5 million through a range of sources, including a successful Kickstarter campaign.
    Semi-proprietary networks: Apple

    Likely to take the place of the legacy systems are the networking protocols being developed by Apple and Google. Apple's HomeKit has now been around for over a year, and has evolved significantly over that time.
  • Apple HomeKit introduction WWDC June 2014

  • What began as a set of protocols to which manufacturers of compatible products had to adhere, has now been transformed into a strict set of guidelines that determines some elements of the networking hardware that must be used.

    Given the security issues that have surfaced elsewhere, this level of caution is understandable, but it is also a product of Apple's desire to control as much of the ecosystems that spring up around Apple products as is possible.

    Even with these restrictions, a number of HomeKit compatible products have been released onto the market. These include:
  • e-cobee3: Sensors and a thermostat
  • Elgato Eve sensors
  • iHome smart plug
  • Insteon hub 22
  • Lutron bridges and kits

  • Some 17 other products have been announced for release in 2015. These include:
  • GE colour changing LED lights
  • Haier smart air conditioner
  • Honeywell Lyric thermostat
  • Kwikset locks
  • Osram Sylvania lights
  • Philips Hue lights
  • Schlage locks
  • SkyBell doorbell systems
  • Withings baby monitors

  • The HomeKit system works by having the homeowner identify all the devices in the house that can be tied into HomeKit. The devices are identified by type and by their location in the dwelling.

    Control of the devices is achieved through the use of two established Apple products: its online "assistant" Siri for control while in the house, and the Apple TV for control from a remote location.

    Users of HomeKit will be able to issue commands such as "Hey Siri, turn on the living room lights", or log into the HomeKit network via their Apple TV, and have it issue commands over their wifi network.

    As an indication of the conflict that is likely to develop between Apple and Google, Apple has also had all of Google's Nest products removed from its stores and website e-commerce, as these will not become HomeKit compatible.
    Semi-proprietary networks: Google

    Google has approached its participation in the connected home system from a radically different angle. Where Apple is interested only in providing the smartphone links and software, Google has invested in hardware devices through its acquisition of Nest in early 2014.

    Nest has continued to expand the range of devices it offers, to include the Protect smoke and carbon monoxide alarm and, with its acquisition of Dropcam, connected video cameras as well.

    In late May 2015 Google announced the next step in its plans, which includes Project Brillo, and the Weave IoT protocol. Brillo is an operating system for IoT devices, based on a stripped down, device-centric version of the Android operating system for smartphones.
  • Google Brillo introduction

  • Brillo is scheduled for release in the third quarter of calendar 2015, and Weave by the end of 2015.
    The energy equation

    While all these developments clearly indicate that this market is gathering speed, HNN remains of the opinion that in Australia what will finally trigger widespread adoption of connected home technologies will be the need to conserve energy to both reduce pollution and create cost savings for consumers.

    The best means of achieving this will be through the use of programmable communicating thermostats (PCTs). These devices enable utility companies to "suggest" that customers alter temperatures during peak load times, in exchange for discounts on their electricity bills.

    The ability to obtain lower peak load limits will create large cost savings for utilities, as millions of dollars are expended every year on developing generation capacity that will only be used for 100 hours or less per year.

    It seems highly likely that sooner or later the potential of these systems will attract the attention of diligent public servants, and perhaps play a key role in the politics around carbon generation and global warming as well.

    Such systems are already being deployed on quite a wide scale in areas of the US. In fact, California company San Diego Gas & Electric has come under fire from the California Public Utilities Commission for failing to increase education about this kind of demand response program to utility customers.

    The company received authority to spend US$39.8 million on these programs during 2015 and 2016. It installed some 15,000 PCTs during 2014.

    As we stated in the introduction, understanding how and when demand will begin to grow in this sector is difficult, but it is also likely to prove worthwhile. The analogy we suggested with smartphones is one that bears thinking about.

    For many people, mobile phones were something of a slight convenience, until Apple launched the real smartphone revolution with its first iPhone, and they became almost essential to daily life.

    We face similar circumstances today in relation to the connected home. Current systems at their peak are something like one of the original clunky smartphones, such as a Palm Treo.

    It is likely we won't see widespread adoption of connected home systems until a simple, integrated system which provides wide capabilities is launched, along with significant network support, such as a link to utility companies.

    At the current rate of development, we could perhaps expect such a system to arrive sometime in the third calendar quarter of 2017. Equally, however, a quite viable early adopter market could emerge in time for Christmas 2016, depending on the rate of adoption of the Apple and Google systems.

    It may be vital for many home improvement retailers to work out how they will sell and source these systems in the future. As technology products, many of these devices will be subject to complete refreshes once a year, along with a partial refresh in the middle of that cycle.

    This will bring with it specific stocking concerns. Selling the products is also likely to require some degree of specialised knowledge, both as regards the capabilities of the systems, and the means of installing and integrating them.

    While these concerns might seem to be something of a retail headache waiting to happen, the reality is that these products and the market they will foster will likely prove something of a bonanza for home improvement retailers, in both their consumer and trade business lines.

    By 2017 many of the innovations in categories such as power tools will have likely worked their way through the entire product lines. The connected home might arrive just in time to keep the tills ringing sharply for many more Saturday mornings.

    Until next time,


    You can contact me directly via email or Twitter @HNN_Australia

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    HNN iPad App
    Big box update
    Bunnings Toowoomba store gets closer to being built
    HNN Sources
    Masters' head of digital Julie Mathers is interviewed about its ecommerce activities
    Masters Coffs Harbour store (Image credit: Coffs Coast Advocate)
    Click to visit the ITW website for move information
    Toowoomba Regional Council's approval to demolish the historic foundry will help Bunnings' plans to build a store on the site; Julie Mathers, head of digital for Masters is profiled; and grand plans for Masters Coffs Harbour store opening.
    Toowoomba foundry makes way for Bunnings

    Toowoomba Regional Council's development assessment panel approves the demolition of the area's historic foundry buildings. Bunnings has approval to build a new warehouse on the site, but needed a green light from council to demolish heritage-listed buildings. The Toowoomba Foundry was established in 1871 and remained in operation until 2011.

    Bunnings has defended the demolition of the heritage buildings, saying they have "minimal heritage significance considering the whole of the Toowoomba Foundry site". The developer's application stated: "It is proposed to retain high value state heritage places being the cylinder head building, maintenance building and the old canteen building." Toowoomba Regional Council agreed with Bunnings. The recommendation read: "It is considered that the buildings to be removed make limited contribution to the overall heritage setting of the property and that the scope of the proposed demolition works would ensure that the most significant heritage values of the site will be retained."
    Lessons in ecommerce from Masters

    In an interview with Power Retail, Masters' head of digital Julie Mathers discusses how she develops offers that blend offline and online retailing for its customers. Mathers was one of the keynote speakers at the recent Online Retailer Conference in Sydney.

    Masters says Masters shows agility in its e-commerce practices because it always puts the customer first and ensures it solves customer problems quickly. She said: "We leverage a few tools to understand our customer more; these help drive our business and changes we make in the customer journey."

    Mathers does not think of offline and online as being separate channels. She said: "I think of us as a retailer with different ways for customers to shop. So whatever we do automatically feeds across the whole business. We have a very high percentage of click-and-collect orders, and our website is as much a research tool as it is a shopping tool; it's a key part of the customer journey regardless of where the customer ends up purchasing."

    To read more of the interview, go to the following link:
    Masters staying agile in big business - Power Retail
    Masters Coffs Harbour opening

    Final preparations are under way for the opening of Masters store in Coffs Harbour (NSW). The 11,000sqm store will open its doors at 7am on August 1, providing jobs for more than 100 locals. The store's departments including flooring, bathroom, gardening, outdoor living, white goods, paints, building supplies, and kitchen and blinds. Opening specials will be on sale and a barbecue will also be held.
    Indie store update
    Sunlite Mitre 10 opens a new store in Paddington (NSW)
    HNN Sources
    A Home Timber & Hardware store in St Morris (SA) is closing down
    Forty Winks has a design deal with Alisa and Lysandra from The Block
    Click to visit the ITW website for move information
    Sunlite Mitre 10 Group has opened its fourth outlet in the Sydney inner suburb of Paddington; an Adelaide Home Timber & Hardware store is closing down; and Forty Winks has forged a design partnership with Alisa and Lysandra Ayres, the twin contestants from The Block.
    Mitre 10 in Paddington

    A new Sunlite Mitre 10 store has opened in the former Isenberg's Hardware site on Paddington's Oxford Street in Sydney. The revitalised site covers 400sqm over two extensive floors. Sunlite Mitre 10 managing director, Steven Czeiger told Retailbiz: "We're thrilled to be expanding into our fourth Sydney property to offer Paddington and the surrounding area the award-winning level of service, expertise and product ranging that we've been able to build up since 1987.

    "At a time when price wars and independent shopping dominate retail headlines, we're proud to be an example of how our customer experience has been able to set us apart from larger competitors. Not only will the store breathe new life into the Oxford Street shopping precinct, but will encapsulate our passion and dedication to providing a one-stop shopping hardware experience that no other hardware store can match." Other Sunlite Mite 10 stores are located in Bondi Junction, Pitt Street and York Street.
    Home Hardware store shutting its doors

    A Home Timber & Hardware store in St Morris (SA) is closing down. Expressions of interests to renovate or redevelop the site are being advertised. The property is being listed for $1.25 million and the site's owner confirmed to Adelaide Now that the 910sqm building is also being sold.

    Commercial SA director Andrew Turner, who is heading the sale, expected any new owner to demolish the prominent building and redevelop the site for retail. He said: "The building is very old and rundown, so there is a fair chance it will be knocked down. The site lends itself to offices or retail businesses." Expressions of interest close on August 13.

    The news of the hardware shop's closure comes a month after the Kensington Park Shopping Centre, opposite the store, shut its doors because of increasing costs from taxes, rates and insurance.
    Forty Winks partners with reno twins

    The Forty Winks' Asta range by Alisa and Lysandra from The Block is a four piece bedroom suite that includes a bed, two bedside tables, and a tallboy. CEO Con Dekazos said this exclusive partnership is a first time initiative for the business. He told Inside Retail: "When we set out to develop our first ever design partnership, Alisa and Lysandra seemed an obvious choice, they boast a tremendously strong fan base and are trusted style influencers with an eye for design. We're thrilled to have established this collaboration, which marks the beginning of more exciting design projects for Forty Winks as we move into the future, evolve as a brand and expand our consumer offering."
    HNN Index for week ending 24 July 2015
    HNN Home Improvement Index for 24 July 2015
    HNN Sources
    Boral's underlying annual profit is expected to increase by 46%
    Stockland's Glendale shopping complex in NSW is getting a major expansion
    Click to visit the HBT website for more information
    The HNN Home Improvement Index for the week ending 24 July 2014 fell by 15.67 points to reach 998.12, below its baseline level of 1000 set at 1 July 2014.

    The underlying ASX 200 index fell as well, down by 104 points to 5566.1 points, or 19 points on the adjusted scale. This indicates that the HNN Index managed not to retreat quite as sharply as the ASX 200.

    Metcash traded back its gains from the previous week, closing down by 9.9%. Myer fell as David Jones reported stronger earnings, coming off 7.8%. GUD Holdings fell by over 7%.
    Boral predicts stronger full year profit

    Boral expects a net profit before significant items of $240 million to $250 million for the year to June 30, 2015. In fiscal 2014, Boral booked a net profit before significant items of $171 million, and a net profit after significant items of $173 million.
    Boral predicts stronger full year profit - The Australian
    CIMIC Group
    CIMIC posts $257.2m in half year net profit

    CIMIC Group, formerly known as Leighton Holdings, has posted $257.2 million in net profit after tax for the half year ended 30 June, an increase of 7.5% from the same period a year earlier. Reporting its results for the first half of its 2015 financial year, it said it gained $7 billion of new work during the period, bringing its total work in hand to $28.5 billion.
    CIMIC posts $257.2m in half year net profit - Commbank
    Lend Lease Group
    Lendlease wins $96m BHP contract

    The engineering arm of Lendlease has won a $96 million contract to build BHP Billiton's new tug harbour at Hunt Point in Port Hedland. The engineering, procurement and construction contract also includes upgrades to BHP's existing tug harbour at Nelson Point and landside non-process infrastructure at both sites.
    Lendlease wins $96m BHP contract - Business News (WA)
    Myer Holdings
    Myer risks 'dangerous spiral' by cutting staff hours, numbers

    Analysts have warned that Myer risks entering a "dangerous spiral" of declining customer service and sales if it cuts staff numbers and hours. The department store chain says a voluntary redundancy program to reduce the number of permanent staff in 42 stores and cut the hours of part-time and casual staff by 20% is aimed at increasing flexibility rather than cutting costs.
    Myer risks 'dangerous spiral' by cutting staff hours, numbers - Fairfax Media
    Stockland Corp
    Glendale shopping centre expansion gets green light

    Stockland says the approval of a major expansion of its Glendale shopping complex in NSW is a win for the community. The $100 million project will see a bigger Coles supermarket, a boulevard-style dining precinct, more retail shops and an enclosed mall. The Hunter's Joint Regional Planning Panel approved the development, on the condition that more be done to improve the look of a group of specialty shops.
    Glendale shopping centre expansion gets green light - ABC
    @Mecca: Porta's latest products
    Porta at the Mecca Melbourne event
    HNN Sources
    Porta Forescolor used to decorate a room
    The Porta story
    Visit the Mecca Website
    Claire Pizzey, commercial communications marketing manager with Porta, and Lyle Maybury, national commercial sales manager, introduce two interesting new products from the Porta range.

    The first product is a coloured MDF product, known as Forescolor. The second is a thermally modified form of wood that Porta is marketing under the Lignea brand name.

    According to the Porta website, Forescolor is:
    ...ideal as a decorative design element for hotel lobbies, restaurants, shop fit outs, exhibition halls, schools and other commercial buildings, or as a colourful constituent in bookshelves, art installations and entertainment centres.
    Porta website page for Forescolor

    Porta also has its own video to present this product:


    This is a thermally modified pine that is impregnated with a resin. It provides the appearance of hardwood but with a 50-year design life without rot and decay.
    @Mecca: Kenbrock Flooring
    Todd Lisson, commercial manager at Kenbrock Flooring
    HNN Sources
    Kenbrock's floor tiles are made of natural, virgin rubber
    Kenbrock Flooring also supplies residential floor coverings
    Visit the Mecca Website
    Todd Lisson is the commercial manager at Kenbrock Flooring, a distributor of resilient floor coverings. Its rubber floor tiles have a commercial grade finishing. "The amount of natural rubber allows it to achieve an R10 grading which is paramount for safety," he explains. The tiles are also non-porous, easy to clean and maintain. They will not harbour bacteria.

    The company's custom design service is unique to its offering. The Kinetics colour range has been created by Australian colour consultants, specifically for the local market. It has a DIY option where end users can mix and match base and chip colours. Kenbrock Flooring also supplies residential floor coverings.
    High end rubber

    Seeking opportunities
    Two new roles at MSP Group-owned Direct Home Timber & Hardware
    HNN Sources
    Agrijobs is seeking to place a rural merchandise manager
    A state-based role at Mitre 10 is available in NSW
    Visit the Mecca Website
    Direct Home Timber and Hardware in Windsor Gardens (SA) has two store-based roles available; a rural merchandise manager is required to work across a group of stores; and a Mitre 10 support and marketing position in NSW.
    Two new HTH store roles

    Direct Home Timber & Hardware needs a trade & building materials manager and store manager for its store in Windsor Gardens, north-east of Adelaide. The roles are career opportunities for experienced sales professionals, who have a history of customer focused sales. They will liaise regularly with the general manager.
    Direct Home Timber & Hardware needs to fill two store management roles
    Managing rural merchandise

    An agribusiness with multiple rural stores is searching for a rural merchandise manager. They will manage merchandise a number of product portfolios including animal health, ag chem, seed, fertiliser and general rural merchandise. The successful candidate will focus on the development of the company's business whilst providing support to the merchandise and sales teams across the branches.
    Agrijobs is seeking to place a rural merchandise manager
    Mitre 10 support & marketing role

    Located in Huntingwood (NSW), Mitre 10 is seeking a state support & marketing officer. Reporting to the state sales manager, the role will include responsibility for providing direct support to Mitre 10 store owners, contributing to the development and implementation of the marketing and promotional initiatives and managing the day-to-day administration.
    State-based role at Mitre 10 is available in NSW
    Home Depot buys Interline Brands
    The acquisition is part of Home Depot's focus on serving professional contractors
    Wall Street Journal
    Interline Brands sells maintenance and repair products
    Sales to contractors account for about 35% of Home Depot's US$83 billion in annual sales
    Click to visit the ITW website for move information
    Home Depot has agreed to buy a direct marketer of repair products for US$1.63 billion. It is the company's biggest acquisition in nearly a decade.

    The home improvement retailer said it would pay for the acquisition of Interline Brands in cash. Interline sells maintenance and repair products to customers like property managers of multifamily housing complexes, and government and educational facilities.

    The acquisition is a way to take part in the recent growth in multifamily housing, as younger workers put off buying homes, because Interline sells cleaning products and new heating systems to managers of those buildings. Home Depot chief financial officer Carol Tome said in an interview:
    It's a way to lean into the space.

    The move is part of Home Depot's strategy to serve professional contractors. Sales to professionals and services like installation account for about 35% of Home Depot's US$83 billion in annual sales.

    That segment has been growing faster than the rest of the chain, fuelled by a recovering housing market that has given homeowners more confidence to remodel and repair their homes.

    The retailer targets contractors and other professionals with a loyalty program and dedicated staff to the section of the store they frequent, but by its own admission, its offering has been lacking. Tome said:
    We don't serve them completely.

    Interline helps fill some gaps with its staff of 1,500 salespeople who call on clients, and a payment system that issues invoices that these customers prefer to Home Depot's traditional retail model.

    Interline also has about 90 distribution locations and can get products to most customers on either the day the order is placed or the next day.

    Home Depot is buying Interline from two private-equity firms, Goldman Sachs Capital Partners and P2 Capital Partners, who bought the company in 2012 for about US$1.1 billion. The deal, which comes after a competitive auction, is scheduled to close before November and is expected to add to Home Depot's earnings this year.

    The deal is the company's second-largest of all time after its 2006 acquisition of Hughes Supply, according to data provider Dealogic.
    Kennards sponsor plumbing & gas event
    Kennards Hire Test & Measure is a sponsor of the 2015 Plumbing & Gas Industry Awards
    Kennards For Kids kicks off on the 1st of September
    Anyone visiting a Kennards Hire branch can contribute to Kennards For Kids
    Subscribe to HNN weekly e-newsletter
    Kennards Hire Test & Measure has announced its role as VIP Function sponsor of the Master Plumbers' Association of Queensland 2015 Plumbing & Gas Industry Awards.

    Seventeen awards will be presented for a range of categories including Apprentice of the Year, Commercial and Industrial Technical Award, a Service Excellence Award and Women in Business Award. The event will be held at the Hilton in Brisbane on 24 July.

    Invited guests include the Minister for Housing and Public Works and Minister for Science and Innovation, the Hon Leeanne Enoch MP, Member of Murrumba, Chris Whiting MP, commissioner of the Queensland Building and Construction Commission, Steve Griffin, and the acting chief gas inspector, Marshall Holmes.

    General manager, Kennards Hire Test & Measure, Gareth Vines said:
    [We] are the first hire company to sponsor the VIP Function at the Plumbing & Gas Industry Awards. Through our corporate membership with Master Plumbers' Association of Queensland, we have been involved in trade shows and a project of building a women's shelter, where we were able to contribute through the donation of equipment.

    As the peak industry body, the Master Plumbers' Association of Queensland provides licensed contracting companies with a range of support services and acts as an advocate through government ministers.

    The MPAQ is also a registered training organisation and offers courses, an apprentice membership program as well as HR, IR and technical support for its members.
    Charity drive

    Kennards For Kids kicks off on the 1st of September. The hire chain is looking to make life a little easier for sick, injured and disadvantaged kids around Australia and New Zealand, and help them get the best start to life possible.

    For over 10 years, it has used the months of September and October to raise funds and awareness for a number of selected children's charities by donating $2 from each hire to these causes.

    Kennards Hire is encouraging businesses and families to get involved this year, after its most successful year in 2014 when it raised over $350,000.

    This year, Kennards will be donating proceeds to Stepping Stone House, Kids Xpress, Variety - the Children's Charity, the Constable Care Foundation and the Children's Hospital Foundation.
    Reno boom in Sydney's lower north shore
    There is a high demand for renovation in Sydney's lower north shore
    More money is being spent on new additions such as kitchens
    Renovation companies noticed a spike in business about six months ago
    Give to Amnesty International
    Such is the demand for renovation in Sydney's lower north shore that some local builders are reporting it is the busiest they've been in more than five years.

    The shortage of high-end houses for sale, especially in the $3 million to $4 million range popular with upgraders, was feeding the frenzy, according to buyers agent Peter Kelaher, director of PK Property Search. He told Domain:
    Most people are not upgrading, they're staying where they are and they're renovating.

    The amount being spent in some suburbs on new additions such as kitchens, decks and pools has more than tripled in the first four months of this year compared with the same period last year. In other suburbs the amounts have doubled, based on data from the ABS and modelled by Domain Group's senior economist Dr Andrew Wilson.

    This compares with spending on renovations across the whole of Sydney, which dropped 8% over the same period.
    Top 20  suburbs for spending on renovations

    Mosman is the epicentre of these alternations with homeowners forking out more than $55 million for work in the first four months of this year alone, 127% more than the same period last year. One dollar in every four spent on renovating in Sydney ($400 million) was in the Mosman council area over the four months this year.

    Other hotspots include Chatswood East and Artarmon, up 130%, and Willoughby, Castle Cove and Northbridge, up 70%. North Sydney and Lavender Bay are the suburbs with the biggest rise in home improvements, with spending there up almost 250%, the figures showed.

    Wilson said the lower north's soaring home improvement rates could be explained by homeowners not wanting to move out of their area, while at the same time seeking to take advantage of favourable economic conditions. He explains:
    Lower interest rates are not just about the mortgage, they're about the money you borrow for your renovation. In some areas where prices are growing strongly you can capitalise, use the value of your property as it's increased to draw down on it to improve it even more.

    Builder Christian Nasr, a director of Koncepts, a company that specialises in kitchen and bathroom renovations on the lower north shore, noticed a spike in business about six months ago. He said:
    The last five years it's been steady but this year has been crazy. Our workload has jumped about 60%, all of my tradesmen are pretty busy.
    Hot links
    Pottery Barn moves to Perth
    HNN Sources
    Kingfisher products win a number of innovation awards
    Orchard Supply Hardware opens first outpost in San Francisco
    Click to visit the HBT website for more information
    An additional roundup of home improvement stories. US homewares retailer, Pottery Barn opens a Perth outpost; B&Q garden products win European innovation awards; Orchard Supply Hardware opens first store in San Francisco location; Allegion to acquire Korean electronic lock company; and new hand tool range from Yanko Design. More stories below.

    For further information, simply click on the images provided.
    Local News
    Perth gets its own Pottery Barn

    Pottery Barn opened its first store in Perth recently. Parent company Williams-Sonoma has taken over a 1878sqm retail space opposite David Jones in the Hay Street mall for its three interconnected stores - Pottery Barn, Pottery Barn Kids and West Elm. Locally made products could make their way on to shelves in the new stores.
    Pottery barn opens in Perth
    International News
    Innovation awards for Kingfisher

    B&Q owner Kingfisher has won several awards for product design. In France, the jury of the "Observeur du Design" 2015 Awards gave a winner's "label" to four of Kingfisher's products, including a MacAllister lawnmower with sliding handles and a cordless hammer drill. In a separate competition in Germany, Kingfisher scooped the 2015 "Winner of the Red Dot Product Design Award" for its Verve range of garden cutting tools.
    Kingfisher's Verve range of garden cutting tools
    Orchard Supply in San Fran

    The first Orchard Supply Hardware in San Francisco is now officially open in North Beach near Fisherman's Wharf. The retailer has customised this location to cater to apartment dwellers and smaller space living. At nearly 36,000-square-feet, the new store occupies two buildings connected by a glass encased skywalk.
    Orchard Supply Hardware opens in San Francisco
    Allegion's Korean acquisition

    Allegion has agreed to acquire Milre Systek, a security solutions manufacturer in South Korea. It produces electronic door locks. The Milre suite of products - sold across both retail and commercial distribution channels - includes mortise, rim and locker locks. Milre generated sales of approximately US$13 million in 2014.
    Allegion acquires Korean security company
    Striking hand tools

    The Aura range moves away from the traditional rugged aesthetics of hand tools. The over-moulded TPE contact points allow the user to comfortably grip each tool and efficiently complete tasks. Each product has been developed with a strong focus on improved ergonomics.
    The Aura range of hand tools from Yanko Design
    Plastic packaging for paint

    Paint company Akzo Spain has started using a plastic packaging solution for its premium brands, Bruguer and Procolor. The Paintainer range from RPC Superfos offers a large choice of volumes and finishing options through in-mould labelling with lacquer. Painters can open and close the package without the use of any tool.
    Paintainer packaging is being used for Akzo Spain's paint brands
    Hands-free fob replaces keys

    A Berlin-based start-up company is hoping to revolutionise the way people get into their homes. The idea is to swap a traditional metal key for a Kiwi Ki - a little plastic square which automatically unlocks the door as you get close. It is essentially a transponder, which uses radio-frequency identification technology. Kiwi Ki connects to a smartphone app so doors can also be opened remotely.
    The Kiwi Ki can replace front door keys
    @Mecca: Australian Timber Company
    Luke Jessop-Smith from Australian Timber Company at the Mecca Night Market event in Melbourne
    HNN Sources
    Jarrah flooring is just one flooring product available at Australian Timber Company
    Australian Timber Company has many experienced hands behind it
    Visit the Mecca Website
    Luke Jessop-Smith from Australian Timber Company shows off Jarrah, a Western Australian red species. He is displaying an "end grain" product because it is cut across the grain of the timber. This provides an "end grain" finish which is a durable finish. It is part of the End Grain Parquetry range.

    The Mosaic Parquetry comes in the standard square-on-square pattern as well as the herringbone pattern, which is very popular with architects. The company also provides products in Tasmanian Oak and some European species but they predominantly come in Australian species such as BlackButt timber.

    Australian Timber Company has its beginnings in an old timber sawmill in Grafton (NSW).
    Parquetry flooring options

    @Mecca: Sika Australia
    Jason Jansz, specifications consultant at Sika Australia
    HNN Sources
    Sikaflloor PurCem is made of a polyurethane cement material
    Sikafloor PurCem can also be used in pharmaceutical environments
    Visit the Mecca Website
    Jason Jansz, specifications consultant at Sika Australia shows HNN the Sikafloor PurCem product. It is made of a polyurethane cement material which is ideal for high traffic areas such as industrial kitchens where food preparation is being conducted. The product can be used in other commercial environments.

    PurCem cement floor systems come in a number of varieties. From the 21 PurCem which is a water-based, high strength, medium duty, self smoothing topping to the 31 PurCem, a three-part, solvent free, high build, coloured, matt finish coating based on the unique Sikafloor PurCem water dispersed polyurethane/cement aggregate technology.

    As Jason puts it: "Sika is a world leader in chemical product manufacturing."
    Commercial floor solutions

    Drive Phillips screws with ease
    The new bit makes it easier to drive Phillips screws
    Original Phillips patent
    One of the Cadillacs that would have featured the screw
    Click to visit the HBT website for more information
    The standard Phillips head screw has always been something of a mixed blessing. A new innovation seeking funding on Kickstarter is designed to reduce some of its downsides, while retaining its best features.

    When it was first designed in the 1930s, the main purpose of the screw was to improve the assembly-line process. At that time, the powered drivers used on the lines were simple and crude, and lacked features such as torque control. This meant that it was easy to over-tighten standard screws, resulting in snapped screw-heads, and a subsequent loss of efficiency.

    The Phillips design, with its cross-hatched design and sloping edges, provided three advantages. It was quick and easy to centre the driving bit in the screw. With the sometimes soft metal used for screws in the 1930s, the greater contact surface enabled more torque to be applied to smaller diameter screw-heads.

    Most importantly, however, the design of the screw prevented over-tightening, as the sloped sides of the contact point would "cam out" the screw bit when a certain level of torque was reached.

    These advantages saw the screw originally adopted by the Cadillac division of General Motors in 1936, and by 1940 the design was almost universally used throughout the automotive industry. Its adoption rate was further enhanced by the massive industrial growth that came during World War II.
    The problem

    While the Phillips' screw's characteristics were ideally suited to machine assembly in the first half of the 20th Century, some of these characteristics have created problems 80 years later. The "cam out" action of the screw can all too easily result in ruined screw-heads when using modern power drill/drivers.

    US company Pinckard Tools have developed a product that could eliminate this problem, and they are currently seeking funding on Kickstarter. Named the "Knife Edge Bit", the product reduces the cam out effect of the standard Phillips screw, making it much easier to remove ruined screws, and to drive standard Phillips screws under higher torque levels with less effort.

    As the Kickstarter project states:
    The "Knife Edge" bit, Does not slip, Does not strip, Does not "cam" out, Does not destroy screws, Requires no extra force to stay in the screw, Drives dirty oily screws like dry screws, Drives most damaged screws and will often remove screws that before would not have been possible with a regular bit.

    The advantages of the new bit are also described:
    It will stay in the screw until it is all the way in or until you take it out. This is new and it is designed that way! No extreme force is required to keep it from slipping. No more leaning into the screw like before. No more sore shoulders. When you try it yourself you'll be pleasantly surprised. Imagine how much easier your work will be without the unavoidable "workout" of the past? This is a tremendous advantage when you're up on a ladder, reaching up over your head or out to the side or in any situation where you have reduced leverage or a lot of screws to drive.

    As of this writing, on 22 July 2015, the Kickstarter project has over US$22,000 of funding, on its way to a goal of US$35,000, with a little less than three weeks left to run.
    New Phillips screwdriver - Kickstarter

    Pinckard Tool have provided a short video which demonstrates some of the advantages of the tools.

    Google could enter home services market
    Google has hired employees from failed cleaning startup Homejoy
    The Verge
    Google may be about to enter the growing home services market
    Homejoy paired house cleaners with apartment-dwellers and homeowners
    Click to visit the HBT website for more information
    According to a report in The Verge website, Google may be about to enter the growing home services market.

    The search giant has hired approximately 20 employees from Homejoy, a US-based startup that focused on pairing house cleaners with apartment-dwellers and homeowners. Google confirmed the hires to sister site Recode, soon after Homejoy announced that it was closing shop for good at the end of the month.

    Google has yet to announce any foray into home services, but Buzzfeed reported earlier this year that the company was working on a service that would connect local plumbers, cleaners, painters, and other workers with homeowners.

    The employees Google has picked up from Homejoy largely represent the startup's product and engineering teams, according to Recode. Their expertise could help Google build out its own service, which would likely pop up when a user searches for a plumber or cleaning person.

    Similar Google services already exist that let people compare prices for flights, hotels, and even car insurance when you search.

    Homejoy launched in 2012 as a website designed to make it easier for people to find and schedule house cleanings from verified cleaners. More recently, it began to set up appointments for other tasks around the house, like carpet cleaning services and repairs from handymen.

    The startup faced stiff competition from sites like Handy, TaskRabbit, and, more recently, Amazon itself, which launched its own home services product just over a month ago.

    Homejoy's closure was related to issues raising enough funding and a number of lawsuits from its cleaners who claimed they should be treated as employees, not contractors.
    Rona buys back stores
    Rona says it will eliminate its franchise structure with the purchase of 20 stores
    Globe and Mail
    The deal is not expected to affect employees and should go largely unnoticed by customers
    Luc Rodier, executive vice-president of retail at Rona
    Click to visit the ITW website for move information
    Canadian home improvement company Rona says it will eliminate its franchise structure with the purchase of 20 stores. Management believes the move will help it compete more effectively with large US rivals such as Lowe's and Home Depot.

