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Looking at the hardware channel as a whole, there is an air of overriding excitement about what the coming months and years hold. By all accounts, painting & decorating is in the same boat, with the category showing some strong growth in recent times.
Many of the players consulted for this piece reported continuing strong growth on last year and, happily, they are to a man predicting a similarly strong season ahead as we move closer to summer.
What’s behind this? Paul Yaxley at Haydn Brush points to Auckland and Christchurch as key factors contributing to the growth. But he also points to the election as a reason the market may be slowing down around the period preceding and possibly following the General Election on 20 September.
“The market has been strong in Auckland and Christchurch with the real work still yet to come. The rest of the country has seen modest growth although after the elections I expect this to lift.
“I just feel that everything tends to go into a holding pattern at election time and it’s quite normal for the rest of the country to be dragged along by the coat tails of the better performing regions.”
NOT ALL JUST NEW BUILDS
Painting & decorating differs from many of the categories covered in these pages in that much of the business is driven by renovation work, rather than almost solely by new home builds.
Richard Percy, Managing Director at Paint Aids, sees both the renovation and rebuild markets going strong for the company: “The 12 month residential consents year on year are up 24% which is the highest I think since 2007. And of those increases, 58% comes out of Auckland and Christchurch. So that tells you where the demand is coming from.
“Having said that though, obviously new housing drives demand and confidence but our business is still heavily geared towards the renovation market, probably 70% of it. And the value of that work has also increased in the region of 27% year-on-year. So both are going reasonably well. Christchurch has been a little bit slower than expected but in general the market is quite buoyant.”
These sentiments about business being driven by both trade and consumer, are echoed by Bostik’s Paul O’Reilly: “In Auckland in particular people are very indecisive purchasing new property and are then deciding to instead just renovate the property they are in already. So that certainly helps us with fillers, wallboard adhesives, those kinds of things.”
Renovations are also a driving factor behind the success that the Dulux paint company has had over the last 12 months. National Retail Sales Manager Darren Newland says that with the economy moving in the right direction there is a lot more positivity around the market.
“There is a lot more confidence, I believe, from consumers in terms of people wanting to do a lot more refresh work on their properties where they may have held off in the last couple of years from doing some of that general maintenance stuff and that’s starting to kick back in.”
Award Concepts’ Sales Manager Darryl Patterson agrees with all this but adds that the recent hard work put in by the company has added to this lift in the market.
“We are pleased with where we are going, our market share has lifted and we think it’s due to the work and effort put into our research and development. Our new products are making it a lot easier for the consumer to use, so some of the innovations in our product are helping to increase our sales as well.”
WHAT’S TRENDING UPWARDS?
So what trends are emerging? Depending on who you speak to, it can be colour trends, product trends or even how consumers purchase and research their products.
Paint Aids’ Richard Percy looks at the type of building that is going ahead in some of the major regions as something to keep an eye on and front of mind. Pointing to the increase in Auckland of apartments, townhouses and retirement homes, Percy feels that this should be looked at as a potential to generate some serious revenue.
“You’re seeing established and emerging retirement home companies announcing big chunks of land and you’re looking at 1,500-2,000 units in the next 12 months. So certainly new building in retirement homes is happening.”
In terms of trending products, Percy says because the dollar has been so high a number of companies in the painting and decorating market have been importing the same brands into New Zealand. The negative net result has been “a race to the bottom both in terms of price and mentality”, he says.
Paul Yaxley over at Haydn Brush looks at the criteria that are fundamental to the operation of businesses in the category. “In a general sense I see that omni-channel marketing is becoming the norm as businesses strive to stay relevant to the all-powerful consumer.
“The real trick to maintaining consumer attention, however, is to keep evolving as tomorrow’s solutions are likely to be products that don’t even exist yet. We’re just constantly in a reinvention process.”
INFORMATION AT THE READY
With consumers entering stores equipped with more knowledge than ever before, what impact has this had on the relationship between suppliers, retailers and consumers?
Paul Yaxley believes this has resulted in more of a focus on retail education. “I think it’s absolutely vital with the proliferation of products available that retail staff are fully trained to ensure that the right decisions are made and of course the ultimate result is to satisfy an informed, hopefully loyal customer base.”
Bostik’s Paul O’Reilly agrees with the importance of suppliers aiding with the training of retail staff to ensure that the best results are being delivered to consumers: “I can’t speak for the DIY side of things, but certainly in the trade stores that we are involved in training is very important.
“A lot of the stores have high turnover in staff so you really have to keep training and talking to people about your product. And when you get a new product on board it’s essential that you go in and demonstrate those to the staff in store and we also do a lot of things like trade breakfasts where you’re actually talking to the builders.”
O’Reilly feels that events such as this are also very important in maintaining relationships in the trade, and in turn aids any additional training that comes with new products.
A SOCIAL NETWORK
The information that end users are consuming is coming from a variety of sources – online via social media and in-store with the use of QR codes on products are two such examples of the various ways that consumers are interacting with suppliers and learning more about products and promotional activity.
Darryl Patterson says Award Concepts has seen an increase in online interaction with consumers: “We are finding that people are using smart phones so much more than before. We have also had a lot of people using the QR code on our products to get information on products.
“We also have found a big lift on the Wagner website; people are going there for product information and education. We’ve also seen a big lift on our social media too.”
Bostik is another company that has put a lot of work
into its website but it’s the interaction it develops that is becoming increasingly important. Paul O’Reilly: “We know for a fact that a lot of people go online to research a product, look at the data sheet and can come back to you after they’ve read it.
