HINEWS 2ND RESPONDERS - HARDWARE HELPS BUSHFIRE RECOVERY - Hardware News Network
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HI
NEWS
2ND RESPONDERS
HARDWARE HELPS
BUSHFIRE RECOVERY
Vol. 6 No. 1
POS PATH TO BUNNINGS F0RECAST
ANALYTICS BUILDS IN MARKET 2020
ROZELLE
contents
HI NEWS VOL 6 NO 1
BUSHFIRES: Hardware Helps Out Forecast 2020
Bushfires have burnt over 17 million hectares over the past year, seven million What will 2020 look like? Prob-
outside the Northern Territory. As communities struggle to come to terms ably much like 2019. While the
with the disaster, and begin recovery, hardware stores are at the forefront of Reserve Bank of Australia forecasts
helping regional Australia get going again. HNN spoke to Andrew Graham a “soft recovery”, HNN doesn’t see
of Traralgon H Hardware about his efforts to help out, and to Peter Hunt of that happening in hardware. The
Corryong Building Supplies about the effect on his community, and how it is decline may halt, but improvement
recovering. is unlikely. The only exception
The big question remains, what happens next? The science indicates we are at is Victoria, which grew strongly
36 15
the start of a major shift, brought about by climate change. How can through 2019, and will
Australia adapt, and how can the hardware retail industry partici- likely continue to grow,
pate n mitigation, prevention and recovery efforts? albeit at a slower rate.
POS & Data Analytics IHG/Total Tools
Up until recently point-of-sale systems have been one of the less dynamic The rumoured acquisition of Total
areas in software development. As the era of data analytics looms, that is set Tools by Metcash, to add it to the
to change. Independent Hardware Group
Many smaller retailers remain uncertain about how analytics might help them (IHG), seems to have been nixed.
out. We’re beginning to see the first POS-based products emerge that are Given the recent news that IHG #2
based on analytics, sometimes modelled through artificial intelligence (AI). Annette Welsh will soon replace
HNN delves into the shallower waters of what analytics can do, specifically the Mark Laidlaw as CEO, it’s not
excitingly titled “K-means clustering”. It’s a new world for store management, surprising the company is dialling
53 25
but also potentially a better one. back on ambition until
the new CEO is estab-
lished.
Bunnings Rozelle gets DA OK
After three years Bunnings has managed to gain approval to build
a unique store in Rozelle , an inner-city suburb of Sydney. The
company got there by making mammoth concessions on supply
via trucks and operating hours. There has also been a great deal of
contestation about traffic patterns.
For Grant Crowle, whose retail operation The Hardware Store, will
be a direct competitor, there is something about the whole deal
that doesn’t add up. He can’t see how Bunnings can supply the
10 11
store, given the limitations. Will Bunnings play by the
set rules? It’s a situation that HNN, Mr Crowle, and a
number of community groups will watch carefully.
contents
Publisher’s Note COMMENT
Covering the bushfires from a hardware industry Are the bushfires the result of climate
perspective was never going to be easy. It wasn’t just a change, as about 15 years of research
matter of “too soon” -- it’s an ongoing story. would indicate, or did we just get some
Fortunately, we received some great help from Andrew bad luck? Will keeping the budget in
Graham of Traralgon H Hardware, and Peter Hunt surplus magically help to fix a declining
(pictured) of Corryong Australian economy, or would it be
Building Suppliers. The real better to add stimulus spending directed
story is everything you would towards software development?
expect from our industry -- Comment doesn’t answer any of these
real Aussies doing questions, be we have some
their best to help
their communities.
6 fun not answering them. 9
Product Focus
Changing up your POS software can seem like a big challenge. For
Michael Kubank of Merino Engineering in Cardiff, New South Wales, it
also gave a real boost to his business, and the way he serves customers.
56
The key is choosing a good provider, and Mr Kubank won out
by going with Merlin Software’s Cobalt product.
Home Improvement
News is a publication of
Net Percent Pty Ltd. insight.........................................................................11
© 2019 Net Percent Pty Ltd
big box update...........................................................20
Betty Tanddo
publisher indie update................................................................25
betty@hnn.bz
supplier update..........................................................30
0411 031 832
Scott Lewis retail update................................................................33
editor-at-large
scott@hnn.bz
usa update..................................................................66
europe update............................................................71
new products..............................................................73
John Ioakim
independent with a strong brand and no forced promotional stock eating up
The Lakes H Hardware - LAKES ENTRANCE, VIC floor space and our bottom dollar.
How did you come into the hardware business?
I was the store manager of this store under the previous owners when it was How is business today?
a bannered store. In 2016 the owners called me looking to sell. My wife, We opened in July 2016 and 12 months on business is good. We’ve had
Leanne and I spent many a night around the kitchen table running figures growth and we have strong customer base. Our trade business makes up
and swapping ideas for the store. We decided to go for it but we wanted to 75% of the business, I look after that and Leanne is the face of our retail
be truly independent and in control of our stock. side. It’s come along way from our first official order that BGC sent to our
house and I borrowed a trailer to be able to deliver it to site.
What made you decide on branding your new store H Hardware?
We had a few recommendations to join the HBT Buying Group and when that What would you say to someone considering transitioning
stacked up we had a chat with Steve Fatileh who showed us the branding to H Hardware?
for H Hardware. It looked great, the colours are eye catching and it really If you want to have control of your business, your stock, your promotions
stands out. The clincher for us was that the store was ours, we could be and a stand out brand,then H Hardware is a no brainer.
For more information and
membership application call
1300 305 719
publisher’s note
When we returned to the HNN writing and editing desk in
early January, the first thing we decided to do was scrap our
original plans for the first edition th nmis year. Instead we
thought it was more important to respond to what was happen-
ing around the country: the bushfires.
Since then, we worked to quickly coordinate interviews and
put together content to develop a narrative that is relatable and
relevant to the hardware industry. Two regional Victorian re-
tailers feature prominently in our story, Andrew Graham from
H Hardware Traralgon and Peter Hunt from Corryong Building
Supplies. Both played different roles during the bushfires.
Andrew has a history of contributing to bush fire recovery.