    The Quebec-based firm announced it is acquiring 18 franchise stores in Quebec and two in the Ottawa area for an undisclosed price. They include 17 big-box stores and three smaller outlets.

    This will leave Rona with 233 corporate and 275 affiliate stores in Canada that operate under several different banners. Luc Rodier, executive vice-president of retail, said in an interview:
    The competition we're facing in big box retailing is all corporate, so it gives us agility to be more reactive to promotions, to be more proactive in terms of development across [Quebec] and it's more efficient, over all, in the company.

    Rona has been streamlining its operations for three years in an effort to cut costs and restore profits amid a tough retail environment. Rodier said the change to a structure used by its rivals doesn't set Rona up for an eventual sale.

    The franchisees approached the company six months ago about a sale. It follows Rona's purchase of five other franchise locations since 2005.

    All 79 of Rona's big box stores will be wholly owned by the company following the acquisition of the 17 franchised big box locations.

    The deal is expected to close in September, subject to a review of the business at each of the franchised stores.

    In total, the Rona franchise stores have 2,600 employees and generate more than C$500 million in annual retail sales.

    Rodier said the deal won't affect employees and will go largely unnoticed by customers.
    For local communities there's very little changes apart from the ownership. Local management stays, the staff stays, the service stays the same, and the assortment will be Rona assortment.

    The acquisition will allow Rona to incorporate the franchised-store sales and profits into its own results.

    But analyst Irene Nattel of RBC Capital Markets said while the transaction will simplify its business model, that does little to change overall challenges facing the company. She wrote in a report:
    With a challenging outlook for the Canadian housing market and modest consumer spending growth, we believe it will be difficult for Rona to generate meaningful sustainable top line growth after the current period of easy comparables.
    IKEA + pre-fab kitchens + online: it all fits
    IKEA's most recent kitchen advertisement
    HNN Sources
    Ideas behind the Metod furniture range
    The ABBUTT kitchen
    Give to Amnesty International
    What is it about kitchens? Of all the rooms in the house, the kitchen is perhaps the most unusual. In particular this sense of its "specialness" has been steadily growing over the past decade.

    We could go so far as saying Australian kitchen is something of a "pioneer" room. It is the place where home-owners - who are (mostly) quite conventional and cautious - are willing to lash out and experiment a bit.

    For example, it's the one room of the house where you can regularly expect to find built-in, complex pre-fabricated components used with great flair. That's not something that could be said of other rooms with a similar utility function, such as bathrooms and laundries.

    It is also, surprisingly, the room with the most technology per square metre in most houses. It can include a stove, oven, refrigerator, freezer, microwave oven, dishwasher, garbage disposal, water treatment system, and a wide range of appliances from the humble hand-mixer to complex all-in-one food preparation devices.

    It is possible that over the next five to six years we will see some of the pre-fab assembly techniques of the kitchen migrate to other rooms, especially as more technology makes it way into houses.

    What is more certain is that over the next two to three years we will see the online marketing techniques used for promoting kitchens become more common across a wider range of sales areas.

    Of all the online kitchen marketers at the moment, there is little doubt that IKEA is the most advanced. By taking a look at what IKEA is doing with kitchen marketing online today, we can catch a glimpse of what marketing everything from power-tools to outdoor furniture will look like in a year or two.
    IKEA + kitchen: made for each other

    As a company that specialises in pre-fabricated, self-assembly products, the rise of the pre-fab kitchen has been something of a boon for IKEA. There is little doubt that the company's expectations for this line of business have contributed to its plans to expand quite radically in the Australian market, including the addition of full online e-commerce by 2017.

    The Australian home improvement industry should be in no doubt that this will be an aggressive move by IKEA. At a guess, it will be seeking a further 10% share of the home kitchen market by 2018/19. That share is going to come directly from existing suppliers, such as Kaboodle and Hafele.

    IKEA brings to the table a number of telling advantages. It has full vertical integration, from design to manufacture to distribution to the sales floor. This extends beyond cabinetry to appliances as well, including stovetops, ovens, microwaves, and rangehoods. It also includes sinks, plumbing, cooking utensils and other accessories.

    Until recently, IKEA's weak point has been distribution, with only a limited number of large stores available for consumers to shop at. IKEA has recently announced plans not only for its e-commerce launch, but also for the launch of a larger number of small-format stores, along with more large stores.

    It is currently building distribution centres and other infrastructure to make this expansion possible.

    The end goal for the company is to increase its current estimated Australian turnover of $1.4 billion a year to $2.0 billion a year by 2020/21.
    IKEA Plans -

    Backing this up has been the launch of a revised kitchen system, known as Metod in Australia and Europe. The core selling points of Metod are price/value and the ability to truly customise the kitchen beyond basics such as different cabinet door designs, into deep functionality changes.

    Metod is a track/frame system, easing some installation concerns so that professionals are more likely to get it right, and bringing more of the assembly within range of a competent DIYer.
    The track system of IKEA Metod

    As though this isn't enough, IKEA's prime expertise, honed through its main distribution base in Europe, is enabling home-owners to make better use of confined spaces.

    With inner-city, very small apartments becoming an increasingly important market over the next decade, it has an automatic expansion market ready. It is also a market which most of Australia's home improvement retailers don't really know how to access.

    It is also worth noting some of the negatives that attach to IKEA kitchens as well. The materials and durability are not the equivalent of high-end kitchens, installation of any kitchen remains a difficult task (fitting something that wants to be square into non-square spaces), and there have been persistent problems reported with IKEA's supply chain and post-sales customer service.
    IKEA's online marketing

    One of the major factors that will contribute to IKEA's expansion plans in Australia is the comprehensive online marketing presence it has managed to build. This goes back eight or nine years, but has become particularly strong over the past four to five years.

    These marketing efforts are not necessarily coordinated, but they do cluster together to create a phenomenal online presence. They encompass the following areas:
  • video
  • blogs
  • image-sharing
  • social media
  • website

  • Let's examine each of these areas.

    While various kitchen brands have some kind of TV advertising creative, what makes the IKEA version unique is that it is tuned for the web.

    Starting with the most recent examples first, this is IKEA's latest video ad for kitchens:

    This is the "making of" video:

    What makes this effective for the web? First of all there is the length which, at 90 seconds is too long for anything other than a very expensive TV ad. Second, there is the depth and amount of detail in the ad itself: it's designed to be watched more than once, to be stopped, rewound, clipped, shared.

    Of course, what is really exceptional about this as a web ad is the amount of time, effort and expense that has gone into it. Setting up a film set in the middle of the Jaguar Rescue Center in Costa Rica didn't come cheap, you can be sure of that. But IKEA is willing to make the investment.

    This is the second of this kind of expensive, detailed web-oriented ad that IKEA has made for kitchens. The earlier one, also developed by UK agency Mother doesn't have an exotic locale, but it is highly complex:

    This is slightly more TV than web, though it is a little long at 60 seconds. It is designed to work across both media, offering an instant punch, as well as a reward for more careful watching.

    While these two ads do indicate a creative departure by IKEA, they build on a long creative process that has been underway previously. This is a kitchen ad from 2011, that has different thematic concerns, but a similar approach:

    Even more interesting, however, are some of the more technically involved ads that IKEA has produced.

    For example, there is this ad which employs Adobe's Flash coding to provide some interactivity. The code takes some time to load.

    To view the video, hover the mouse cursor over the clip, and hold down the left mouse button to play. When the button is released the video freezes. The idea is to allow the viewer to record details, or just take a longer look at the IKEA products.
    Ikea dream kitchen

    In another video ad, IKEA has taken interactivity one step further by enabling the viewer to choose the viewpoint from which the video is viewed:
    Interactive IKEA video

    Once a highlight of life on the web, blogs have tended to retreat into the background as people employ social media to establish a more equal peer-to-peer relationship with followers and friends.

    However, IKEA has managed to use both blogs and blog-like content to great effect in recent years.

    One of the more outstanding examples of this is what IKEA did with the most recent Federal Australian election, offering two kitchen designs, the ABBUTT and the RUDDIK:
    IKEA gets political

    It is a difficult trick to pull off, making equal fun of both sides of a political divide, but IKEA managed to pull it off.

    Other blog activities have included taking well-known Australian design bloggers and getting them involved in the design of IKEA kitchens. In this video of design blogger Katrina Chambers, she shows three ways in which to use IKEA products to create fun kitchens:

    IKEA has a more formal company blog presence as well. Even this blog, which has the usual tips and tricks for interior design, offers a form of interactivity. Users register with the site, then upload images of their own rooms and home.

    Perhaps the biggest surprise, however, is that the blog isn't run by the usual bored interns, but rather by professional writers who work to develop content.
    The IKEA Share Space Blog

    The biggest internet phenomenon over the past three years has been the rise of image-sharing sites such as Houzz and Pinterest. While Pinterest is very general, Houzz is dedicated to sharing exterior and interior images of people's homes. IKEA has a considerable presence on both sites.

    Here, for example, is a sub-site to Houzz that is dedicated to Metod kitchen design:
    Houzz Metod Kitchens

    IKEA has a similar presence on Pinterest:
    Pinterest Metod Kitchens
    Social media

    In general, it could be said that IKEA uses social media with the same caution most businesses have learned to employ. However at times it has broken out and found inventive ways to get value from the format.

    In particular, Forsman & Bodenfors were employed to help launch a new IKEA outlet in Malmo, Sweden, and found a creative way to use Facebook. They started up an account for the store's manager, then used this to post photographs of IKEA furniture. The first person to "tag" an item inside each of those photographs would then receive that item for free.

    As the video explains this created a great deal of interest and good will, with the "competition" being shared across multiple formats by friends.


    One of the areas of unprecedented success for IKEA (though, in this case, it has been a bit slow to appreciate it) has been the way IKEA has been taken up by a "hacker" community, that uses IKEA furniture as the basis for a great deal of creative DIY.

    One of the main sites that provides a focus for this activity is, which is run by a Malaysian woman. In 2014 IKEA was silly enough to send the website a "cease and desist" letter regarding the site's use of the IKEA name in its URL. However, within a very short time, IKEA worked to put things right, and eventually ended up supporting the site instead.
    IkeaHackers and IKEA

    As a result the site remains vibrant and interesting, filled with great ideas about how IKEA furniture can be repurposed. One of the great stories from the website is the PAX room, which won its Hack of the Year for 2014:
    The PAX room

    The IkeaHacker site is only the very tip of a great deal of hacking activity, however. Just about every "life ideas" website and quite a few individual bloggers offer all kinds of advice on repurposing and re-using IKEA components in novel ways.
    Office desk from kitchen elements

    Super compressor is one of the best sites for this kind of advice:

    At the moment when it comes to marketing on the internet, most home improvement businesses have their attention firmly fixed on elements such as digital advertising and their own commercial websites, with a little bit of social media thrown in. While these means of promotion might be somewhat effective, they are never really going to be enough.

    The approach of most home improvement companies to the internet has two problems with it: a reluctance to really invest in this medium, and a lack of understanding of how to handle the informality of the medium.

    What IKEA has really done, and what makes it so effective online, is that it has managed to cast aside some of its corporate persona, and to relate more directly to people. Even when it does make a mistake, as it did with IkeaHackers, it manages to correct its actions quickly enough so that its overall reputation is not too badly affected.

    One of HNN's purposes in assembling this portrait of IKEA's online activities was to make a key point about online promotion: unlike many other forms of promotion, including TV and print, promotional content on the internet has a very long life.

    It's not forever, but content will remain somewhat effective for four or five years after its initial creation. Items such as the Abbott/Rudd IKEA kitchen ads will date, but they are familiar and engaging.

    For home improvement retailers and suppliers, the test of whether they are doing enough with their online presence might simply be this: is there someone in the organisation who knows exactly what is currently out there on the internet and how it is being received?

    That would provide a basis for future planning, for knowing what direction that content needs to go in, and how to best build a solid basis of content for the future.

    Until next time,


    You can contact me directly via email or Twitter @HNN_Australia

    To receive a daily dose of HNN, download the free HNNBrowser app from the Apple store:
    HNN iPad App
    Aldi has paid over 30% in taxes
    Aldi results, per submission to Australian Senate
    Aldi Expressi capsule machine
    Economics references committee chair, Sam Dastyari
    Click to visit the ITW website for move information
    Demands by industry figures such as Wesfarmers managing director Richard Goyder that German-based supermarket chain Aldi demonstrate it has paid correct taxes have backfired.

    Accounts presented by Aldi to the Australian Senate indicate that it has paid taxes above the standard corporate rate of 30%. It's potential for transfer pricing tax avoidance is small. Only 1% of its business involves international related parties.

    In its submission to Australia's Senate Economics References Committee, Aldi states:
    The actual income tax paid by the ALDI Australia Group over the 4 year period to 31st December 2013 is $238m which represents an average of $60m per annum over the same period. This represents an average effective tax rate of 32%, which is above the company tax rate of 30%.
    Aldi results per ALDI Submission to Senate Economics References Committee

    Aldi currently operates 373 stores in four states and territories, and employs 9000 Australians in part-time and permanent positions.

    While laying to rest doubts about Aldi's tax payments, the figures shown to the Senate did indicate why both Wesfarmers and Woolworths are so concerned about Aldi. The company is having a big impact in areas such as appliance sales.

    This is backed up by an annual survey conducted by consumer research group into consumer satisfaction with capsule coffee makers. As reported by Appliance Retailer, the survey indicates that the Aldi Expressi coffee machine outperformed all other brands in terms of customer satisfaction.

    Partly that may be due to the quality of the coffee, but the price likely played a part as well. The Aldi machine costs only $89, and it uses capsules that cost just $0.37 each.
    Canstar Blue's 2015 Coffee Machine survey

    Executives at major big-box hardware retail chains have privately confirmed to HNN that their retail operations have also felt the effects of Aldi sales of power tools and other hardware items.

    The Senate enquiry into corporate tax avoidance is currently scheduled to deliver its report by 13 August 2015.
    HNN Index for week ending 17 July 2015
    HNN Home Improvement Index for week ending 17 July 2015
    HNN Sources
    CSR says its outlook is positive as housing starts climb to record levels
    Coles Fresh campaign mirrors "Woolworths, the Fresh Food People"
    Click to visit the HBT website for more information
    In a slightly startling turnaround, the HNN Home Improvement Index surged during the week ending 17 July 2015. It gained over 43 points to finish at 1013.79, indicating that it is now above the level it was at on 1 July 2014.

    In doing so, it closed ground comparatively with the underlying ASX 200 index, which rose 178 points to close at 5670.1 points. On the comparative scale, this was an increase of 33 points.

    Eleven of the index stocks recorded an increase of over 5% for the week. Leading the pack was Mitre 10 owner Metcash, which rose by 10.4%, followed by CIMIC Group (formerly Leighton Holdings) which climbed 7.9%, with UGL close behind, posting an increase of 7.4%.

    Bluescope Steel rose by over 6%. Super Retail Group, Adelaide Brighton, Boral, GWA Group, James Hardie and Woolworths all posted gains of between 5.3% and 5.9%.
    HNN Index for week ending 17 July 2015
    Charter Hall Group
    $46m of industrial, retail sales

    Mining services and manufacturing firm Bracken has sold its Bassendean engineering facility to Charter Hall in an off-market sale and leaseback deal worth about $32.8 million. It will lease back the seven hectare site which comprises 31,000sqm of covered floor space from the property group for a 15-year period.
    Bracken sells its engineering facility to Charter Hall - Business News WA
    Residential construction drives positive outlook for CSR

    CSR says its outlook is positive as housing starts look to climb to record levels, with more than 200,000 expected in fiscal 2016. Managing director Rob Sindel said an increasing number of people wanted to live closer to where they worked, which is fuelling demand for multi-residential housing closer to city centres. The sector now represents around 45% of all Australia's new dwellings.
    Residential construction drives positive outlook for CSR - Sourceable
    Metcash gets a boost with new supermarket boss

    Metcash has appointed retail "hard" man Steven Cain to lead its supermarkets division. He replaces Metcash's long-serving supermarkets chief executive Fergus Collins, who left the business in March after 13 years. Cain is understood to have earned a reputation for being a tough operator during his time as group managing director at Coles a decade ago.
    Metcash gets a boost with new supermarket boss - Sydney Morning Herald
    Myer Holdings
    New chief Richard Umbers prepares Myer for major surgery

    Robust sales figures released by David Jones' South African owners, Woolworths, are a reminder of the challenges facing rival Myer as its new boss Richard Umbers prepares his strategy for fixing the business. The skills of his new executive team will be the key to this and Umbers is not going to outline his game plan until they get their feet under the desk. This includes finance chief Grant Devonport who starts soon. Myer is also recruiting for a new chief digital and data officer.
    New chief prepares Myer for major surgery - Australian Financial Review
    Coles takes fresh food battle to Woolworths

    Coles has cranked up the marketing battle with Woolworths by muscling in on the fresh food battleground once ruled by its competitor. Creative agency Big Red is behind a TV campaign called Coles Fresh which shows brand ambassador Curtis Stone promoting the freshness of its product. The positioning mirrors that of Woolworths which for years marketed itself as "Woolworths, the Fresh Food People".
    Coles takes fresh food battle to Woolworths - Mumbrella
    Woolworths chairman Ralph Waters under pressure

    A confidential poll of some of the country's biggest and most powerful fund managers rates the performance of the Woolworths board among the lowest of the ASX 100 companies. There is strong speculation among key fund managers that Woolworths chairman Ralph Waters will resign in 2015. Some believe it will be after the company releases its full-year earnings on August 28.
    Woolworths chairman Ralph Waters under pressure - Australian Financial Review
    Hot links
    Darren Lehmann will remain the face of Fielders Home Improvements until 2017
    HNN Sources
    Panasonic Australia's Connected Home System has just been released
    Olympic ASSURE is now available exclusively at Lowe's stores
    Click to visit the HBT website for more information
    An additional roundup of home improvement stories. Darren Lehmann to remain as the face of home improvement brand Fielders until 2017; Panasonic has released a monitoring and automation solution for Australian households; customer engagement puts Lowe's on top of customer satisfaction study for appliances; and UK's Wyevale Nurseries picks up on garden do-it-for-me trend. More stories below.

    For further information, simply click on the images provided.
    Local News
    Face of Fielders

    Australian cricket coach Darren Lehmann will be the face of Fielders Home Improvements until 2017. The renewed partnership will see the high profile sportsman represent multiple brands under the Fielders portfolio including the Centenary Patio, Carport and Veranda brand, Endurance Sheds, plus Dominator fencing.
    Darren Lehmann will be the face of Fielders until 2017
    Home automation for local market

    Panasonic Australia's Connected Home System offers a new range of devices and kits that enable electrical appliances to be remotely activated around the home, and monitored from inside and out. There is no monthly fee for monitoring, recording and controlling this system.
    Panasonic Australia has unveiled its Connected Home System
    International News
    Lowe's ranks highest in appliances

    Lowe's occupies the top spot in the recently released J.D. Power 2015 Appliance Retailer Satisfaction Study. In its eighth year, the study measures customer satisfaction with appliance retailers by examining seven factors (in order of importance): Sales staff and service; store facility; price; delivery service; sales and promotions (new to the study); merchandise; and installation service.
    Lowe's occupies the top spot in the J.D. Power 2015 Appliance Retailer Satisfaction Study
    DIFM in garden retail

    The do-it-for-me (DIFM) trend is emerging in the garden industry, according to UK-based Wyevale Nurseries. It believes the move will see a bigger demand for garden designers and landscapers. In response, it has launched a new garden design and domestic landscape sales department.
    UK-based Wyevale Nurseries responds to DIFM trend
    Grafton's Irish revenues up almost 14%

    Home repairs, improvements and DIY are all beginning to pick up in the UK, according to builders merchant and retail company Grafton Group. The Dublin-based, but London-listed, firm said its revenues in Ireland were 13.7% higher for the six months to the end of June. The majority of Grafton's business, however, is in the UK where it saw more modest growth of 4.3%.
    Grafton Group owns the Woodies DIY retail chain
    PPG introduces new Olympic paint at Lowe's

    Olympic ASSURE[tm] paint-and-primer in one is now available exclusively at Lowe's stores throughout the US. This paint simplifies the painting process with easy-flow application and a hardworking finish. Olympic is a brand of PPG Architectural Coatings and includes formulas for interior and exterior applications.
    Olympic ASSURE is available exclusively at Lowe's
    Auto shutoff for home automation systems

    EcoNet Controls has introduced its automatic water shutoff controller. The EBV105 is simple to install over an existing levered ball valve, and no plumbing is required. The unit pairs as a standard Z-Wave Switch and is compatible with many home automation systems.
    EcoNet Controls launches an automatic water shutoff controller
    SiteReview: est - The London Edition Hotel
    The London Edition Hotel featured in est
    A review of the London Edition Hotel
    The Telegraph's view of the hotel
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    Looking at the design of hotels can be a somewhat mixed experience. At one time, it is the kind of architectural palette that permits a certain freedom to experiment. At the same time, what works in temporary accommodation is often a poor guide to what needs to work day after day, year after year as a place to live in.

    That said, there are some really interesting design features to this hotel located in London's Fitzrovia district. In particular, it offers a suggestion of ways in which to achieve a coherence in design that is frequently lacking from dwelling spaces today. Take, for example, this living/dining room combination:
    London Edition Hotel

    There is a restrained palette of colours in use here, and the dark wood on the walls and the floors, which could be overwhelming but instead seems enclosing and comforting.

    A similar effect is achieved in one of the bedrooms, though here the lightness of the wood makes it seem somehow fresh-cut, and there is a sense of things finely seamed instead:
    Bedroom in the Edition Hotel

    This room is in many ways a fusion of the light and the dark, something of a miniaturist living space. This does also point, however, to one of the emerging trends in house design, where rooms are becoming increasingly multi-functional, with bedrooms reverting to their origins as quite public rooms.
    A bed/sitting room
    Seeking opportunities
    A manager is required for the Mitre 10 store that is part of the Mount Barker Co-op
    HNN Sources
    Hays Retail searching for experienced hardware managers
    Colli Timber and Hardware needs a building supplies representative
    Visit the Mecca Website
    The Mount Barker Co-operative in WA is seeking an experienced retail manager for its Mitre10 store; Hays Retail puts out a call for hardware store managers; and Colli Timber & Hardware has an opportunity for a building supplies representative.

    To read more about each role, simply click on the image provided.
    Retail professional for co-op

    The ideal candidate to manage the Mitre 10 store that forms part of the Mount Barker Co-operative will have store management experience in the home improvement and DIY industry. However any results driven retail professional is encouraged to apply. An open communication style will also be highly regarded. The role will report directly to the CEO.
    Mitre 10 store manager role at Mount Barker Co-op
    Looking for hardware managers

    Recruitment company Hays Retail is working with a number of hardware retailers who are seeking self-motivated and experienced managers to join their teams across Sydney. These roles are offering an opportunity to work in a fast-paced, energetic and dynamic retail environment. On-going training and development will be provided.
    A number of hardware management roles are available in Sydney
    Selling building supplies

    Colli Timber and Hardware is seeking a "hands-on" sales representative with a proven sales background who has a passion for the building industry. The individual will be responsible for looking after an established sales territory as well as seeking new customers.
    Colli Timber & Hardware needs a building supplies representative
    Big box update
    Bunnings plans to replace its Caringbah warehouse
    HNN Sources
    The Masters store in Coffs Harbour expected to open on August 1
    Bunnings Springfield Central store set to open in mid-August
    Click to visit the ITW website for move information
    Bunnings plans to replace its Caringbah (NSW) warehouse at a cost of $37 million; Masters will open its doors in Coffs Harbour (NSW) next month; and tradies form part of the new team at Bunnings Warehouse Springfield Central (QLD).
    Replacement store for Bunnings Caringbah

    The existing Bunnings Caringbah warehouse will be demolished and replaced with a multi-storey warehouse, nursery, and timber trades area. The proposed new Bunnings complex will include: 10,000sqm of warehouse; 2500sqm for timber trades sales; 1200sqm bagged goods canopy; 1000sqm outdoor nursery; 2600sqm of landscaping; and 408 car spaces in roof top parking.

    According to the plans lodged with Sutherland Shire Council, the total retail area will be 15,637sqm. It will cover the entire block and includes all the present structures and car parking.
    New Masters store at Coffs

    The new 11,000sqm Masters store in Coffs Harbour is set to open on August 1, 2015 with more than 35,000 products on sale. This store features the latest design and layout and has a large paint department, tool shop and home improvement section.

    It has a dedicated garden section as well as an extensive bathroom and kitchen display area with design and installation services for customers.

    The Woolworths-owned store is one of 56 Masters stores currently in Australia and will create approximately 100 full time, part time and casual positions.
    August opening for Bunnings

    Coming in at nearly 16,000sqm, the new $39.5 million Bunnings Springfield Central store will include a retail warehouse, timber and trade supplies, garden centre, on-site cafe and a fundraising and community service barbecue area. While an exact opening day is not yet known, the company insists it will be open by the middle of August.

    From the 120 Ipswich locals who have secured jobs at the soon-to-open outlet, 13 of them are qualified tradies with backgrounds in carpentry, building, brick-laying and painting. This is a way for Bunnings to provide hands-on experience for customers, especially given the high number of people doing their own renovations in the region.

    Complex manager Elliot Nunn said he was excited to welcome the latest team members. He told the Queensland Times: "Bunnings provides a wide range of meaningful career development options for all team members, and I'm confident our new recruits will relish the opportunity to learn and grow with us."
    Indie store update
    Sunshine Mitre 10 celebrates its 105th birthday
    HNN Sources
    Narrabri Mitre 10 has closed its doors permanently
    The Good Guys is dropping its "pay cash and we'll slash the prices" promise
    Click to visit the ITW website for move information
    Supporters have celebrated Sunshine Mitre 10's 105th birthday; the doors have closed permanently at Narrabri Mitre 10; and appliances retailer The Good Guys will no longer use its "pay cash and we'll slash the prices" promise from its TV ads.

    Milestone for Sunshine Mitre 10

    On its 105th birthday, Sunshine Mitre 10 employs 350 people across 13 stores in Queensland and has an annual turnover of more than $100 million.

    It began trading as Lanhams in Nambour and in 2008, it merged with Melco and became Sunshine Mitre 10, acquiring six stores including Nambour, Cooroy, Kunda Park, Noosaville and two stores in Gympie. The business has since established at seven other sites in south-east Queensland including Caloundra and Maroochydore.

    Kunda Park team member Silvina Alvarez told the Sunshine Coast Daily that Sunshine Mitre 10 was able to maintain its connection with local communities because each store had built its own tradition of looking after locals' needs. She said: "We've got a big tradies network, who love sticking with us because we're local."
    Narrabri Mitre 10 closes after 63 years

    Logan's Mitre 10 owners, Tim and Karen Logan have ended their association with the retail group after many years of success. The store has been part of the Narrabri community for six decades, a familiar destination for generations of district builders, home handymen, DIYers and hardware customers.

    Mitre 10 grew from the original Logan Timber Industries, expanding to meet demand and moving from its original premises in Maitland Street to the current, much bigger location in 1952. Its lineage as a joinery, building supplies and hardware store reaches back 63 years.

    The Logan family, Tim, Karen and their daughter Kate, will continue to operate their remaining businesses, Homemakers' Furniture, Leading Appliances, Local Appliance Rentals and Logan Funerals.
    End of cash marketing push

    The Good Guys is cutting its "pay cash and we'll slash the prices" promise from its TV campaign, underlining the impact of e-commerce and new payments technology on the $20 billion household appliances and consumer electronics market.

    More than 57% of The Good Guys customers research products online before they come into stores and offering discounts for cash no longer guarantees a sale, particularly in an increasingly cashless society, according to chief executive Michael Ford. He told Fairfax Media: "Pay less pay cash is in the noose now. It played a very significant role in building the brand but we now have to move on to recognise we're in a fully digitised world and the customer has all the power in their hands."

    According to the Australian Payments Clearing Association, cash use has declined from almost 70% of transactions to 47% since 2007, while debit, credit and charge card payments have risen from 26% to 43%.

    Ford said: "Customers have so many other ways to pay and our online prices are the same as [prices] in store. The power has shifted from the retailer to the consumer and the consumer has become digitally empowered."

    To read more, go to the following link:
    Digital disruption spells end of cash marketing push - BRW
    Spark New Zealand launches Morepork
    Spark has announced the beta launch of its latest product, Morepork
    The android version of Morepork
    Morepork is the latest from Spark Ventures
    Click to visit the HBT website for more information
    New Zealand communications service provider, Spark has announced the beta launch of its latest product, Morepork.

    Designed to allow customers to control and monitor their homes remotely from their smartphones, Morepork is the latest product and the first security solution from Spark Ventures, Spark New Zealand's innovation and incubator business unit.

    Spark Ventures CEO Rod Snodgrass told ZDNet the potential in the security market may not be endless, but there is more room to grow than in traditional home security. He said:
    Our objective is really to deliver smarter, safer, healthier homes, but in a future proof way around technology. In fact, it's taking us in a much different direction of how home security has been; it was a model that was constrained by technology. Whereas now we're looking at models that are consumer centric, self installed, controlled by the mobile phone; it's about being there when you're not there and giving the control you need, and freedom you want.

    Spark Ventures other projects include the launch of internet TV service Lightbox and big data service Qrious.

    Snodgrass said the decision to expand the company's digital services unit was part of an overall goal the company had when it set up Spark Ventures. He said:
    We've got a clear objective to not be just a utility based network operator or telco. We want to move much beyond that. We want to think of ourselves as a digital services platform over time. Clearly with mobile at our core, we also have data and video.

    As part of establishing its entry in smart living, the company has appointed Gemma Croombs to the position of general manager smart living. She will be responsible for bringing to market smart home technologies, including Morepork.

    Formerly known as Telecom New Zealand, the company was rebranded Spark New Zealand mid-last year to reflect the changes in the telco market. Managing director Simon Moutter said at the time:
    We now do much more than provide a copper line telephone service and we no longer own the fixed line network. We're into a whole raft of new cloud services, data centres, Internet TV, whatever new is around the corner. The Telecom brand simply didn't reflect this new world.
    Betting on smart paint
    Smarter Surfaces was initially founded as Smart Wall Paint in 2011
    Smarter Surfaces paint is distributed in Australia
    Managing directors, Denise Doran and Ronan Clarke
    Subscribe to HNN weekly e-newsletter
    Irish entrepreneur Ronan Clarke spent a decade managing a successful construction business before the light bulb moment which led him to create Smarter Surfaces, the company which he founded first as Smart Wall Paint in 2011. Clarke explains:
    I was in the construction industry and we had a customer who was going to fit out an office and wanted to literally cover all of the walls with whiteboards. So obviously that had a lot of restrictions, because with room sizes all being different, you have doors and light switches and so on to contend with.
    That was where the initial idea came from, getting around those issues and coming up with something that could solve them. And we spent over two years then doing research to find the original coating that would do just that."

    The result of this research and development was unheard of in the industry. Smarter Surfaces now produces three categories of "smart" paint products, which add functionality to surfaces.

    These products include a white board paint - which turns any room, surface or building into a giant white board - magnetic wallpaper and magnetic paint, and also projector paint.

    After the initial two-year period of extensive research and development, the company launched its first product Smart Wall Paint White in November 2011.

    In 2014, the company filed two new patent applications for a new dry erase coating technology. That same year Smarter Surfaces launched Smart Wall Paint Clear and the Smart Wall Paint Contractors kit during the first quarter.

    The Smart Magnetic Primer was the final product to be launched in 2014. This year the company launched Smart Projector Paint, Smart Magnetic Wallpaper and Smart Whiteboard Sheets.
    Global growth

    The pace at which the company has produced these products, led to its re-brand at the beginning of this year - after just four years in existence - in order to reflect its growing range of offerings.

