Hardware Connection Fall 2011

STRENGTHENING THE TWO-STEP CHANNEL

NOT JUST A NUMBER

The Relationships Aren’t Just About Business, They’re About the People

“We’ve had connections with other distributors and co-ops in the past, but we find it’s better working with an independent like Orgill. The relationships aren’t just about business, they’re about the people behind those businesses.”

Support

Jerry Lightfoot

, Vice President

Orange County Building Materials. Inc.

“Living in one of the most active hurricane regions, we know a lot about the devastation adverse weather can cause on a business. When we were hit by two hurricanes in a row, an Orgill truck was waiting for us first thing Monday morning. My old distributor wasn’t able to provide that kind of service when we needed it the most.”

expanded to a total of five locations.

Five locations throughout southern Texas Orange County Building Materials, Inc. opened in 1975 and has since expanded to a total of five locations. The company employs over 100 staff members and caters heavily to the pro consumer while balancing the needs of DIYers in the community. Specializing in lumber and building materials, Orange County Building Materials has been sourcing its hardlines assortments from Orgill for over 25 years and recently made the decision to shift all hardlines buying to Orgill.

the decision to shift all hardlines buying to Orgill.

“Besides buying, we’re very active in Orgill’s retail programs. We use the Market Driven Retailing (MDR) program for every store we open, and have Orgill conduct a study every year to make sure we’re keeping on track with our mission. Sometimes you just need a second set of eyes.”

Meeting Our Needs

“We originally got into business with Orgill because they understand the pro sector we cater to and have the ability to serve a larger client like us. Today, the higher fill rates and the close relationship Orgill has with its vendors ensures we’ll get the product we need when we need it.”

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Making Connections

“Everyone from the top down at Orgill cares about your business. Not only does the staff help connect you into other industry networks but events like the Dealer Market have allowed me to make connections within the industry I may never have had otherwise.”

“We’ve

–Jerry Lightfoot

Often imitated, never duplicated, WD-40® Multi- u se Pro D uct is the lubricant P rofessionals an D D o-it-yourselfers use an D rec O mmend M ore than any other bran D

By Chris Jensen

MWhat’s Your Social Media Strategy?

ore retailers are discovering the benefits of social media such as Facebook and Twitter, but that doesn’t mean they are using it effectively. After hearing what experts have to say about social media strategy and after looking over several dozen retailers’ Facebook pages, it’s possible to distinguish between those that are doing it the right way and those that are still struggling to make sense of this new form of communication.

The retailers who stood out did several things consistently well — they posted interesting content, they posted frequently (at least 2-3 times/week) and they found ways to engage their customers. They posted pictures of store events, promoted Facebook-only contests and shared DIY project tips that might be of interest to their customers.

Effective social media strategy costs the same thing as ineffective social media strategy — nothing! So there’s still hope for those retailers who haven’t figured out how to make the best use of this brand-building tool. And that’s ultimately what Facebook can do for your store — help you form a closer bond with new and existing

customers so they view your store as the store of first choice when they need hardware products.

Imagine you’re back in algebra class and you get to copy the answers from the super-smart kid with no repercussions. Isn’t it nice to get all the answers right? Now go to the following Facebook pages and soak up the wisdom of these hardware retailing Facebook stars.

n Dave’s Ace, Milton and Evansville, Wis.—http://www.facebook.com/ davesace

n Rapid True Value, Kingston, Jamaica—http://www.facebook.com/ RapidTrueValue

n K&B True Value, Annapolis, Md.—http://www.facebook.com/ kbtruevalue

See how these retailers used creative events and helpful information to engage their customers? It’s all stuff you can do easily, and no one knows your community better than you. Get started today on a new social media strategy and make it an urgent priority. Your business’ future success just might depend on it. n

By Tom Chasteen

Are You Leaving Money On the Table?

Iwould like to share with you a tool

I’ve been using to increase my overall gross margin 1 to 2 percent in our store. I don’t know how your market is, but ours is still slowly recovering and my hard fixed costs have been steadily increasing over the past four years, so anything I can bring to the bottom line is a welcome sight for sore eyes.

We’ve had a constant struggle with our variable price scheme. How much is too much to increase prices? Will an increase affect our price image in our community? What is the price perception set by the mass merchants in our area like Home Depot, Lowe’s, Sears and Walmart? Well, you get the idea and you probably have the same situation we do. If you’re fortunate enough to not have the pricing pressures from the mass merchants, you can still use this tool to increase your margins as well.

First, you have to accept the premise that 20 percent of your merchandise mix (typically the A & B movers) is responsible for 80 percent of your sales. Next, you have to accept the premise that there are only 250 to 300 items, at most, in your product mix that you should consider price sensitive at any given time. And those 250 to 300

items are constantly changing due to seasons and your competitors’ advertising campaigns.