This would not come as a surprise to anyone who has dealt
with him. Andrew is one of those people who makes practical
use of his kindness. From hiring staff with disabilities to organ-
ising this current initiative, Andrew often reaches out to help.
Based on his experiences of helping out with the Black Sat-
6 urday bushfires in 2009, Andrew set out to work with some of
his suppliers and fellow HBT store owners to sell Fire Recovery
Kits.
This kind of activity helps store owners and end-users in a
genuine way. Suppliers contributed products (and a percentage
Andrew Graham ffrom H
of margin) they would have earned but probably gained a lot Hardware Traralgon (VIC)
more in terms of integrity. Each one is mentioned in the story. had a very astute and
pragmatic approach to
What is impressive to HNN is the effort and the thinking helping with the bush-
Andrew did to get the Fire Recovery Kits together in a short fire recovery effort.
amount of time. He chose carefully
the suppliers he wanted to contribute
to the kits, ensuring the quality of
the products is high. He negotiated
individual margins on each product,
organised their delivery, put the kits
together ready for sale, and ensured
the other stores had them in-stock to
sell.
It would have been easier to just
make a donation, and we know An-
drew did that too.
What this tells us is that the future
of hardware retailing is very safe with
people like Andrew. He is young, am-
bitious for the industry, social media
savvy, and has a thoughtful intelli-
hnn.bz
gence that all make for natural leadership
skills. We need more people like him.
In Corryong, Peter’s house and store
were in direct line of the bushfires. Luck-
ily his structures survived but he is sur-
rounded by black ashes including a large
tract of his land. He spoke a lot about the
ongoing impact on the local economy once
the mainstream media attention turn their
attention to other disasters, and the rest of
the world has moved on.
But it will be difficult to forget his resil-
ience in the face of catastrophe where he
continued to open his store when there
was no electricity, just so people could get
what they needed to start the recovery
process and build again.
Thank you to Andrew and Peter who
spoke to us for the story. Also thanks to
the top executives at HBT and Bunnings
who provided responses. Bunnings held a number of sausage sizzles across its
Independent Hardware Group declined national network of stores to raise money for bushfire
relief. In addition to Bunnings, employees in parent
to participate. company Wesfarmers including Kmart, Target, Office-
See you next time, works and the industrials division have been offered
paid leave if they join the volunteer services fighting the
bushfires across the country.
7
Betty
HI
NEWS
WHAT THE PRO’S READ
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DIGITAL
IS THE FUTURE
OF MARKETING
8
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Still relying on print? Consider this: how much time do your customers spend
using their mobile phone and computer? And how much time do they spend
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DIGITAL is all about performance and engagement. DIGITAL readers opt-in
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To make the move to DIGITAL, just call HI News on 0411 431 832, or email
Betty Tanddo on betty@hnn.bz. The future looks great, believe us.
hnn.bz
comment
There are, HNN would suggest, some surprising similarities between
government policies as regards bushfires and the economy.
In terms of bushfires, there has been well-researched scientific evi-
dence awarding a high probability to increased danger over time. One re-
port put together by scientists from the Bureau of Meteorology and the
CSIRO in 2007 pegged 2020 as the year when the effects of an increased
danger would first become noticeable.
When we look at the Australian economy, we can see something quite
similar. HNN has frequently cited the very good speech by the governor
of the Reserve Bank of Australia, Philip Lowe, where he indicated that
the growth sector Australia needed to develop was pretty much anything
that was software related. (rba.gov.au/speeches/2018/sp-gov-2018-06-13.html)
Both sets of scientific advice have been almost ignored by successive
governments of all persuasions. This would seem to be the result of a
combination of two cultural situations. The first is the well-known “she’ll
be right” philosophy that works so very well for surfers, footballers and
Instagram stars, but perhaps less well for people actually concerned with
producing real value.
9
The second is that all too often this scientific stuff is just so inconve-
nient. All those facts, the data, the weirdo math equations, and let’s face
it, do they ever smile, scientists? Do they ever just come up with some
kind of life affirmation, such as “it all looks pretty bad, but we’re sure it
will all work out OK in the end”?
While it’s easy to make fun of this sort of bad judgement, it’s really in
part a response to another phenomenon in Australia and elsewhere in
the world. This is that when a risk is predicted and action taken to avert
its ill effects, later on doubts are cast that the risk ever really existed.
The classic case for this is the Y2K bug. As one part of the HNN team
spent a very busy 1999 helping to fix this problem, these doubts tend
to create an interesting season of head-desking around the office -- es-
pecially because it is a pretty easy thing to understand. What do you
think happens when you try to sort ascending dates and you have years
represented as 93, 84, 98, 73 and 00? Or when you subtract the year 1998,
represented as “98” from the year 2000, represented as “00”? (And no, as
one person suggested, the answer, surprisingly, is not -2.) In technical
programming terms, this gives rise to a situation we refer to as “thing go
boom”. Not good.
Looking at the bushfire situation, it’s not going to be all that surprising
if we see the government do the bare minimum in 2020, and only really
take serious action when we have a second catastrophe sometime in the
next three years.
hnn.bz
Really, that’s what is going to happen.
At the moment, it seems the bad bushfire season is being treated
like a bit of bad luck. It may be bad luck, but it’s the sort of bad luck
you get when you stand in the middle of a busy road on a rainy
night wearing a black overcoat.
Similarly, when it comes to the economy, it looks like the current
plan is to wait until the US lifts sanctions on China, other econo-
mies magically recover, driving demand, and Australia can go back
to shipping large amounts of iron ore and coal at high prices. Mean-
time, we’re going to balance the budget. We’re not really sure why,
but that’s the plan.
There are really two difficulties here. One is that there is a very
big possibility that there is no real intention by the current US
administration to lift sanctions on China. This is a complex issue,
but in short form, it has become less about establishing a better
balance of trade, and more about harming the Chinese economy.
More importantly, every day that goes past spent on waiting for
the good ol’ days to come back is another day when Australia slips
further behind. Technology, like any business endeavour, is not
something you can just wheel in, it’s the result of building a sophis-
ticated, supportive culture.
Meanwhile, of course, some businesses are surging ahead in this
area, notably Wesfarmers. While from the outside that looks like
it’s all data analytics, it’s just as much about artificial intelligence
10 and a broader embrace of technology. That company is likely to
become an even more dominant player in retail and other sectors.