    From the very beginning, Clarke believed these products had international potential, and each market's response seems to have confirmed his foresight.

    Smarter Surfaces is creating new products in an industry where change and innovation is often slow. This has given them a strong niche in the market. Smarter Surfaces Director Denise Doran explains:
    The response has been amazing...we are now an international company and 95% export-led.

    Smarter Surfaces now has 33 distributors around the world with every continent covered. Doran said:
    We plan to maintain the business growth at the level we are at. Our most recent sign-ups have been in Brazil, Singapore, Canada, Chile and Australia, so we are getting a very wide distribution across the globe.
    Online sales

    Currently the company is working on the expansion of Smarter Surfaces e-commerce operations. All its products are for sale online and websites that are live in four additional languages: French, Italian, Spanish and German. Doran said:
    It is all go for us in terms of growth and geographic coverage and getting more distributors, working online and maintaining our investment in R&D, because we are all about being on the cutting edge of what we do.
    Our products...don't look like they are there, but they completely transform how a business operates or how schools might teach and students learn. They are really cool, funky, innovative products all rooted in extensive R&D programmes.

    At this stage, while Doran welcomes competition and believes it has a healthy place in the market, it is not a particular worry for the company given their pioneering position. She said:
    There are people doing different things in a similar space, but nobody who has really benchmarked the product like us. Between our distribution channels and our R&D and our brand, we have huge differentiators, so we are very comfortable in our position and don't really see anyone else catching up with us at this stage.
    We are still fairly new to market, so there is a way to go in educating people about the fact that our products our out there to transform their businesses and educational environments."

    Smarter Surfaces is head-quartered in Dublin and all of its manufacturing is carried out in Ireland too. Clarke said:
    We are Irish-owned, Irish-managed, Irish-manufactured and very proud to be exporting in the way we are from a little island like Ireland. And while we are very proud of our entrepreneurial background, our mission now is to keep being a globally proven company, which is what we have grown into.
    Rockler's continuous product releases
    The Adjustable Height Work Station has a hydraulically assisted hand crank for the ideal height
    Rockler Woodworking and Hardware
    The SawStop Jobsite Tablesaw features an innovative safety brake
    Bandy Clamp is designed to make edge banding and moulding projects easy
    Click to visit the HBT website for more information
    A summary of the latest products from Rockler Woodworking and Hardware. A heavy-duty Adjustable Height Work Station has been added to its offering; the Mini Finishing Points can help DIYers who need to finish multiple workpieces quickly; innovative safety brakes for the SawStop Jobsite Tablesaw; and the Bandy Clamp applies even, non-marring pressure around edges.
    Working to an ideal height

    The Adjustable Height Work Station is a table base with a hydraulically assisted hand crank that can adjust the table height between 26-1/2-inches and 42-inches. It allows users to work at their most comfortable height, moving from sitting to standing.

    Whether working in the shop, kitchen, office or craft room, height adjustments can allow greater comfort and better work performance during prolonged periods. With its 500lbs (226.8kg) weight rating, it is adaptable for many projects in the house, garage, workshop and other environments.

    The cantilevered, U-shaped frame design allows users plenty of leg room when working in the seated position. Casters can be added to the base to make the work station mobile.
    Rockler's Adjustable Height Work Station
    Way to make painting easier

    Made from durable plastic with structural ribs for strength, the Mini Finishing Points will elevate workpieces so the bottom can dry while finish is applied elsewhere - allowing all sides of a project to be coated without stopping. Their narrow, rounded tips minimise contact with the workpiece, so they won't mar the finish or damage the wood.

    They come in packs of 12 and compact enough to fit in a tool pouch or apron pocket for easy access.

    Mini Finishing Points come with brad nails and can be secured easily wherever support is needed, whether on a shop-built fixture, a bench or a sawhorse. Once tacked down, they can be rotated to fine-tune their position, and they pry loose with a claw hammer when the job is done. Because of their shape, they can be nested close together to support narrow stock or small pieces.
    The Mini Finishing Points come in packs of 12
    Brake innovation on tablesaw

    The SawStop Jobsite Tablesaw is the first fully portable, compact table saw to feature SawStop's safety brake, a feature that immediately stops the saw blade if it makes contact with skin. Its pedal-controlled stand functions as a dolly with 8-inch wheels when in the folded position. This allows users to easily move the saw around home, garage and jobsite areas. It can also be moved up and down stairs.

    Its compact footprint is convenient for those with limited space, especially hobbyists and DIYers who work in a garage space shared with cars, bikes and other tools and machinery.

    The folding stand and rolling wheels are also very handy for tradies who need to transport the saw from site to site.

    The SawStop Jobsite Tablesaw is a full-featured 10-inch table saw. The table extension rides on rails that slide out for a maximum rip cut of 25-1/2-inches right of the blade, while the sliding T-square fence ensures precise cuts and parallelism with the blade. A one-turn blade elevation adjusts the blade to the desired height.
    Even clamping style

    The Bandy Clamp quickly and easily clamps edging to plywood, MDF and other sheet materials without damaging the piece or the edge profile. It applies even pressure all the way around virtually any edge, including very ornate or decorative designs as well as oddly shaped or asymmetrical profiles.

    It makes edge banding and moulding projects easy by providing fast, one-handed clamping. The clamping pressure is created by squeezing the clamp open and pushing the built-in flexible rubber band against the profile or piece being clamped until the desired resistance is achieved.

    The band is made of tough, tear-resistant rubber which has three extra-strength splines moulded into it. Large, anti-slip clamp pads on pivoting jaws accommodate clamping at different angles with full pad contact.
    The Bandy Clamp quickly and easily clamps edging to a range of materials
    Oneflare raises another $3m
    Oneflare has announced an oversubscribed $3 million capital raise
    Business Specator
    It allows users to post home improvement jobs from any device
    Oneflare acquired review website WOMO earlier this year
    Subscribe to HNN weekly e-newsletter
    Australian local service marketplace Oneflare has announced an oversubscribed $3 million capital raise and plans to launch an IPO later this year.

    The Sydney firm, which saw revenue climb 300% for FY15 on last year, now has 70,000 registered businesses and attracts 1.3 million unique visitors per month.

    Oneflare allows users to post home improvement jobs from any device, with tradies subsequently responding with competing quotes.

    The current round was led by microcap fund manger Microequities Asset Management but all existing investors also participated. Carlos Gil, chief investment officer at Microequities said:
    We invested in Oneflare because it's contesting a huge market vertical. The local services vertical will ultimately be won by a company with an obsessive focus on customer experience underpinned by great technology. Oneflare possesses these two crucial elements.

    Co-founder and CEO Adam Dong said the funds will be used to further expand the Oneflare team with a focus on technology, sales and customer support. He said:
    This funding is all about accelerating our growth. We have assembled an exceptional team and believe we have the best online platform in the local services market. Thousands of businesses rely on us as a vital source of job leads and our customers look to us as the most trusted platform to find, compare and ultimately hire local services.

    He said FY16 would be "transformative" for the company.
    As we continue to entrench our market position and with revenue expected to triple this year, we are actively planning for an IPO. We're super excited about the year ahead.

    Oneflare competes with the likes of HiPages and Airtasker. Dong says Oneflare's competitive advantage is its low cost of customer acquisition, both businesses and consumers. He told BRW:
    We don't spend lot of money on advertising; growth is mostly word of mouth, and that speaks to quality of product. Because the cost of acquisition is low, we are able to charge businesses less than competitor businesses.

    Oneflare has previously raised $1.5 million in two separate angel rounds, bringing the total raised to $4.5 million.
    Aldi having an impact on appliance sales
    Aldi appliances are gaining popularity
    Channel News
    A growing number of consumers are choosing Aldi over Coles and Woolies
    Aldi earned a pre-tax profit margin of 5.2% on sales of $5 billion in 2013
    Click to visit the ITW website for move information
    Industry executives have told the Channel News website that Aldi is shifting sales of appliances and consumer electronic goods from the likes of The Good Guys, Betta Electrical and smaller appliance retailers.

    A senior executive said the emergence of Aldi as a retail powerhouse is effecting appliance and consumer electronic retailers, distributors and brands such as Sunbeam, Breville and Delonghi.

    Peter Hammerman, CEO of NSW-bases retailer Seconds World said both distributors and retailers are under pressure from Aldi. He said the quality of its house brand appliances is "terrific" and its presence it is "being felt" in the industry. He adds:
    What we find is that in the weeks that Aldi roll out consumer electronics and appliance specials, sales drop.

    A senior manager at The Good Guys in NSW concurs:
    What is worrying is that consumers are buying from Aldi stores and finding that the quality is excellent, they then go and tell their teenage children who have moved out of home or friends and they in turn are shopping at Aldi.
    What is coming from Aldi is another 100 plus stores in WA and South Australia. They are also expanding their presence in the eastern states. The bigger they get, the more appliances and consumer electronic goods they will sell and this will hurt a lot of retailers especially smaller retail chains.

    Hammerman believes the quality of appliances coming out of China overall is very good. He said:
    Branded products from Sunbeam and Breville are made in the same factory as the Aldi appliances. I recently took a Breville and a Chinese Tiffany sandwich product home. They both delivered the same functions. The Breville product was $79 and the Tiffany $49, and ironically the Tiffany product was better.

    A Harvey Norman franchisee attending the Harvey Norman conference in Melbourne said:
    Since Aldi came into the market, we have expanded our range of house brand appliances and they are selling well. However we have not. in some cases, been able to match Aldi prices.
    Larger store sizes

    Channel News also writes that Citigroup analyst Craig Woolford said that one area of concern is the floor size of Aldi stores. Currently the average store size is 1400sqm which he said restricted the volume or size of appliance products that Aldi could range.

    He said Aldi is currently trialling new concept stores in Victoria and New South Wales that are significantly larger than its current stores.

    In a recent article in Farifax Media, new information supplied to a Senate Inquiry into tax payments in Australia reveals that Aldi Australia makes more profit on each dollar of sales than its much larger rival Coles and Woolworths. So it has more scope to cut prices in the event of a prolonged price war with mass retailers.

    Accounts provided by Aldi to the Senate inquiry show the discounter earned a pre-tax profit margin of 5.2% on sales of $5 billion in 2013.

    As a result of its healthy profit margins, Woolford expects Aldi to continue to gain market share from Woolworths and Coles, placing increasing pressure on their margins. He said:
    The financials for Aldi confirm both its success and its room for further growth in Australia.

    Deutsche Bank analyst Michael Simotas also told Fairfax Media:
    These numbers suggest Aldi's operating margins in Australia are very healthy compared with the rest of the world and may be boosted by significant sales of high margin general merchandise.
    This provides the group with headroom for price investment if needed. However, given the momentum, we do not believe it is needed at this stage.

    To read more, go to the following link:
    Aldi well placed for Woolworths Coles price war - Sydney Morning Herald
    Kwikset reveals new brand identity
    Kwikset has unveiled a new brand message: "Made for the world you live in"
    PR Week
    It represents a major shift for the 70-year-old door lock maker
    The campaign will continue to introduce new families and their stories about Kwikset
    Subscribe to HNN weekly e-newsletter
    Kwikset has unveiled a new brand message - "Made for the world you live in" - to connect with consumers on an emotional level, rather than focusing on product-centric messaging.

    "Made For The World You Live" represents a major shift for the 70-year-old door lock maker. Led by Los Angeles-based integrated marketing agency Imre, Kwikset is moving from its traditional business model in favour of a brand direction designed to be emotionally impactful, and informed by market research and industry insights.

    Kwikset and Imre also teamed up with design company, Hatch Works, to bring the brand and its key pillars of innovation, durability and style to life through videos, interactive web pages, social content and digital ads.
    Achieving cut-through

    Formerly touting the slogan, "Smart security is the best security", Kwikset realised that over the past few years, the word "smart" went from being something audiences could identify with to an "overused and convoluted" term, according to Marty Hoffmann, vice-president of marketing. He said:
    [We] saw it used 80 million times online last year alone.

    Hoffmann said the door hardware space is becoming more of a "lifestyle" category, one in which Kwikset feels it fits nicely. The company did a lot of self-reflection and this factored into the company's new brand platform, "Made for the world you live in" which Hoffmann believes represents Kwikset's overall culture.

    Christine Zippert, general manager and account director at Imre explains:
    [We] set out to discover what homeowners and trade professionals really wanted in a lock brand. They want a stylish, innovative, security-driven lock...every consumer wants a product that's exactly right for their home.

    Ryan Jordan, vice-president and creative director at Imre, said an integral piece in creating the campaign was to "really get inside the homes of consumers." With the help of a builder-interior designer couple, Imre and Kwikset found a specific story to share. He said:
    We created a really targeted campaign so that we are able to talk to specific audiences.

    It also "hits on the popularity of the HGTV network" and similar home, garden and DIY programming that has become increasingly popular.

    The campaign lives primarily on YouTube, Twitter and Facebook. Zippert said it will continue to introduce new families with their own stories of how Kwikset fits into their lives. She added it was important for the campaign to "be relevant, even when the consumer isn't in the market."

    A major challenge for Kwikset is the lifespan of a lock. She said:
    Consumers might not be in the market for seven, 10, 20 years.
    Big box update
    Bunnings will be taking over Civic Home Timber & Hardware in Colac (VIC)
    HNN Sources
    Masters could be offloaded to private equity
    Masters has been valued at $1bn in a sale
    Click to visit the ITW website for move information
    Bunnings is set to take over Civic Home Timber & Hardware store; speculation about Masters being sold to private equity; and Morgan Stanley values Masters at $1 billion if it is sold by Woolworths.
    Home store becomes a Bunnings

    Bunnings has reached a conditional agreement to buy the Home Timber & Hardware store in Bromfield Street, Colac (VIC). It plans to begin trading on August 1.

    Director of operations Michael Schneider said the deal formed part of Bunnings' continued investment across Victoria. He told the Colac Herald: "We see great potential in the regional Victorian home improvement and building markets and expanding our network into new areas is a key priority for us.

    Colac's Home Hardware employs about 30 people, and Schneider said Bunnings would offer those employees employment with the new store. A Bunnings spokeswoman also said the company would consider whether it maintained existing contracts with Colac district suppliers in the next "couple of months".
    Investors eyeing Masters

    In a recent "Street Talk" column in the Australian Financial Review, Masters could be in the spotlight as investment bank Citi becomes an advisor to Woolworths on "shareholder engagement" following Grant O'Brien's retirement plans and potential strategic changes that may follow him out the door.

    Masters is the one topic on every Woolworths investor's lips and something the incoming chief executive will have to address whenever he or she first fronts the market. There are many investors who believe the hardware rollout is occupying too much time and attention, when capital employed on the unit only accounts for about 5% of Woolworths' enterprise value.

    At the risk of some red faces in the short term - and a repeat of Dick Smith - investors are asking whether Woolworths has properly considered offloading Masters to private equity.

    To read more about the possibility of Masters becoming a target for private equity, go to the following link:
    Citi in Woolworths camp as investors eye Masters - Australian Financial Review
    Masters $1b sale valuation

    Woolworths could reap up to $1 billion by closing the doors on Masters, according to Morgan Stanley. Business Spectator reports that Masters has only captured 2% of the market, compared to Bunnings 18% share. It has accumulated losses topping $500 million, and the Woolworths-Lowes joint venture isn't expected to be profitable until 2019.

    But Morgan Stanley analyst Thomas Kierath said Woolworths could get between $600 million and $1 billion if Lowe's exercises its put option and the business is sold. While Woolworths had not indicated it is considering closing Masters, Kierath believes the business would be worth around $1.5 billion upon wind-up.

    After selling the 20 leased store operating leases at $640 million, and paying around $40 million in redundancies, Woolies would receive 100c, 25c and 80c in the dollar for Masters' property, plant and equipment and inventory assets, respectively, based on Kierath's calculations.

    The payment to Lowe's, should the put option be exercised, would be around $500m if Woolworths decides to wind-up Masters simultaneously, or around $900 million if it elected to continue the business, he said. Adding this up, Woolworths could realise up to $1 billion on the sale.
    E-commerce growth: it's all about the relationship
    Crossing the Chasm, published by HarperCollins
    Diffusion of Innovations
    Warby Parker business model
    How Alibaba failed in the US (Picture: Wikimedia)
    Give to Amnesty International
    While retailers as diverse as David Jones and Target have come to pursue online retail avidly, Australian home improvement retailers remain reluctant to invest in this area.

    The general sense in the industry is that e-commerce continues to be a little "iffy". At the core of this "iffyness" is a sense that investment in online retail is not going to pay off - or at least not pay off as much as investment in other areas might.

    There is certainly support for this view. Technologies have improved, but standards have also risen, so website development and deployment costs remain high. Also, online retail isn't just about the website. There are issues of procurement, supply, picking, shipping, handling returns, and so on. It requires a big investment in attention, time and capital.

    Why, though, when faced with these same issues and decisions, is it so much easier for most retailers to say "yes" to e-commerce, while home improvement retailers usually say "maybe" instead? Is it a timing issue? Does it relate to the slow pace of the economic recovery? Housing price concerns?

    HNN believes that there are solid reasons for this reluctance. E-commerce really is different for home improvement. The core difference is that the market is not at the same stage of development compared to other forms of retail. This means that in developing e-commerce operations, home improvement retailers face different and more difficult tasks.

    In terms of the jargon that describes the spread of new technologies through a market, the task for home improvement retailers is to develop the market from early adopters to include what is called the "early majority".

    The market development task for most other retailers is easier. They seek to develop their market from an existing early majority base to include the significant "late majority" market as well.
    Market expansion

    When we speak of categories such as early adopters, or early and late majorities, we are drawing on the work of Everett M. Rogers, whose book "Diffusion of Innovations", first published in 1962 (with a fifth edition in 2003), remains highly influential. The core diagram that emerged from that work is this one:
    Diffusion of Innovations graph

    Prof. Rogers suggests that this diagram illustrates the pathway the diffusion of new technologies/ideas takes through a social system. It's worth briefly looking at the five categories outlined in the diagram:
  • Innovators: High appetite for risk, willing to spend money on new things, technically savvy, network of similar peers with whom they collaborate.
  • Early Adopters: Most influential in getting others to adopt, respected for opinion.
  • Early Majority: Followers of early adopters, but seldom leaders, spread innovations through example.
  • Late Majority: Sceptical about innovation, but willing to follow lead of others, and conform to social norms, but intolerant of failures.
  • Laggards: Usually only move to new innovations when forced to by circumstances, cautious, conservative, prefer certainty over advantages of the new.
  • Understanding gaps

    This diagram was further developed by the US-based business analyst Geoffrey A. Moore. In the 1990s Mr Moore wrote the first edition of a book entitled "Crossing the Chasm" (CtC), which has gone on to become something of a classic in the tech industry. At the core of CtC is this diagram:
    Standard crossing chasm diagram

    Though similar to the diagram of Prof. Rogers, the significant change is in the addition of the two gaps, between the early and late majorities (the orange line), and between the early adopters and the early majority (the thick red line).

    These gaps represent transitional phases that new technologies need to bridge in order to expand their available markets. Each gap requires its own approach.
    Crossing gaps

    One common misperception of marketers is that these adoption categories apply to each consumer for everything they do. In fact, a single consumer will likely be in different categories for different retail experiences.
    Early majority to late majority

    For example, we could say that when it comes to the purchase of music online, this innovation has reached well into the late majority category (hence the sharp reduction in physical stores selling music CDs).

    Selling books online, however, is less advanced, and is probably still in the early majority category. Thus there are many consumers who will buy music online, but prefer physical books purchased from bookstores.

    The task that faces an online retailer of books in this situation is not to convince this potential market that e-commerce is useful. Instead it is about persuading them that the experience and result of buying books online will come close to that of buying books in a bookstore.

    On Amazon and other sites, books can be previewed directly online. A great deal of attention is paid to curation, providing a range of books the shopper can browse through.

    This kind of facilitation is what enables online retailers to expand their appeal from the early majority to the late majority. It is about reassurance, familiarity and "safety".
    Early adopter to early majority

    Consider a very different example: marketing eyeglasses to consumers. Back in 2008, that kind of purchase would be way outside the comfort zone of most online consumers.

    The company that worked out how to do this was Warby Parker in the US. The idea that helped that company succeed was actually quite simple: they enabled consumers to try on up to five pairs of glasses for free over five days before making a purchase, or simply returning all the frames. The company paid for everything, including the return postage.

    One reason why this worked, of course, is that as an online store, Warby Parker could offer a much wider range of eyeglass frames than any optometrist could. It's simply quite difficult to not find something that's suitable among these choices.

    The marketing phrase we would use to describe what happened here is "Warby Parker took online eyeglass buying into the mainstream". But how, exactly?

    In part it is about the convenience, being able to "live with" a choice for a few days before making a decision. At the heart of what Warby Parker did, however, was trust, and the establishment of a relationship.

    This is a theme that is echoed in CtC. It appears initially in the foreword to the book, written by Regis McKenna. Mr McKenna was one of the leaders of marketing in Silicon Valley. For example, his agency was the one to which the fledgling Apple Computer turned for advice when it first began. He writes:
    If we step back from this chasm problem, we can see it as an instance of the larger problem of how the marketplace can cope with change in general. For both the customer and the vendor, continually changing products and services challenge their institution's ability to absorb and make use of the new elements. What can marketing do to buffer these shocks?
    Fundamentally, marketing must refocus away from selling product and toward creating relationship. Relationship buffers the shock of change.

    It is certainly a technique which Apple has used successfully.
    Relationship building

    If building relationships is the task, how do home improvement retailers go about achieving this online?

    One place to start is fairly evidently with the website itself. An example of a website that goes out of its way to foster relationships is that of Home Depot. A typical product webpage includes the following:
  • Reviews
  • Images customers have uploaded
  • Questions and answers
  • Links to information downloads, including installation, assembly, specifications, user manual, and the warranty
  • Link to brand product page for more information

  • The review section is especially prominent, headlined with these graphics:
    Review section of Home Depot product listing

    As it turns out, for home improvement e-commerce, managing delivery options is one of the keys to building customer relationships, and getting customers to commit to buying.

    HNN's recent article on the talk by the senior vice-president of online for Home Depot, Kevin Hofmann, at the Goldman Sachs Sixth Annual dotCommerce Day describes some of how Home Depot views delivery:
    Kevin Hofmann, Home Depot

    Home Depot goes far beyond just providing a cheap option for getting product to customers' homes. It provides comprehensive services that guarantee a two-hour delivery window, and includes early delivery on weekends.

    As Mr Hofmann points out, these services do come at a cost to the customer, but they are quite willing to pay this cost, as they benefit from the convenience.
    Structural problems

    Lurking underneath these considerations there is, however, a somewhat larger problem, which applies to the bigger retailers in the home improvement industry. It is somewhat marked that there appears to be very little crossover in terms of technology usage between the different divisions of Woolworths, Wesfarmers and Metcash.

    For example, the e-commerce systems that have been developed for supermarkets by Woolworths and the Coles division of Wesfarmers are quite advanced, including features such as GPS-based tracking of orders for customers.

    One would think that, as each of these conglomerates have multiple retail divisions, each of which has moved or will shortly move into e-commerce, that it would make sense for them to have a dedicated technology/online division to deliver these services. There would certainly also be advantages in featuring products from other divisions on each division's website.

    The e-commerce challenge, even in this brief outline, can be seen to be a tough one. It really does make sense that retailers which do not have either the capital, the personnel resources, or the executive expertise might pull back from e-commerce, or fall back on building a "minimum" we presence.

    However, what should equally be borne in mind is that e-commerce is something of a two-way street. That is to say that in the development of the relationship with customers needed to make e-commerce work, not only e-commerce benefits, but the entire retail organisation as well.

    It is HNN's belief that it was similar conclusion which led Home Depot to pursue its breakaway strategy of seeking to expand only online, at the expense of its expansion of physical floorspace.

    You could almost say that, regarded in this light, e-commerce is not so much an objective to be achieved, but more a natural outcome of the work to transform from the transactional model of the 20th Century to the relational model of the 21st.

    Until next time,


    You can contact me directly via email or Twitter @HNN_Australia

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    HNN iPad App
    Indie store update
    Bob's Mitre 10 in Whyalla (SA) has shut its doors
    HNN Sources
    Good Guys store in Maitland (NSW) gets a major revamp
    Mitre10 MEGA in New Zealand was involved in a transportable home project
    Click to visit the ITW website for move information
    Bob's Mitre 10 in Whyalla (SA) has closed its doors; the Good Guys in Maitland (NSW) has reopened with a whole new look following April's super storm; and Mitre 10 New Zealand helps make a transportable house a reality.
    Whyalla Mitre 10 shuts up shop

    Timothy Clifton and Mark Hall from corporate recovery firm Clifton Hall have been appointed joint and several liquidators of Bob's Mitre 10 in Whyalla (SA). Senior manager Anna Agostino told Whyalla News: "The liquidators are currently reviewing the company records to calculate the amounts owing to each employee based on the relevant employment instruments and legislation. The store closed as a result of the appointment as liquidators and we are currently investigating the cause of the company's failure."
    New look for Good Guys store

    Store owner Brad Sangster took the opportunity to revamp his Good Guys store in Maitland (NSW) after it was damaged by the April super storm.

    Such redesigns are usually co-ordinated on a national (head office) level, but the Maitland team formed a clear and functional plan for the shop. The showroom gave some of its space to the storeroom in the renovation, but changes to the ceiling made the store look bigger.

    The showroom was divided into three clear zones - cooking, technology and televisions. The large new kitchen appliance section is the centrepiece of the store. Sangster told the Maitland Mercury: "The biggest reaction is when people walk in and say, 'wow'. Our staff has responded positively to the changed layout too."

    Some customers told staff they had put off purchases until the store reopened, a result of the loyalty the retailer has developed since it opened seven years ago.
    Transportable house project

    Mitre10 MEGA in New Zealand was involved in a three-bedroom transportable home built by Southern Institute of Technology (SIT) students. The house has been sold to Julie Newell and Daryl Eason for NZ$188,000, with NZ$32,000 from the sale going to charity.

    Project organiser Gerry Forde said the NZ$32,000 going to charity would be divided evenly between Hospice Southland, the Gore Women's Refuge, ILT Stadium Southland, Lakes District Air Helicopter Rescue and SPCA Southland. There were more than 40 requests for tenders for the house.

    Forde said several businesses had provided add-ons and services for the house either free of charge or at cost. Major partners for the project included SIT, Arrow International, Scobies Transport and Mitre 10 MEGA.
    HNN Index for week ending 10 July 2015
    HNN Home Improvement Index for week ending 10 July 2015
    HNN Sources
    Metcash-owned Ritchies Stores is forecasting its first profit growth in four years
    Woolworths is failing to close the gap on Coles when it comes to prices
    Click to visit the HBT website for more information
    The HNN Home Improvement Index for the week ending 10 July 2015 fell by over 12 points to 970.16. The underlying ASX 200 index fell by close to 54 points to close at 5492, or 1021.8 on the HNN adjusted index, down 9 points.

    Metcash and Bluescope led the declines for the HNN Index stocks, with the former losing 5.8% of its value, and the latter declining by 12.8%. DuluxGroup also did not fare well, showing a decline of 4.5%.

    One of the few of the Index stocks that showed any signs of upward movement was BWP Trust, which rose by just under 1.3%.
    How Breville is facing its 2015 challenges

    In an interview with Appliance Retailer, Breville's general manager Mark O'Kelly describes the challenges the company is facing in 2015. It plans to drive category success through innovation and new product launches. He believes connectivity in small appliances will become increasingly important.
    How Breville is facing challenges in 2015 - Appliance Retailer
    Charter Hall Group
    Fairfax Media sells printing plants for $55 million

    Charter Hall Group has purchased Fairfax Media's two printing plants in Sydney and Melbourne in a deal worth about $55 million. Fairfax had originally hoped to reap almost $70 million from the combined sales of its Tullamarine site in Melbourne's northwest and the larger Chullora facility in Sydney but they are now both in due diligence at the lower sum.
    Charter Hall buys Fairfax Media printing plants - The Australian
    CIMIC Group
    CIMIC Group awarded Hong Kong border control contract

    CIMIC Group has been awarded a contract by the Government of the Hong Kong Special Administrative Region to construct a boundary control point on the border between Hong Kong and China. The revenue to CIMIC will be approximately $1.2 billion.
    CIMIC Group awarded Hong Kong contract - ABN Newswire
    Goodman Group
    International: Goodman grows in China

    Goodman Group has signed two new leases with French sports apparel and equipment retailer Decathlon for the construction of approximately 1.69 million square feet (157,000sqm) of prime logistics space in China.
    Goodman grows in China - Commercial Property Executive
    Metcash's biggest IGA chain sees light at end of tunnel

    Australia's largest independent grocery chain, Ritchies Stores, is forecasting its first profit growth in four years. Ritchies chairman Fred Harrison said earnings for the 12 months ending June, which will be lodged with ASIC in December, had risen for the first time since 2011, underpinned by stronger same-store sales growth and better gross margins.
    Metcash's biggest IGA chain sees light at end of tunnel - Sydney Morning Herald
    Woolworths trails Coles on grocery prices: Macquarie analysis shows

    Woolworths is failing to close the gap on Coles when it comes to prices. Despite launching a $500 million price slashing strategy in May, new figures from Macquarie Securities suggest Woolworths' grocery prices were still flat in the June quarter at the same time as Coles got cheaper for shoppers.
    Woolworths trails Coles on grocery prices: Macquarie - Sydney Morning Herald
    Ring, the doorbell-come-security system
    Ring works as both a security camera and high-end entry videophone
    The Register
    It has an HD camera, motion sensors, microphone and speaker
    Ring is battery powered and installs easily on a doorframe
    Click to visit the HBT website for more information
    Ring is experiencing that classic moment in a company's lifecycle when word has started getting out and orders are coming in at a rate that requires scaling up to the next level.

    By all accounts, Ring the video doorbell is successfully navigating the path between hardware, software, smart phones and cloud services to deliver an innovative product with a real-use application. CEO Jamie Siminoff said:
    We wanted to produce a high-quality product rather than nickel-and-dime our customers. As we move forward, we should be able to find ways to save some cents here and some money there on components, but we had to start out the gate with a quality, reliable product.

    Ring has an HD camera, motion sensors, microphone and speaker and works as both a security camera and high-end entry videophone.

    It's battery powered, not very big, and installs easily on a doorframe with a couple of screws. Similar systems until recently would have cost many times the Ring's price ($US199) and probably required hiring someone to install it.

    If someone presses the Ring's button - or if there is a motion in front of it (the motion settings can be tweaked) - a notification goes through to a phone through the related iOS and Android app, and users see through the wide-angle lens as well as hear and speak to the person at the other end.

    In essence, customers get a security system on their front door. And it runs off the tiny current that an existing doorbell uses, or on battery power - lasting a full year with normal use. For a small monthly fee, all the footage from the Ring will be stored in the cloud for later use or download.

    What Ring is trying to do is expand that simple circuit-break button of a doorbell into a 21st century video and audio security system. Motion detectors, HD video, microphone and speaker, WiFi chip - they can't run that off a single AA battery.

    Siminoff shares the philosophy of most companies now working in this field: a "smart" product needs to work both independently and with other products; both online and offline.

    So the Ring both makes its own sound (it's a doorbell after all) and it can connect to an existing doorbell system. But its unique selling point is the fact that it instantly pings a homeowner's phone and let's them not only see but also speak to whoever is at their front door. They don't need to be home to do this.
    USG Boral contributes to terminal upgrade
    USG Boral's Fiberock has been used in the Sydney Overseas Passenger Terminal fitout
    USG Boral Fiberock
    Fiberock acts like a paperless plasterboard
    Fiberock helped form part of the improvements made to the cruise facility
    Click to visit the HBT website for more information
    USG Boral's patented Fiberock(r) has been used extensively for ceiling linings, wall linings in stairwells and on bulkheads in the Sydney Overseas Passenger Terminal (OPT) at West Circular Quay. They formed part of the improvements made to the cruise facility.