Now if you agree with those two premises, that means if our fictional hardware store is stocking 10,000 different SKUs, then 2,000 of those SKUs represent the 20 percent that are responsible for 80 percent of the sales. And since 250 to 300 SKUs, at the most, are price sensitive, some of those price-sensitive SKUs are in the 20 percent of the items that make up 80 percent the stores sales, right?

That leaves potentially 7,500 SKUs that are “blind” items, meaning they are not price sensitive or are only semiprice sensitive. You can probably make up some of the margins you’ve had to reduce to stay competitive on the pricesensitive items. I promise, you can easily find 10 items out of 7,500 you can raise your price on for every one of the price-sensitive items you have to lower your price on.

Keep in mind that most of these items are not your faster-moving items, so if you can increase that ratio of 10 to 1 so much the better for you. Now the real trick is NOT to lower the price on a disproportionate number of the 2,000

way i see it

SKUs that make up 80 percent of your sales. Also, make sure you are not selling any of those A & B movers at a price lower than is absolutely necessary.

Now I should be honest and come clean. I did not think of this concept on my own, I borrowed the idea from another hardware retailer — John Shell, who has been retired for many years. I will forever be indebted to him for making me understand the true crux of variable pricing. It’s not the price-sensitive items we should focus on, it’s the blind items. Our big-box competitors go to great expense to print fliers and buy TV and radio commercials to remind us what the pricesensitive items are, which makes my job easier identifying the price-sensitive items in our market.

Now about that tool I spoke about earlier. It’s the Margin – Volume – Profit Calculator (MVP Calculator for short), which I “borrowed” and modified many years ago. I’m happy to share it with you for FREE, just click on this link: http://thehardwareconnection.com/ Margin_VS_Markup.pdf

It’s nothing innovative or new, but it is easy to understand. Print off a copy of the MVP Calculator and you will see what I mean.

It goes like this: if you give a 15 percent discount on an item and you are working on a 40 percent gross margin, then you will have to sell 60 percent

more units to make the same amount of gross profit dollars as you would have if you hadn’t given the 15 percent discount. Sixty percent is a lot of merchandise, no matter what it is. If you think my example has too much discount or too low of a gross margin for your store, then look at the MVP Calculator table and pick whatever discount and gross margin fits your store.

Now here’s the beauty of using the MVP Calculator — flip the concept around. If you raise your margin 15 percent will it reduce your sales of that item by 60 percent? If it will, the answer is obvious — you can’t increase the margin on that item or category by 15 percent. But if you don’t think raising the margin by 15 percent will cut into your sales of that item significantly or at all, then you are leaving profits on the table if you don’t increase the margin on that item.

If you have the patience and determination to evaluate that part of your inventory that is not price sensitive, then you will start to see a small increase in your gross profit margin within 60–90 days. And as the saying goes, this is a gift that keeps on giving, month after month and year after year.

If you can increase your gross margin by 2 percent and your gross sales are $1,000,000, congratulations — you will have brought $20,000 to your bottom line. There’s that vacation to

Hawaii you’ve always wanted to take or you could come to The Hardware Conference next month and learn how retailers are increasing their margins by 3 to 4 percent.

Don’t forget to apply the same thought process to the 20 percent of your merchandise that sells 80 percent of the time (A & B movers). It just takes a little more time to think through it on those items compared to the blind items. I also use the MVP Calculator when a customer is requesting a discount.

Sometimes I’ll even show the customer the MVP Calculator and ask them if I give you a discount, how much more business do you think you’ll be able to

do with me? If they have the potential to be a good customer (and they pay their bills on time), then I will say “why don’t we give it a try for a couple of months and see how it works out.” Now the pressure is on the customer to hold up his side of the bargain and it gives me the option to discontinue the discount if the sales volume is not there.

So what’s the price I paid to John Shell for stealing his idea? He made me promise I would share it with other retailers for the same price I paid him and I’ve been doing that for more than 20 years. I ask nothing less from you. If you feel the MVP Calculator is helpful, share it with another retailer and help me pay my debt to John Shell. n

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Hardware StorieS Amazing but True

The funniest moments in hardware stores often have to do with customers’ inability to remember the correct names for the products they need. Chances are you’ve had experiences similar to the retailers in the tales that follow.

We sell Fisher & Paykel washers, often abbreviated as F and P. Our hardware employees, unfamiliar with the abbreviation, think customers are swearing at them when they say they need service on their F ‘n’ P washer. They probably wonder what a P washer is used for, too, but none have ever asked.

Amy Earls Page Hardware & Appliance Co. Guilford, Conn.

Had a lady ask if we had any paralyzed lime. Finally figured out she meant pelletized.

Susan Miller • Bob’s Hardware Whiting, N.J.

We frequently get calls for “womanized” wood. Wolmanized. Really. Thanks for the laugh!

Karla Robson Slavens True Value Cortez, Colo. My personal favorite is “hose (hoes),” preceded by “Do you have...” 50/50 chance of getting it right and I have had some pretty indignant looks when I didn’t guess right.