Should we be worried about that in the hardware sector? Could
Bunnings become even more dominant? Well no, of course not.
She’ll be right. We’re absolutely sure it’s all going to be just fine, in
the end.
HI
NEWS
WHAT THE PRO’S READ
NEWS/ANALYSIS hnn.bz CLICK TO SUBSCRIBEinsight
Bunnings gets go-ahead
for Rozelle store
The long-running saga of efforts
name:
in this by Bunnings to open a kind of
•update: mini-warehouse store in the in-
products: ner-Sydney suburb of Rozelle has
• The Inner West finally concluded its first phase.
Council has been After several years, a refusal to
online:
overruled by the grant a building application, and
• NSW Land Court, a successful appeal to the New
to grant Bun- South Wales Land Court, Bunnings
social:
nings permis- now has a go-ahead to build the
• sion to build a store.
mini-warehouse
email: The judgement in the case
in Rozelle Artazan Property Group Pty
•
11 • Bunnings Ltd v Inner West Council [2019]
start text severe
accepted NSWLEC 1555 is available on-
limitations in line at: bit.ly/2Uq9it3 . Artazan
terms of truck pushed forward the case for the
size and frequen- Wesfarmers-owned Bunnings.
cy of deliveries in The development company has
order to succeed honed its skills at helping some
less popular projects past council
• Traffic flow was objections, most notably with the
the subject of expansion of the Stiletto brothel in
much debate, Camperdown, which one Sydney
with the council
councillor dubbed “the Westfield of
arguing the com-
brothels”.
parisons offered Grant Crowle leans againt the front wall of The Hardware Store
There are a number of features
by Bunnings
were not accurate that make this case compelling. On
Objections
the town planning, and local independent store
• Grant Crowle, versus corporate giant angle, the town council In the end, the objections came down main-
who will be com- has had its hand forced to permit the construc- ly to issues related to traffic and congestion.
peting with the tion of a large retail premise is an area that is Additional matters considered included trading
new Bunnings, basically industrial in nature. One question hours, secondary effects of traffic congestion,
is puzzled as to that gets raised by this is exactly how fair other issues related to flooding and to pollution.
how Bunnings planning decisions will now look in retrospect. The traffic issue was examined from a number
will make the of perspectives. According to Section 20 of the
Will the council need to slacken some restric-
arrangement ruling:
tions, so that smaller retailers can compete at
work the same level as Bunnings? Council’s traffic-related concerns can be sum-
From the perspective of Bunnings, this kind marised as follows: (1) negative impacts on local
of development has the potential to serve as a traffic system (here I also consider traffic-related
model store for a new strand of development, amenity concerns), (2) inadequate parking and
as it seeks to reach deeper into highly active (3) inadequate loading and unloading arrange-
areas of inner-cities with smaller format stores ments.
that are almost tailor-made of click-and-collect/ The first point came down to these three
home delivery operations. concerns:
hnn.bzinsight
(1) expected traffic generation of the devel- catchment was the number of households with-
opment, (2) capacities of existing network to in a 10 minute drive from the store, and suggest-
accommodate expected new traffic; with the ed that stores such as Kent Town actually had a
ultimate point of attention the capacity of the higher number of households than the store at
Parsons/Mullins Street intersection to accom- Rozelle would have.
modate the additional traffic, and (3) residential In terms of constraints, the Bunnings side
amenity implications of additional traffic. agreed to a number of constraints in terms of
its delivery vehicles. These would be limited to
Expected traffic generation
15 vehicles per weekday, except in the month of
This portion of the discussion was further December, when this would be increased to 20
divided into three parts: per day.
(1) supply side predictors of traffic (in particu- The size of these vehicles was also restricted.
lar considering gross floor area (GFA) of the out- There would be limited to medium rigid vehi-
let, and product/service offerings (in particular cles, up to 8.8 metres in length, excluding the 12.5
the attraction to professional tradespersons), (2) metre trucks previously proposed.
demand side predictors (eg considering geo- The representatives for the Inner West
graphic sales catchments and relevant compe- Council did suggest that, while there were
tition), and (3) proposed or induced constraints restrictions on the use of the loading dock for
(eg specific conditions imposed by regulators or tradies, continued market demand might see
adopted by proponents). this change. However, this concern was not
In terms of supply side, this largely came down agreed to.
to trying to find comparable Bunnings stores
which could be used to infer the traffic load the Capacities of existing network to ac-
12 store would attract, which was expressed as the commodate expected new traffic
“peak traffic generation rate”, given in vehicle This discussion largely devolved to the matter
trips per hour, per 100 square metres of floor of whether the Mullins/Parsons Street intersec-
space. Four locations were used: Fairfield, Vic- tion immediately in front of the proposed store
toria; Lilydale, Victoria; Artarmon, New South location would be adversely affected to a critical
Wales; and Kent Town, South Australia. extent. Expert opinion, modelling and vid-
Artarmon had a higher level of traffic genera- eo-based evidence was submitted by both sides.
tion than the other sites, but the Bunnings side The critical factor considered was whether
countered this by suggesting this was because it traffic at the intersection would back up so far
had a larger catchment area. as to block the actual exit and entrance to the
The point was also made by the Bunnings side proposed store. That entrance is set back just 30
that the store did not feature a tradie loading metres from the intersection. A mock-up of what the
area for utes, which would reduce vehicular It was found that in the end, the added traffic Bunnings store would
traffic. level would be acceptable. look like once completed.
Evidently, just another
In terms of the demand side, Bunnings repre- neighbourhood hardware
sented that the measure it used to determine continues next page store.
hnn.bzinsight
Local traffic impacts er over in Alexandria, in close proximity to one
Here the Court chose to rely heavily on of the largest Bunnings warehouses.
evidence tendered by the Bunnings side using Grant was one of the people who helped
traffic modelling through SIDRA (Signalized previous applications by Bunnings be rejected,
Intersection Design and Research Aid). This is a and he found the process that took place with
software package developed by the Australian the New South Wales Land Court to not be very
Road Research Board as an aid for capacity helpful. As he told HNN:
planning. [Bunnings] were refused three times by council,
Modelling through SIDRA showed that the and then they go to the NSW Land Environment
effect on local traffic of building the Bunnings Court, and that [usually] takes forever. But the
store would be minimal. As a secondary point, weirdest thing that happened was that the last
the Court also noted that as the area was zoned hearing was in March, and usually Land Envi-
light industrial, it did not have the same expec- ronment Court, the commissioner would bring
tations and restrictions as a pure residential a decision within days, or two weeks or so at the
area might have had. longest. Nine months later, they’ve just made a
decision.