    The original project specification was for two different fibre cement materials to be applied. However, the contractor, Interior Works, wanted to use just one product for the two applications to increase efficiency on site and reduce waste. USG Boral Fiberock was the chosen material. It has the added benefits of being water, fire, mould and impact resistant with excellent acoustic qualities.

    In total, 800m2 of Fiberock was supplied to the OPT project. USG Boral staff worked closely with Interior Works to ensure supplies were on the ground in a timely manner.

    A tight schedule with many trades working two shifts a day, and limited site access during the day, required precise coordination of deliveries to installation teams. Liz Borg, USG Boral national account manager commercial said:
    Interior Works was keen to use one product as a substitute for the two specified 6mm and 9mm fibre cement boards, which substantially streamlined the fitout process.

    Interior Works director, Darren Hitchon said:
    Fiberock was not specified on this project, but we felt we could achieve a better outcome by using it. We used more than 30,000sqm of Fiberock at the Hornsby Mental Health Hospital so we knew from experience that we could control the outcome more and that it paints up much more easily, and gives a better finish than the product that was specified.

    Interior Works site manager Lloyd Pennings added:
    One of the main benefits of Fiberock is that our installers find it easier to cut and lighter and faster to install than fibre cement products. The fact that we can use it on interior and exterior soffit surfaces means we have less inventory to manage in terms of delivery to and around the site, which obviously reduces wastage.

    USG Boral has been innovating with synthetic gypsum for more than 30 years, with the technology for Fiberock developed 15 years ago.

    It is like paperless plasterboard, getting its strength from a patented process of growing gypsum under high pressure which interlinks the crystals with paper, so there is no paper needed on the outside. There is also no possibility of delamination, as it is a solid matrix.

    USG Boral Fiberock is approved by GECA (Good Environmental Choice Australia) as a sustainable product and is recyclable. Every board can be reused by removing it and rebating the edges before being reapplied.

    Fiberock also contains very little new material, incorporating 10% recycled cellulose (from post- industrial paper and cardboard) and 85% re-encapsulated gypsum.

    The finished wall system balances its higher cost of board, when compared to conventional plasterboard, with time, labour and logistical savings at installation.

    A contractor can achieve with a single layer of Fiberock what other walls would achieve with a double layer. The boards also provide longevity, and result in lower maintenance partitions and walls.
    Seeking opportunities
    A supply chain network analyst is wanted at Masters' head office
    HNN Sources
    Masters is searching for an installed sales team leader at its Penrith store
    A paint specialist is required at Masters Dandenong store
    Visit the Mecca Website
    Masters has an opportunity for a network analyst to join its supply chain team; it is also seeking a leader for the installed sales team at its new Penrith (NSW) store; and a paint specialist for its Dandenong store. Yates is also looking for an account manager to manage its Bunnings account.

    To read more about each role, simply click on the image provided.
    Supply chain network analyst

    A network analyst at Masters will be part of a team that identifies and manages process improvement opportunities to increase store service level, optimise stock flow and reduce the cost of logistics. The successful candidate will be working with the latest IT systems in replenishment and supply chain planning.
    Supply chain analyst role at Masters
    Managing installed sales team

    The installed sales team leader at Masters' Penrith store is accountable for providing expert service, advice and knowledge to customers regarding installations. Ideally, the individual will have project management experience in residential and home improvement.
    An installed sales team leader is required at Masters Penrith
    Paint sales at Masters Dandenong

    Paint specialists at Masters provide specific product advice to customers and ensure a high standard of customer service and presentation of products in the store. A vacancy exists at Masters store in Dandenong (VIC).
    Paint specialist role is available at Masters Dandenong
    Yates account manager

    Due to a promotion, Yates has an opportunity for an account manager to take the next step in their career. This individual will be responsible for servicing its Bunnings channel as part of the sales team. A proven track record of selling and working in a retail and/or hardware chain market is desirable.
    Yates is looking for an account manager to manage its Bunnings account
    Housing estate developments in Melbourne
    A townhouse by developer Gillon Group
    Sydney Morning Herald
    Sterling Global is finalising a concept plan for a South Oakleigh quarry site in Melbourne
    Gillon Group and Abacus are developing the Virginia Park site in Melbourne's south-east
    Give to Amnesty International
    Housing estates, worth a total $1.5 billion, are poised to transform two former industrial sites in Melbourne's south-east. Developers have drawn up concept plans for the 12.3-hectare former WH Wills Virginia Park cigarette factory in East Bentleigh and an old 19-hectare sand quarry in Oakleigh South overlooking the Huntingdale Golf Club.

    The move to develop so-called "brownfield" sites has been encouraged by state governments as it keeps new housing well inside the metropolitan boundaries where there is existing infrastructure.
    Development proposals

    The Gillon Group, which has owned the Virginia Park site since 1994, is proposing an $850 million development with 1250 apartments and a 12,000sqm neighbourhood shopping centre.

    Virginia Park has been a business estate since the 1990s when it was largely occupied by Telstra. Tenants now include Officeworks, Visionstream, Xtralis and Call Active that rent some of the 58,000sqm of office buildings on the site.

    The Gillon Group's founder Peter Gillon paid $8.5 million for the site in 1993 and sold half to the listed Abacus Property Group in 2006 for $37.5 million. Gillon is also recently cashed up after selling two development sites for $40 million in Brighton and Mornington.

    Gillon Group and Abacus are developing the estate in a joint venture called Fortrans. They have already tested the waters with the sale of 23 townhouses on a separate parcel of land adjoining Virginia Park on Dromana Avenue.

    Gillon Group senior development manager Adam Brick said that development sold out in three months and received 400 expressions of interest. Brick said the concept plan involves keeping the main office building at the centre of the park and developing the south and east of the site where there is vacant warehousing and car parking.

    However, a rezoning of the area in 2011 did not include residential development in these sections and the group has applied to Glen Eira City Council for an amendment. Brick told Fairfax Media:
    The existing 10-storey height limit on the site is over the existing major office complex. Currently the south and east of the site are the only areas which cannot accommodate residential development under the zone which is the reason for the zoning request.
    We already have a development plan overlay which provides for between three and four storeys to the boundaries of the site tapering up to 10 storeys in the centre. We have not sought to increase these height limits. We are seeking the amendment in order to preserve the office component of the site and redevelop the remainder.

    Developer Sterling Global is also finalising a concept plan for a South Oakleigh quarry site it acquired more than 18 months after a legal battle with developer Danny Schwartz.

    Up to 440 townhouses are proposed for the land at 1221-1249 Centre Road, Oakleigh South, with the possibility of apartments and detached housing, depending on market demand. Sterling Global development director Brandon Yeoh said:
    We are comfortable with the density. We didn't want to overdo it. If there's a demand for apartments we can do up to 500 and reduce the number of townhouses.

    However, the plans are yet to be presented to City of Monash. Remediation work on the site is under way and expected to take about 18 months.
    Taubmans releases new fandeck
    Taubmans has unveiled its new Colour Galaxy Fandeck
    It was created as a tool to support the Taubmans Colour Galaxy online
    The latest fandeck is both comprehensive and functional
    Click to visit the HBT website for more information
    It has been 15 years since Taubmans unveiled a fandeck, and after extensive market research into how design professionals use their decks, the Colour Galaxy Fandeck was created as a tool to support the Taubmans Colour Galaxy online. Trevor Lowder, head of marketing - trade said:
    Australian designers are increasingly inspiring their clients to make bold choices in paint so we've designed a new fandeck which clearly presents both the classic and trend driven colours.

    The Colour Galaxy Fandeck features 1505 hand-selected shades divided into two main sections. In the first section, Whites, Neutrals and Mineral Tones, end-users will find some old favourites plus new directional shades.

    Whites and neutrals are placed the front of the deck, making the colours easily accessible and the selection process much simpler for specifiers.

    The second section, Spectrum Colours takes its name from the popular Spectrum Fandeck produced in 2000. The colours featured include both muted and clear palettes. It also includes accent colours that capture global colour trends. This section also has 31 brand new colours that have been added to the Taubmans Colour Galaxy.

    Every leaf in the Colour Galaxy Fandeck displays seven generous colour swatches. The leaves that feature whites have darker shades in the centre of each leaf layout. This acts as a handy guide to the nuances of the colours on either side of it.

    The innovation continues through to the packaging of the Colour Galaxy Fandeck. The embossed black cover features a magnetic closure, making it both comfortable to use and easy to work with.

    It was important to ensure the latest packaging is as inspiring as it is functional. The isolator that is part of the Colour Galaxy Fandeck has black, grey and white backgrounds, providing additional contrasts to help select the ideal colour. The fact the isolator is separate and not attached to the fandeck itself offers increased flexibility when using this tool.

    Taubmans commissioned muralist Stephen Baker to create artwork for a limited edition Colour Galaxy Fandeck bag to celebrate the history of the brand. "The Painter" is an image of a sign painter in Baker's signature colour blocking style and inspired by Taubmans' founder, George Taubman.

    Taubman was a Sydney sign writer who decided to create his own paint brand in 1901 to supply himself with the highest quality of paints needed for his trade.

    The recently-launched fandeck is both comprehensive and functional. It includes a well-considered and user-friendly palette filled with classics and directional colours.
    ARA recognises top retailers
    Beauty retailer Lush won Retailer of the Year Award
    Appliance Retailer
    True Value Hardware is Roy Morgan's Customer Satisfaction Retailer of the Year
    The ARA Australian Retail Awards are the industry's longest running awards
    Click to visit the ITW website for move information
    The retail industry celebrated its own at the 2015 eftpos Australian Retailers Association (ARA) Retail Awards at the Grand Hyatt in Melbourne.

    Winners across eleven categories were announced at the event attended by more than 400 industry supporters, with Jodie Fox, co-founder of Shoes of Prey delivering the keynote address.

    This year, beauty retailer Lush took home the top accolade of Retailer of the Year. According to the judges, Lush was chosen for its impressive employee education programs, focus on employee wellbeing, and corporate social responsibility.

    Roy Morgan Research also named True Value Hardware as its Customer Satisfaction Retailer of the Year. The Customer Satisfaction Awards are based on data from Roy Morgan's Consumer Single Source survey (over 50,000 consumers annually), as well as Roy Morgan's Business Single Source survey (over 12,000 business decision makers annually).

    The Good Guys was named the NORA (National Online Retailers Association) Australian Multichannel Retailer of the Year.

    Other winners include Wilson Retail's Saltwater Wine and Stormriders for The Realise Group Australian Independent Retailer of the Year; Paul Baker, NRMA Insurance, REST Industry Super Australian Individual Retailer of the Year; Cannings Butchers, MasterCard Australian Retail Payments Leader of the Year; eyeclarity, Pronto Software Australian Retail Innovator of the Year; Stormriders, Shop for Shops Australian Retail Store Fit-out of the Year; Charmaine Wilson, Super Retail Group, FCB Australian Retail HR Rising Star of the Year; Leaanne Stone, Beacon Lighting, Expr3ss! Staff Selection Software Australian Retail Graduate of the Year; and Specsavers, BDO Australian Retail Employer of the Year.

    The annual eftpos Australian Retail Awards are the sector's longest running awards. They acknowledge the growth and achievements of both businesses and people in the country's largest private industry. ARA executive director, Russell Zimmerman said:
    Retail is an industry that touches all Australians and contributes to the economies of almost every community across the nation, no matter how small. It is an exceptionally important industry because it impacts all of our daily lives and it is great to have an opportunity to recognise the contribution of these businesses and the people who run them. [The] winners represent the diversity of Australian retailing and the depth of talent we have in this important industry.
    Lowe's and Home Depot at conferences
    Home Depot's logistics development
    HNN Sources
    Features of Lowe's Iris smarthome system
    Home Depot website design
    Click to visit the ITW website for move information
    Recently, executives from the major US big box home improvement retailers Lowe's and Home Depot spoke at investor conferences.

    The chief customer officer for Lowe's, Michael (Mike) Jones attended the 35th Annual Piper Jaffray Consumer Conference in New York. The senior vice-president of online for Home Depot, Kevin Hoffman, appeared at the Goldman Sachs Sixth Annual dotCommerce Day.

    There were interesting similarities and differences in the approach and perspective of both the companies, and the executives who spoke. While both companies are broadly going after the same markets, their approaches vary widely.

    One point of similarity was that both retailers are heavily interested in the "Pro" (tradie) market, which they both believe is heavily under-represented in their customer base. We'll take a closer look at that near the end of this article, after we've covered the basics of the presentations.
    The Lowe's approach

    Asked to describe what he believed Lowe's had achieved during his 2.5 years with the company, Mr Jones was heavily focused on in-store shopping amenities, product lines with growth potential, and a better use of seasonality.

    One of the innovations that Mr Jones helped to bring to the stores was the use of what he terms "vignettes" - shop floor displays of goods that replicate use scenarios. It's a strategy that has been particularly useful for patio (outdoor) furniture. Under Mr Jones' guidance, Lowe's has developed an elaborate method of display, with the central vignette surrounded by aisles offering complementary goods, such as cushions and table umbrellas.

    For 2015, Mr Jones is particularly enthusiastic about the sales trends for products such as lightbulbs and paint. LED technology is leading many homeowners to rethink their lighting choices, both replacing existing lighting systems, and installing new areas of lighting.

    Paint has long been a focus of Lowe's, with its long-term close relationship with Valspar. In 2015, Lowe's has added the paint manufacturer Sherwin-Williams to the mix, as it believes that company has a superior home indoor product. It has continued as a growth area.

    Mr Jones believes Lowe's has managed to boost sales through close attention to what he termed "microseasons" in regional areas. Microseasons relate to the specific time of the year when various regions in the US might set about specific tasks.

    For example, in the mid-West region, the end of autumn typically brings about activities related to the coming cold weather, while early spring is usually the time when home owners repair their gutters. By tracking these small changes, and anticipating customer needs through timely promotions, Lowe's has been able to boost its seasonally-based sales.

    Mr Jones also commented on how the smarthome market is developing. Lowe's has not developed many new products in this area, but it has continued to market its own smarthome products under the Iris brand name.

    As Mr Jones pointed out, one of the major problems in this area is getting different devices and systems to "talk" to each other. He cited examples where home owners might use two entirely different methods of control for a backyard light system and a front porch light system. He sees Iris, which enables easy communication between systems, as one answer to this problem.
    The Home Depot online approach

    Speaking at an online commerce event, Mr Hofmann was obviously focused on this aspect of Home Depot's operations. Much of the discussion involved the major difficulty for home improvement retailers online: delivery.

    As Mr Hofmann related, Home Depot has a wide range of delivery options - he referred to it as a "buffet". The options include delivery from a distribution centre, delivery from a store, delivery by services such as UPS, and delivery direct from a vendor.

    Home Depot is currently working on a Customer Order Management (COM) system. This is a form of logistics software which will find the optimal "flow path" for goods to reach the customer, from both a customer satisfaction perspective and cost perspective. Mr Hofmann revealed that around 40% of order fulfilment today originates in stores.

    Home Depot has worked hard to ensure that delivery options are convenient as possible, Mr Hofmann says. This means finding the optimal delivery pattern that will suit a customer, and includes providing quite tight, two-hour windows of delivery. The services offered range from "curb-side" dropoffs, to in-house delivery, to "white glove" service, which includes correctly positioning items in a home.

    When asked about the costs of such delivery, especially during a time when the trend for online deliveries is "faster and free", Mr Hofmann admitted that "free" remained a point of pressure.

    However, he did also say that customers were in general quite reasonable. For example, if customers needed a load of timber and landscaping materials dropped off at their house between 6am and 8am on a Saturday morning, they quite understood they would need to pay for this.

    Asked about how the "ticket" (purchase) size varied between in-store and online, Mr Hofmann indicated that online tickets tended to be larger than in-store tickets. He said that buy online, pickup in-store tickets averaged at several multiples of the average US$55 to US$60 size of in-store tickets, and that buy online for delivery tickets were even higher than that.

    This was largely due to the mix of merchandise ordered, with a higher concentration of what he termed "project starters", such as new appliances, featuring in the online sales.

    Mr Hofmann emphasised that one of the challenges of online was delivering the same kind of personalised service Home Depot provides in its physical stores. He said the goal was to provide interaction with not only the brand, but a representative of the brand that the customer could trust.

    This was enabled through facilities such as web-based chat, which was tied into a centralised group of experts in the various categories of products.

    This is one of the online differentiators Home Depot has provided. Another is the provision of material online that makes it easier for customers to engage with home improvement projects. This includes project guides, buying guides, real "know-how" articles, and assistance in procuring in-home services.

    One area where Mr Hoffman is clear Home Depot will not go is towards "inspiration" content, such as that provided by Pinterest and Houzz.

    Providing access to home services online is something Mr Hofmann sees as a major growth area. It is already a US$3.5 billion a year business for Home Depot, with Home Depot originated services at work in over 7000 homes in the US every weekday.

    His way of explaining service promotion online was that if a home owner wakes up to find her hot water heater is not working, and goes online to search for a plumber, Home Depot will be one of the main options provided.

    Mr Hofmann believes Home Depot has a considerable advantage in providing such services, as they fit into a continuum of product and service. The example he gave was of a customer seeking to replace hardwood flooring. Home Depot could provide the flooring and fixing materials. It could also sell the required tools, or rent the required tools. It could also provide a service to install all or part of the flooring.

    Asked about potential competition from some Home Depot vendors deciding to sell online direct, Mr Hofmann replied it was Home Depot's goal to simply be the best option for its vendors.
    The Pro market

    Both retailers are investing heavily in improving their penetration into the Pro market. Lowe's sees the Pro market as representing 50% of its potential market, but says it has only a 30% penetration into that market.

    Home Depot believes it is capturing less than 10% of the expenditure of Pros. Mr Hofmann suggested Pros used Home Depot like a kind of hardware "7-Eleven", picking up convenience items.

    Lowe's has gone after the Pro market through fine-tuning its product range, product stocking, and offering a more focused online service, Lowe's for Pros. Mr Jones could see some tensions existing between what suited the Pro market and the consumer market, but also a good deal of overlap.

    One important change has been deeper stocking of some ranges, offering both a slightly wider selection, and carrying stock in the quantities that might be needed by a Pro. Lowe's believed its recent adoption of Sherwin-Williams paints has given it an edge in the Pro paint market, as that is a preferred brand.

    Mr Hofmann indicated that the take-up of online commerce by Pros has been slower than elsewhere. He agreed this was in part due to some reluctance to use new technologies, but he also suggested that in many ways online did not provide the same convenience it did to the general consumer.

    While consumers might visit a Home Depot store 15 or 20 times in a year, Pro customers frequently visited as much as 100 times. Thus the Pro customer benefitted less from the "where is it?" capabilities of online than the regular consumer.

    Mr Hofmann saw the real opportunity online as being in relationship building, rather than transactional ease. He believes adoption online will be driven by helping Pros with their accounts through providing purchase histories and the ability to tag certain purchases to certain jobs, making cost accounting easier.

    If we were to say what the main difference is between these two retailers, it seems that Lowe's is slightly more product and market focused, while Home Depot is slightly more transaction and service focused.

    Home Depot sees its future as driven by its ability to enable a wide range of transaction types, and to deliver a comprehensive set of services to its customers.

    Lowe's is acutely tuned to its markets, interested in regional and seasonal variance, and believes that the right product presented in the right way will provide major boosts to its sales.
    Durable storage for tradies
    Milwaukee Tool recently launched the Jobsite Organiser
    Milwaukee Tool
    The new organiser includes eight small and two large removable bins
    The unit features a reinforced rib for strength
    Click to visit the HBT website for more information
    Milwaukee Tool continues to grow its line of storage products with the introduction of the Jobsite Organiser. It is designed to have 20% more capacity than similar items on the market.

    The new organiser includes eight small and two large removable bins that can be mounted on common jobsite materials by utilising the integrated screw slots. A seal around the perimeter of each bin prevents small items from migrating from one bin to the other. The convenient 4-inch x 4-inch size of the small bins allows them to be easily swapped out with a common electrical box.

    To allow users the option of carrying multiple organisers at once, the Milwaukee Jobsite Organiser contains innovative side clips. They allow the units to be attached together and provide full access to each when they are stacked on top of one another.

    For added durability, the unit features a reinforced rib for strength and an integrated weather seal gasket to prevent water intrusion.
    Home Depot has its eye on visual search
    Home Depot is offering visual search functionality on its iPhone app
    Power Retail
    Visual search "reads" images
    Target US leverages image recognition technology to streamline product search
    Click to visit the ITW website for move information
    Home Depot is embracing mobile visual search. Its iPhone app now offering the functionality in beta form as part of its omnichannel strategy.

    Visual search "reads" images to identify colour, shape, size and proportions, or text to identify brand and product names. This offers an advantage over keyword-matched search, in which results are only as good as the searcher's ability to describe an item.

    With an average 35,000 SKUs in its stores and close to one million online, Home Depot wants to make it easier for customers to find what they are looking for.

    Now, iPhone users with the Home Depot app can tap on the menu and the camera function to take a picture of a household item and automatically be delivered results for similar items within the retailer's inventory. Once customers find the item they are looking for, they can purchase it online or pick it up in-store.

    The technology offers several key benefits, including streamlining the search process on small smartphone screens and potentially driving impulse purchasing from mobile as a result. Stephen Holmes, Home Depot's director of corporate communications told Mobile Commerce Daily:
    If you think about our business, it is uniquely beneficial for our customers in that they often come in looking for a part they are not quite sure what it is called.
    This can be helpful on that front. We don't just develop tech for the sake of coming up with new and cool things for people to use; we really want to make the shopping experience easier for our customers. This is a good example of that.

    The move into visual search is part of a recent update to the retailer's iOS apps that includes an iPad app redesign to give it a landscape orientation, something users had been requesting.

    Visual search has been proving a popular addition for large retailers' apps in the past year. Many are looking to leverage digital devices to enhance the in-store experience, bridge the gap between offline and online, as well as drive bigger conversions.

    Amazon's Flow technology was also added as a standard feature of the company's iOS app last year, allowing consumers to simply point their mobile camera at an object in order to receive information, prices and the ability to purchase.

    As well as visual search, Home Depot's mobile app is offering Live Chat, a message centre, and voice search. This enables in-store users to say the name of an item and be directed to where it is located. Holmes said:
    Overall, the download of our app has been very strong. I think that you can attribute that to the fact that it really is a tool that just makes shopping easier for the customer, whether online or in the store. Our apps are built to support our strategy of interconnected retail.
    HNN Index for week ending 3 July 2015
    HNN Home Improvement Index for 3 July 2015
    HNN Sources
    GWA is focusing purely on the domestic renovation market
    Lend Lease will trial micro-style apartments in the Melbourne Quarter project
    Click to visit the HBT website for more information
    The HNN Home Improvement Index for the week ending 3 July 2015 showed a slight recovery, with the Index lifting by five points to 982.94. The underlying ASX 200 index fell slightly, by a little over six points.

    The HNN index was buoyed by the performance of Bluescope Steel, which recorded an increase of almost 26% over the week. Downer EDI also grew by over 5%. CSR fell, losing close to 7% of its share price value.
    Thiess wins $137m Chile deal

    CIMIC Group's global mining company Thiess has been awarded its first project in the Americas with the signing of a $137 million services agreement for a copper development in Chile. The four-year project is in partnership with Emeco. It provides a launching pad for expansion in the resource-rich regions of North and South America.
    CIMIC mining company wins $137m Chile deal - Business Spectator
    Fletcher Building
    Fletcher wins $800m Christchurch housing project

    Fletcher Residential will buy land from the New Zealand Government to develop nearly 1000 townhouses in central Christchurch. The $800 million project will provide about 940 new townhouses and apartments to accommodate up to 2200 residents.
    Fletcher wins Christchurch housing project - Stuff NZ
    Goodman Group
    Goodman Group agrees $253 million sale

    Goodman Group says its industrial fund joint venture with Brickworks will sell a Coles Chilled Distribution Centre in Eastern Creek, NSW for $253 million. Singapore-based Mapletree Logistics Trust has agreed to the sale which is still subject to foreign investment approval.
    Goodman Group agrees $253 million sale - Finance News Network
    GWA Group
    GWA cleans is slate ready for FY16

    GWA Group has moved further along the road to becoming a pure investment in the domestic renovation market, confining its business to specialist building supplies for kitchens, bathrooms and door fittings. The company has now shifted most of its manufacturing offshore.
    GWA cleans its slate - Financial News Data & Analysis
    Lend Lease
    Lend Lease launches micro-apartments

    Lend Lease will pilot new micro-style apartments as small as 25sqm as it forges ahead with the residential stage of its $1.5 billion Melbourne Quarter project. It has lodged plans for three residential towers that will deliver 1600 apartments at the project in the Batman's Hill section of Docklands, on the edge of the old city grid.
    Lend Lease launches micro-apartments in Melbourne Quarter project - Australian Financial Review
    Deutsche Bank rates Wesfarmers a 'hold'

    Deutsche Bank has a "hold" on Wesfarmers and a $41.50 price target. It writes: "Wesfarmers has entered into an agreement to acquire an effective 13.7% interest in Quadrant Energy...While there are no obvious synergies between these assets and Wesfarmers' existing WESCEF business, we expect the Group knows the dynamics of the segment well given its exposure as a downstream customer...
    Deutsche Bank rates Wesfarmers a 'hold' as it buys into Quadrant Energy - Australian Financial Review
    Woolworths to deliver more pain before a recovery, fund managers say

    Leading investors do not expect Grant O'Brien's successor as chief executive of Woolworths to put a swift end to the turmoil playing out at the grocery giant. Although respected fund managers such as Regal Funds Management portfolio manager Julian Babarczy and Ausbil Dexia chief executive Paul Xiradis believe Woolies will turn around its lacklustre performance, they expect the recovery will play out slowly.
    Woolworths to deliver more pain before a recovery - Fairfax Media
    ABS retail turnover May 2015
    ABS retail statistics for May 2015
    NAB Online Retail Sales Index - Growth May 2015
    NAB Online Retail Sales Index - May 2015
    Click to visit the HBT website for more information
    According to figures from the Australian Bureau of Statistics (ABS), retail turnover for hardware, building and garden supplies growth seems subdued when May 2014 is compared to May 2015.

    South Australia was the standout state, bettering its 2014 performance by $20 million, a 36% increase. Queensland also grew strongly, up $36 million, a 14% surge.

    The ABS reports that for overall retail in Australia the seasonally adjusted estimate for May 2015 rose by 0.3%. It also reports that in trend terms, Australian turnover rose 4.4% in May 2015 compared with May 2014.
    Online sales

    The NAB Online Sales Index estimates that Australians spent $17.1 billion in the year to May 2015, about 7% of the turnover produced by physical retailers.

    Online sales growth for May 2015 was almost flat, falling by 0.1% in seasonally adjusted terms.
    Plug and play vertical gardens
    Podplants are vertical gardens for indoor spaces
    The product won the Australian Innovation Challenge in 2014
    Australian PodPlants founder Chris Wilkins
    Click to visit the HBT website for more information
    PodPlants are a portable, lightweight, modular vertical garden with a unique design and watering system. The outer shell is made from recycled ABS plastic which is high impact resistant and very thin, making it easy to transport. Each 2.4m tall module weighs 20kg.

    The plants are watered through the PodPlants hyper aeroponics system. The bare roots of the plants hang inside the unit, while tiny droplets of water are circulated through the air and into the root zone.

    This has proven to eliminate the bacterial infection common in existing greenwall plants. Because the water is only moved into the air, it also means that very little electricity is needed to run the system. Australian Podplants founder Chris Wilkins told Gizmag:
    Our system moves less than a litre of water per hour, whereas a conventional system will move litres per minute. We're also not using pumps, filters or nozzles which have created difficulties for other systems.

    The vertical garden is stabilised by a reservoir of water in the bottom of each unit. It is freestanding so it can be placed in front of an existing wall. The only requirement is access to a power point to run the electricity. No pipes, drainage or wall fasteners necessary.
    PodPlant beginnings

    In 2014, Wilkins won the Australian Innovation Challenge for his fresh take on vertical gardens for indoor spaces. The award came with $10,000 in prize money and recognition for the technology that he has developed in conjunction with Sydney University.

    Wilkins began exploring current horticultural technologies because he was motivated by issues such as agricultural vulnerabilities to climate change, and the growing recognition of the health and productivity benefits of plants in the workplace. He explains:
    We realised that hydroponics in general were really only something which expert horticulturalists could use effectively as they can be very complicated. We also found that there is a large problem with bacterial infection in the root zone of the plants.

    Highlighting the need to eliminate this issue and simplify the process, Wilkins started to investigate the air in the root zone and developed a new way to make the plants grow more healthily. This is how PodPlants was born.
    Research & development

    The focus was not just to address the bacterial infection common in vertical gardens, but also to respond to the research around the psychological impact of plants in the workplace. Wilkins said:
    We looked at the research that's been conducted at different universities, measuring cognitive performance, memory function and how company productivity changes with or without plants and the evidence shows that the inclusion of plants makes a big difference, in the order of about a 15% increase.

    The research also showed that this concept is becoming more mainstream. The notion of including a natural element into the workplace was an interesting proposition for Wilkins. He said:
    We learned a lot about the space around interior design and what they call biophilic design. It was incredibly interesting to see how innovative companies were using plants to affect the psychology of the people in the workplace.
    Not only are the plants cleaning the air and making people happier, but this forward thinking can change a business' corporate identity and culture to one that fits the sustainability agenda.

    With sustainability in mind, PodPlants use a combination of rainforest varieties, such as philodendrons, which are low lying colorant plants that grow well indoors and do not need supplemental lighting.

    The team at PodPlants maintain the plants themselves, continuing the relationship with their clients and refresh the water supply monthly. The design is fully customisable and can be produced in any size or shape. He said:
    The technology inside is standard, so we're able to meet the clients' needs in terms of design. There are 10 different shapes and sizes to start with but we can do anything. For example, we have one client who has asked us to design a wall to wrap around the cylindrical columns inside the work space.

    In the future, Wilkins and the Pod Plants team plan to expand product ranges to edible plants, outdoor walls and a product that clips onto the face of any building.
    Can Masters compete with Bunnings?
    The Homebase approach
    Australian Financial Review
    Example of high-low Masters advertising
    Woolworths could be an acquisition target
    Give to Amnesty International
    The fate of the Woolworths-owned home improvement big box chain Masters continues to provoke comment.

    Writing in the Australian Financial Review, Sue Mitchell reports that David Errington of Merrill Lynch favours a selloff of all Masters assets - the "cut your losses" approach. The AAP quotes UBS analyst Ben Gilbert as suggesting that Masters is a viable business that could be continued.

    Both views are actually correct. If all Woolworths is capable of doing with Masters is to repeat or modify the past, it should sell, and sell now, at any price. If a new Woolworths CEO (which the company should get this calendar year) can redefine and change Masters, then it should continue its operations.

    In looking at any future, changed Masters strategy, Woolworths needs to begin with the basics, which means considering how it can compete with the with main player in its market sector, the Wesfarmers-owned Bunnings. This means it needs to develop a better understanding of Bunnings' strengths, and of its own failings.

    This is a wide-ranging topic, but we're going to limit ourselves to just two aspects. The first aspect we will consider is how Bunnings has, as a low-cost provider, nonetheless managed to establish a high degree of brand loyalty and trust in a wide section of the Australian consumer market. The second aspect we will consider is pricing strategy.
    Globalisation and its discontents

    It is not a difficult task to understand how Bunnings has succeeded on the balance sheet. It has great financial discipline, and has narrowed its operational focus to a series of key areas, such as property acquisition, supply chain efficiency, and staff management. But a company can perform well in all those areas, and still not generate the kind of loyalty and regard that Bunnings has.

