In The Office EXECUTIVE INTERVIEW MIGHTY Independent

In a duopolistic industry that is run by big-box stores, Mitre 10 is giving a voice to the independent retailers and helping them to compete against the major chains.

Images by Estelle Judah Photography

ith over a decade $42-billion hardware sector was The core value at is to “It is our belief of experience going through dramatic change, build successful independents. that consumers across the with the introduction of new Metcash group, entrant Woolworths—through its This model is different to want a plus 16 years Masters chain—planning to take on Woolworths and in the convenient, Wwith major fuel company Exxon the market leader, Bunnings. sense that Mitre 10 does not want local, and Mobil including four years in Masters announced plans in 2009 to company-operate its network. France and Germany, Mark to roll out 150 big box hardware “As a wholesaler, we own the innovative Laidlaw joined Mitre 10 with a stores over a five year period. The distribution centres, the brand, brief to turn the company around. home improvement market is very and the marketing programs, but alternative to fragmented and will go through we want families and small the chains, but “In April 2010, I was appointed considerable consolidation over businesses to own and operate our we have to CEO to Mitre 10. Metcash had the next three to five years. stores. It is our belief that just acquired a 50-per-cent share consumers want a convenient, fight hard of the business. The other 50 per “After the two big-box operators, local, and innovative alternative to each and cent was owned by the Mitre 10 the remainder is split among the chains, but we have to fight storeowners at that time but was hundreds of independent hard each and every day to make every day subsequently purchased by operators, from timber yards to sure small businesses survive. To to make Metcash in July 2012. Before that, plumbing and bathroom succeed in this fight against the I was general manager for IGA in specialists. Currently, there are two big-box operators, it is important sure small from 2004 to 2010. It wholesale suppliers servicing the to have a passionate executive businesses was a time of significant growth independent sector, Mitre 10 and team that is committed to and a fantastic time to be Danks, which was acquired by protecting and growing the survive.” involved with IGA and the Woolworths in 2009. independent hardware sector. - Mark Laidlaw independent grocery sector. “In many ways the two big box “I am very proud of our team- “Metcash appointed myself and conglomerates Wesfarmers and based culture at Mitre 10, and As featured in two other senior executives, Carl Woolworths, which now control 80 consider our people and our

The psychology Brooks Brothers The CEO Magazine behind business decisions Swiss Escape: The Valais Range Rover Sport Effective governance Science of Club-fitting Salem, General Manager per cent of the grocery market are storeowners to be our strongest Rethinking your wheelhouse For more info visit Merchandise, and Robin Johnston, trying to do the same in hardware. assets alongside the Mitre 10 theceomagazine.com.au BUILDING General Manager Commercial, to We believe there is also a place for brand. We encourage our staff to

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Defence Bank’s Jon Linehan • De’Longhi’s Paolo Albertoni • Saracen Mineral Holdings’ Raleigh Finlayson drive the turnaround. The a third player and that is Mitre 10. spend time in stores rather than

theceomagazine.com.au The CEO Magazine - May 2014 11. sitting behind a desk in the office. You learn a great deal by visiting a Mitre 10 store and walking the shop floor.”

Considering the similarities between independent grocery and hardware stores, plus Mark’s previous experiences, Mitre 10 introduced some similar strategies to the ones used in strengthening IGA. “At Mitre 10, the first thing we did was make sure our external branding was consistent. Over the years, Mitre 10 had experienced nine different versions of the brand, and the 400-store network had no consistency. We painted our stores in a contemporary blue and white, and it was pleasing to see the Mitre 10 storeowners were prepared to invest in the new branding. This helped to provide a sense of unity and team spirit.”