Parking So [Bunnings] kept going backwards and for-
As regards parking, the decision followed the wards to council and the commissioner. Saying
same pattern as that for traffic generation. The we’ll do this, we’ll do that to make it all work,
Council suggested a higher rate of parking per they kept going back. They couldn’t get the
100 square metres, the Bunnings side suggested trucks in there and the hours were a problem,
a lower one, and the Court agreed more with access is huge, all these things, and they kept
the Bunnings modelling than the Council’s. This saying, “Oh, we just want to be a local neigh-
13 was largely because the Council modelling was borhood store”. Sure, like when you’ve got 4000
derived from parking at larger Bunnings ware- square metres selling space and your building is
house store, and the Court accepted Bunnings’ 15.5 metres tall.
argument that customers parked for shorter While the process was a bit of a puzzle to
periods at smaller stores. Grant, what is even more of puzzle to him is
how Bunnings is going to make the store work,
Summary given the conditions that have been placed on
One way of looking at the case for the Bun- it.
nings store in Rozelle is that it is a unique store The conditions that the commissioner has put
being built in a somewhat unique location. on them makes it impossible to actually work.
While many locals do not think that the model- They are only allowed 8.5 tonne trucks, 8.8 metre
ling presented by the Bunnings side will reflect medium rigids at the most. They are only al-
the real traffic situations in the long term, the lowed 15 deliveries a day, Monday to Friday, only
Court really had no choice but to accept the within business hours, and there are no weekend
data tendered and regard it as reasonable. deliveries, no after-hours deliveries. They are not The Hardware Store
This does mean, however, that this develop- allowed to deliver to any tradespeople at all off- is nestled into a leafy
sidestreet.
ment will be closely monitored into the future.
If the Bunnings modelling proves correct, then
the Rozelle Bunnings could serve as the basis
for the construction of similar projects in other
inner-urban areas. If it instead turns out that
the modelling is quite wrong, Rozelle will form a
strong basis for Councils elsewhere in Australia
to reject similar planning permissions.
The view on the ground
Somewhat unsurprisingly, one of the local
hardware store owners who will be affected
by the new Bunnings, Grant Crowle, had a few
things to say about the approval. Grant runs
the creatively titled “The Hardware Store”,
which has two stores, one just down the road
from the site of the new Bunnings, and the oth-
hnn.bzinsight
site, so no outwards goods. Tradesmen are not traffic is handled in the region, Grant thinks he
allowed to use the loading docks. Everything’s can move just 1.5km away, and find better access
got to go to the car park. And so, if they abide by to existing markets.
the rules, it’s inoperable.
Grant’s puzzlement isn’t based on speculation, Analysis
or even modelling: it comes directly from his No one, of course, is privy to what Bunnings’
own experience. strategy is except Bunnings itself, but it does
We use medium rigid vehicles, because that’s a seem that the Rozelle store must play an outsize
condition of our development application (DA), role in the development of new strategies, given
and we have on average nearly 15 deliveries a how much time and resources Bunnings has
day. My store is less than one twelfth the size put into it at just the planning stage. Given its
of theirs, and we have trouble keeping it full. I unique design, it’s tempting to see it as the kind
mean, we bring in three pallets at a time on our of store that would complement online sales,
truck. That’s the most you can get in on an eight or even potentially a nearby warehouse (of the
and half tonner. So there’s no way they can fill a storage kind) that could be used for remote dis-
building under those restrictions for the amount patch of goods to building sites and consumers.
of turnover they will do. Bunnings might be able to service the store
When you count your 15 deliveries a day, that under the existing restrictions, but that would
could be, one delivery could be one pallet of take a considerable logistical operation, with
Dulux. That comes off one truck, so that’s one every inbound truck carrying goods that had
delivery. Bunnings being in the same situation been completely repackaged to maximise the
as we are, besides their name brand goods, no- delivery. That is going to be pretty expensive
name goods, they’re getting deliveries from the however — unless it forms part of a broader,
14 likes of Dulux and Sika and the timber guys. So more generalised pattern. Is the Rozelle store,
if they stick to the rules, how do they get a bag then, a sign that Bunnings intends to shake up
of concrete in there, or a stick of timber in there, its logistics operations?
a delivery of doors? And even Dulux has stopped Taken strictly from the independent hardware
using small couriers. So what are they going to retailer side of the story, one of the features that
do? stands out is that it might be time for many lo-
Grant’s real concern is that the only way the cal councils to recalibrate. If firms like Bunnings
store can work is if the rules are not strictly fol- can force their way into developments, then
lowed by Bunnings. Or, with the store opening councils need to think about further relaxing
likely only in another four or five years, that the rules they use to control smaller retailers.
Bunnings will make a subsequent application, Paradoxically, those restrictions end up benefit-
based on new “modelling”, that will enable it to ting businesses like Bunnings, as they restrict
undo some of the restrictions currently in place. smaller retail developments, but pose less of a
Alongside that he has a concern, which has barrier to companies with the size, experience
been growing over the years, that Bunnings and resources to override the decisions of local
has switched from a strict profitability model, councils.
to acting more like a monopoly, seeking market
control. Certainly in his own case, while he does
see much of his trade-oriented business remain- The elevation view of
ing unaffected by Bunnings, he is still thinking the proposed Bunnings
of moving his store elsewhere. Due to the way mini-warehouse for
Rozelle.
hnn.bzstatistics
Forecast: Hardware retail
sales growth in 2020
February is the ture spending to help of slow wages growth These themes were
in this traditional season of trigger more growth and, last year, to a de- picked up and to some
update:
update: calendar year forecast- in the local economy cline in housing prices, extent amplified in the
ing. This is the month — though the picture with the result that second speech:
when we get just is more complex than consumption has been As I have been saying
•start
The text
RBA is mildly enough stats about the that, as we will see. quite weak. Following for some time, we are
optimistic about previous year to work One clue to the this period of bal- passing through a
the Australian up a picture of what government’s reluc- ance-sheet adjustment, gentle turning point
economy for has happened, so that tance on stimulus has consumption growth for the better.