    As an example of the regard Australians have for Bunnings, the results from a 2015 survey of 1000 Australians by research company Ipsos indicated that Bunnings ranks as Australia's eighth most influential brand.
    Ipsos brand survey

    It is no secret that many Bunnings customers have strong feelings for the brand. Overwhelmingly they regard Bunnings as a company that is on their side.

    What is fundamental to this regard is something that is close to a "social justice" issue. The introduction of open markets and globalisation has not universally benefitted all Australians. Particularly, Australian families in the lower 70% income brackets have benefitted less than those in the upper 30%.

    What Bunnings has done is to bring home to every Australian some of the benefits that do accrue from this economic shift. Where other retailers have used these changes to fatten their margins, Bunnings has been quite rigorous in passing the market advantages gained on to its customers.

    This approach has helped Bunnings "square the circle" of retail market engagement. It is a low-cost, minimum service operator that has managed to create and drive great customer loyalty.
    The Masters response

    There are some indications that Masters initially approached the home improvement market with a very different attitude to Bunnings. Where the Bunnings approach is comprehensive - it really wants to be compelling to every and all Australians - the initial Masters strategy had some basis in segmentation. Through a better store layout, and a higher overall grade of products, it sought to appeal to the upper end of the market, the top 30% to 40%.

    However, this core strategy was allowed to "slip", because it didn't meet Woolworths' second strategy requirements. If the first strategy requirement was to have a successful home improvement retailer, that second requirement was to directly take market share away from Bunnings.

    One of the biggest and potentially best moves Masters could take is to adjust its competitive strategy so that it is more inline with the way Homebase competes with B&Q in the UK market.

    Homebase has moved increasingly further away from pure DIY products, and more towards providing the tools and services needed for people refurbishing, renovating and redecorating their homes.
    Pricing strategies

    Just as Bunnings "squared the circle" with its combination of low prices and customer loyalty, it has achieved something similar with its overall pricing strategy. The Bunnings approach manages to take what is essentially an "everyday low prices" (EDLP) strategy, and provide it with the same impact as a "high-low" pricing strategy.

    As HNN has remarked in the past, a big part of the winning Bunnings strategy is that it is at least partly in the business of surprise as much as anything else. It finds consistent price points with some of its products that seem almost impossible.

    Far from being "loss leader" specials, these prices prove persistent and consistent. This drives a desire by its customers to almost always check the price of any purchase against the Bunnings price.
    The Masters response

    Masters has persisted with a strategy of reasonable and competitive prices backed up by "specials", which are essentially examples of a high-low pricing strategy. Inline with the segmentation strategy described above, Masters should also consider finding a unique place on the price/value curve that is different to that of Bunnings.

    In particular, Masters needs to pursue a product development plan that places a different value on its customers' time. In both the upper segment of the available market, and for the Millennial generation, personal time is seen as a commodity that needs to be used carefully. The real curve that Masters needs to consider, in other words, is price/value/time.

    Bunnings customers often enjoy shopping, and being able to come home with a power tool (for example), where they can effectively say, "Guess how much I paid for this!"

    For this adjacent market segment, the purchase is more about finding a tool that will make a task easier to do in less time, and that will solve these problems for five or six years at least. It is essentially an "asset accretive" approach, as opposed to a consumable approach.

    We should perhaps make clear that nothing we've described is in any way a criticism of Bunnings and its strategies. The fact is that when any company takes a particular position in a market, there are always vulnerabilities created, and it is the role of competitors in that market to take advantage of those vulnerabilities.

    The most striking failure of Masters has been its inability to do exactly that. Instead of developing counter-strategies to everything that Bunnings does so well, it instead seems to have emulated the Bunnings strategy set, with the apparent belief that it could execute that strategy better than Bunnings itself.

    What perhaps drove Woolworths in this belief is that it saw the Coles supermarket chain under the guidance of Wesfarmers pretty much doing just that to its supermarket business. That fact is, though, that the Coles business has itself been quite innovative. It succeeded by exploiting weaknesses in Woolworths, initially in the area of margins and price, and later in terms of improved store quality versus store fleet expansion.

    Woolworths has certainly paid the price of its policies over the past five years. It will be interesting to see if it has managed to learn from this experience, and will seek to redefine its approach, or if it will take a greater collapse for such a needed change to be triggered.
    HNN at the HBT Gala Dinner in Melbourne

    Old friends are new friends; l-r Lawrie Peck (Romak), Betty Tanddo (HNN) & Mitch Cameron (Cameron's H Hardware)
    Aimee Blake and Steve Fatileh at the HBT Melbourne office

    HBT has recruited more talent to its team; (l&r) Aimee Blake and Steve Fatileh at the group's new Melbourne office

    Until next time,


    You can contact me directly via email or Twitter @HNN_Australia

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    HNN iPad App
    Treasure chest for tools
    The GearWrench 4 drawer tool chest features four drawers for all tools
    Apex Tool Group
    The GearWrench 7 drawer roller cabinet is designed for larger tools and equipment
    The top chest and roller cabinet is also sold as a combo
    Click to visit the HBT website for more information
    Tool storage systems from GearWrench are designed to house tools in one place, so users can easily find what they are looking for when they need it.
    27-inch 4 Drawer Top Chest

    The 27-inch 4 drawer tool chest is built with 0.8mm steel for the body and 0.6mm steel for the drawers. This makes it tough enough to withstand inevitable knocks and dings but light enough to move around the workshop if required.

    It features four drawers for all tools and is designed to be situated on top of a roller cabinet, so all the gear is kept in one tidy place.

    The 45mm ball bearing slides have a load capacity of up to 30kg per drawer, so no tool will be left out. The auto return function ensures the drawers slide back once opened to reduce the risk of unexpected knocks or bumps. The quick lock keeps it securely in place.

    GearWrench has also fitted the 27-inch 4 drawer tool chest with a perforated square hole accessory system on each side to accommodate any leftover items that don't quite fit in the drawer.
    27-inch 7 Drawer Roller Cabinet

    The 7 drawer roller cabinet features the same quick lock and auto return system as the drawer tool chest, but is designed for larger tools and equipment. The same 45mm ball bearing slides ensure smooth movement for the life of the cabinet.

    To support the drawer tool chest and keep it securely in place atop the cabinet, it is fitted with 5mm EVA top mat. Each drawer also features a 2.5mm EVA mat to prevent tools and equipment from sliding when the cabinet is being moved around.

    The GearWrench top chest and roller cabinet is also sold as a combo including a 189-piece tool kit.
    Small format IKEA stores planned for Australia
    IKEA is planning to build around 12 small-format stores in Australia
    Sydney Morning Herald
    The retailer hopes to boost customer visits to its stores in Australia
    IKEA also plans to build two distribution centres
    Click to visit the ITW website for move information
    IKEA Australia country manager David Hood has unveiled plans to increase store numbers from eight to about 22 over the next few years. It will build another three or four 30,000sqm mega-stores and as many as 12 small-format stores, less than one third of their size.

    The small-format stores, which are currently being tested in markets such as Spain, Germany, the UK and Canada, would enable consumers to buy top-selling products such as Billy bookcases and Klippan sofas in-store and collect products ordered online from a dedicated Australian e-commerce site.

    IKEA also plans to build two distribution centres, including a 100,000 pallet multi-functional logistics centre. This would allow the company to increase the number of products stocked in Australia from 1300 to almost 9000, slashing the time it takes to ship orders to customers.

    Hood is a 25-year IKEA veteran who has been running the Australian business since 2008. He expects sales to more than double over the next five years, from $733 million in 2014 to at least $1.8 billion by 2020, as customers shop more often and the group takes market share from competitors such as Bunnings, Masters, Harvey Norman, Freedom Furniture and Fantastic Furniture. He told Fairfax Media exclusively:
    It would be fair to say somewhere in 2020/21 for sure the east coast alone, with good online step up and this [distribution] infrastructure in could be around $1.8 billion or $1.9 billion.
    We have a real opportunity to grow the business very fast in the next five, six, seven years. But we have to first become more accessible to customers with our footprint and our stores.

    Most customers tend to shop at IKEA four or five times a year, and those who live hours away shop once or twice a year. Hood hopes to boost the number of visits to seven or eight by making stores more accessible and giving customers the option to shop online.

    IKEA has stepped up new-store expansion and will open three stores this year - Marsden Park in Sydney's west opened last month, Canberra is due to open in November and a second Brisbane store in August - adding almost 80,000sqm of floor space and 1000 jobs.

    Hood sees scope for another one or two more mega-stores in Melbourne and Sydney and a network of smaller stores along the east coast, including the NSW Central Coast and the Gold Coast. He said:
    There are 22 locations that we feel the customers could meet IKEA in some way - what it will not be is what we see at Tempe [which is 37,000sqm]. It could be 10 or 12 units of some kind to support the multi-channel rollout.

    Hood said Australia is enjoying strong support from its European parent, which will fund the investment in stores, DCs and e-commerce.
    Shriro's $50m IPO
    Shriro's recent $50.5 million IPO was four times oversubscribed
    Sydney Morning Herald
    The popularity of charcoal cooking has helped boost sales of its Everdure BBQ range
    Shriro purchase Robinhood from Dulux in 2012
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    Shriro's $50.5 million IPO was four times oversubscribed, but the company took only what it was seeking, ensuring a strong sharemarket debut.

    Shriro owns the Omega, Robinhood, Everdure and Altise brands and sells products including cooktops, ovens, rangehoods, dishwashers, heaters, sinks, taps, ceiling fans and barbecues through retailers such as Bunnings, Harvey Norman, Myer, Winnings, Bing Lee and BIG W.

    Shriro also distributes third-party brands including Blanco kitchen appliances and Pioneer speakers, and is the exclusive distributor for Casio calculators and watches.

    House prices and a buoyant new housing and renovation market have fuelled demand for Shriro's cooktops, sinks, ovens and rangehoods. And the growing popularity of charcoal cooking has helped boost sales of its Everdure charcoal BBQ range.

    The company accounts for 8% of the oven market, 13% of cooktops and 22% of rangehood sales.

    Earnings before interest, tax, depreciation and amortisation have risen 25%, from $14.9 million to $18.7 million, over the last two years. After a strong first quarter, the company is forecasting a 6.4% increase in EBITDA to $19.9 million and a 12.3% increase in net profit to $10 million, on sales of $187 million in 2015.
    Going public

    The float heralds a new era for the Shriro group, which started life 106 years ago in northern China, selling furs to Europe via the trans-Siberian railway. It is now a major kitchen appliances and consumer electronics marketer and distributor, with operations throughout Asia, Australia and New Zealand.

    Shriro Holdings chief executive Mike Westrup believes demand for Shriro shares reflects its solid sales and earnings growth over the past few years and the strength of recent appliance sales.

    After a series of acquisitions and range extensions, including the purchase of Hagemeyer Brands from Rexel in 2011 and Robinhood from Dulux in 2012, company-owned brands now generate about 45% of sales, up from 26% in 2010, and third-party brands 55% of sales.

    Brand ownership allows Shriro control over product and brand development, sourcing, distribution and intellectual property and to tailor products specifically for the Australian and New Zealand markets. Westrup told Fairfax Media:
    Distribution is a great business but you don't own anything but the stock you buy, so it made a lot of sense to us to secure the future of the business by owning brands.
    Upcoming launches

    The company is set to launch a range of top-quality cooktops and ovens designed in collaboration with celebrity chef Neil Perry. It is also developing a new range of charcoal barbecues. Westrup said:
    Eighty per cent of the world cooks on charcoal. Wherever you go in Argentina or the streets of Bangkok there's charcoal [used in cooking]. Charcoal barbecuing will be the next big thing - it cooks better.

    Westrup and his team are also looking at bolt-on acquisitions, additional categories and overseas expansion, including taking the company's barbecues to Europe. He said:
    By owning our IP we can sell overseas as well.
    Hot links
    Mr Fothergill's seed range can now be found in New Zealand
    HNN Sources
    Sales at Canada's Richelieu grew by 22.4% in the second quarter of 2015
    Topps Tiles reported a 5.9% rise in like-for-like sales in the 13 weeks ended 27 June
    Click to visit the HBT website for more information
    An additional roundup of home improvement stories. Mr Fothergill's seeds are now on sale in New Zealand; a new collection of tikis is being rolled out at Home Depot; UK's Homebase reports major increases in plastic storage sheds; Canadian specialty hardware distributor Richelieu increased its second quarter sales; and Topps Tiles in the UK posted a jump in third quarter sales following the retail brand's makeover. More stories below.

    For further information, simply click on the images provided.
    Mr Fothergill's stocked in NZ

    Mr Fothergill's seed ranges are now being distributed through all 45 Bunnings stores in New Zealand. The seeds are also being listed by 20 independent garden centres including the Palmers and Oderings chains. Mr Fothergill's is working with Australian-based Lincoln Brokerage to oversee its merchandising operation in New Zealand.
    Mr Fothergill's seeds are now being distributed through all NZ Bunnings stores
    Home Depot selling tikis

    The collection of tikis being sold through Home Depot includes four 4-foot figures, several 10-inch planters and a complete bamboo bar that breaks down to fit in the boot of a car. The tikis are made of a mixture of fiberglass and adobe clay that is lighter than concrete and harder to chip.
    Tiki range being sold at Home Depot
    Storage products at Homebase

    Homeowners in Britain are turning to unconventional ways of increasing valuable storage space. Heidi Towse, outdoor structure buyer for Homebase, said: "The average three bedroom family home is much smaller than it was 50 years ago...Plastic sheds seem to be the key to creating much needed extra storage in the home..."
    Plastic storage products are experiencing a large increase at Homebase
    Richelieu gains market share

    Sales at specialty hardware distributor Richelieu in Canada grew by 22.4% in the second quarter of 2015, ending May 31. Sales to hardware retailers and renovation superstores stood at C$25.9 million, up by C$5 million or 23.9% over the corresponding quarter of 2014. The latest result can be attributed to introduction of additional products in stores.
    Richelieu increased sales in Q2
    Topps Tiles sales rise

    Efforts to modernise Topps Tiles and broaden its appeal to include more higher-earning customers seem to be paying off. The UK-based retailer, which has 346 stores, reported a 5.9% rise in like-for-like sales in the 13 weeks ended 27 June - its third consecutive quarter that underlying sales have risen above five per cent.
    Topps Tiles reported a 5.9% increase in like-for-like sales
    Makita tool development

    Makita has joined forces with the Manufacturing Technology Centre (MTC) in Coventry (UK) to create the next generation of power tools. The two organisations will create professional power tools with capabilities to match the manufacturing technologies being developed at the MTC.
    Makita will develop the next generation of power tools in the UK
    DIY drives Pinterest users in UK

    Social media site Pinterest has doubled its number of users in the UK in the past year as Britons "pinned" 1.6 billion items with DIY projects and recipes among their favourite topics. According to Pinterest, its users are particularly keen on DIY, with 52% looking for that, while 46% search for recipes. In terms of building their own boards, 37% are planning home decorations, 17% a holiday and 14% a wedding.
    DIY projects driving UK users on Pinterest
    Kingfisher's Net Positive progress
    Kingfisher has released its annual Net Positive Report
    The report also outlines Kingfisher's increased focus on the circular economy
    It updates stakeholders on Kingfisher's sustainability progress
    Click to visit the ITW website for move information
    A collaborative approach to responsible sourcing, packaging and the circular economy has taken DIY giant Kingfisher to a new level in the second year of its Net Positive sustainability plan.

    The owner of the B&Q and Screwfix chains has released its annual Net Positive Report, updating stakeholders on its ambition to transform the business to have a restorative impact on the environment.

    Kingfisher's group sustainability director Richard Gillies said the strategy - which incorporates 50 specific targets for "priority areas" - is generating business value from efficiency, productivity gains and new revenue streams. Gillies said:
    We're driven to integrate sustainability into everything we do. To reach our restorative goals, we will need to continue to do so at pace...We are taking a systematic approach, tackling issues in our operations and by working with external partners and suppliers.

    Highlights from the 2015 Net Positive Report include reaching 92% responsibly sourced timber and paper products last year, 2% ahead of Kingfisher's 2016 target and well on-track to hit the 100% target by 2020.

    The retail group reported that its customers are now saving an estimated GBP600 million a year through energy-efficient products and services purchased from Kingfisher brands since 2011/12. Total sales of products with a lower environmental impact were worth GBP2.4 billion to the business this year.

    In its own operations, Kingfisher has reduced its energy intensity by 17% since 2011/12 and marginally increased its recycling rate to 70% - on track for its target of 75% by next year. However, the firm is not on track with its target to understand the water footprint of its own operations, and water use has fallen by just 2% in the past five years.

    Underpinning all of Kingsfisher's sustainability progress is collaboration, with a number of initiatives involving rival businesses, non-government organisations (NGOs) and suppliers.

    One example of this is in sustainable timber sourcing. Last year, Kingfisher fronted a new project known as VIA (Verification Impact Analysis) with non-profit organisation FSC (Forest Stewardship Council), IKEA, Tetra Pak and ISEAL. The project seeks to establish a credible methodology for measuring the impact of FSC certification.
    Closing the loop

    The report also outlines Kingfisher's increased focus on the circular economy. The company has worked with the Ellen MacArthur Foundation and Bioregional to develop a "closed loop calculator", which assesses the products that have closed loop credentials. Kingfisher has identified 562 "closed loop'" products so far, with a target of identifying 1,000 by 2020.

    To read the report, please go to the following link:
    Kingfisher Net Positive Report 2015
    Multichannel customer experience at Carpetright
    UK-based Carpetright is reshaping its store estate in light of digital
    Internet Retailing
    Chief executive Wilf Walsh said this had been a "year of significant progress"
    Carpetright's new website was launched in April 2015
    Click to visit the ITW website for move information
    Carpetright is placing an emphasis on developing a multichannel customer experience as it looks to create a floorings-to-beds retailer to meet the demands of a modern consumer and to perform in a competitive market.

    It said its new "updated and more inspirational" website, launched in April 2015, has been successful in encouraging shoppers into stores, while also being mobile-friendly. That's important, it said, because although most customers visit a store at some point while they are buying flooring or a bed, the importance of digital technology as a research tool is growing. The company said in its full-year results:
    While the ability to visit a store to touch and view the product and to obtain specialist advice prior to making a purchase remain critical, the internet has become a vital research tool for many customers and the rapid growth in the use of mobile devices has made an integrated multichannel proposition a necessity.

    Carpetright's strategic plan focuses on the customer experience through measures including a web-based customer service programme, which has seen 70,000 individual customer reviews added since it was launched in January.

    It is also training staff through a Carpetright Academy focusing on product knowledge and customer service, while investing GBP4.5 million in a systems upgrade aimed at improving the in-store purchasing experience.

    The retailer is reshaping its store estate in the light of digital, reducing store sizes and moving existing stores to better sites while reducing the overall of catchment areas. During the year, it opened 12 stores and closed 24 to reach a total of 460. Elsewhere in Europe the company has 137 stores.

    The update came as Carpetright reported sales of GPB462.6 million in the 52 weeks to May 2, 3.3% ahead of the same time last year. Pre-tax profits came in at GPB5.4 million, a turnaround from losses of GBP7.2 million last time.

    Visits to the Carpetright website grew by 27.6% over the year, with an average of more than 110,000 weekly visitors to the website. The number of sales converted from call centre leads rose as well, following improved store follow up. The retailer said that sales generated through the combination of call centre and online grew during the year to bring in the same turnover as one of its top 10 retail stores.

    Chief executive Wilf Walsh said this had been a "year of significant progress". But he said the company is still at the beginning of its strategic journey to broaden Carpetright's appeal. Walsh said:
    We have a clear direction and the positive results we are seeing from a number of our initial activities give us confidence that we are on the right path.
    Rona ready to build again
    Rona is transitioning back to growth mode
    Canadian Business
    Installing Robert Sawyer as the new CEO seems to be a turning point
    Many strategic changes can be seen at the company's Reno-Depot stores in Quebec
    Click to visit the ITW website for move information
    Rona is not dead yet. Far from it. The chain, based in Boucherville, Quebec is the largest retailer and distributor of home improvement products in Canada, serving a network of more than 500 stores (Home Depot, by comparison, runs 180 locations; Lowe's has 37).

    And while the retailer took its lumps in recent years, it's showing signs of a promising rebound. In the past year, the company's profit has ballooned to C$78 million, from a loss of C$153 million one year earlier (C$117 million of that loss can be attributed to discontinued operations).

    Margins are higher, same-store sales are up 5% year-over-year, and the company will open six new stores by December, its biggest expansion since 2008. At the same time, Rona has cut capital expenditures, found more than C$100million in annualised cost savings and bought back stock, and it's generating a lot of cash flow. All this helps explain why Rona's shares surged almost 50% when dividends are factored in.

    Consider the state the company was in as recently as three years ago, and Rona's turnaround seems that much more remarkable.

    In 2011, Rona was in a pitched battle with shareholders. At the time, then CEO Robert Dutton was unapologetically pushing ahead with a plan that had failed to curb its revenue and earnings declines, to the disgruntlement of shareholders like Invesco Canada Ltd. and Caisse de depot et placement du Quebec, who were tired of seeing the company struggle despite robust demand from contractors and consumers.

    Dutton was pursuing an aggressive expansion plan that included the purchase of Alberta-based Totem Building Supplies Ltd. and opening a number of new big-box stores under the Rona banner. Meanwhile, an attempted takeover by Lowe's was thwarted by the Quebec government.

    The growth strategy never paid off. As the retailer grew, it found it increasingly challenging to squeeze profits out of its diverse network of stores of varying sizes - it operates locations under a variety of banners, including Reno-Depot, Materiaux Coupal, Dick's Lumber & Building Supplies and Noble Trade Inc., all of which have different merchandising needs. (It also sells Rona products via a network of dealer-owned stores, which have been dwindling in number.)

    Historically, Rona had excelled at operating as a wholesaler-it was founded in the 1930s as a co-op of hardware retailers who sought to collectively boost their buying power-but its management team lacked extensive retail experience, which became a significant issue as the chain rolled out more Rona-branded stores. Purchasing, for instance, was directed by head office instead of by store managers, who had a better sense of what was selling, resulting in an oversupply of slow-moving products.
    Turnaround strategy

    Revenue declined for the past five consecutive years, even as the broader market for home and hardware products grew. The trend prompted normally quiet shareholders to scream for a shakeup of the board and the CEO's resignation.

    Ian Hardacre, head of Canadian equities at Trimark Investments, which is owned by Invesco, was one of those angry investors. He told Canadian Business:
    We felt the company's approach was growth at any cost, but the market had changed, and they were spending an enormous amount of capital and getting no return for it.

    At first, Rona threw up legal barriers to block Invesco from pressuring the company to overhaul its board. But a short time later, Dutton resigned and a majority of the board was replaced.

    The turning point for Rona came in March 2013 with the appointment of Robert Sawyer as the new CEO. His job was clearly outlined by Rona executive chairman Robert Chevrier in the press release announcing the hire. At the top of the list: simplify the business, optimise merchandising and fix the supply chain.

    Sawyer, a 30-year retail veteran with a solid track record in distribution and retail operations, was no stranger to dealing with those challenges. He'd gained that experience from his time at Metro, a grocery chain that had a similar structure to Rona, in that it operated under several different banners.

    The company really needed someone who could get it back to basics, and Hardacre believes that's what Sawyer has done.

    Within four months of his appointment, Sawyer started unwinding the work of his predecessor. His first move was to close 20 underperforming Rona stores, most of which were part of the company's big push into Ontario. Many of those closures targeted stores built in the past 10 years, including one that never opened.

    Some of those stores were in markets that one would expect to be no-brainers, but in the words of one analyst, Rona was ruthless in deciding which locations were going to close.

    Sawyer also streamlined Rona's distribution system - he closed a number of smaller satellite distribution centres - and reduce the number of products the company stocks in-store, while introducing new categories, like automotive cleaning products, pet food and basics like bottled water. These categories are meant to function like magazine and confectionery racks in a grocery store, offering convenience for customers, potentially saving them a trip to a competitor.

    Many of these changes can be seen at the company's Reno-Depot stores in Quebec. When Sawyer announced his plans to reposition those 16 locations, he thought it'd take 12 months - it took him only six.

    The transformation beefed up the number of brand-name products (particularly in the power tool aisle) to appeal to the high number of contractors who shop the chain, increased the size of parking spaces to accommodate larger vehicles, reorganised the store and added bigger signage to make it easier to find products.

    The other major change was in limiting the variety of items in a given category. In the lighting department, for instance, the company reduced the selection of fixtures available, but the ones that are for sale are easier to find and well-stocked, meaning they don't have to be special-ordered. All of these changes have resulted in higher sales.

    Not all the alterations at Reno-Depot will be rolled out across the various banners, but some, like the expanded range of ancillary items and emphasis on cleaning supplies, will likely extend across the company.
    More competition

    Turning around a major retailer is no simple task, and analysts and investors are impressed with what Rona has accomplished in such a short time. But there is still more work to be done. The bigger issue now is how Rona intends to grow in a tough market. With Lowe's announcing plans to add 25 new stores, it's a timely question.

    In a recent conference call, Sawyer said the company is transitioning back to growth mode, with several expansion projects in the works for 2016 and 2017. As for Lowe's, Sawyer said he's not worried about added competition. Lowe's stores, he argues, are based on a template, unlike Rona. He said:
    With our proximity stores and our contractor stores and our big-box stores, we are really catering differently to tons of different customers.

    The larger concern for analysts is about what impact a slowdown in Western Canada will have on sales. So far that hasn't shown up in the numbers, but as BMO analyst Peter Sklar wrote in a recent note, that part of the country accounts for a third of Rona's sales, so it's something to watch.

    The weakening dollar is another challenge. While the company's currency hedging strategy has protected it, Sklar is concerned that once these hedges roll off early next year, procurement costs could rise.

    Sawyer's current focus is on expanding the company's seasonal merchandise and putting more emphasis on big-ticket, high-end products that haven't been available in the stores before. Managing the rollout of the national install program, in which the company will find contractors to do the work for you, is another priority. Sawyer said:
    It is another growth vector with huge potential.
    Coastal-inspired paint colour
    Krylon Sea Glass Finish allows DIYers to create beach-inspired decorative pieces
    It is available in eight nature-inspired colours
    The finish is dry to the touch in 15 minutes or less
    Click to visit the HBT website for more information
    Krylon Sea Glass Finish allows DIYers to create one-of-a-kind decorative pieces that conjure thoughts of summer nights and trips to the beach. With a semi-translucent and smooth frosty finish, it resembles glass tumbled smooth by the waves.

    Available in eight nature-inspired colours, the spray provides high quality adhesion and durability. It can be easily applied to glass creating accents inside the home including bottles, vases, mirrors, window, lanterns, candle jars and lamps.

    The Krylon Sea Glass Finish is dry to the touch in 15 minutes or less and is a cost-effective way to create sea glass gems with an authentic nautical look and feel. Rita Forman-House, Krylon product manager said:
    The Sea Glass Finish offers consumers an easy application with a unique finish, allowing crafters to create beautiful ocean-inspired projects without taking a trip to the beach.

    The Krylon Sea Glass Finish is available in the following colours: Ruby, Rose, Amber, Lemon, Sea Foam, Ice, Aqua and Cornflower.
    Redbank Plains housing project begins
    Work on the $360 million Eden's Crossing residential community has started
    Queensland Times
    It is situated in the suburb of Redbank Plains, Queensland
    Devine Homes is behind the development
    Give to Amnesty International
    Preparation for Devine's $360 million Eden's Crossing residential community has begun. The development is located in the suburb of Redbank Plains, Queensland.

    Devine general manager - communities, Andrew Brimblecombe said the construction of the 960-dwelling community would see about 50 homes to be under construction at any one time. Brimblecombe said the first two stages of the project were expected to be completed by the end of the year.

    Originally scheduled for next year, he said demand at Devine's adjoining Mountview estate prompted it to bring the Eden's Crossing project forward. He told the Queensland Times:
    There are now limited blocks remaining in the first three releases in the Creekstone Village precinct of Eden's Crossing. The amenity is here, the land is affordable and it's a great place for families.

    Mayor Paul Pisasale said Eden's Crossing estate would provide substantial opportunities for the Ipswich community and its economy. He said:
    It will not only deliver new jobs for the construction industry, but also creates a flow on effect that will generate additional local jobs in industries such as real estate, electrical, plumbing and landscaping. We're pleased that developers like Devine are recognising Ipswich's enormous growth potential and investing in the future of this vibrant city.

    The estate adjoins Devine's Mountview estate, extending development across the other side of the Centenary Highway towards the White Rock-Spring Mountain Conservation Estate.

    About 30% of the 110ha master-planned community has been dedicated to green open space with hiking and bike paths and four parks.

    Construction of an access road to connect the estate to the Centenary Highway is planned for next year. Brimblecombe said:
    There are also plans for a proposed train station linking Ipswich and Brisbane, with a Redbank Plains South Station. There is an existing bus service in the area, which will be expanded in time to service Eden's Crossing.

    A new state primary school is due to open nearby in 2017.
    Schlage survey on DIY home trends
    Schlage has announced the findings of a US survey on DIY trends
    Its Satin Brass and Polished Nickel finishes are new to the range
    Schlage is part of the Allegion group of companies
    Subscribe to HNN weekly e-newsletter
    Lock brand Schlage has announced the findings of a US survey revealing that style and design upgrades - such as door hardware - are a major component for homeowners completing a DIY project. Steve Down, Allegion residential leader said:
    As decor and design trends change, Schlage recognises that consumers are always looking for new ways to express themselves through their home's unique style without sacrificing quality. It's the smaller details and finishing touches that bring a home's style together...

    The survey, conducted by third-party research firm Kelton Global, polled a nationally representative sample of more than 1,000 American homeowners ages 25 and older. It revealed that homeowners are in the market for doors and door hardware that bridge style and tradition as well as complement their personal taste. Findings include:
  • Almost half of homeowners (46%) feel it's important to ensure that their door hardware is stylish, and 43% of homeowners believe the doors themselves need to feel stylish.
  • Looks clearly matter when it comes to door hardware, with 55% of homeowners agreeing that style or design would most likely impact their decision after cost.
  • Traditional styles are still preferred by 50% of homeowners as opposed to transitional styles (27%) or contemporary styles (24%).
  • Mirroring the traditional style aesthetic, aged bronze topped the list of preferred finishes at 56%, followed by antique brass (54%) and polished nickel (51%).
  • Survey methodology

    This survey was conducted online within the United States by Kelton Global on behalf of Schlage from May 5-12, 2015, among 1,059 adults ages 25 and older. Results of any sample are subject to sampling variation; in this particular study, the survey results may vary by plus or minus three percentage points.

    Schlage is part of the Allegion group of companies. It remains committed to shifting consumer perception of door hardware and bringing it to the forefront as an accessory that can complete or enhance the look of any room.
    @HBT 2015: HBT gala dinner
    (l&r) Tim Starkey and Gavin Keane speaking to HNN. The "HBT yacht" is in the background.
    HNN Sources
    (l-r) Lawrie Peck (Romak), Betty Tanddo (HNN) & Mitch Cameron (Cameron's H Hardware)
    Another successful event for HBT
    Click to visit the HBT website for more information
    Tim Starkey and Gavin Keane explain that its latest event in Melbourne is the biggest yet in terms of supplier and member participation. The mood was upbeat but it was tempered with a dose of reality. As Tim says: "There is naturally a level of concern about the future...but there is plenty of hope and...these guys can be competitive if they are dealing with the right people."

    This year's event was also an opportunity to reflect on what the group has achieved, especially in the last two years. "We are the only group that covers traditional timber and hardware and the industrial tools area, and that is bringing interesting benefits to members in both areas...We are now the biggest industrial tool, welding, fastener group in the country..."
    Bringing more value to members

    Chip away at outdoor chores
    The 5cm Rover Chipper Shredder can be a reliable addition to clean-up apparatus
    Rover's RCS 35 comes with a 37cc engine that is full of grunt
    The larger RCS 40 model has a big 40cc engine for added power
    Click to visit the HBT website for more information
    Rover's 5cm Chipper Shredder unit is designed to make an easy meal out of all unwanted branches and debris.

