Total Tools is one of Australia’s largest independent professional tools retailer and has serviced tradies for more than 30 years. An Australian-owned and operated franchise network, Total Tools is continuing to grow and expand its unique offering nationwide.
Inside Retail Weekly: How have the past 12 months been for Total Tools?
Tim Cockayne: Total Tools continues to grow at extraordinary numbers with total growth greater than 25 per cent and same store growth remaining in double digits. We also opened 10 stores in the period, and continue our expansion in all states of Australia.
Just this week, we relaunched our Insider loyalty program, and two per cent of the Australian population are Insider members. The launch of the new program allows every single one of our loyal customers to start earning points from every dollar they spend. Customers can earn points today, then they can spend them tomorrow on any products in-store. It’s a big change in the way we previously ran our loyalty club and we should see our engagement levels increase even more.
This week, we also started a new division for commercial accounts and a general manager of commercial accounts has just started, so we can tap into the national accounts business that we haven’t been able to get into until now. That’s business such as mines, government work, large national customers and that’s a $1.3 billion industry. We believe there’s no reason that we can’t have 10 per cent of that over the next period and we’re certainly targeting a big share of it. We want that 10 per cent as quick as possible.
IRW: What plans do you have for the coming year?
TC: We’ll continue to open stores – we’ve opened 10-12 stores over the last number of years. We’ve got those numbers up to 65 and between now and June next year, we’ll open another 11. We’ve launched our new fit-outs and currently, 15 out of 65 store fit-outs are already rolled out – we’ll continue that to have more than 50 per cent of stores completed. The benefit is it’s a much improved customer experience, it also provides us with an additional 35 per cent of inventory selling space, which is critical for us.
We will continue to focus on Sydney, too. The issue is it’s an older town with older buildings and there are restrictive zoning laws throughout the city that limit our ability to provide our full offer. If we were looking to have an offer that’s in a 400sqm space, we could get into Sydney much easier, but we aren’t. Our offer is an average of 1,250 sqm and it’s certainly been difficult to find that size. We have a lot of franchisees ready, and a number of sites available, so in the next two years, we’ll open another six stores in Sydney.
In the meantime, over the past couple of years, we’ve opened two stores in Wollongong, one in Newcastle, two in Sydney and we will open a further two in Newcastle, one in Tuggerah, another in Gosford, and six more in Sydney.
IRW: Would you say there are a lot of other competitors in the trade retail space?
TC: It is a changing landscape and quite diverse, as many of our competitors have an industrial offering, whereas Total Tools has taken their industrial offer to a retail offer, with greater enjoyment and experience in store. In the sector of professional tools for tradespeople, Total Tools is number one in Australia with regard to sales and national coverage and is continuing to grow.
There’s certainly competition, but it’s more state-based than national. There’s Trade Tools (Qld), Adelaide Tools (SA), Toolmart (WA) and Sydney Tools (NSW).
That said, we compete with hardware stores and Bunnings to a small degree. The reality is the typical tradesperson would rather go into a store where like-minded people go – they don’t want to go into a DIY store and buy something that will fall apart.
IRW: A lot of tool and DIY stores seem to be slower when it comes to entering the ecommerce game.
TC: I think some managers within retail companies have been reticent to move and don’t believe that customers will move that way, but the reality is they are and we’re seeing it.
We’re already on our second platform, we relaunched again with Magento 2 and the increases on our online platform are massive. The reality is we’re growing at three, four, five times from the previous year. Customers are getting into the habit of going online to purchase, and picking the product up in-store or having it delivered.
We treat all our stores as distribution centres. Being a franchise network, the sales still go through the store and it works well because it links the customer back to their local store. The other part is we have to treat our customer wherever they want to be serviced, whether they’re on the end of the phone, online or come in store. We need to adapt to a different world and at the end of the day, it won’t come down to whether someone’s a tradesperson or someone just wants to buy a pair of pants – it comes down to shopping habits and for Australians like everyone else, it’s changing.