“So it’s very interesting talking to them because they have the information in front of them and they can then in turn ask you questions in relation to that information where previously they haven’t been able to do that.”
Richard Percy has also seen an increase in the number of people using the Paint Aids website and iPhone app, but feels that ultimately the New Zealand consumer is more than happy to physically interact with a retailer. Still, the app, which helps users choose the right equipment, has been very successful for the company with around 55,000 downloads.
And again interaction with consumers is taking place but in this case they end up going to see a retailer. “It’s still really nice for people to go in-store and have confidence talking to an experienced, knowledgeable staff member,” he emphasises.
With so much information available at the touch of a button for consumers, more emphasis than ever is being placed on the relationship between suppliers and retailers to ensure that consumers are greeted with well-educated staff members.
Dulux’s Darren Newland says: “The more we can do to make sure that the people in the retail stores are well trained is vital. The reality is that e-learning online is huge. More and more now, people will pick up a smart device, YouTube something and get a step-by-step guide of how to do something and that gives consumers a lot more confidence to give things a go.
“There are varying degrees of information out there but having good quality information is what really makes the difference as well.”
As well as in-store training, Darryl Patterson says that Award Concepts also places a lot of importance on in-store interaction with consumers.
“We do a lot of in-house training for the staff so that they are happy and comfortable using the product and also that they transfer that to their customers. We also have in-store touch screen TVs that show the product and also facilities that allow staff to use them as a training guide as well. So when a customer comes in, the staff member can bring them to one of these screens and shows them training as far as the use of the machine and the product.”
And, by way of proof of the worth of such an investment, Patterson says that each time the company conducts in-store training with retail staff, sales increase in the specific area.
TV AS AN INSPIRATION?
As well as all of the information available through the internet, the proliferation of interior decoration and style magazines, home improvement and DIY television programmes has seen more access than ever to design ideas and concepts for consumers.
Do these shows and magazines actually impact on the attitudes of consumers? Gauging opinion from the suppliers consulted for this piece, the majority would say yes.
Darren Newland at Dulux feels that these shows and magazines help show consumers that many of the paint effects they had envisioned in their homes are feasible.
“They definitely get inspired, without a doubt. There is definitely a direct correlation between people seeing that sort of thing and getting the idea and inspiration to start a project themselves.”
Darryl Patterson is another that feels these shows have not only educated and influenced consumers but have also led to increased business and sales of painting & decorating products.
“I think those shows have impacted on the attitudes of consumers. It’s two fold where in some cases, consumers will see those shows and feel somewhat inspired to go out and do those things themselves. On the other hand, with the work we put into the products, they are easier to use and consumers are getting more success out of using them.”
In contrast, and with a bit of a lull around the election in mind, Haydn Brush’s Paul Yaxley doesn’t feel that these shows have impacted much on the attitudes of Kiwi consumers. Instead he feels that this is an area where New Zealanders have traditionally been strong and, in terms of what is driving the market, places greater importance on other factors.
“If anything in recent times the debt risk aversion and the GFC and rising interest rates are likely to offset any positive stimulus that these shows might generate outside of their obvious entertainment value. I think at the moment that ties in with the fact that DIY traditionally goes into a holding pattern pre-election.”
But, with consumers continuing to look for inspiration and education from an ever increasing range of sources, despite a hiatus around voting time, it could well be that the good times will keep rolling.
ADVANCES IN WORLD PAINT AND COATINGS SALES WILL BE DRIVEN BY A STRONG REBOUND IN BUILDING
According to a “big picture” study conducted by Freedonia Group earlier this year, global demand for paint and coatings is forecast to rise 5.2% per year to 51.6 million metric tons in 2017, worth US$186 billion.
Paint demand not just housing-led – Advances will be driven by a strong rebound in global building construction, particularly in North America, Europe and Japan, which will fuel increased demand for architectural paint.
Manufacturing and speciality coatings will also grow at a more rapid pace, benefitting from an improved outlook for motor vehicle production and overall industrial output. However, gains will be limited by the increased use of higher quality coatings in both the developed and developing world, reducing the volumes necessary to complete a given paint job.
Water-based coatings and other high solids formulations will gain share over solvent borne products in virtually all world markets, as paint makers continue to reduce emissions of volatile organic compounds (VOCs) in coatings to comply with government regulations and consumer preferences.
Architectural market to remain dormant – Architectural markets will continue to account for the majority of paint and coatings demand in 2017. Demand will be fuelled by an improved outlook for residential building activity in high income countries, as well as rising urbanisation and housing construction spending in the developing world.
Coatings demand in manufacturing applications will benefit from an uptick in world motor vehicle production, while an improvement in building construction activity will boost demand for furniture coatings.
Maintenance and speciality markets will be driven by rising demand for protective coatings in industrial and oil and gas applications, as well as for auto refinish paints and road and bridge coatings.
Asia/Pacific region to stay largest, fastest-growing – The Asia/Pacific region will continue to be the largest and fastest growing coatings market through 2017, rising to account for half of global demand.
Gains will be led by robust growth in China, the world’s largest coating market, although advances will slow somewhat from the double-digit annual pace of the 2002-2012 period. Even faster growing is the forecast for the large Indian market, while other countries in Asia such as Indonesia, Thailand and Vietnam will also see strong gains.
In North America, a marked turnaround in building construction activity will fuel healthy growth in demand, while Western Europe and Japan will see similar (though slower) rebounds in the coatings market. Among the other areas of the world, best opportunities are expected in the Africa/Mideast region, albeit from a low base.