    The 5cm Rover Chipper Shredder can be a reliable addition to clean-up apparatus, disposing of leaves, twigs, branches and other unwanted organic garden materials. It features a 205cc Briggs & Stratton engine for consistent performance. The two chromium steel chipper blades and 12 replaceable cast steel flares offer a durable design for chipping and mulching needs.

    This chipper shredder has a reduction ratio of 10:1 converting offcuts and debris into reusable mulch that is ideal for the garden. The bushel collection bag also makes redistribution back into the garden easy.

    Consisting of the RCS 35 and the RCS 40 models, Rover's newest set of chainsaws come with the sturdy OREGON(r) bar and chain for extended durability. The innovative SpringAssist[tm] starting system makes start-up efficient and reduces pulling effort. This allows users to fire up the chainsaw first time, every time with just one pull.

    Rover's RCS 35 comes with a 37cc engine that is full of grunt. The 35cm cutting blade makes it an ideal option for pruning and lopping small to medium sized trees and branches.

    The larger RCS 40 model has a big 40cc engine for added power and a longer 40cm blade. It can be used for cutting larger logs around the paddock and tidying up the work site.

    The Rover RCS range comes with a side-mounted chain tensioning system, which makes for safe chain tensioning and chainsaw maintenance. To help reduce operator fatigue, Rover has also integrated a 6-point anti-vibration system.
    The big three-hearted economy
    Glenn Stevens calls Sydney house prices "crazy"
    HNN Sources
    The renovation market is not trending up
    Sydney market shows signs of instability
    Give to Amnesty International
    Forecasting the housing market has become something of a shared preoccupation for much of Australia. The Australian economy is still in a weak stage of recovery - its recuperation not helped by various global events.

    So many commentators watch factors such as house prices with the kind of intensity usually reserved for the hospital electro-cardiogram of a favourite ageing relative. There is concern if the beat is too slow, and just as much concern if the beat is too healthy.

    To make matters worse, the patient we are so closely watching doesn't just have one heart. It has three hearts, and they are all beating at a different rate.

    There is the heart that represents the Sydney/Melbourne property markets, a heart for the property markets elsewhere in Australia. The third heart is the beat of the economy itself.

    At the moment the Sydney/Melbourne property heart is racing at about 120 beats per minute (bpm). The standard property market is mildly excited, at about 80 bpm. Meanwhile, the economic heart is weakly beating at about 40 bpm, with signs of a kind of arrhythmia developing from time to time.

    All three hearts have become somewhat independent in the last five years, but the fate of each heart still affects the others. If the Sydney property market crashes, that will affect the property markets elsewhere and the economy itself. If the economy suffers a setback, that could crash the Sydney property market.

    This is what makes forecasting so very difficult at the moment. The simple fact is, no-one can really answer the question of what the heart-rate is now, today, with any accuracy. Predicting what its future rate will be is thus close to impossible.

    It's also no wonder that the Reserve Bank of Australia (RBA) feels itself to be under stress at the moment. To extend the heart analogy a little further, the RBA is, in a sense, the patient's cardiologist. Its responsibility is to administer the medicine - through interest rates - that will stabilise the patient's heart-rate.

    The problem is that any medicine the RBA administers affects all the hearts equally. If it seeks to stimulate the economic heart with lower interest rates, the Sydney property heart also gets stimulated. Try to stabilise the Sydney property heart rate by slowing it down, and you risk a major failure in the economic heart.

    This is what is behind RBA governor Glenn Stevens' apparently "off the cuff" remark that parts of the Sydney property market are "crazy", made at a business luncheon on 10 June 2015.

    Mr Stevens really does not do "off the cuff". What he was trying to do, one suspects, is to find the equivalent of a homeopathic remedy that would slow down the Sydney property heart-rate a few beats.
    HNN's approach to forecasting

    HNN began looking at statistics and reports about a month ago in preparation for forecasting in July 2015. We rapidly reached the conclusion that we would not be able to make all that great a contribution. From our perspective, the general situation is too complex to analyse with much certainty.

    Instead, we decided to look at the few areas where either it was possible to make some reasonable assertions and estimates about the next 12 months, or where we could contribute just by describing some changes and interesting developments.

    In this light, we've decided to focus on just four areas over the coming two weeks:

    While HNN will look at some of the numbers coming out of the general housing market, our core focus will be on the alteration/renovation market. We believe there are some interesting insights to be seen in the numbers coming out there.

    Our focus in this area will be on developing markets, particularly those related to technology. This includes internet technology, but also mechanical technologies, such as the spread of brushless electric motors.
    Overall economy

    We will provide an overview of the general economic factors that will have an impact on home improvement retail.
    The consumer

    HNN looks at the forces that will shape consumer choice over the coming 12 months. This include overall consumer sentiment, as well as trends in the marketplace.
    This week

    To begin this series on forecasting, we will look at the situation in housing, with an emphasis on the renovations market.
    Forecasting: Housing, Construction & Renovation in 2015/16

    Until next time,


    You can contact me directly via email or Twitter @HNN_Australia

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    HNN iPad App
    HNN Index for week ending 26 June 2015
    The HNN Home Improvement Index fell by 22 points in the past week
    HNN Sources
    UBS currently has a "buy' recommendation on Fletcher Building
    Metcash-owned IGA will match the lowest prices offered by Coles and Woolworths
    Click to visit the HBT website for more information
    The HNN Home Improvement Index for the week ending 26 June 2015 fell by 22 points to reach 977.46. This means the Index will finish 2014/15 at a net loss on its benchmark initial setting of 1000.

    The underlying ASX 200 also fell, down 51 points to close at 5545.9, or 1031.8 on its scaled comparative measure. This means the HNN Index has fallen more sharply than the ASX 200, with the gap widening, after approaching closer during May 2015.

    There were a number of shares that suffered significant falls during the week. UGL fell by 16%, Bluescope Steel by 11.8%, and the newly renamed Leighton Holdings, now known as CIMIC fell by 6.5%.

    CSR, Downer EDI, Breville, GWA Group and Metcash all lost value by between 5% and 6%.
    CIMIC named for rail project

    The Victorian government has named an alliance including CIMIC's Leighton Contractors as the preferred group for a $480 million project to design and construct four Melbourne railway level crossing removals.
    CIMIC named in VIC rail project - Business Spectator
    Fletcher Building
    Fletcher Building has challenges

    UBS currently has a "buy' recommendation on Fletcher Building and a $NZ10.61 price target. It said: "Longer term we see recovery in key Australian operations: Rocla (with leverage to infrastructure uplift); Stramit (via general construction recovery); Tradelink (as operational improvements continue); and Iplex (given QLD CSG projects ongoing drilling and pipe needs). The business also has new opportunities for growth in NZ..."
    Fletcher has challenges in Australia, new growth in NZ - Australian Financial Review
    Goodman Group
    Goodman Group developing Horsley Park sites

    Goodman Group will develop two warehouse facilities totalling nearly 60,000sqm for logistics firm DHL after securing development approval. The two sites at the Oakdale Industrial Estate in Horsley Park are valued at about $80 million. Oakdale Industrial Estate is a joint venture between Goodman and Brickworks.
    Goodman Group to develop Horsley Park warehouse sites for DHL - The Australian
    GWA Group
    GWA hires top Diageo executive

    GWA Group has tapped the head of global drinks giant Diageo in Australia as its new chief executive. Tim Salt, currently managing director of Diageo Australasia, will replace Peter Crowley who led the company for the past 12 years and oversaw the sale of non-core businesses.
    GWA taps top Diageo executive to revive bathroom fixtures business - Courier Mail
    Lend Lease
    Lend Lease wins $1.1bn road contract

    Lend Lease won a $1.16 billion roads project to upgrade a motorway near Brisbane airport. The road links freight hubs, including the Port of Brisbane and the Brisbane airport.
    Lend Lease wins $1.1bn road upgrade contract - The Australian.
    Metcash attempts to match pricing

    Metcash-owned supermarket chain IGA will adjust its prices every week on hundreds of branded products to match the lowest prices offered by Coles and Woolworths. However it lacks the artillery of its larger competitors to cause damage in a price war.
    Metcash attempts to match it - Intelligent Investor
    Wesfarmers makes $US100m oil and gas play

    Wesfarmers has made its first acquisition in oil and gas production, taking a 13.7% stake in Quadrant Energy for $129 million. Quadrant owns Apache Corporation's former Western Australian oil and gas assets, which account for about 40% of the state's domestic gas supply.
    Wesfarmers grabs Quadrant Energy stake - Sydney Morning Herald
    Woolworths v Coles - the report card is in

    The UBS Supermarket Supplier Survey records how supermarket suppliers rate supermarket chains across of range of areas. It shows Woolworths has dropped the ball in numerous respects. Overall Woolworths came in with 5.7 out of 10. Coles in contrast improved its score to 7.1 - its highest ever.
    Woolworths report card - Sydney Morning Herald
    Woolworths stock up on takeover rumours

    Fresh from parting ways with chief executive Grant O'Brien, Woolworths stock went up 3.8% to $27.39 - its best day since February 2010 - after reports suggested US equity firm Kohlberg Kravis Roberts was preparing a takeover offer. According to the report, KKR is close to assembling a bid for consideration of the Woolworths board, led by chairman Ralph Waters.
    Woolworths stock up on takeover rumours -

    Courier Mail
    Indie store update
    The latest Woodman's Mitre 10 store is located at the Marian Town Centre (QLD)
    HNN Sources
    Terang Co-op's hardware sales skyrocketed by 43% this financial year
    Inspirations Paint in Clarence (NSW) has experienced a sales increase in wallpaper
    Click to visit the ITW website for move information
    Queensland-based Kerry Woodman has added another Mitre 10 to his store network; Terang Co-op achieved a record $22.7 million turnover this financial year; and Inspirations Paint in Clarence (NSW) sees wallpaper sales grow.
    Woodman's Mitre 10 expands

    The latest addition to the Woodman's Mitre 10 store network is located at the Marian Town Centre (QLD). It has been open since early June, measures 1200sqm and houses 16,000 products. Owner Kerry Woodman said the Marian store had been three years in planning.

    Michael and Carlene, contestants from television series The Block and Reno Rumble were onsite for the official opening of the store. Other attractions on the day included a jumping castle, face painting, free popcorn and a sausage sizzle. Woodman told the Daily Mercury he is also working with community groups and organisations.
    Record trading for Terang Co-Op

    Terang Co-op increased its revenue by nearly 16% over the 2014-15 reporting period, according to its annual report. The co-op boosted its annual before tax profit to $303,297 during the past 12 months, a significant increase on $70,347 during the 2013-14 financial year. Net income profit after tax was $218,928 compared to $50,146 the previous year.

    Divided into departments, the co-op's hardware sales skyrocketed by 43% due to improved trade as well as a takeover of the former Terang Plumbtec and the reopening of the Camperdown hardware site.

    Rural division sales, incorporating the Dairy Services and CRT rural store, were up 22%. However, general manager Charlie Duynhoven told the Standard the IGA supermarket still contributed to more than half the sales across the co-op, with a 4% increase to $11.6 million. He said: "The changes with the Plumbtec and Camperdown business side of things has really boosted the hardware [business] and the supermarket continues to perform well."
    Growth in wallpaper products

    An Inspirations Paint store in Clarence (NSW) has experienced a sales increase in wallpaper recently. Owner/manager Erin McLachlan said television programs like The Block, House Rules and Reno Rumble had seen the popularity of what was once considered kitsch, come back into fashion. She told the Daily Examiner: "Thankfully we stock some of the same lines as they have featured on those TV shows, as quite often people will see something that night and come in the next day looking for the identical product."

    McLachlan said most people opted for a feature wall over an entire room of wallpaper and these days anyone could put it up thanks to advanced paper quality and adhesives. She said the heritage damask pattern in black and white had been really popular in the Clarence with commercial clients from cafes to doctors' surgeries. She said: "They are also starting to use paper in display homes for feature walls in bedrooms."
    Nest reveals HD security camera
    Nest has launched a camera that senses movement in a user's home
    The Learning Thermostat will issue alerts if temperatures drop to dangerous levels
    The latest Nest Protect smoke alarm will alert the user if it senses danger
    Click to visit the HBT website for more information
    Smart homewares firm Nest has launched a camera that senses movement in a user's home and alerts them via a smartphone app.

    The camera will have a night vision mode and customers will be able to pay for their videos to be archived for up to 30 days, according to the company.

    The Nest Cam will film in high definition and be capable of streaming video live. Nest also announced updates to its thermostat and its smoke detector.
    Alarm indicators

    The existing Nest Protect product, which comprises a smoke and carbon monoxide (CO) detector, has been updated and will alert the user if it senses danger. The Learning Thermostat, for which Nest is perhaps best known, will also issue alerts if temperatures drop to dangerous levels.

    Nest's chief executive Tony Fadell told a press conference in California recently that the carbon monoxide detector will talk to the thermostat to turn off a user's boiler if there is a carbon monoxide leak.

    If Nest Protect detects smoke, it will also communicate with the thermostat, as well as its owner. Each of the products will be integrated with the firm's 5.0 smartphone app.
    Security challenges

    Mark Hung, an analyst with research firm Gartner, said he expected the launch to be the first step in a move by Google towards more smart home devices. In May 2015, Google announced that it had developed an operating system for the internet of things called Brillo.

    But Hung said that security with such appliances remained an issue, adding that there was little in the announcement to soothe his concerns. He said:
    On the security front, the details from Google have been fairly sparse, so we will have to wait until these things are launched and they are able to tell us more. The way to make things secure is to have a platform that is easily updated to prevent the latest hacks.
    Seeking opportunities
    Kitchen sales specialists required at Masters Rockhampton store in QLD
    HNN Sources
    Makita Australia is looking for a national outdoor power equipment manager
    A branch manager is wanted for a retail group based in regional Victoria
    Visit the Mecca Website
    Masters is seeking a kitchen sales design specialist for its Rockhampton (QLD) store; Makita Australia has an opportunity for an experienced professional to lead its outdoor power equipment team; and a branch manager is wanted for a retail group based in regional Victoria.

    To read more about each role, simply click on the image provided.
    Masters requires kitchen knowledge

    Kitchen sales specialists at Masters provide expert product advice, kitchen design solutions and assistance with installations. To be considered for this role, applicants must have previous demonstrated experience in using kitchen design CAD programs and demonstrate a strong customer focus.
    Kitchen specialist role at Masters Rockhampton
    Makita OPE manager

    As the national outdoor power equipment (OPE) manager for Makita, the successful candidate will be able to include conduct market research that will contribute to decisions relating to product ranging and development, pricing, channelling and promotions. They will need to demonstrate prior sales or marketing experience in the Australian OPE industry and report to the national marketing manager.
    Makita is looking for a national outdoor power equipment manager
    Managing multiple stores

    A branch manager for this retail group in regional Victoria must be able to motivate and develop teams. The successful candidate is commercially capable and responsible for the financial and cultural indicators of their stores. He/she will have a strong operational background and understand the building supply chain process.
    A regionally based retailer is searching for a branch manager
    Multi-use cutting tools
    The Wiss W10TM 250mm shop shears have a titanium coating
    Its W10 250mm all-purpose scissors have been precision ground for fine cutting
    The W812S 216mm home and craft scissors feature soft comfort grips
    Click to visit the HBT website for more information
    The new range from Wiss includes two pairs of scissors and three shears. They are tailored to specific uses. Each pair of scissors and shears is exceptionally tough and provides razor-sharp cutting for the shop, home and garage.
    W10TM 250mm shop shears

    Designed to be as tough as the tradespeople that use them, the W10TM 250mm shop shears feature a titanium coating that is three times harder than steel. The full-length steel blade extends right through the scissor for maximum, reinforced strength. The adjustable pivot allows for fine tuning to ensure the most comfortable setting for the user.
    W10T 250mm all-purpose scissors

    Everyday scissors need to be durable enough to tackle a variety of projects, big and small. Wiss has designed the W10 250mm all-purpose scissors with this in mind and have used the same titanium coating as the shop shears. The blades on the all-purpose scissors have been precision ground for smooth, fine cutting and the ergonomic ring has been specifically designed for comfort and easy handling.
    W812S 216mm home & craft scissors

    The W812S 216mm home and craft scissors have soft comfort grips to make long periods of work easy. A serrated lower blade grips materials securely for even and precise cutting. Ideal for cutting paper, fabric, cardboard and craft-materials.
    W7T 175mm utility shears

    The utility shears have spring-loaded blades that reduce fatigue on repeated cuts. It features a wider, heavy-duty stainless steel material, coated with titanium. The shears also have an adjustable pivot, so it can be changed to the most comfortable setting. Fitted with an ergonomic handle for added comfort, the serrated blade grips material for a more even cut. Suitable for cutting cardboard, heavy fabric, rope, leather and plastics.
    Hot links
    A 3D printed house in China by WinSun Decoration Design Engineering
    HNN Sources
    Temple and Webster expects 50% year-on-year growth
    Ikea will trial a small format store in the city of Norwich
    Click to visit the HBT website for more information
    Australians could be living in 3D printed houses with the technology now available; a new sustainability rating tool is being used by a number of councils in Melbourne; Temple and Webster currently dominates the online homewares market; Ikea plans to try out a small-format store in Britain; and True Value signs Puerto Rico's largest hardware retailer. More stories below.

    For further information, simply click on the images provided.
    Local News
    Houses printed in 3D

    Dr Hank Haeusler, senior architecture lecturer at the University of NSW, said building a 3D printed house was technically possible in Australia but the key is finding the right client, developer and builders to construct a property. He said researchers at RMIT had developed a 3D printed structural node that could be used to connect building parts, such as flat concrete walls together.
    A 3D printed house is technically possible in Australia
    Councils measure sustainability

    The Built Environment Sustainability Scorecard, or BESS, is a tool that assesses energy and water efficiency, thermal comfort and overall sustainable performance of buildings and renovations. BESS replaces two older rating tools, SDS and STEPS, which were used to assess non-residential and residential buildings. It is currently being used by local government in Melbourne.
    BESS assesses the sustainable performance of buildings and renovations
    Buying homewares online

    When the Temple and Webster website launched in 2011, the idea was to pursue people who are passionate about homewares with magazine-style imagery, styling advice and product variety. Today, it sends daily emails to one million members containing sales events where 2000 to 3000 items are sold each week. The company expects 50% year-on-year growth.
    Temple and Webster hopes to become a $200 million business by 2018
    International News
    Small format Ikea store

    Ikea intends to try out an "order and collection point" in the city of Norwich as it attempts to extend reach across UK. The Norwich outlet will allow customers to touch and test the product range, speak to home furnishing experts, and make and collect orders made online or in the store. Customers will also be able to make purchases from a limited range of products to take home on the day.
    Ikea will trial a small format store in the city of Norwich in Britain
    True Value in Puerto Rico

    True Value Company announced National Lumber and Hardware as its newest purchasing partner. With more than 50 stores in Puerto Rico and growing, it is the country's largest hardware retailer. The growth of True Value's international presence is a key initiative as the company focuses on its long-term strategic plan.
    Puerto Rico's National Lumber and Hardware
    Home paint trends for 2016

    US paint manufacturer Dunn-Edwards Paints examined colour inspiration in literature, art, film, history and fashion to forecast five colour trends that will be popular in 2016. The trends report called "2016: Home" outlines five paint palettes that can evoke different themes and moods within a home. They evoke romantic nineteenth century settings or spiritual meditation retreats.
    Dunn-Edwards Paints 2016 colour trends
    DIY empire gets bigger

    Lifestyle website Brit + Co is expanding its growing DIY empire by acquiring Snapguide, a mobile service app that allows users to create and share step-by-step, how-to guides. The app's technology will allow Brit & Co users to create their own DIY guides.
    Brit + Co is has acquired Snapguide
    Making light of garden work
    The Fiskars Garden Light tools have optimal geometric angles to reduce strain
    This Fiskars range is designed to be easy-to-use in the backyard and outdoors
    Ergonomic, soft grip handles have also been added to the design
    Click to visit the HBT website for more information
    After extensive research into ergonomics and anthropometry, the Fiskars Garden Light tools have been developed with optimal geometric angles to reduce strain and excessive hard work. The handles sit at a 17-degree angle and the shaft at a 26-degree angle from head of each tool, providing better grip and general working position.

    Manufactured with the high-quality materials, these feather-weight garden implements reduce user fatigue even when a garden demands a lot of work and maintenance. Offering four different tools, the Garden Light range includes a pointed spade, square spade, fork and a 14 steel-pronged rake.

    This Fiskars range is designed to be easy-to-use in the backyard and outdoors, so each tool features aluminium shafts to cut back on bulk and weight without sacrificing durability.

    The spades weigh just 1.2kg, far below the weight of regular spades on the market. The blades, forks and prongs of the Garden Light range are all made from durable and rust-proof stainless steel.

    Ergonomic, soft grip handles have also been added to the design to allow optimal control and comfort.
    Belt maker bucks trends
    Tanya Van Der Water is the 31-year-old chief executive of Buckaroo
    Production of Buckaroo's handmade tool belts is close to 40,000 per year
    It discovered Leatherite, a polymer-coated webbing which has replaced leather in the equestrian industry
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    Production of Buckaroo's handmade tool belts for miners and tradesmen is pushing close to an annual rate of 40,000 belts, thanks to recent contracts from Australian procurement companies working on mining, oil and gas projects in Vanuatu, Papua New Guinea and China. These wholesale customers join Qantas and the Australian Navy, which in turn add to a retail business led by Mitre 10 and Masters where the belts can sell for up to $300 each.

    Despite this success, the shrinking number of Australians with leatherworking skills meant Buckaroo was struggling to fulfill orders and paying a premium for the staff it needed.

    The addition of six staff in 2014 (for a total headcount of 25) increased Buckaroo's annual wages bill well above the $600,000 threshold for payroll tax liability. The resulting $9000 bill was an unwelcome result for a business which only turned over around $1 million in 2013/14. Owner, Tanya Van Der Water explained to BRW:
    It was then I realised I had to find a way to get young people into the industry. I went to Wollongong TAFE and found they'd last offered a leatherworking course 21 years ago.
    Thankfully they agreed to tweak and revive it for us, and we agreed to house the theory and practical at our factory, with the TAFE teacher coming in for classes. It's essentially a factory production qualification with a specialty in leather.

    The first intake in 2014 included six trainees and four more traineeships were filled in April. Van Der Water said:
    We had to do it as a traineeship because leatherwork's not a recognised trade any more. The kids are so keen, I never would have expected it...
    There's modules on things like teamwork, which you realise is a skill that every sixteen-year-old should learn. We use a flow production model so if you don't show up for work on time, everybody falls behind.
    Leather boom

    The rising wage bill has been compounded by soaring leather prices, which rose 30% in a six-month period last year and continue to climb thanks to reduced production and increasing demand from China. Van Der Water said:
    The abattoirs are now holding on to their good skins and sending them over partly processed to China. It's ironic - we have to then buy them back from leather merchants here, even the tanneries have to. My 3am worry is that there'll be a complete world shortage of leather.

    Buckaroo has been forced to innovate to reduce its reliance on leather. It discovered Leatherite, inventors of a polymer-coated webbing which has replaced leather in the equestrian industry, and is now blended into Buckaroo's toolbelts as well. She said:
    It's expensive but it's easier to work with than leather, and has ended up making our belts perform better. You can expose it to extremes of heat and snow and it won't give like leather will. The guys are very protective, they won't even let us into their factory but of course they've still had cheap imitations come we have with our toolbelts.

    Buckaroo has also replaced leather padding on its belts with natural wool felt, and taken to "piggybacking" off what's left of the Australian shoe industry. Van Der Water said:
    An RM Williams or a Rossi Boots in Adelaide require very fine leather, so if they reject a skin we can always use their seconds.
    Saying "no"

    The next challenge for Buckaroo is to expand capacity enough to fulfill existing orders and allow for new contracts. Van Der Water said:
    Every year we say no to Bunnings. We'd have to be able to supply 250 stores in one hit and we couldn't do that today without the rest of the business falling apart.

    Top priority is another oscillating cutting machine. Buckaroo received a government grant to help pay for their first in 2007, but will front the $150,000 price tag for another of the Italian-made machines itself. Cashflow should cover it, but the problem is the wait. She said:
    An issue with Australia no longer being seen as a manufacturing country is that we are pushed to the back of the line on orders like this. There's one factory in Brazil that has 150 of these on order, and we've been told we won't get ours for two years.

    Buckaroo is also in the market for some robotic help. Van Der Water and her executive team have sketched designs for a machine that would perform pre-production tasks like moving cut leather samples from one place to another, a task that can take half a day for a human. Van Der Water said:
    Now we just need somebody to make it.

    Buckaroo was founded in Wollongong (NSW) in 1971 by Van Der Water's father, Kenneth. She has been chief executive since her father's illness-related departure from the business in 2012.
    Caulking brand wins packaging award
    Through the Roof! won awards at the 2015 NRHA packaging and merchandising awards
    Judges praised Sashco's Through the Roof's "bold type" that was "easy to read"
    The North American Retail Hardware Association holds its awards every year
    Click to visit the ITW website for move information
    Sashco has been on a mission to change the perception that caulking aisles at hardware stores are confusing and bland. Bins full of caulking cartridges that all look the same can overwhelm and frustrate DIYers.

    So the company was honoured to be acknowledged for its efforts at the 2015 North American Retail Hardware Association (NRHA) packaging and merchandising awards. Sashco's Through the Roof! quart (one litre) container received a Silver Packaging Award, and the Fully Loaded Retail Partner (FLRP) merchandising system received an Honorable Mention.

    All winners were recognised at the recent National Hardware Show in Las Vegas where the submissions were on display for all in attendance.

    Judges praised Through the Roof's "bold type" that was "easy to read" along with the fact the "message is clear on what it does." The FLRP merchandising system was hailed for its bright, attention-grabbing colours that differentiate the products, as well as the helpful signage and hands-on tools that make in-store purchases easy. Shari Bundy, marketing communications supervisor at Sashco said:
    We're dedicated to revitalising caulk and sealant aisles...making them a bit more vibrant and easier to navigate for the typical DIYer. We're excited to take the feedback from the judges and incorporate it into our future designs as we strive to make this a reality.

    For nearly 80 years, Colorado-based Sashco's passion has been providing high-performance solutions to everyday sealing problems. It has been making these solutions easy to find and a bit more fun to look at through superior design and merchandising.
    UK's Tradepoint introduces design tool
    Tradepoint Spaces provides clients with a visual of how their finished project will look
    DIY Week
    Tradepoint is another Kingfisher business
    Spaces has already been rolled out at TradePoint outlets across the UK
    Click to visit the ITW website for move information
    Tradepoint Spaces will enable tradesmen to show clients an exact visual of how their finished project could look in a 3D rendered view.

    According to Tradepoint, customers can spend an average of two hours designing a kitchen but the new online tool will allow tradesmen to create a design for their client within minutes.

    A built-in messaging system lets them to stay in contact during a project. This means the client can share the design with their friends and family for added input. Clients can change the colour, shape and layout of their room design then share their updated design with the tradesperson.

    Alternatively, if a client needs a product replaced at a later date, tradies can log into TradePoint Spaces and find the exact product required for the job.

    The new design tool also offers a dual quote feature. Each project generates a full, itemised parts list and throughout the design process, TradePoint Spaces will calculate the price in real time.

    The tool has been designed in collaboration with 2020 Technologies, a specialist interior design software company. Tradepoint director Mark Cooke said:
    Spaces is an exciting new development in design and offers some real benefits for tradesmen. Only through Tradepoint Spaces can tradesmen offer clients a complete kitchen design in minutes, as well as allowing them to be flexible to change layouts and designs to suit client's desires.

    Spaces has already been rolled out at TradePoint outlets across the UK and available for members to sign up and use.

    Tradepoint is a Kingfisher business and is an in-store offer for trades available at large B&Q stores.
    More than a smart flashlight
    The Fogo flashlight has been a favourite on crowdfunding site, Kickstarter
    Digital Trends
    The flashlight has a GPS built into it
    Bluetooth allows users connect with headphones or fitness monitors
    Click to visit the HBT website for more information
    The Fogo flashlight has been dubbed the "Swiss Army Knife" of personal lighting. In addition to its modes of operation, it has an adaptive lighting setting to focus and adjust the beam for speed and distance.

    The flashlight can be set it to blink when moved, making to easier to find in the dark. There are two interchangeable reflectors that screw off the flashlight head; one for a narrow beam and one for wide.

    It runs on two 3,500mAh batteries, and comes with a power management setting that lets the Fogo stretch the battery for the length of a trip. Users can tell it how long they think they'll be out on their adventure and the Fogo will adjust the brightness and electronics settings to make sure they have enough juice to last. The batteries are also replaceable and rechargeable.

    As a combination product, the Fogo can be plugged into something else such as a camp stove and be charged up. At the same time, it can be used to charge other electric camping gear.

    This flashlight also has a GPS built into it. Via the small black and white LCD screen, users can download and save their own waypoints, creating and saving their digital maps. And if they wander off a selected route, the flashlight will blink to warn them they losing the path.

    Other features include Bluetooth that lets users connect with headphones or fitness monitors. It has a clock with timer and an alarm, as well as a pedometer.

    At the end of the Fogo is a screw-off USB/5V/UART port where customers can add on different peripherals, like a laser rangefinder, an avalanche beacon, or even a walkie-talkie - a microphone and speaker that work with the messenger chip.

    The messenger chip allows users to use the LCD screen to send text messages to other Fogo users. The messages can show up on the map over the sender's location at the time of the message.

    The messages app - which comes preloaded along with the clock, compass, activity tracker, and maps - is just the tip of the iceberg, since the open operating system allows for app-building. A good one so far is a Morse code translator that turns typed messages into blinks of the flashlight.

    Its other unexpected function is as a basic bike computer. Since it has a built in accelerometer and GPS, this flashlight can track your speed, distance, elevation, and altitude changes.

    Users can download their activity to their phone once they've finished. The automatic brightness adjustment works well for cruising through the night.

    There is a bike mount available so it can be placed handlebars with a simple quarter twist. The Fogo is waterproof up to about six feet and impact resistant.
    Sydney apartment construction surge
    The Renwick Street development in Redfern will create at least 20 more residences
    Daily Telegraph
    Central Park will have around 2200 residential apartments and 900 student dwellings
    Pier 99 in Pyrmont which will consist of 71 apartments
    Give to Amnesty International
    A new residential development in Redfern is set to bring at least 20 more residences to Renwick Street once it has been completed. Renwick Apartments will span four levels and contain a mix of one and two-bedroom units and two-bedroom penthouses.

    The development is one of the many projects that are expected to be completed within the next five years in Sydney's inner city.

    According to City of Sydney council, around 100 new homes are being completed in the local government area (LGA) each week.

    Over the past five years, there has been an average of 1900 dwellings built each year. Within the next five years, this number is expected to grow to almost 5000 per year.

    During 2017 and 2018 alone, the City of Sydney is expecting 8000 dwellings to be completed. More apartments are being built in the City of Sydney LGA than in any other council areas in Sydney.

    It saw 2848 dwellings built between July 2014 and January 2015 while the second highest numbers were seen in Blacktown City Council with 924 dwellings built. Around half of the dwellings completed in the City of Sydney area during this time were built in the Green Square, Central Park and Harold Park developments.

    Within the next four years, the Green Square development alone will consist of around 10,000 apartments once completed. Central Park will feature around 2200 residential apartments and 900 student dwellings by the time it is completed. Barangaroo South will have 900 apartments and Darling Square in Darling Harbour will feature 1500 units.

    Other smaller developments set to be built in the inner-city include The Foveaux in Surry Hills which will have 55 apartments, East Central also in Surry Hills, with 42 apartments and Pier 99 in Pyrmont which will consist of 71 apartments.