The second strategy for Mitre 10 was to re-launch a new marketing program. “Julie Smith, General Manager of Marketing, was instrumental in securing Scott Cam as the brand ambassador for Mitre “Our a successful model. It also helps our knocking on suppliers’ doors in an 10. Scott provided great appeal for consumers storeowners manage their inventory effort to win back respect and both our tradie and our DIY levels better, as once the sale is show them we had a clear vision customers. Scott was actually a these days received online, our distribution and strategy for the future. Mitre 10 customer before he want to centres check to see that the joined us, and that helped make nominated store has adequate “We support both the big-brand our TV commercials very authentic. spend across stock. If the product is not in stock, suppliers and the small innovators. This also enabled us to secure The a number the store receives a delivery within In terms of big brands, paint is Block, which has been a very 24 hours and we ensure the stock a very interesting category. successful DIY television series of channels. is available when the customer Dulux is ranged in Bunnings and allowed us to reach a new and Bricks-and- drops in to pick it up.” and not Masters. Wattyl is ranged younger audience. Mitre 10 has mortar is very in Masters and not Bunnings. We been a major sponsor of the show Mitre 10 will continue to invest in are happy to be a customer of for over four years.” important to us, its omnichannel platforms in the Dulux, Wattyl, and Taubmans as it particularly as future, seeking to take advantage provides our stores and their It was also important for Mitre 10 of its physical stores as convenient customers with greater choice. to expand its digital platform. “Our our brand is pick-up points for products consumers these days want to about being ordered online. The retailer is “There are also a number of spend across a number of also very pleased when online smaller, innovative suppliers that channels. Bricks-and-mortar is very ‘mighty helpful’. shoppers visit the store and make will not be ranged by the big-box important to us, particularly as our But we have additional purchases. operators. Things such as pool brand is about being ‘mighty testing works very well in Mitre 10 helpful’. But we have also also established Strategy three was about re- stores. We work with a supplier established an online ‘click and an online ‘click engaging with suppliers to ensure called Pool Resources, and nearly collect’ service which generates they saw value in Mitre 10 and 50 per cent of our network has over $1.3 million in sales. It has and collect’ continued to invest. “Carl Salem pool-testing facilities available. been very pleasing to see the Mitre service which and I spent the first three months This has worked well, as many 10 storeowners embrace online generates over selling and become better at it. $1.3 million “Our partnership with Mitre 10 is solid and a key platform for growth in the Independent “Having the end consumer order hardware segment. Our strong relationship with Mitre 10 ensures we continue to work in sales.” together closely ensuring high quality support and programs to members and their product online and then pick up - Mark Laidlaw consumers.” - John Lange, National Key Account Manager - Independents, Valspar the product instore is proving to be Consumer ANZ

theceomagazine.com.au The CEO Magazine - May 2014 13. pool shops are not open on “We also introduced a locked- still an ongoing battle today Saturday or Sunday afternoons. down low pricing program, and with the chequebook acquisitions developed a more aggressive and by the chains, the backing of “Premium power tool company appealing monthly catalogue which Metcash has allowed us to find Stihl refuses to deal with large has been well received by our better solutions when storeowners corporates like Bunnings and stores. Previously, the Mitre 10 want to sell. Masters. You will find the Stihl catalogue looked more like a range www.abscosheds.com.au range in a number of Mitre 10 guide than a sales tool. Today’s “For example, we can assist in stores due to our stores enjoying version is far more consumer finding a new owner for the store, local ownership.” friendly and allows our customers or in some instances take a to purchase many goods online. minority interest in a group of Carl Salem and his merchandising Our warehouse range increased stores. When we completed our team introduced some other from 16,000 to 22,000 SKUs, network plan, we recognised the significant initiatives which have which provided our stores with a need to retain a national footprint improved Mitre 10’s competitiveness. wider variety from suppliers and of the larger Mitre 10 stores that These include a revamped private reduced the need for our stores to had a good mix of trade and DIY label program. “In 2010, Mitre 10 purchase elsewhere.” customers. To help protect this carried 17 different private labels, footprint, we took a share in 10 of which was very confusing to both The fourth strategy was about the businesses. We don’t want to the storeowners and the consumers. protecting and growing the become involved in the day-to-day We decided to cut the number from 400-store-strong Mitre 10 network. operation of the stores, so we leave 17 to eight but improve the depth of “In previous years, both Bunnings this to the local owners. But we the range and price points of the and Masters had approached larger did need to provide some remaining eight brands. This has Mitre 10 owners and offered them additional capital that has allowed seen the re-launch of our ‘buy right’ a large cheque to sell. This was these businesses to grow. Some range, which has increased from 60 occurring in regional areas, and examples of this are the Petrie’s to 300 SKUs. The new black-and- while it was a good retirement business in regional New South red packaging, together with a more package for the owner, it did not Wales, which has six stores; competitive opening price point, has help the group as it weakened our Sunshine Hardware in been a good sales driver in stores. national footprint. While there is Queensland, which has grown