2020
we can consider more emerged from recent is expected to pick up There are a number
• The RBA forecasts clearly what might forecast statements gradually. The overall of factors contributing
growth in GDP of happen next. One of made by Reserve Bank outlook is also being to this outlook. The
2.5% for the year the main activities is, of Australia (RBA) gov- supported by the low expected pick-up in
15 • However, a num- a little paradoxically, ernor, Philip Lowe. The level of interest rates, world growth should
ber of downside looking at everyone first was Mr Lowe’s recent tax refunds, on- help us, the resources
factors indicate else’s forecasts, in large Statement on Mone- going spending on in- sector is in expansion
a less than 50% part because those tary Policy Decision, frastructure, a brighter mode again and we are
probability this forecasts indicate which explained why outlook for the resourc- expecting consumer
will prove true what type of action interest rates were es sector and, later spending to pick up.
the government and kept unchanged, pub- this year, an expected The outlook is also
• Projecting hous-
other entities might be lished on 4 February recovery in residential being supported by
ing demand from
taking. 2020. The second was construction. ongoing high levels of
building approv-
Many people who his speech to the Na-
als indicates
2020 is most keep watch on the tional Press Club on 5
likely to be like economy have been February 2020, entitled
2019 puzzled about the “The Year Ahead”.
direction the current In the first, this
• Demand trends federal government is slightly curious state-
will cease to moving Australia in. ment appears:
decline, but any The centrepiece of this The central scenario
improvement wil has been the apparent is for the Australian
be mild
“need” to balance the economy to grow by
• The economy is budget. There have around 2¾ per cent
highly vulner- been increasing calls this year and 3 per cent
able to disrup- for more stimulus next year, which would
tions, such as a spending to be deliv- be a step up from the
second bad bush- ered by the federal gov- growth rates over
fire season, or if ernment. These have the past two years.
the Coronavirus largely been ignored, In the short term,
develops into a as increased spending the bushfires and the
true pandemic would “unbalance” the coronavirus outbreak
budget. Instead it has will temporarily weigh
largely fallen to the on domestic growth.
states, with Victoria be- The household sector
ing the most success- has been adjusting to
ful, to use infrastruc- a protracted period
Reserve Bank of Australia (RBA) governor, Philip Lowe
hnn.bzindie
statistics
update
investment in infrastruc- government of the day. by the government, and
ture and the likelihood In that sense, what these if it matches up with the
that the downswing in statements may give us a insistence on a balanced
residential construction read on the government’s budget, what is the
will come to an end thinking, as well as an real, perhaps unstated,
later this year. Further analysis of the potential economic policy of the
increases in resource for 2020 by the RBA. government? Chart 1
exports and continuing In brief, it is likely that
Downsides
solid growth in public current economic policy
demand will also help. To start with, there are is to accept what has
Later in this same quite a number of nega- been dubbed “the new
speech he delves deeper tive signs in the business normal” by economists.
into consumer spending. statistics. Elsewhere in This is about accepting
Looking back at last the second statement Mr that growth in GDP is
year, economic growth Lowe mentions the im- unlikely to exceed 3% for
was weaker than we portance of businesses the foreseeable future.
had expected. The global investing in productivity The cause of that limit
slowdown is part of improvements, and yet is a global decline in pro-
the story, but the most business investment as ductivity that has been
important factor is a a share of nominal gross around since about 2005.
domestic one, and that domestic product (GDP) That is a complex topic,
is subdued consumer is down to levels not but perhaps it is enough
spending as households seen since 1994 (Chart 1). to say that it seems likely
16 adjusted to slow wag- Business confidence, as the current Australian
es growth and falling measured by the Nation- government has simply
housing prices. The al Australia Bank, is in accepted slow produc-
downswing in residential negative territory (Chart tivity growth. In that Chart 2
construction was also a 2). GDP growth has not context, balancing the
factor. met forecasts or targets, budget does make sense,
Over 2019, household languishing below 2% as the alternative is
consumption looks to (Chart 3). And the tax stimulating the economy
have increased by only cut delivered during 2019 so as to help investments
around 1 per cent. Given did not stimulate the that improve produc-
that Australia’s pop- economy by much, being tivity.
ulation is growing at used mainly to pay down
household debt. Risks
1.5 per cent a year, this
represents a decline in Probably the most If we forecast this as
per capita terms. This is a curious idea to emerge the approach to the
highly unusual outcome from these statements economy we will see
in an economy that has is that the problem with through 2020, it seems
recorded the type of low wage growth has not unlikely Australia will Chart 3
strong jobs growth that been low wage growth, reach even the mod-
we have experienced in but rather the expecta- est goals the RBA has
Australia. tion that higher wage suggested. GDP growth
It is very difficult to growth is the norm. is more likely to remain
share even the mild Wage growth has been under 2.2%. Figuring into
optimism that Mr Lowe below 2.6% for around that is that the RBA sees
expresses in these six years (Chart 4), while the Coronavirus as being
statements. We can say for most of the preceding the equivalent of SARS.
that one of the things 20 years it was above It is far more severe, and
that have made him a 3.5%. Any acclimation is affecting China at a
very good RBA gover- should have happened time when that nation
nor is that he has been before now. is more central to the
careful to not set the If this approach is one global economy. Analysts
RBA needlessly at odds which has been some- JP Morgan, for example, Chart 4
with the policies of the what foisted on the RBA have predicted the virus
hnn.bzstatistics
will take 0.7% off of early forecasting. the central bank’s very but at a rate which has then declining, while
forecast Chinese GDP One of the paper’s mild suggestion that become slower. multi-dwelling approv-
growth, bringing it conclusions is that the the decline evident Chart 6 shows the als have a steep rise
down to 5.0%. That will construction market during 2019 might same dataset, but in followed by a steeper
have a global flow-on is highly influenced by diminish by the end of a quantifiable form. decline.