    With the number of dwellings expected to be built within the next five years, a spike in the area's population is also expected. City of Sydney strategic research manager, Phil Raskall, said the City's population was on track to hit 250,000 by 2022. He told the Daily Telegraph:
    That's three years ahead of earlier forecasts which predicted the City would hit a quarter of a million people in 2025.

    Lord Mayor Clover Moore said the council was working closely with developers and business and spending $1.94 billion over the next decade to build some of the infrastructure needed to make these high density areas liveable. However she says more needs to be done. She said:
    The NSW Government needs a clearer plan for supporting urban renewal. It must urgently increase its investment in high-growth areas like Green Square so essential infrastructure such as public transport, schools and child care keep up with growth.

    Social researcher Mark McCrindle said an entire generation is now making the shift towards inner-city living, with a lust for a creative and entrepreneurial lifestyle. He said:
    The 20 and 30-somethings are leaving the suburbs and heading to inner-city suburbs. They want a lifestyle close to work, a walkable lifestyle and cafe culture.

    McCrindle said more than half of housing approvals are for medium and high density developments. He said:
    The Aussie dream has changed. It's not having a Hills hoist, shed and garage with two cars anymore. It's the walkable way of life and as a result we've seen an increase in scooters, bikes and public transport.

    He said the inner-city suburbs were now seeing more generation diversity. Where once only single people and a much older generation were living in the city, it's now becoming more family orientated. He said:
    We're seeing families come in and schools that were struggling for numbers opening again.
    HNN Index for week ending 19 June 2015
    HNN Home Improvement Index for week ending 19 June 2015
    HNN Sources
    Downer EDI has been signed by NBN Co as a construction partner
    Lend Lease is part of a proposal to build 2,700 residential units in Chicago
    Click to visit the HBT website for more information
    The HNN Home Improvement Index for the week ending 19 June 2015 fell by six points to reach 999.40, close to parity with the 1000 score which reflects the market on 1 July 2014. Both Wesfarmers and Woolworths declined through the week, while the surprise outstanding upside performer was Metcash, which gained 5.9% on the market.

    The underlying ASX 200 index climbed for the week, ending nearly 52 points up at 5,597.0, or 1,041.3 on the HNN Index adjusted scale.
    Charter Hall
    Charter Hall in battle for retail assets

    Charter Hall Group has added Katherine Oasis Shopping Centre in the Northern Territory to its portfolio. The Katherine centre is being sold by Federation Centres, which held it at about $27.5m on an 8.5 per cent capitalisation rate, at the end of December. The centre, marketed by Savills, spans 7162sqm.
    Charter Hall joins fray for hotly contested retail assets - The Australian
    CIMIC in US$500m debt buyback

    CIMIC Group, formerly known as Leighton Holdings, has offered to buy back up to US$500 million of debt due to mature in 2022, after the group's John Holland divestment generated surplus funds. The buyback forms a part of CIMIC's strategic review and will help to reduce the group's interest costs.
    CIMIC's US$500m debt buyback - Business Spectator
    Downer EDI
    Downer signs contract with NBN Co

    Downer EDI is one of the construction partners that have been signed by NBN Co under a new contracting model. The contracts cover around four million homes and businesses which are scheduled to be connected with fibre to the node, fibre to the building or fibre to the premises.
    NBN gets new contract model - Sourceable
    Fletcher Building
    NZ$550 million sale plan for Fletcher

    Fletcher Building announced it intended to divest itself of Rocla Quarries, its 50% joint venture stake in Sims Pacific Metals, Fletcher Aluminium, Tasman Sinkware and Fletcher Insulation. It also signalled more investment in Tradelink, Laminex, Formica and residential construction.
    NZ$550 million sale plan for Fletcher - Otago Daily Times
    Lend Lease
    Lend Lease in Chicago residential plan

    Lend Lease Group in a joint venture with Chicago developer CMK has submitted plans to build five towers with nearly 2,700 residential units on a 7.3-acre riverside parcel of land in the South Loop neighbourhood of Chicago. The largest building, on the north end of the site, would have 47 stories and include 626 units.
    2,700 homes planned on South Loop site - Crain's Chicago Business
    Indie store update
    The building where JJ Glass & Co and a True Value store is located is for sale. Photo credit: The Rural
    HNN Sources
    The Flower Power garden centre in Bass Hill (NSW) will close
    United Tools Wynnum in Queensland is destroyed by fire
    Click to visit the ITW website for move information
    The building that houses JJ Glass & Co and a True Value store is for sale; Bass Hill Flower Power garden centre in New South Wales is closing; and extensive damage was done to United Tools Wynnum in Queensland after a fire.
    Retail property investment

    A retail property where JJ Glass & Co and True Value is located in Junee (NSW) is currently for sale by tender. Real estate company Fitzpatrick's PCI Commercial is describing it as a secure property investment with well-maintained buildings on substantial land holdings in the heart of Junee. Leased to the Riverina Co-Op for five years with two further five-year options, the property has a net rental return of $55,000 per annum.

    It has two frontages and land areas of 1386sqm and 931sqm, and features a large hardware and agricultural products showroom. There is a large skillion shed with drive through access leading to a hardstand area for pallet loading and unloading. There are also two adjoining clear-span sheds with sliding doors fronting onto a concrete hardstand yard.
    Flower Power store closing

    Flower Power in Bass Hill (NSW) will close after 44 years of trading. The Bass Hill store is the oldest in the chain of 15 garden centres across Sydney and Melbourne. It will close at the end of June after opening in 1971.

    The nursery business pointed to the lack of space to expand its Bass Hill store, the smallest in size within the network, as the reason for the closure. Flower Power is looking to diversify and compete in the market of large home improvement retailers, such as Masters and Bunnings.

    Chief executive John Sammut said while the company was "sad to see one of the original stores close after many years", they were looking forward to the next phase. The garden centre innovated through drive-though landscape yards, introducing soil and sand bins, a trailer service and home deliveries.
    United Tools store gutted by fire

    A fire has wreaked enormous damage on United Tools Wynnum, also known as Bayside Power Tools. The back part of the shop had been destroyed while the rest of the shop, including stock, were smoke or water damaged. Owners Garry and Sylvia Turpin are still unsure of the true extent of the damage as they wait for assessors to gauge the damage. They are grateful no-one was hurt.

    Sylvia Turpin said they were grateful for the help of their franchisee, United Tools, and people in the industry who had offered them storage. She said they would have to close for a time but hoped to reopen as soon as possible. Turpin told the Courier Mail: "We have loyal customers who we're sure will stick by us when we're open and running again."
    Seeking opportunities
    Training to become a manager of a big box store in Adelaide
    HNN Sources
    A retail operations manager role for a building supply group in regional Victoria
    Combined Rural Traders requires a state manager to join its Queensland team
    Visit the Mecca Website
    A chance to operate a large format store in South Australia; a retail manager to contribute to business strategy and development in Gippsland (VIC); and a Queensland state manager role at Combined Rural Traders.

    To read more about each role, simply click on the image provided.
    Large format store manager

    An opportunity exists for an "enthusiastic and driven" manager to learn the essentials needed to become a manager of a big box store. The Adelaide-based role involves overseeing manufacturing, retail and trade customers. Intense training is provided. The ideal candidate must be able to "empower staff" and have a proven ability to sell.
    Big box store manager required in Adelaide
    Driving change and retail performance

    A long established building supply group in regional Victoria is looking for a retail operations manager in the face of growing competition. The business is searching for an individual with skills in retail leadership and team empowerment, and commercial acumen. The role involves working closely with the CEO to deliver strategic objectives.
    A retail operations manager needed at a building supply company
    Rural retail management

    Combined Rural Traders requires a state manager to join its Queensland team. Reporting to the general manager, the successful candidate will be responsible for the Queensland operations and a footprint of 100 stores. It involves managing relationships and providing support and direction to retailers. The individual should have strong experience in a similar multi site role.
    State manager wanted at Combined Rural Traders in QLD
    Restoration Hardware Q1 2015 results
    Restoration Hardware quarterly report video
    Restoration Hardware
    RH Modern as explained by Apartment Therapy
    A Restoration Hardware catalogue
    Click to visit the ITW website for move information
    US home improvement retailer Restoration Hardware (RH) has reported a solid first quarter for 2015. Net revenue was USD 422.4 million, up from USD 366.3 million in the previous corresponding period (pcp), an increase of over 15%. Adjusted net income was USD 9.8 million, up from USD 7.2 million in the pcp, an increase of 37.6%.

    The company has revised upwards its forecast for the current financial year. Restoration Hardware's CEO, Gary Friedman, stated:
    The business momentum we are experiencing thus far in 2015, coupled with the launch of new businesses and the opening of four next generation Design Galleries later this year, gives us further confidence in our financial outlook for fiscal 2015. We are increasing our adjusted net income guidance for fiscal 2015 to growth in the range of 30% to 36% - above our long term target of mid to high twenties - and now expect net revenues to grow in the range of 15% to 17%.

    The company is continuing its ambitious project to expand its current physical retail footprint, and backing this up with the construction of new distribution centres, including one in Northern California, which is due to open before September 2015.

    While at first glance, the business of Restoration Hardware might seem to have little bearing on standard hardware/home improvement retail - it's unlikely even the more adventurous retailers will soon stock $10,000 divans next to their range of outdoor line trimmers - closer examination reveals that the company is built on many of the same principles as expanded hardware stores.

    In an interesting video, Mr Friedman explains that what Restoration Hardware has done is to bring to bear the same supply chain and sourcing logistics as those that have enabled companies such as Australia's Wesfarmers-owned Bunnings chain to succeed.

    The difference has been that instead of exploring the low-cost manufacturing capacity of regions such as China, RH set out to explore how to source high quality goods from the nations were formerly cut off behind the USSR's "iron curtain".

    About this source of goods, Mr Friedman says (in a video presentation):
    It is a market that has many layers of opacity, and very [few] synergies. Opacity as it relates to customer accessibility, availability and pricing, and an absence of synergies due to the fragmentation of distribution points, buying power and scale. We like to say there are those with taste and no scale, and those with scale and no taste.
    RH Modern

    For autumn 2015, the company will be launching a new line of products, an extension brand named "RH Modern". This consists of furniture that is directly based on, or inspired by, furniture from the mid-twentieth century.

    Again, Mr Friedman has strong business reasons for venturing into this area. As he states in the video:
    RH modern will have a retail footprint that grows by up to 100,000 square feet a year, and will be a disruptive force in the highly fragmented Modern market.

    In answering analysts' questions at the presentation of the quarterly report, Mr Friedman expanded further on the nature of this disruption:
    I think the disruptive pricing models that we've had in the core business will be the same in the Modern category. I think you are going to see versus the price points that you see in the Modern market or to the trade were going to be a significant value and were going to have, I believe, overall very disruptive pricing position in the marketplace.
    I think you're going to have a lot of people that are buying Modern today that are having a hard time buying it and finding the price points very high and the value creation very low because the lack of synergy and scale that exists. And so that's going to create - I think that's going to create market share gains for us there. But just as importantly I believe, it's going to create a new market. I think it's going to motivate people who maybe weren't thinking about furnishing their home or buying new furniture furnishings.

    Mr Friedman also added further detail in the video:
    As you may know the furnishing market for Modern design has historically been small, and some would say insignificant. What you may not know, is who or what drives the trends in our industry. We believe that there are multiple trends that are driving a shift towards modernism, and [these] support our thesis that we can create a significant and new market, much larger than at any time in history.

    Mr Friedman identifies four drivers behind the emergence of Modern as significant force in the furniture industry. The first is the progression of possessions from estate sales, to antique resellers, and from there to reproduction manufacturers.

    The second driver is architecture itself, which has drifted more towards the Modern since the mid-1990s.

    The third driver is generational. He sees the Millennial generation as one fundamentally rooted in Modern values, and a viable market as they begin to move into their homemaking years. This in turn, in Mr Friedman's view, will drive similar purchases by the Baby Boomer generation, as they strive to stay relevant and youthful in their approach to life.

    The final, fourth driver is the move towards more urban living spaces. Mr Friedman sees this as a move towards "Modern living", as people adapt the inner spaces of their homes to match the exterior reality of where they now live.

    Mr Friedman also makes a strong case for retail that escapes from the typical big box confinement. He believes that a lack of imagination is responsible for much of the decline in physical store retail, rather than the unchecked rise of internet e-commerce.

    As an example of this he points to the transformation of a retail space RH has brought about in Denver, Colorado. Below is the "before" picture of the building:
    Before picture

    RH tore down that building, and constructed the building shown below, which is replete with 112 sets of French doors, a conservatory and rooftop park:
    The Gallery at Cherry Creek, Denver

    There has been some rather unfair and unkind commentary on both Mr Friedman and RH in the US popular and financial press. RH is not the product of some "flakey", Northern California sensibility, but a clearly thought-out, coherent strategy, that is leveraging the capacity of some regions to produce high quality items at reasonable cost and scale to disrupt markets that have not even clearly defined as formal markets.

    It's a little interesting to observe the differences that obtain between support for other makers of high-end luxury goods, such as Mercedes-Benz, and the distinctions applied to the makers of high-end home furnishings.

    In fact, the core trend that RH is "riding" is not to cater to a lot of very wealthy people, because there are more of them about these days, due to a strong divergence in incomes.

    It is about the trend that people are increasingly valuing their homes more than they have in the past. As technology increases it value, as people move to more urban areas, it is possible to envisage taking away the $100k automobile, and replacing it with a share-car instead. That "freed" personal capital would most likely come to be spent on designing a more comfortable, and a more valuable home.

    HNN would like to sincerely thank the investment website Seeking Alpha for making the transcript of the Restoration Hardware earnings call available for republication. It is a great contribution to improving the quality of company reporting on the internet.

    To view the complete transcript of the earnings call, please click on the link below.
    Restoration Hardware - Seeking Alpha
    Home Retail Group Q1 2015-16 results
    The Home Retail Group business model
    Home Retail Group
    Home Retail strategy report for FY2015
    Homebase is open to an amount of haggling
    Click to visit the ITW website for move information
    UK-based Home Retail Group has reported mixed results for its first quarter ending 30 May 2015. Its Argos electronics retailer division continued to see sales fall, while its Homebase home improvement retailer reported better than expected results.

    Argos reported sales of GBP846 million, a fall of 2.6% on the previous corresponding period (pcp). Like-for-like (comp) sales fell by 3.9%. Home Retail said the fall was due to a decline in demand for electrical goods, especially televisions and tablet computers.

    The CEO of Home Retail, John Walden, has put in place a plan to transform Argos into a largely e-commerce driven company. He stated that:
    We continue to expect that sales will be challenging during the first half at Argos, but we look forward to a stronger second half as we progress the Transformation Plan and introduce new propositions more broadly to the market.

    The news for Homebase was better. Total sales fell by 1.6% over the pcp, coming in at GBP438 million. This was driven by the closure of 17 stores during the quarter.

    However, like-for-like sales grew by 5.4%, a strong improvement over the 0.8% decline in the previous quarter. Some of this improvement was driven by wide-ranging stock clearance sales. These sales also sent the company's gross margin down by 1.75%.

    While the Homebase result was better than expected, analysts continue to see the company as facing difficulties. On the more positive side of the equation is continued growth in housing demand in the UK.
    Vegetable seed varieties for spring
    Eggplant Ping Tung Long is a very high yielding seed variety
    Johnsons Seeds Australia
    Eggplant Turkish Orange produces abundant yields of round, red-orange fruits
    The Okra Burgundy seed variety tolerates cooler growing conditions
    Click to visit the HBT website for more information
    Johnsons World Kitchen has extended its range of vegetable and herb seed varieties for the upcoming spring season. Aaron Whitehouse, managing director of Johnsons Seeds (now part of Mr Fothergill's) said:
    Australian home gardeners are increasingly enthusiastic about growing new varieties. They see exciting and exotic vegetables and herbs used in cooking shows and magazines, but can't find them in the supermarket.
    By growing your own you get a much greater choice - plus the benefits of freshness and ability to control what goes into your food.

    The new varieties include:
    Eggplant Ping Tung Long

    A high yielding variety that produces up to 20 long and narrow fruits per plant. The amethyst coloured skin is very thin and needs no peeling. When cooked, the white flesh has a creamy texture that is never bitter. Characterised as having a high tolerance to disease, heat and moisture.
    Eggplant Turkish Orange

    Native to Turkey, this variety has become a favourite of Italian gardeners and chefs. The petite 18-22-inch plants produce abundant yields of round, red-orange 3-inch fruits that are sweeter when young and still slightly green. Once orange, they are excellent for stuffing.
    Okra Burgundy

    This unusual member of the hibiscus family has an important part in African, Indian and Mediterranean cuisine, as well as in South America, where the red variant was developed. Very prolific and tolerates cooler growing conditions.
    Tomato Thai Pink Egg

    A grape tomato from Thailand. Produces very large quantities of brilliant, jade-pink and sweet fruits to 40mm. Disease and cracking resistant variety even in areas of heavy rain. Well suited for the different Australian climates, and tolerates heat and humidity better than most tomatoes.
    New boss for B&Q
    B&Q UK & Ireland has a new chief executive
    SuperBrugsen is one of the largest retail chains in Denmark with 250 stores
    Veronique Laury, chief executive of Kingfisher
    Visit the Mecca Website
    Kingfisher recently announced that Michael Loeve has been appointed chief executive of B&Q UK & Ireland. He will be moving from his native Denmark in September to join the business. A company statement said:
    Michael is an experienced retailer, with 12 years' experience in senior roles across retail operations, supply chain, IT and strategy. He has a strong track record of leading successful business transformation, focusing on customer needs whilst remaining close to the operations.
    Michael Loeve is the newly appointed chief executive of B&Q

    Loeve leaves Coop Danmark, Denmark's largest supermarket group which has around 1,200 stores, to join B&Q. He made a name for himself as group retail director by boosting sales at the company to GBP3.8 billion.

    Loeve is used to operating in tough markets, with pressure from discounters and premium retailers, according to a Kingfisher spokesman. He was previously managing director of SuperBrugsen, which is part of Coop Danmark and one of the largest retail chains in the country with 250 stores.

    In his three years at the helm of SuperBrugsen, Loeve drove up profits from GBP600,000 to GBP10 million in 2014.

    Prior to this, he worked at Copenhagen Airports for two years as vice president of operations, until 2011.

    Commenting on the appointment, Veronique Laury, chief executive of Kingfisher, said:
    As part of our strategic update in March, we are moving at pace with our 'One' Kingfisher plan to create a single, unified company where customer needs come first.
    I am delighted to welcome Michael to Kingfisher. He is an experienced retailer who will form an important part of the new diverse international team we are putting together at Kingfisher.

    Loeve said:
    I am delighted to be joining Kingfisher at such an exciting time in its development. Home improvement is a great market with huge potential and B&Q has a strong position within it, however there is more that we can do to maximise its strengths.
    With a better and more unique offer at good prices where customer needs come first, all backed by the scale of a unified Kingfisher, we will transform and grow B&Q, helping our customers to have better homes and better lives.

    Loeve's appointment seems to suggest that Kingfisher will keep the B&Q brand alive for the foreseeable future. Earlier this year, Laury announced plans to close 60 B&Q stores in Britain, which raised the prospect of the DIY brand disappearing as part of an overhaul of the company.

    It was her first major strategic decision since replacing Sir Ian Cheshire as boss of the company, and meant that one in six B&Q shops will close as the retailer battles slow sales in the DIY market in the UK. The closures will take place over the next two years and puts 3,000 jobs at risk.

    The announcement came just months after B&Q's rival Homebase said it would close one in four stores.

    Despite the DIY industry's woes, profits at Kingfisher edged higher during the first 13 weeks of the this financial year on the back of a strong performance at its Screwfix hardware chain.
    Instant lighting charcoal
    The latest charcoal product from Duraflame features fast, one-match lighting
    The charcoal has a unique hexagonal shape
    Duraflame is a privately held, family-owned company based in California
    Click to visit the HBT website for more information
    The newest charcoal from Duraflame features fast, one-match lighting and a unique hexagonal shape that generates significantly hotter temperatures for longer than standard briquets.

    Duraflame's QuickSear(r) Design provides maximum surface area and a channel to increase airflow both through and around the charcoal. The result is hotter searing temperatures and charcoal that's ready for cooking in just 10 minutes.

    Unlike the traditional pillow-shaped briquet, the re-engineered hexagon shaped charcoal allows for superior searing of grilled foods for browned and caramelised crusts.

    The key to infusing grilled foods with rich, smoky flavour is to achieve the perfect sear. The pursuit of those beautiful, dark brown seared-hash marks requires quick cooking at high temperatures. While reaching searing temperatures is nearly impossible with a standard briquet, Instant Lighting Charcoal provides exceptionally hot temperatures for optimal searing and steakhouse quality results.

    Duraflame Instant Lighting Charcoal eliminates the need for additional lighter fluid, and produces low volatile organic compound (VOC) emissions. Chris Caron, vice president for Duraflame said:
    This product takes backyard grilling to the next level by offering an easy to use charcoal capable of reaching the high temperatures needed for searing, but are often only achievable using lump charcoal. Now, expert and novice grillers alike can enjoy the flavour of gourmet grilling.

    Duraflame is a privately held, family-owned company that has been in business for more than 40 years. The company produces and distributes fire logs, fire starters, fireplace accessories, barbecue and outdoor products.
    Big box update
    Bundaberg Masters store developer asks for another extension of its start date
    HNN Sources
    Bunnings has confirmed its commitment to Tasmania
    Masters gains support from a property development lobby group
    Click to visit the ITW website for move information
    The developer of the Masters Bundaberg store has made another request to extend its construction start date; Bunnings prepares to launch its new Glenorchy store in Tasmania; and a lobby group believes current planning and zoning systems limit the potential of big box retailers like Masters.
    Masters asks for extension

    Bundaberg Regional Council has received a request from the developer of the local Masters store to further extend the start date of construction to August 31, according to the Gladstone Observer. This is the second request for an extension, following a decision by council in March 2015 to grant the developer an extension of three months to the agreed start and completion dates.

    Under the current infrastructure agreement, the Masters development is required to commence works by June 30 and have development completed by May 30, 2016 in order to take advantage of the maximum discount on the council imposed infrastructure charges. To qualify for the discount which is worth $1 million, the project was originally required to be commenced by the end of March.
    Bunnings' plans for Tassie

    Bunnings managing director, John Gillam says the company has a long-term future in Tasmania. The big box retailer will take its total staffing complement in the state to more than 800 by the time three new stores are built over the next few years or so. Bunnings has reaffirmed its commitment as it prepares to launch its new Glenorchy store on the Brooker Highway.

    Gillam says it is spending $77 million. He told Hobart's 7HO FM station: "Looking out 10 - 20 years, we're very confident that we'll have successful businesses. We're pleased to be able to confirm that stores in Kingston and Mornington in the wider Hobart region and right up the top in Devonport are right on the radar and will proceed in the next 24 months."

    Bunnings has invested around $115 million in Tasmania in the past two years, including the Glenorchy store and new warehouses in Burnie and North Launceston which opened last year.
    Zoning system limiting Masters

    Australia's peak lobby group for property developers, Urban Taskforce, believes some of the problems being experienced by Woolworths and its home improvement arm Masters can partly be attributed to local and state governments. Specifically, the paucity of store locations in New South Wales available for Masters sites.

    Urban Taskforce claims the planning and zoning system is slowing down the roll out of large megastores and made the availability of new sites more difficult. Chief executive, Chris Johnson said: "Behind the current financial concerns affecting Woolworths are planning issues that have limited where new retail outlets can be located. Due to the restrictive land use zones of the NSW planning system, there is an undersupply of appropriately zoned land to accommodate stores with a large floor plate, such as Masters. This is leading to a restriction on the location of outlets therefore reducing customer access. These restrictions are only leading to more car usage across metropolitan Sydney as customers have to travel longer distances to purchase goods."

    Developers also say businesses like Masters are forced to pursue complex and lengthy rezoning processes, creating significant delays and investment uncertainty.

    To read more, go to Government News:
    Government blamed for Woolworths woe
    Hot links
    Milwaukee Power Tools sponsorship of Surfing Australia will continue in 2015
    HNN Sources
    Adairs made a strong debut on the ASX
    The Cabot Woodcare range is being rolled out through more Ace stores in the US
    Click to visit the HBT website for more information
    An additional roundup of home improvement stories. Milwaukee Power Tools has renewed its partnership with Surfing Australia for 2015; shares in Adairs closed more than 10% higher after its first day of trade; the Australian National Retailers' Association changes its name to the Retail Council; Cabot Exterior Woodcare range will be distributed through additional Ace Hardware stores in the US; and Gorilla Glue gains shelf space in UK's Wilko stores. More stories below.

    For further information, simply click on the images provided.
    Local News
    Milwaukee teams up with Surfing Australia

    Milwaukee Power Tools' sponsorship of Surfing Australia will primarily involve a digital video series that will bring together professional tool users with a shared passion for surfing. Titled "Ultimate Power Surfers", it will provide fans with an insight into the lives of professional tradesmen who combine their love for surfing with their passion for working with Milwaukee power tools and accessories.
    Milwaukee Power Tools sponsorship of Surfing Australia will continue in 2015
    Adairs' strong listing

    Homewares retailer Adairs' initial public offer raised $218.1 million through a combination of sale of shares by existing investors and issue of new shares, in a deal managed by UBS and Goldman Sachs. The company plans to add between eight and 12 stores a year, with hopes to expand internationally with stores in New Zealand and South Africa.
    Adairs made a strong debut on the ASX
    Name change for ANRA

    The Australian National Retailers' Association has become the Retail Council. As part of its new configuration, Peter Birtles, managing director and CEO of Super Retail Group has been elected to the position of chair of the board. To mark its renaming, the Retail Council is hosting the Women in Retail Business and Leadership Seminar Series, which will run from July to November.
    ANRA has become the Retail Council
    Cabot stocked in Ace Hardware

    Cabot Woodcare has teamed up with Ace Hardware to expand the distribution of the company's range to more than 2,000 Ace Hardware stores across the US. In addition to the product offerings, the Cabot team is installing new displays in many Ace stores to increase the shopability of the category.
    Cabot Woodcare range being rolled out through Ace stores
    International News
    Gorilla Glue on Wilko shelves

    Adhesives supplier Gorilla Glue now has its products stocked in 184 Wilko stores in the UK. Wilko buyer Lloyd Taylor said: "The brand fits perfectly into our DIY category space and the inclusion of Gorilla Glue is a great opportunity to show just how versatile these products are..."
    Gorilla Glue has a presence on Wilko shelves in the UK
    IKEA getting more personal

    IKEA in the US plans to make 1,000 house calls a year at customers' homes, poking through their cabinets, observing how their kids play and determining the biggest headaches people encounter when running their households. The goal: learn what customers in different markets need and make stores more local and personalised.
    IKEA US plans to make 1,000 house calls a year
    True Value's data solution

    Data management company Edgenet has been chose by True Value Hardware to manage and standardise its supplier product data to meet both internal and consumer demand. Edgenet will be working with suppliers to provide a catalyst for True Value's retail and e-commerce strategy.
    True Value is using Edgenet to manage its product data
    PPG adds to industrial coatings portfolio

    PPG Industries has reached an agreement to acquire IVC Industrial Coatings, a US-based specialty powder and liquid coatings manufacturer. In 2014, it had sales of over US$100 million. The transaction is expected to close in the third quarter, subject to customary closing conditions. Financial terms were not disclosed.
    PPG buys industrial coatings company

    Velcro to acquire specialty weaving company

    Velcro Companies has purchased Alfatex, a manufacturer of hook and loop fasteners in the medical, automotive and industrial sectors, and Gavaert which manufactures elastic and rigid webbings for the apparel industry. The move will increase Velcro's presence in Europe.
    Velcro has acquired a specialty weaving company
    Investment for Gracious Home stores

    A former Wal-Mart executive, Dottie Mattison has bought a majority stake in New York-based home goods stores, Gracious Home. Along with business partner, David Mitchell, they plan to expand the chain's e-commerce business, improve customer service and scout for locations outside New York.
    New owners for Gracious Homes chain in New York
    Restore rusting metal objects
    Hammerite Rust Remover Gel formulation is ideal for fences, hinges, gates and doors
    The formula is non-harmful, safe on skin and will not damage paintwork
    The new website has how-to videos, rust removal tips and project inspiration
    Click to visit the HBT website for more information
    The Hammerite Rust Remover is specially developed for the safe and effective removal of rust from vertical surfaces and intricate metal items. It is available in both gel and dip formulations.

    Hammerite Rust Remover Dip is ideal for loose metal objects such as car parts, nuts, bolts and garden tools. Users simply immerse the metal items in the dip and within three hours of soaking, the items will be rust-free. They need to follow with a rinse using fresh water and clean off excess rust.

    For metal objects that are in-built or vertical such as fences, hinges, gates and doors, the Hammerite Rust Remover Gel formulation can be applied. After using a wire brush or coarse sandpaper to remove loose rust, paint and dirt, the gel can be worked into the surface with a brush. It should have a coating of approximately 1.5millimetres. Similar to the dip formula, the surface can be washed after two to three hours and any excess rust can be brushed off.

    The procedure can be repeated until the desired finish is achieved.
    Digital inspiration

    Hammerite is also empowering DIYers to restore furniture and other items with a new online resource.

    At, home owners and DIY enthusiasts will find information on identifying different types of metal, how-to videos, rust removal tips, project inspiration and answers to frequently asked questions.

    Before commencing, users can input details about a project using the interactive "Product Finder" to obtain recommendations on the most suitable treatments and products.

    There are also numerous short videos that guide the viewer through the application process to ensure they are well prepared and achieve the best results.

    For anyone not familiar with different materials, the website offers a video on how to correctly identify different metals to ensure the correct product is being used.

    The "Inspiration" tab showcases a wide variety of projects and decorating ideas for those keen to transform rusty objects around the home. It is a cost effective, useful way of adding pops of colour, or creating statement decorative pieces. Each project includes step-by-step guidelines on how to achieve an ideal finish.
    Power tool ownership in Australia
    More households headed by women will impact the power tool ownership
    Roy Morgan
    Ownership of hardware/gardening products in Australia: 2011 vs 2015
    Chainsaw ownership in Australia has grown
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    Roy Morgan data shows that as of March 2015, 53% of Australian households have power tools in them, virtually unchanged since the same time in 2010.

    Lawnmower ownership has declined slightly over the last five years (from 62% to 60%), as has the proportion of Aussie households with a whipper-snipper/brush-cutter/line-trimmer (from 51% to 48%).

    Chainsaw ownership, on the other hand, has grown: 27% of households now have a chainsaw, up from 24% in 2010.
    Ownership of hardware/gardening products in Australia: 2011 vs 2015
    Hardware and gardening products ownership

    Source: Roy Morgan Single Source (Australia), April 2010 - March 2011 (n=18,263) and April 2014 - March 2015 (n=15,913). NB: Whipper-snippers denotes Whipper-snippers, brush-cutters and line-trimmers.

    Whether there are power tools, chainsaws and/or garden gear in a household depends very much on the living arrangements of its inhabitants.

    People living with their partner are most likely to have these items at home. Couples with no children have the highest ownership of power tools (66%) and chainsaws (37%), while couples with kids are more likely than others to own lawnmowers (72%) and whipper-snippers (60%).

    Ownership rates fall among Aussies who live alone or as single parents, although there is a huge disparity between the genders.