If you don’t adapt, then there’s a good chance that in a number of years, you’ll wonder why your business is going backwards. A great example is for six months, we’ve had a project team that’s been studying Amazon and looking at what they do well and where the differences lie between our businesses. We put a lot of marketing funds into ecommerce and we continue to challenge ourselves in our ability to improve our logistics.
We don’t want to be a one-dimensional retailer. We need to be an omnichannel retailer and the way we go about it is important.
It’s no different to how marketing has changed. Go back 10 years and most of it was done through radio, catalogues and press – good luck with that today. If you don’t have everything else in place, you’re in trouble. You need to understand the customer and their details – the broad approach of sending everyone the same offer has gone. When you run loyalty, and ecommerce, gathering data and understanding the customer better, you can tailor offers to customers. To us, it’s a part of the overall customer service.
If I want to market to customers, I have to market to them at home, when they’re on transport, when they’re working on-site. At home, I can market to them via their phone or through catalogues in the letterbox. In the car, I can do it through radio. On the work site, I can do it through radio, SMS’ and EDMs.
Retail is about thinking in that same way – how do I service customers in ways that they want, not what our business wants? Remember, there’s a group of kids about to enter the workforce who have never known a life without a mobile phone or the internet. We need to be ready for them.
IRW: What plans does Total Tools have for overseas expansion?
TC: The reality is Total Tools won’t work in every country – I don’t think it’d work in some developing countries or under developed second and third world countries, but when you look at places like New Zealand, the US and across Europe, it will work because when you look at the numbers, they’ve got the same requirements in regards to construction, they’ve got the same brands and needs.
I go into a lot of these countries and the independent channels look a lot like Australia did 10 years ago. It’s still a very industrial offer. Somebody’s got to change that, but nobody has and nobody is like us.
The first place we’ll go will probably be NZ, we’ve done a lot of work on it. The only reason we haven’t entered is because we have opportunities within Australia and we want to focus on that.
IRW: What do you mean exactly by tool retailers having an industrial offer and what does it look like?
TC: Even in our business, up until the last 10 years, we had 200-400 sqm stores with a limited range in store – you’d come in and purchase a product. It wasn’t just browsing, it was going to the counter to ask for something and a lot of the time, someone would say to you, ‘I’ll order it and have it in seven days’.
But with our offer, it’s about providing the customer with a selection to choose from and an ability to take that product home today. That’s what we’re focused on. If you go into a lot of other countries, you have to go into hardware stores that are extremely old and underinvested. That’s the relic of a cooperative model, where there are a lot of stores that just haven’t had the investment they require.
IRW: You’ve been in retail for 20 years now. How has the art of retail changed over that time?
TC: When I started in retail, it was all about high low selling and there was a lack of discipline and efficiency and the customer was treated with contempt in many ways. So how did the best differ from the others? It was on a strong brand or price – customers bought based on a brand they really wanted or a perceived saving at particular time.
Today, that has completely changed with EDLP (everyday low prices) and how you go about business. The internet has changed everything, customers want to be treated and spoken to differently. It’s more personal, but at the end of the day, the one thing that hasn’t changed is the fact that we buy product, sell it and offer customers an experience. That experience is all about the customer service, the customers’ enjoyment of being in-store or online and how we can get them there.
When loyalty programs first started, it was all about giving customers a card that they carried around in their wallet, but now it’s electronic and there needs to be something in it for the customer. They need to be able to opt in and out, too – privacy laws have come in.
Retailers have had to change along with the world and through that time, we’ve lost a lot of large retail companies and iconic brands. When the internet came in, all of a sudden, there was ecommerce and three, four, five years later, we started to see retailers disappear. You’d hear managers and owners saying, ‘The internet killed me’, but the reality is it didn’t kill them. What killed them was their reluctance to change.
Now we’re going into a period where Amazon is coming in and it’ll be the same thing – some retailers will disappear and excuses will be made that Amazon killed them, but Amazon won’t kill them, it will be their reluctance to change. That’s the sad thing about retail when people don’t change. As I like to say, in retail, if you’re doing today what you did yesterday, you’re in trouble.