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Developing the foundations to support rapid change

The homewares and hardware sector continues to experience a prolonged period of elevated demand. CommBank research conducted in January 20201 shows that over the past five years, consumers were more likely to have increased their shopping in the category than any other.

More recently, the pandemic has led to ‘cocooning’ and a rush on items that could help consumers improve their work and living spaces as they spend more time at home. This has supported a sharp uplift in spending within the category since [March] 2020, which was sustained even as the first round of lockdown measures eased.

CommBank research from January 2020 also showed that as both online and in-store shopping increased over the past five years, homewares and hardware retailers had been investing heavily in their product offering, technology, systems and processes, and customer experience.

While this investment helped the sector manage the recent surge in demand, we spoke to Philip MacGregor, Managing Director of leading independent hardware retailer Hardware & General, about other crucial steps the retailer is taking to navigate a changing market. 

Meeting demand

For Hardware & General, Sydney’s housing construction boom in recent years had skewed the business towards supplying tradespeople with heavy building materials. But with the onset of coronavirus, retail customers emerged alongside strong ongoing demand from building sites which put pressure on the supply chain.

“People were turning to us to supply everything you could possibly put into your home,” Philip says. “Given our focus on serving our customers, we wanted to make sure people knew it was safe to trade with us, but we also needed to manage our supply chain to meet stronger demand.”

“Many retailers have sacrificed resilience in their supply chain for price and speed, but we weren’t too badly caught out. We began asking our supply chain partners about possible coronavirus disruption in February before the pandemic was declared. We also sourced new suppliers of products like toilet paper and sanitiser.”

Systems to support change

CommBank research conducted in January 20201 found that for homewares and hardware retailers, technology, systems and processes was the third largest investment area over the past five years.

Hardware & General’s General Manager of Operations, Kevin Baker, believes this investment, which includes a quality management system of continuous improvement, has made Hardware & General nimble, agile and innovative. This helped the business remain more responsive to changing customer needs.

Hardware & General’s promise of free next-day delivery of heavy building materials to building sites has been a barrier to online competitors. Hence, its most significant operational change following coronavirus was responding to the sudden demand for “online everything” from commercial and retail customers, and making a further move from in-store to online sales channels.

“With people more home-based and ecommerce a firmly embedded part of the way of life in Australia, we needed to be customer-centric and responsive to changes to our customers’ needs. More people were looking for home offices, home entertainment and home gyms.”

“Within two weeks, we had online product lists, an ordering capability and launched ecommerce for retail customers. We had already done some of the groundwork and accelerated from that.”

People and customers

According to the CommBank Research1, consumers say that homewares and hardware retailers have captured their attention through their product range and prices, as well as customer service, something they rate significantly better than in other categories.

Hardware & General’s customers say they choose to shop there due to service levels and staff’s willingness to help. This reflects its “journey to transformation” over the past two years to become “a great place to work and a great place to shop,” explains Philip.

Amid the spike in orders, staff worked until each delivery for the day was done, expended considerable time and effort finding new suppliers for basics, and volunteered to work at other stores as part of contingency planning if any store had to temporarily close.

“We have learned a lot about ourselves and that will have a long-lasting impact on the quality of our customer service,” Kevin says. “Particularly, the trust we have in each other, coming together to meet our mission, and learning that we have deeper capabilities.”

Responding to market changes

With digital clearly cemented, Philip sees an opportunity to do more online with smaller retail products. He expects households will continue to purchase more homewares and hardware while the scope for travel and holidays remains limited.

However, Linda Lamb, Hardware & General’s Financial Controller, says that the retailer’s investment plans need to be constantly re-assessed and that successful retailers need to remain entrepreneurial.

“A nimble company has to be constantly reviewing where cash is directed and keep capital on hand to pivot quickly,” Linda says.

Kevin reiterates that Hardware & General’s investment in technology, systems and processes has given it the “apparatus to change as our market changes” from tradesmen on building sites to homeowners undertaking renovations and home improvements. But having an engaged team focused on delivering good customer service when it was needed most was just as crucial.