effect. direct changes, rather 2020. From 2015 through to Chart 8 shows the
The RBA also sees than a sustained posi- Chart 5 shows the 2018 house approvals same numbers for the
the net effect of the tive level of crucial fac- percentage change on remain fairly fixed, Melbourne region.
bushfires as being min- tors, such as interest an annual basis for while multi-dwelling Here the new hous-
imal, which dismisses rates or house prices. building approvals approvals decrease. ing approvals remain
the possibility that It is changes in inter- across Australia. It Only in 2019 do house relatively stable, and
December 2020 could est rates and in exist- shows that approv- approvals also fall. there is an increase in
be as bad as December ing housing prices that als for new housing Of course, as we multi-dwelling, but it
2019. In addition to drive construction, not shrank for the first know, the housing remains, for the most
the negative business their level. So the direct time in six years market is intensely part, proportional to
statistics we’ve cited, effects of these vari- during 2019, while the regional, so it is helpful the housing approvals.
we would also note ables are temporary. decrease in approvals to consider the perfor- Chart 9 shows these
that a Roy Morgan poll Although discussions for multi-dwelling mance of individual numbers for Brisbane.
has determined that of dwelling investment residences accelerated cities as well. Chart 7 In contrast to the two
Australians are among often emphasise levels, its decline. Alterations shows approvals for previous metropolitan
the most pessimistic our attempts to include and additions — in this the greater Sydney regions, we can see
nations globally at the these in the model did case those requiring metropolitan area. three phases. There
moment. not fit the data. For a permit, so generally It’s a familiar arc, is a period dominat-
17 Residential
example, the ratio of over $10,000 in value with house approvals ed by new houses,
approvals to income — continued to fall gradually increasing followed by a period
housing recovery
has been below average
Top, Chart 5, bottom Chart 6.
The element of the over the past decade,
RBA forecast that is even though the level
of specific interest to of real interest rates
the hardware indus- has been unusually low
try is, of course, the and the relative price
state of the residential of established housing
dwelling market. In the has been unusually
first RBA statement, high.
reference is made to The irony to this
a “recovery”. In the situation is that what
second statement, this creates a bubble in
is moderated to 2020 the residential dwell-
seeing the end of a ing market is not a
“downswing”, which growing economy, but
arrives late in the year. one that is in a state
The RBA has pub- of steady decline. The
lished an interesting RBA responds by drop-
paper entitled “A Model ping interest rates, this
of the Australian Hous- increases house prices,
ing Market”, by Trent and if that increase is
Saunders and Peter sufficient, it becomes
Tulip. One of the most self-sustaining for a
interesting aspects of time.
this paper is that it If the RBA’s forecast
makes use of building is for a very gradual
approvals as its major improvement in the
metric. As the paper economy, then it is
states, among other likely that the housing
factors, approvals pro- market will remain
vide a better basis for very subdued. Hence
hnn.bzindie
statistics
update
where houses increase, but However, drilling down
multi-dwelling reaches a further into the numbers, we
peak, which is then followed see the situation is not very
by a period where new house good in most states and ter-
approvals dominate. ritories, as Chart 11 indicates.
Chart 10, for the greater Australia overall shows
Perth area, shows a market growth of 1.82% for 2019
dominated by houses. At over 2018. However, if we
the very peak of growth in exclude the only state that
approvals, there is a signifi- did perform well, Victoria,
cant amount of multi-dwell- then the gain was only 0.2%.
ing approval demand, but New South Wales showed
proportionally it’s not really growth of just 0.9%, while Chart 7
that much greater than at Queensland, South Australia
other periods. and Western Australia were
These are the most dy- all mildly negative. Northern
namic dwelling markets in Territory and the Australian
Australia. Given the addi- Capital Territory both man-
tional shock to the economy aged around 2% growth.
of bushfires, it is difficult The big winner in terms
to read anything into them of sales was Victoria, which
other than a continuation in showed 6.04% growth for the
2020 of the 2019 market. period. Chart 12 shows just
18 It is hard to find a firm how unusual the situation is,
basis for even the mild op- with most states and territo-
timism of the RBA. It is un- ries converged around +2% Chart 8
derstandable that the RBA to -2%, with the exception of
would describe the economy Victoria. This clustering is
in such mild terms, but it different from the situation
is also a little unrealistic. for 2018 and 2017, where there
Absent stimulus spending was some clustering, but also
— and there really will not a degree of variance.
be any — the downside risks It’s tempting to see this as
are individually small, but due to periods of uncertainty
collectively indicate mod- brought on by events such
erate risks. Another moder- as the 2019 federal election.
ately bad bushfire season, or However, Chart 13, which
a failure to limit the spread shows the numbers for the
of the Coronavirus until the fourth calendar quarter, Chart 9
second half of the year, and indicates the same tight clus-
the economy could even tering, albeit in more positive
lurch towards GDP growth territory. Chart 14 shows that
of under 1.5%. sales for 2019 were close to
those for 2016, but with Vic-
Hardware retail toria and New South Wales
sales swapping places in terms of
In terms of the retail stats their contribution.
for hardware, we see a If we were to predict why
situation that has become Victoria is outperforming the
familiar through much of other states, we would say it
2019. At first glance, it looks is likely not so much due to
like the slight growth we’ve an increase in population, as
seen since 2016 has contin- growing urbanisation. This Chart 10
ued, so that while things are relates both to expanding
not robust, they are at least suburbs, but also to urban in-
improving. fill. Previously distant subur-
hnn.bzindie
statistics
update
ban areas are transforming ware industry will need to
into semi-urban areas, with start taking a more holistic
their own set of resources. approach. Though it is some-
thing that has been studious-
Sales in 2020
ly avoided by the industry Chart 11
One of the major questions in the past, it is well-known
for 2020 is whether Victoria that for many consumers
can maintain its sharp pace hiring a tradie remains a
in sales, or if it will succumb difficult choice to make.
to the same doldrums as the While the rest of the world
other larger states. HNN’s has moved on, home repairs,
general forecast is that this alterations and renovations
sales pace will be maintained remains in a 1970s haze of
for the first half of the year, poor customer relations, and
but begin to encounter head- limited guarantees for work
winds in the second half. performed — not to mention
For the other states and the gender imbalance that
territories, sales are likely has been permitted to flour-
to be a repeat of 2019, as the ish unchecked.