    For example, single-father households are much more likely than single-mother households to contain power tools (61% vs 30%), chainsaws (22% vs 10%), lawnmowers (66% vs 55%) and whipper-snippers (55% vs 36%). Likewise, men who live alone are more likely than women to own these items. Angela Smith, group account director at Roy Morgan Research, said:
    The Australian market for garden/hardware items is large and diverse, as the findings indicate. The slight overall decline in ownership of these items is consistent with a slight drop in the proportion of separate houses (from 83% to 81%) and a corresponding increase in smaller residences such as flats, villas, units and terrace homes (from 16% to 18%) with smaller-scale maintenance and renovation requirements.
    However, savvy retailers and manufacturers of these items know that even as the size of some households is decreasing, there are other household types where the need for such products is only too apparent: such as those headed by single mothers or solo women. Reaching these groups would require a rethink of the male-focused marketing traditionally employed in this field...
    High tech putty Sugru hits crowdfunding target
    British-made Sugru is an adhesive that turns into a flexible rubber within 24 hours
    Founder and inventor of Sugru, Jane ni Dhulchaointigh
    Forbes described Sugru as "21st century Duct Tape"
    Click to visit the HBT website for more information
    Sugru is the world's first mouldable glue and the London startup recently reached its Stg1 million crowdfunding target in four days. Founder and inventor, Jane ni Dhulchaointigh said:'s been incredibly humbling to see so many of our longstanding customers further support the business and then to get such a positive response from people hearing about Sugru for the first time is truly rewarding.

    Manufactured in East London, Sugru is an adhesive that moulds like play dough, sticks to almost anything and turns into a strong flexible rubber within 24 hours.

    Forbes described Sugru as "21st century Duct Tape" and this British invention is becoming a "must-have" in every household tool kit. It has now sold five million packs in over 160 countries worldwide.

    More than one million customers use the glue for all kinds of projects from DIY repairs at home through to customising gadgets, appliances and toys.

    The capital injection will be used to support the company's expansion in the UK, Scandinavia and the US. An extensive roll out of Sugru is already underway across 4,000 stores at major US retailers including Lowe's Home Improvement and Target with the number of outlets scheduled to reach 10,000 by December 2015.
    Growth through social media

    Sugru has built a community of customers around the world over the past decade. Its YouTube channel has had almost 10 million views.

    What started as an alternative to duct tape or superglue, is now being used for a range of applications that far eclipsed ni Dhulchaointigh's ambitions. She told the Telegraph:
    Once people use Sugru, they become evangelical about it and share their fixes and ideas. People keep finding such ingenious solutions to everyday problems.

    Sugru's customers send in around 200 projects each month, showcasing the weird and wonderful ways they have used the patented putty, which comes in several colours to suit different fixes. She said:
    The crowd has been integral to our success to date. Facebook and Twitter have helped us grow the brand without spending lots of money. People get their own ideas once they see it in action. They just need a little stimulation then imagination lights up. That's people power.

    Before the current crowdfunding campaign, the business raised StlgStg4.5 million over the past 10 years to develop its easy-to-use putty. Ni Dhulchaointigh said:
    Sugru has been successful because of timing. When I started the company in 2004, I would talk to people about fixing things and they would look at me like I was mad. By 2009, they were saying, 'Oh that's cool'.
    The recession made people think about whether they really needed that extra pair of trainers or if they could fix the ones they had. We also spend so much time in front of computers that we want something to show for our day. We bake cakes, make meals from scratch, garden, and fix things.

    Sugru the brand is unknown to most consumers and most don't even know that such a material exists. To solve this problem, ni Dhulchaointigh is investing heavily in in-store demonstrations. She said:
    You have to touch it and see it in action to see its potential. That means we have to spend a lot of time showing staff in stores what it can do and doing merchandising, which is expensive but essential.

    Sugru has been sold through DIY chain B&Q in the UK for a couple of years, and online through the company's e-commerce website.

    The additional marketing, alongside continued investment in Sugru's manufacturing capacity will help the company to double revenues this year.

    Ni Dhulchaointigh is keen to expand into new territories and is also looking to sign deals with industrial partners. She said:
    Sugru is really great for mounting things in cars, for example, or fixing cables, and there are companies that specialise in these markets.

    A new version of Sugru, which is chid safe, is also in production. Ni Dhulchaointigh said:
    We are looking to get into the toy space.

    The inventor wants Sugru to become ubiquitous and create generations of people that choose to fix their possessions rather than buy new. She said:
    This is just the beginning. We want to be just as normal as duct tape or superglue, so that when you have any problem, people will say 'Sugru it'. That's' what we're shooting for.
    IKEA plans smart home future
    IKEA wants to make light bulbs to help customers control their smart home
    IKEA is working on creating an affordable and versatile smart home system
    IKEA's version of the smart kitchen
    Click to visit the ITW website for move information
    IKEA recently told the Gizmodo website it is planning to offer lighting kits that will "enable people to personalise their homes to create a sense of safety and wellbeing". A statement from the company said:
    Bedside lamps will be able to imitate the sunrise while coffee will be automatically brewed and different modes can be optimised to support each family throughout the home using wall switches or a smartphone App.

    Unlike many smart home systems however, IKEA is aiming this directly at consumers, with the company claiming that there's no need to call an electrician or to wire in the system.

    While IKEA has been dipping its toes into smart solutions for the home, this is the biggest push yet by the furniture chain. Bjorn Block, head of lighting and IKEA Home Smart, says the company plans to sell its solutions at "prices so low that as many people as possible can afford them".

    The system will comprise of smart lights and a switch that acts like a remote. Taking the remote into a room will activate the lights automatically and adjust them to the preferences set by the person holding it.

    IKEA is taking customisation even further, expanding the functionality of the system beyond what the remote is capable of, by offering a mobile App - although the company is yet to say what its purpose for the App is.

    What is unique about this system is that IKEA seems to be getting rid of the ubiquitous smart hub for its system. Instead it is relying on putting all the "brains" of the system inside the light bulb.

    IKEA has yet to provide details about this system, or to prove that it works, but this time next year there may be a smart home system everyone can afford.
    Ace Hardware signs deal with PGA Tour
    Ace has signed a multi-year deal to be the "Official Hardware Store of the PGA Tour"
    It won top accolades again in J.D. Power's 2015 customer satisfaction study
    Ace performs particularly well in the categories of staff, service and store facility
    Click to visit the ITW website for move information
    As part of its deal with the PGA Tour, Ace Hardware products and services will be used in the preparation and operation of tournaments, and the maintenance of facilities.

    Planners of the PGA Tour, Champions Tour, Tour, PGA Tour Latinoamerica, PGA Tour Canada and PGA Tour China, and the PGA Tour's TPC Network, will have access to products through Ace.

    Ace, for its part, is airing commercials during live PGA Tour telecasts on Golf Channel and NBC Sports, as well as during ancillary programming. It also has advertising on

    In terms of player endorsement, Ace announced in April a multi-year sponsorship of PGA Tour player, and six-time winner Hunter Mahan. Mahan is appearing in the brand's 2015 "Golf Swing Away" television commercial to promote Ace's Free Store Pickup program. Mahan also wears the Ace logo on his golf apparel during tournaments.
    Customer service award

    Ace just won top accolades again in J.D. Power's 2015 US Home Improvement Retailer Store Satisfaction Study. The study ranked Ace Hardware "Highest in Customer Satisfaction among Home Improvement Retail Stores" for the ninth year in a row.

    The study is based on responses from nearly 3,000 consumers who purchased home improvement products or services in the previous 12 months. Ace Hardware ranked highest among major retailers with an overall satisfaction index score of 807 on a 1,000-point scale.

    According to consumers, Ace performs particularly well in the categories of staff and service, as well as store facility. After Ace Hardware is Lowe's, and Menards. Below the retailer average score are The Home Depot, True Value and Sears.

    The study finds that customer loyalty has a huge influence in hardware retailer success. It reports that nearly a quarter of surveyed customers said they shop one home improvement retailer exclusively, and 84% of those customers shop at only one location.

    And satisfaction among customers who shop one retailer exclusively is higher than among those who shop multiple retailers. Therefore, notes the study, retailers can remain competitive and increase their share of wallet by converting customers who shop multiple stores into customers who shop exclusively at their store.

    The study says 46% of customers who shop one retailer "definitely will" make their next home improvement purchase at that same retailer, and a similar proportion (47%) say they "definitely will" recommend that retailer.
    Seven market forces to shape 2015-16
    How Hilti innovated its business model
    HNN Sources
    The CSIRO has developed energy management systems
    Solar energy adoption in Australia
    Give to Amnesty International
    Earlier this year Veronique Laury, the CEO of European home improvement big box conglomerate Kingfisher, introduced some new ideas to the industry. She did so most clearly in her presentation at Kingfisher's report on its performance for 2014.

    One of the most interesting parts of what she had to say occurred in her discussion of what she saw as the market forces at work that would affect the home improvement industry in the future. She presented a list of seven main points:
  • Convergence of customer needs, illustrated by the rise of multinational models such as those of IKEA and Starbucks
  • Demographics, such as the increased delay in singles establishing their own dwellings
  • Urbanisation, with increasing numbers of people choosing to live in cities
  • Internet's continued penetration and increased pervasiveness
  • Increasing energy costs
  • Increasing regulatory requirements
  • Rise of the sharing economy

  • One of the unique features of this list, and the way in which Ms Laury presented it, is that all of these points are less about "disruption" than they are about new cohesions.

    For the most part, we tend to see "modernity" and "modern changes" as being alienating, and tending towards some kind of social dysfunction. It's the teenager who would rather play video games than come to the table for dinner, or the twenty-somethings glued to their mobile phone screens at a social event.

    Ms Laury's is a more mature and experienced view, and it is based on both statistical and personal research she has conducted. At the time she delivered her remarks, she had recently returned from a tour of much of the "Kingfisher World", spread out across Western and Middle Europe.

    It is worthwhile, as we all begin to engage with the task of looking at forecasts for the next 12 months, to think about each of these points, and consider how they will affect the home improvement retail market in Australia over the next several years.
    Convergence of customer needs

    If you walk into a Bunnings, a Masters, a Home Depot, a Homebase or a B&Q store anywhere in the world, you are going to have a surprising similar experience. Many, if not most of the brands of goods on display will be familiar, their method of display will be similar, and even the pricing, allowing for currency fluctuations, will seem understandable.

    Sizes of things, and specific technical aspects to building materials will differ, of course, and you won't find that many snow-blowers for sale in Darwin, but there is a surprising degree of similarity.

    One consequence of this is that people are becoming increasingly cosmopolitan, without even realising this. Customers accept goods and designs from all over the world without being unduly concerned about their origins.

    This has brought about a number of opportunities and some difficulties that go with them. For example, getting to design a product for a global community is a fantastic opportunity - buy how do you really go about doing it?

    The answer seems to reside, typically, in discovering what is most fundamental to some kind of human interaction, then working out ways to tap into those fundamentals. IKEA furniture, for example, has some aesthetic characteristics, but is very appealing on a practical level. It constant addresses key issues such as space, comfort and ease of use.

    The job of the retailer when faced with products of this nature has some difficulties. The retail experience becomes something that is as much about contextualisation as anything else, presenting products to customers in a way that they can make sense of them.
    Demographic changes

    The major demographic changes are taking place at either end of the age spectrum. Younger people, many of whom have lived for longer with their parents than previous generations, are beginning to form households, just as older people are seeking ways to evolve their lives so that they can grow old at home.

    Population pyramids which map these changes are a good way to grasp what is going on:
    Australian population pyramids

    Further details at:
    Demographic facts of ageing in Australia

    In these diagrams you can clearly see the progress of the baby boomer generation as it ages.

    One of the best references to this kind of demographic change, complete with animated graphs, is found at the Australian Bureau of Statistics (ABS):
    3236.0 - Household and Family Projections, Australia, 2011 to 2036

    One of the overwhelming trends to emerge is the increase in single-person households, which occurs at both ends of the spectrum. As women live longer on average, there is set to be an increase in elderly women living alone.

    At the same time, as younger people delay marriage until later in life, the percentage of young people living alone is also set to increase.

    The attraction of the inner-urban life continues to increase for young people. Just as previous generations fled the cramped and noisy conditions of the inner-city for the space and freedom of suburbs, so the younger generation are migrating back, in search of the mysterious energy of cities.

    As such, this trend intersects with the demographic trends outlined above, and can be represented in a similar manner.
    3235.0 - Population by Age and Sex, Regions of Australia, 2013

    In contrast to the population numbers pyramid, the age/geography distribution bulges towards the bottom in term of those who live in the capital cities.
    Internet penetration

    According to the ABS, in 2012/13 83% of Australian households had access to the internet, up from 79% in 2010/11. Around 77% of all households had access via a broadband connection. Around 80% made some use of the internet everyday.
    Households with internet access, by state/territory, 2010/11 and 2012/13
    ABS data on internet access

    While there is a bit of an age drop in internet usage, it is surprisingly consistent up to people aged 55 years.
    Internet users, by age group(a), 2012-13
    Internet usage by age

    What is perhaps most surprising about these statistics is the degree to which internet usage remains confined to day-to-day browsing, buying, researching and networking.
    Increasing energy costs

    For many people all around the world, including Australia, the rising cost of energy has become a major concern. One expression of this has been the take up of solar energy panels for households.
    Solar energy adoption in Australia

    Equally important are trends towards energy conservation through insulation and intelligent construction used for buildings.

    Another coming trend in this area is Home Energy Management Systems. These are intelligent, programmable systems that can do everything from shutting the blinds automatically on a hot day, to communicating with energy providers so as to coordinate energy usage with energy availability.
    CSIRO has developed energy management systems
    Increasing regulatory requirements

    Australia's Housing Industry Association (HIA) highlighted increasing regulatory requirements as one factor contributing to insolvency in the construction industry. The discussion forms part of the HIA's submission to the Australian Senate Economic References Committee's Inquiry into Insolvency in the Construction Industry.

    In part the submission states:
    2.7 Similarly there is a large red tape and regulation burden imposed on the industry.
    2.8 The average small business builder/principal contractor spends significant hours each week attending to paperwork and compliance obligations arising from regulatory requirements including business, income and payroll tax compliance, training regulations that apply to apprentice employees, workplace health and safety management, occupational licensing and state-based home building laws and requirements.

    The HIA submission also cites a document from the OECD:
    in general the adverse impact of regulations on SMEs can be particularly harmful. This is because SMEs are less equipped to deal with problems arising from regulations since they have less capacity than larger firms to navigate through the complexities of regulatory and bureaucratic networks. SMEs are more likely to be hampered by regulations because their strength stems from their flexibility...
    Furthermore, due to its "fixed cost" nature, the cost burden of regulation is larger for small firms than for larger firms: i.e. administrative costs entailed in compliance have a disproportionate effect on small firms. In many cases compliance is based on an initial fixed, standard cost for all firms, irrespective of size, followed by a sliding scale, related to increasing size. This means that average compliance costs per employee are much higher for small firms.
    HIA submission

    The rise of the sharing economy is something that most can no longer ignore. Services such as Uber for replacing taxis, and Air BnB for replacing hotels have entered the mainstream, and become profitable, well-run businesses.

    The main feature of the sharing economy that many commentators have missed is that it is not just about people who are willing to share what they have with others out of a responsible sense of community. It is just as much about individuals really understanding what is meant by asset utilisation.

    Cars and homes, for example, are two of the most expensive purchases that anyone makes. Both Uber and Air BnB offer the means to better utilise these assets by on-selling the excess capacity over personal needs they represent.

    The flip side of that is better capital utilisatation by customers. Instead of having to spend big on a hotel room for the entire nine hours it will be used, seven of them asleep, visitors can rent a couch or a tiny bedroom for the night at a fraction of the cost.

    And Uber has demonstrated that the regulatory requirements around taxi services are largely useless, and do little but drive up the costs of getting around.

    The issue for retailers, of course, is that they tend to make some of their income from the inefficiency of asset utilisation. Or at least they think they do. In fact, the profits to be made from better asset utilisation are quite high.

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

    Boston Consulting Group

    What this discussion also introduces is one of the major challenges in making the sharing economy work: de-scaling. The Hilti model works because it is designed to operate at scale - in fact, it solves some major problems created by scale.

    But for the sharing economy to work, it's necessary to find ways of making models that work well at scale, work just as well in micro-situations. These are precisely the problems that both Uber and Air BnB solve.

    Until next time,


    You can contact me directly via email or Twitter @HNN_Australia

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    Big box update
    The new 13,500sqm Masters Parafield Airport store is expected to open in May 2016
    HNN Sources
    Bunnings has been looking for a site in Yeppoon (QLD)
    Wesfarmers may be considering the acquisition of Carters Building Supplies in New Zealand
    Click to visit the ITW website for move information
    Work has begun on a Masters store at Parafield Airport in South Australia; Bunnings could be opening a store in Yeppoon (QLD); speculation regarding Wesfarmers' potential acquisition of New Zealand-based Carters Building Supplies; and Bunnings advises staff on dealing with ice addicts.
    Another Masters store in SA

    The new 13,500sqm Masters Parafield Airport store is expected to open in May 2016, and located close to Bunnings' Parafield store. The Parafield store will be the second Masters store in Adelaide and the third in South Australia.

    Masters senior property development manager Rob Hain told Adelaide Now: "The construction will employ a number of people from the area and we look forward to strengthening our ties with the local community." The store will have a large paint department, tool shop, garden section, bathroom and kitchen display area and drive-through area to assist local tradies and builders.

    Bunnings "interested" in Yeppoon

    Livingstone Mayor Bill Ludwig recently confirmed that Bunnings had been looking to open up shop on the Capricorn Coast in Queensland for some time. He told The Morning Bulletin: "Bunnings have certainly expressed interest in the last three years about establishing a presence here. I'm not surprised that it's been discussed for some time because we are looking to develop a home maintenance centre on some depot of land down here. They have previously expressed a desire and looked at three locations in the past, but it would still be a couple of years before the centre would be established. Our land is likely to go up for tender for businesses with expressions of interest soon and the coast has reached that critical mass where a lot of national groups like Bunnings are looking to establish due to our growth..."

    Bunnings general manager of property, Andrew Marks released a statement to The Morning Bulletin saying that Yeppoon remained an area of interest for Bunnings. The company would consider opening a store there in the future if the right opportunity became available.
    CHH building arm targeted

    According to a recent report in The Australian, Wesfarmers is believed to be in discussions about a potential acquisition of the distribution arm of Carter Holt Harvey Building Supplies. Carters Building Supplies has 50 branches and stocks general building materials and wood products along with plumbing, home appliances and manufacturing services.

    The company has been viewing the Carters Building Supplies division with interest amid plans by CHH to embark on a dual share market listing in Australia and New Zealand. Initially, this was to happen as soon as next month. However, billionaire Graeme Hart, who holds the company within his private empire, The Rank Group, has now placed the float on both the Australian and New Zealand sharemarkets on hold with the Wesfarmers negotiations afoot.

    The IPO will now happen in the third or fourth quarter of this year should a deal with Wesfarmers fail to eventuate in a deal, according to sources. This article first appeared in The Australian Business Review. To read more, go to:
    Wesfarmers eyes Carter building arm
    Bunnings' safety advice for staff

    Bunnings recently sent a safety memo to staff telling them how to deal with addicts - affected by the drug, ice. A spokeswoman told The Australian the hardware chain took the safety of staff and customers very seriously. She said: "We have in place comprehensive guidelines to ensure we provide a safe environment at all times for our team and customers. Bunnings regularly reviews and communicates these guidelines to our team members to ensure they are well informed and equipped to deal with the many different situations which could occur."

    Health experts recognise that ice addicts are hard to manage. Rebecca McKetin, an associate professor from the Australian National University's Centre for Research on Ageing, Health and Wellbeing, said the drug presented particular challenges for those dealing with an intoxicated user. Any workplace drug protocol should encourage staff to defer to those with expertise in handling intoxicated customers, such as calling an ambulance if necessary, she said.
    HNN Index for week ending 12 June 2015
    The HNN Home Improvement Index rose by 4 points to reach 1,005.59
    HNN Sources
    BlueScope Steel has denied reports it intends to close its Port Kembla steelworks
    Woolworths has launched its budget mobile offering, Woolworths Connect
    Click to visit the HBT website for more information
    The HNN Home Improvement Index for the week ending 12 June 2015 recovered slightly from its previous downward trajectory, rising by 4 points to reach 1,005.59. The underlying ASX 200 index rose by 47 points, or 9 points on the adjusted index.

    Myer Holdings was the only stock in the index to decline sharply, falling by 6.5%. UGL and Harvey Norman both climbed by 7%. Bluescope Steel rose by 6.2%. James Hardie and GUD Holdings both rose by more than 5%.
    Bluescope Steel
    BlueScope denies Port Kembla steelworks closure, admits cost cut push

    BlueScope Steel has denied reports it intends to close its Port Kembla steelworks. However the steel giant has admitted the site is under review and it needs to cut costs to remain competitive with imports. The Illawarra Mercury reported that unions were meeting with BlueScope because of the closure of Port Kembla, with up to 1000 jobs at risk.
    BlueScope denies Port Kembla closure - Sydney Morning Herald
    Downer EDI
    Downer EDI switches to renewables

    Downer EDI has won a $130 million deal to build another wind farm project at Ararat, northeast of Melbourne. The project, still subject to final financial approval, is expected to produce enough electricity for up to 123,000 homes.
    Downer EDI wins $130 million deal to build another wind farm - Business Insider
    Goodman Group
    Goodman Group's $42 million New Zealand development

    Goodman Group will develop four new sites in Auckland, with a total project value of $NZ45.8 million ($42 million). When developed, the four industrial sites will take in a total of 27,112sqm of lettable area, which is expected to generate revenues of $NZ3.4 million for the New Zealand-listed Goodman Property Trust.
    Goodman Group's New Zealand development - The Australian
    Woolworths unveils budget telco brand

    Woolworths has returned to the telecommunications market and launched a budget mobile offering called Woolworths Connect. It has been available since 15 June, and offers two prepaid options each running on the Telstra 3G network.
    Woolworths launches budget telco brand - The Australian
    Kingfisher results Q1 FY 2015-16
    Kingfisher results for Q1 2015/16
    The Do It For Me market in the UK
    The CEO of Kingfisher, Veronique Laury
    Click to visit the ITW website for move information
    The first quarter FY 2015/16 results for UK-based European big-box home improvement retailer Kingfisher were mixed. Overall sales fell by 4.6% to reach Stg2,509 million. On a like-for-like (comp) basis, the company improved sales by 0.8%.

    Retail profit declined by 4.8% to reach Stg150 million. However, this number was slightly above consensus estimates by investment analysts.
    Kingfisher results Q1 2015/16
    UK and Ireland

    The most positive note was that while sales for the UK and Ireland consumer chain B&Q fell by 1.7% to Stg991 million, sales for the company's trade-based chain, Screwfix, grew strongly.

    The Screwfix sales increased by nearly 27% overall, and by 15.4% on a like-for-like (comp) sales basis, reaching Stg244 million. The strong performance by Screwfix was enough to lift the company's UK and Ireland retail profit by almost 10%.

    The newly appointed CEO of Kingfisher, Veronique Laury, said that the B&Q numbers were better than they looked, with actual volume of sales increasing. In her remarks on the full-year FY 2014/15 results, Mme. Laury noted that:
    The B&Q team has made good progress with the transformation plan. They've started to re-energize the business by simplifying in-store price messaging and highlighting great value. They've used doorbusters, so going, going, gone type promotions to drive footfall to the stores, and they've lowered prices on more than 5,000 products.
    The results so far have been encouraging, helping to grow market share on a volume basis; to improve value perception of the customers; and to improve marketing awareness.

    Later, in response to an analyst's question, Mme. Laury clarified why the company thought everyday low pricing (EDLP) worked better than high-low pricing in home improvement:
    [L]et me answer in principle, because of the way home improvement works for people, we are not selling food. You buy food almost every week. You do a bathroom project every seven years. So I think in principle, EDLP works better for people because they want to buy the product at the right price when they need it.

    This strategy would be a contributor to the fall in profits for B&Q. The goal, as announced by Mme. Laury, is to recoup the margin through greater efficiencies in the future.

    That said, there is also evidence of a shift in the UK market, as do it for me (DIFM) gains over DIY. The success of Screwfix has been widely attributed to a shift in consumer buying habits as economic recovery continues in the UK and Ireland. As employment continues to increase (it now stands at over 73%, a modern record), more families prefer to hire tradespeople to perform work, rather than relying on DIY.

    This shift has contributed to the decline in B&Q sales. Another factor is more competition in the low end of the market from supermarkets and other general retailers branching out into hardware. Low cost operators such as Aldi and Lidl are taking some of this business.

    An added boost to the Screwfix business has been provided by its embrace of online e-commerce. This is being rapidly adopted by tradespeople in the UK seeking greater efficiencies. However, the company is not neglecting standard retail channels, and has recently opened its 400th outlet.

    During the fully-year FY2014/15 analysts' briefing, Kingfisher was asked about cannibalisation between the expanding Screwfix stores and existing B&Q stores. Kingfisher's CEO of group productivity and development, Steve Willett, replied:
    ...we keep doing exercises looking at cannibalisation between the two formats. And quite frankly, we can never find anything within points of statistical analysis. If it is anything, it's like sub percentage points.
    The primary issue quite frankly is they're different customer sets generally. Screwfix customers are either trade or they're serious hobbyists is probably a better word; and DIY customers are more non-pro...
    So we don't see a lot of cannibalisation, and quite frankly now, Screwfix is past B&Q, and most of the catchments that we're now opening up into basically haven't got B&Qs in them.
    Other European

    Sales in the company's French chains, Castorama and Brico Depot, fell by 11.5% to Stg953 million, declining by 1.9% on a like-for-like basis. Profit also fell by over 19%, but only 8.2% on a constant currency basis.

    In Kingfisher's other international operations including Poland, Russia and Spain, overall sales declined by 8.4% to Stg402 million, but increased by 3.8% on a like-for-like basis. Other international profit increased by 8.4% to reach Stg12 million.

    Sales in Russia were strong, increasing by nearly 39% on a constant currency basis, but declining by 7.3% on an actual currency basis. Russia contributed Stg1 million to overall profits.
    Husqvarna expands 500 Series
    The 525HF3S Hedge Trimmer comes with an innovative in-line gearbox
    The 525L Professional Trimmer is built for demanding trimming
    Husqvarna's 500 Series continues to expand
    Click to visit the HBT website for more information
    Husqvarna had added to its extensive 500 Series platform of high-performance, handheld equipment. The latest products - 525L Professional Trimmer and 525HF3S Hedge Trimmer - are designed specifically to enable professionals to complete demanding jobs with efficiency and effectiveness.

    Like other Husqvarna 500 Series products, each of these durable and powerful products features advanced X-Torq(r) engine technology that combines high performance with fuel economy and lower exhaust emissions.

    The LowVib(r) anti-vibration dampener system maximises user comfort with a floating throttle handle. Jeff Dewosky, vice president and general manager, Husqvarna North America said:
    Tough jobs require reliable performance, and these...additions to the Husqvarna 500 Series are built to accommodate the needs of the professional.

    With its 500 Series, Husqvarna is committed to providing the professional landscaper and tree care expert with the optimum tools needed to complete their demanding jobs.

    The recently launched Husqvarna 500 Series products offer several key features.
    Husqvarna 525L Professional Trimmer

    Ideal for semi-professional use, this robust and sturdy machine is built for demanding trimming at an economical price. Intuitive controls make choke and purge easy to reach and understand. The Smart Start(r) is designed to get the engine running with minimal effort.
    Husqvarna 525HF3S Hedge Trimmer

    This powerful yet low-weight fixed pole hedge trimmer comes with an innovative in-line gearbox to withstand tough work. It is ideal for the professional landscaper as it allows the operator better control through superior balance and positioning.
    @HBT 2015: ProDeck offers lasting quality
    Paul Brophy presented Valpar's brand new ProDeck oil
    HNN Sources
    ProDeck lasts three times longer than other decking oils
    Valspar provides the merchandising that complements the ProDeck product
    Click to visit the HBT website for more information
    Paul Brophy from Valspar knows his product and is intelligent about the industry he works in. ProDeck is new to the Australian marketplace. Its main benefit for consumers is that it lasts three times longer than most decking oils. As a result, it only needs to be used every 2-3 years. The finishes are also of high quality so the satin sheen will be maintained. It does not fade or dry off in that time. More importantly, it can be applied "wet on wet" so users do not have to wait for it to dry. They can put a second coat on while it is still wet.

    Valspar provides the merchandising that complements the "high end" brand promise of the ProDeck product.
    Long-lasting properties

    @HBT 2015: Bailey's latest platform ladder
    Ron Garlepp pitches Bailey's new P150 Platform Stepladder at HBT
    HNN Sources
    The product is still very new to the marketplace, launched two months ago
    Bailey has created clever merchandising options for its latest ladder
    Click to visit the HBT website for more information
    A gentleman of the "old school", Ron Garlepp explained the advantages of the Bailey P150 Aluminium Platform Stepladder which has just been released by Werner. As Ron puts it: "You only need to know two things..." Firstly, it is a 150kg, industrial rated product that is well-priced. Secondly, it is 20% lighter than any other step platform ladder on the market. Retailers can be confident of selling this product that meets all of the Australian and New Zealand standards. Ron suggests stocking the three-, four- and six-step sizes with an option for the pro series if there is room in the store.

    The merchandising is cleverly placed on the actual step of the ladder and includes all the necessary information that a tradie or professional user needs to know.
    Increasing productivity

    @HBT 2015: Macnaught's new gun in town
    Jeff Albert demonstrates Macnaught's new PowerGun at the HBT show
    HNN Sources
    Macnaught's PowerGun is made for Australian conditions
    The company designs and produces lubrication equipment
    Click to visit the HBT website for more information
    Jeff Albert from Macnaught ably demonstrated the key features of Macnaught's new 18V lithium-ion battery-operated grease gun called the PowerGun. His presentation was clear, concise and expressive. He listed its 8,500psi delivery; LED light for hard-to-see areas; metre-long extension for hard-to-reach areas; ergonomic design; 450g cartridges bulk or cartridge fill as some of the product's defining features. The high and low pressure switch also gives users volume over pressure.

    Retailers have the option to display the product as they wish but Jeff recommends using the carry case so that end-users can "play" with the tool and see how easy it is to take the battery in and out.
    Robust construction

    Canadian Tire store "showcases" digital shopping
    Customers can create and interact with a 3D image of their dream backyard
    Hardware Merchandising
    There are expanded ranges in the tools and outdoor living departments
    Canadian Tire's Edmonton store provides customers with dynamic digital experiences
    Click to visit the ITW website for move information
    Canadian Tire Corp. opened the doors of its first "Showcase" store in Edmonton, Alberta recently.

    At 140,000 square feet spread across two floors, the store provides customers with dynamic digital experiences. Chief operating officer, Allan MacDonald said:
    Our investments in high-impact digital technology create a modern, inspirational and fun environment to shop.

    In this sleek new version of Canadian Tire, more than 240 store associates will use advanced interactive technology to provide personalised customer service to shoppers.

    The Showcase store has more than 100 digital screens. It features a large exterior high resolution LED screen, digital flyer access and helpful product selectors in the living, playing, fixing, seasonal and automotive departments.

    When visiting the store's seasonal department, customers can create and interact with a 3D image of their dream backyard using the "Canada's Dream Backyard and Patio Builder". This app technology was built internally at Canadian Tire's NEWcleus digital lab and utilises state-of-the-art virtual reality technology from Oculus.

    The store's automotive department features Canadian retail's first ever use of a car simulator, providing customers with the opportunity to test drive tires in different weather conditions before purchasing and installing them on their vehicle.

    With more than 73,000 individual products, the Showcase store has the most extensive product assortment of any Canadian Tire outlet. There are expanded ranges in truck and trailer, tools and outdoor living departments as well as a large Hunting and Fishing Pro Shop.

    The store has been purposefully designed with over 50,000 square feet of warehouse space to house inventory intended to fulfill e-commerce orders.

    A dedicated drive-thru area along the side of the building makes it convenient for customers to easily pick-up their online purchases. This area also allows sales associates to assist customers with pick-up and loading of large items and bulk purchases.

    Design and development of the digital experiences throughout the store are delivered by Canadian Tire's team of in-house digital experts working in close partnership with interactive specialists from around the world.

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