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25 CEO Mag Ad_6.indd 1 21/03/2014 11:08 am and Banner group in South need to be good enough to stand . Both these businesses on our own. have a strong trade focus, and this fits with Mitre 10’s aim to become “Our experience in a dominant trade player over the has shown that the big-box next three years.” operators have ended up with about 80 per cent of the market. Trade in the home improvement We are confident that a good sector is driven by the relationship independent wholesale operator between the storeowners and the such as Mitre 10 can survive and tradespeople. Mitre 10 storeowners thrive on the remaining 20 per are very good at understanding cent, and there is certainly a place their customers. They also realise for well-run family businesses that that it is service, reliability, and provide superior customer service. stock availability that are critical But we need to keep fighting for to tradespeople. the independents every chance we get because if smaller players are “Our competitors at Danks have driven out of business, it will taken a different approach and reduce choice and innovation and decided to corporatise Home will eventually drive up prices.” Hardware stores in an effort to build their trade business. Over time, they are removing the owner of the stores from the business, “Mitre 10 have been long term partners of which is interesting as it is the ours, sharing the same vision of constantly owner that holds the key improving equipment for DIY projects relationship with the customer.” throughout Australia. The relationship has helped both companies enhance their reputations as reliable, forward thinking and According to Mark, strategy five accessible to all consumers.” - Ian Dalziel, involved modernising Mitre 10’s Managing Director, Positec Australia Pty Ltd supply chain. “Metcash is well recognised for providing world- class distribution solutions. Mitre 10 is now well advanced in automating our distribution centres to the Metcash standards. This has included the introduction of voice-pick, an upgraded warehouse management system, common standards, establishment of a national distribution centre for slow-moving stock, and a partnering arrangement with Kerry Logistics in China. The primary from six to ten stores; and the many instances, because they focus is to provide an efficient, low Fagg’s business in Victoria, which believe the Woolworths–Danks cost-to-serve model for our now has four stores.” model is conflicted. For example, customers while ensuring a safe when Masters builds a work environment for our staff.” At the same time as protecting the 13,000-square-metre box within existing network, Mitre 10 has five kilometres of a family-run Mitre 10 is protecting a well- also been able to grow by business, it is difficult for that respected, heritage Australian attracting 76 new independent family to feel valued by their brand while helping independent stores to the Mitre 10 family over supplier. One of the core values at storeowners survive in a market the past four years. A large Mitre 10 and Metcash is not to dominated by chains. “It’s so number of these have come from compete with our retailers or important that Australia continues A CUTTING EDGE TOOLSHED the Woolworths-owned Danks storeowners. We are a wholesaler, to have a vibrant independent group. “Over 40 stores have not a retailer. sector, and a company like Metcash FOR A CUTTING EDGE BRAND joined us from Danks. These are plays a vital role, be it through the really good, independently owned “We have also been able to IGA supermarkets, the Mitre 10 You may not know the name Positec; however, our WORX brand is rapidly becoming a household name in family businesses that were convert a number of hardware stores, the Cellarbrations market. The name Positec is derived from ‘positive technology’, reflecting our cutting edge innovation and design with a previously branded Home Timber independently branded, family- liquor stores, or the Autobarn desire to have a positive impact on people lives and the environment. This philosophy is interwoven into every aspect and Hardware or Thrifty Link. owned stores to the Mitre 10 automotive stores. It is a very of the WORX brand, from initial design through to production. WORX is not only at the cutting edge of today’s market, They have joined Mitre 10, in brand, such as the Dahlsen group competitive marketplace and we it is creating the tools for the future, Positec sees MitreJohn Danks10 Australia & Sons as and key Homeretail partnersHardware in as delivering key retail the partners innovative in delivering WORX brand the innovative to the Australian WORX brandmarket. to This the Australian partnership market. is a true This collaboration partnership tois abring true WORXcollaboration to Australian to bring consumers. WORX to Australian consumers. you’ve got the power Our new headquarters is in Suzhou, China. Opening in 2014. 16. The CEO Magazine - May 2014 theceomagazine.com.au

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