residential dwelling mar- HNN would go so far as to
ket remains subdued, and say this sector could grow by
overall consumer confidence over 20% if it simply adopted
remains low. While there will more regulated modern prac-
19 likely be some sales generat- tices. Online brokers such
Chart 12
ed by the need for bushfire as HI Pages have provided
recovery works, in the longer a step in the right direc-
term communities that have tion, but as their revenue is
suffered from the bushfires generated from tradies, their
will take a dire economic oversight is never going to be
hit, despite government and comprehensive.
charitable contributions. In the retail sector, HNN
There will also be a lingering cannot help sensing that
concern that it’s possible the looking at the charts for
bushfire season of 2020/21 building approvals the
will be a repeat of 2019/2020. answer to growth is fairly
clear. There has been a major
Analysis surge in flat and apartment
Perhaps the biggest ques- dwelling, but not a corre-
tion for hardware retail that sponding shift in the items
emerges from this is simply that urban and suburban
where will future growth hardware stores stock. Yes,
come from? For the Wes- of course, part of the point
farmers-owned Bunnings, of that type of dwelling is
the answer has been to make Chart 13
low-maintenance, but at
better use of existing online the same time there is an
assets, and to move to grow increase in attention paid to
its trade business. For the elements such as storage and
Metcash-owned Indepen- overall room design.
dent Hardware Group the What is common to both
answer delivered at its most these is not so much a
recent results announce- change in business strategy
ment seemed to be to wait as a change in business cul-
for a better housing market. ture, a recognition that hard-
In terms of the trade sector, ware retail needs to change
it seems inevitable that in if it is to stay relevant and
search of growth the hard- continue growing. Chart 14
hnn.bzbig box update
Planned stores include
“hotel” Bunnings
A larger Bunnings
is set to be built
in this in Campbelltown
update:
update: (NSW); a Mercure
hotel in Doncaster
•start
ACCC text
has delayed (VIC) is set to open
its decision on atop a Bunnings
the Adelaide store; Cassowary
Tools acquisition Coast Regional
Council has ap-
• Smarthome
proved extensions to
offering
Bunnings’ Innisfail
• Reynella and (QLD) store; an ex-
Christchurch pansion of Bunnings
20 Airport openings, Balcatta in Western
closures in Mor- Australia has been
ley, Te Aroha and approved after it
Waikanae won an appeal in
A Mercure hotel is being built above Bunnings’ new double-storey store in Doncaster (VIC)
• Store build out the State Adminis-
very progressive by made sense. a number of different
around Australia trative Tribunal over
Campbelltown Coun- The site will span formats that cater
and New Zealand fire risk; and a large
cil – is that this actual more than 17,000sqm for the local markets
Bunnings Warehouse is
Bunnings and the and is worth more where we operate.
in the pipeline for the
site is owned by the than $40 million. There’s no cookie cutter
Christchurch suburb
council, owned by the https://bit.ly/2Uqgl57 approach – we always
of Woolston in New
community, owned by assess the local need
Zealand. There are Doncaster
rate-payers. and what can be
also plans for a new The $90 million
This will give a great achieved in a space.
$47 million Bunnings
return, which is a fan- multi-level Bunnings The new store will
warehouse in Wagga Warehouse at Don-
tastic investment for span 11,000sqm, located
(NSW).
the community. What- caster is set to open at 659 Doncaster Road,
Campbelltown ever happens in the fu- its doors late in 2021. and was once home to
ture, the site is retained Bunnings acting gener- an observation tower
Works have begun
by the community of al manager – property, which stood over 86
on the site of a new
Garry James, said: metres back in the
Bunnings outlet locat- Campbelltown.
Construction is We identified a need 1800s.
ed off Farrow Road in
expected to take 18 for Bunnings in the The Mercure hotel on
Campbelltown (NSW).
months. According to Doncaster area and top of the store is the
This store will replace
Cr Brticevic, it will be this site provided an work of global hotel
the existing location
a purpose-built store opportunity to build group Accor and devel-
nearby on the corner
and have an extra something in line with oper Accord Property
of Kellicar Road. Camp-
Manningham Council’s Group, and the devel-
belltown mayor George 5000sqm. The mayor
also said the lease vision for Doncaster opment will feature
Brticevic told the
on the existing store Hill. 183 rooms, including
Campbelltown-Macar-
would be up in about We are always look- a restaurant and bar,
thur Advertiser:
two years, so the move ing at opportunities to alfresco dining space,
...Another thing that’s
really exciting – and to a different location innovate the design of continues next page
our stores and we have
hnn.bzbig box
update
“Hotel” Bunnings (continued)
meet Australian Stan-
dards for construction
in bushfire prone
areas, and revised
bushfire management
plans being submitted
before work started.
https://bit.ly/2OnA8ya
Woolston
A resource consent
has been approved for
a 10,744sqm Bunnings
store with 329 car
parks in Woolston,
New Zealand. It will
be situated on a site
that is currently home
to industrial activity
including a car dis-
mantler and a trailer
21 builder.
Bunnings could not
confirm when work
The Bunnings Innisfail store in Far North Queensland is set to expand the development be
would start on the
sundeck, fitness centre, an existing adjoining year.. allowed. In delivering
Woolston store, or
rooftop pool and a building which will From The Cairns Post and its findings, the tribu-
when it was planning
function room with an allow for the bigger Innisfail Advocate nal acknowledged the
to open. NZ general
outdoor terrace. nursery as well as a proposed development
Balcatta did not comply with
manager Toby Law-
https://bit.ly/31k1nib building materials and rence said it was
landscape yard. In August 2018, the the State’s Planning in
Innisfail Metro North-West Bushfire Prone Areas
still early days and
The Innisfail Advo- they would keep the
The planned expan- cate reports that the Development Assess- policy but said denying
community updated as
sion of the Innisfail site for the develop- ment Panel approved the building exten-
things progressed.
store will cost more ment application is for- Bunnings’ application sions would not reduce https://bit.ly/2SaKClG
than $2?million and merly home to Innisfail to expand its opera- the risk or impact of
create more than Motor Company and tions on the corner of bushfire on the prop-
500sqm of extra bought for $650,000 in Balcatta and Erindale erty.
retail space as well as July 2019. Roads. But it denied It said the panel’s
increased car parking Bunnings currently an extension of the bushfire and planning
facilities. Bunnings has four stores across timber trade sales yard experts had “inflexibly
area manager Michael Far North Queensland, and enclosure of the applied” the policy and
Rodwell told The at Atherton, Cairns, building materials and associated guidelines.
Cairns Post: Smithfield and Innis- landscape area because Michel Scott, who
Our landlord has pur- fail. Mr?Rodwell did of a perceived fire risk presented in support
chased additional land not say whether any from its location next of Bunnings, said the
next to our Bunnings new Far North stores to vacant bushland, redevelopment would
Innisfail store and were on the cards. He classed as a bushfire improve safety and re-
this has presented an said: prone area. duce the bushfire risk,
opportunity to ex- While a start date is Bunnings appealed according to Commu-
pand the nursery and yet to be confirmed, to SAT (State Adminis- nity News.
improve the car park. construction (in Inn- trative Tribunal) which The tribunal imposed
The expansion will also isfail) is expected to late last year ordered conditions requiring
see Bunnings move into begin some time this the refused aspects of building materials to
hnn.bzbig box
update
Changes to retail network are ongoing
22
Bunnings has opened its $29 million store at Reynella, South Australia
In the latest round- playground, along with We’ve also been teach- porting team members Christchurch
up of Bunnings store nearly 300 carparks. ing the kids at Reynella at Morley. She told
The NZD33 million
openings and closures, Complex manager Primary about the Community News:
Bunnings store at
the retailer has opened Mark Guster said the benefits of worm farms All of the current
Christchurch Airport
its $29 million store atteam was looking for- and how to properly Morley team mem-
has opened its doors.
Reynella (SA); the Mor- ward to being part of maintain them. bers will transfer to
The new warehouse
ley branch in Western the local community. From Southern Times Mes- alternative stores and
covers more than
Australia will close in He told the Southern senger our focus is on working
13,000sqm and includes
April 2020 before its Times Messenger: with them throughout
Morley parking for more than
lease expires in June; Team members this transition. The
The closure of the 300 vehicles.
the Christchurch have already worked Bunnings Morley team
Morley branch was Store manager Mihir
Airport store in New together to assist has done a great job
planned when the Chitre has worked at
Zealand opened in in local community serving local custom-
Bunnings store in Bay- ers over the past two Bunnings for seven
December while its Te projects such as a
swater (WA) opened in decades. When the years. She told the
Aroha and Waikanae garden revamp with
2018. However, the big Inglewood store was Otago Daily Times:
outlets closed for good communal seating at
box retailer decided to destroyed by fire early Team members have…
around the same time. Neporendi Aboriginal
keep it open when the last year, the team been working togeth-
Forum Inc. We’ve com-
Reynella Inglewood store was er to assist in local
pleted a mural, sensory really pulled together.
The store on Panalat- wall and painting at destroyed by a fire. The We’re really proud of community projects,
inga Road store spans Reynella Community final day of trading will everything they have such as rejuvenating
more than 14,000sqm be on April 13. Burnside Primary
Children’s Centre, as done.
and includes six kitch- well as installed garden Bunnings regional School’s fruit and
https://bit.ly/2uUX5lo
en displays, six bath- operations manager vegetable garden with
beds and worm farms
room/laundry displays, at Reynella Primary Hayley Coulson said seasonal vegetables
a nursery, a cafe and a School. the priority was sup- continues next page
hnn.bzbig box
update
Retail network (cont.) Connecting smart
devices at Bunnings
Bunnings is using the Grid Connect plat-
form to control its smarthome ecosystems
that use both Amazon Alexa and Google
Home. The big box retailer now has an online
section devoted to its smarthome offering
with every single product controllable
through the Grid Connect app, available on
both iOS and Android.
According to Channel News, the Grid
Connect platform had a low-key reveal in
July 2019, and aims to connect every smart
home product sold by Bunnings to the same
companion app. The app is seen as ideal
for beginners wanting to get started with
connecting their home to the internet and
The new Bunnings opens at Christchurch Airport (NZ) has officially opened controlling their household with Google
and installing their Bunnings direc- and safety or efficiency Assistant or Amazon Alexa.
very own greenhouse. tor – group HR and perspective. He told The arrival of the platform and the app
https://bit.ly/395U7td New Zealand Jacqui Stuff NZ: comes a few months after Bunnings initially
23 Coombes said it was a It was very, very began stocking home automation products.
Te Aroha and Its first brand offerings included Philips, Sen-
sad and difficult deci- sweet, but the fact is,
Waikanae gled, Google Home Mini, LIFX and Wiz.
sion to make. She said it doesn’t fit Bunning’s
The permanent in a statement: efficiency or safety
closure of Bunnings While our smaller-for- models. https://bit.ly/2GMinUZ
stores in both Te Aroha mat stores play an The speed with which
and Waikanae impact- important role servic- Bunnings had moved
ed their local commu- ing local communities was not a surprise to
nities. Matamata-Piako these two stores have him. He said:
District Council mayor been challenged to These days if you’ve
Ash Tanner told the translate the Bunnings got a situation where
Waikato Times: offer of widest range, a risk is indicated
It’s a huge loss for the lowest prices and, to a board, then the
community because despite the excellent ef- board’s going to make
it’s one of the bigger forts of our team, best quick and cathartic
shows we have got in service. Smaller-format decisions.
the town and also the stores are often in sites From the Waikato Times and
tradies rely on it and that are older and Stuff NZ
now it means potential- aren’t able to offer the
ly they have to travel 20 environment we will
minutes or further to accept for both our
pick up any supplies if team and customers.
they need them. Retail expert Chris
The closure will also Wilkinson of First
create difficulties for NZ Retail agreed the
the town’s ageing pop- Bunnings store in
ulation because of the Waikanae was old
travel now required to and previously used
purchase goods they by a chain of timber
would have been able merchants, so it could
to buy at Bunnings, he well have been chal-
said. lenging from a health
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