Mark Nakajima Ace Forest Grove Forest Grove, Ore.

How’sBusiness?

Northeast

Sales first six months? Sales this year are stable. However, I believe Vermont lags behind the rest of the country, so we seem to be near the bottom of the economic downturn. During the first six months, we managed to have a 4.5 percent increase in our Middlebury location and a 4.5 percent decrease in our Bristol location.

How have you faced economic challenges? We have done more direct-mail fliers and in-store specials. The True Value Rewards program has been a great way to keep customer loyalty and drive sales during the downturn. Our diversity has kept our business strong over the past few years. For example, to offset the downturn in building materials, we have had strong sales in housewares, lawn and garden goods, electronics and large and small animal feeds.

Which niches are selling well? We have a RadioShack electronics department in both stores that has really helped our sales in the slower months.

Martin and Kathleen Clark Martin’s True Value Hardware Bristol, Vt.

Sales first six months? Because of all the snow early in the year, we were up 38 percent in January and 52 percent in February. In the early spring months we were down, but in June we’re back up 5 percent.

Which niches are selling well? We have added a pool category with chemicals and accessories. Part of the accessories that have been selling well is squirt guns. Impulse stuff, such as novelty lighters, is selling well, too.

How has your operation changed with economy? Our model doesn’t change because the economy is good or bad. A lot of people recommend holding tight and not spending money, but business doesn’t change or get better unless you invest. We have been spending money on improving the facades and inside of stores. Customers don’t see such visual improvements in the local market, so these upgrades give us attention. We have focused on add-on sales, too.

New initiatives? We’ve gutted one site and will be putting in a rental center starting in spring 2012. Along with rental, we’ll be adding clothing sales. We can build off the boot and clothing needs of town employees. We’re also rebooting our paint lines.

Jon Phillips • Phillips Hardware Albany, N.Y.

Sales first six months? The first four months were down quite a bit, but the last three have been up. In March and April we were still getting snow storms, so we couldn’t put out the lawn and garden products.

New initiatives? We have changed our advertising strategy quite a bit. We’re getting our web site together and are putting a strong emphasis on social media with Facebook and Twitter. We offer 10 percent off deals on Facebook. For television and radio, we’re switching to year-long packages, aiming for more exposure. We want to always be on the top of customers’ minds instead of just busy-season top of the mind.

Which niches are selling well? We added Stihl chainsaws and that’s really been taking off this year. Also, we began carrying SodaStream, and while the units are one-time sales, customers keep coming back to buy the accessories and canisters. Last year, we became a regional service center for Mosquito Magnet and that keeps our repair shop busy all

summer. Lawn and garden has been doing pretty good, too. We changed some of the display space so that we have lawn mowers and grills right when people walk in, and that seems to have made a difference. We have sold some high-end zero-turn mowers recently, and that seems to be picking up over previous years, too.

Brandon Buckalew Hardware Hank East Grand Forks, Minn.

How’s Business?

Sales first six months? Pretty sour through the first few months, but June has been better compared to last year. We don’t know if it was economy or weather related, but April and March were down. New initiatives? We are moving our Appleton store to a newer, bigger location. It’s near a busier street, so that should help. We added True Value Rewards to our stores and are looking to increase TV advertising.

Which niches are selling well? Our gas lawn mowers and tractors have done better this year than last. Even with the economy, people can put off these purchases for only so long before having to replace them. We think it’s catching up now.

Nan Adams, manager • Kitz & Pfeil Oshkosh, Wis.

How’s Business?

Mid-Atlantic

Sales first six months? After the end of the six months, sales are up, but it wasn’t good in the early part of the year. We also had a wet spring, so customers weren’t out and sales were down in outdoor knickknacks and furniture. May and June cooperated and the weather was beautiful and that’s when it began picking up.

New initiatives? We’re working to increase our business-to-business sales. We’re also looking to tighten our

Sales first six months? We are up about 5 percent. We make sure we stock what customers need at any point of the year. Right now, mosquito and stink bug products are doing well.

New initiatives? We’re constantly updating the web site. Our stats are up and we continue to get a lot of traffic. We advertise sales on the web rather than spending money on print media. With about 80 percent of our customers do-it-yourselfers, we put do-it-yourself links on the site. And it seems like people are more willing to try projects they wouldn’t have in previous years. We’re also looking into the QR codes with our print media,

inventory and selection. For example, while we won’t carry 30 brands of hammers, we’ll carry 10.

What niches are selling well?

Composters and rain barrels have been good sellers. Also, tabletop housewares items, such as salt and pepper shakers and grilling accessories, keep increasing. We aren’t selling as many big grills, but all the stuff you need for grilling and throwing parties is doing well.

Sarah Pitkin Pitkin’s Home Center Dale, Va.

so customers can have another way to connect with us.

Which niches are selling well?

Canning jars and gardening products such as garden trug tubs have been popular with the backyard gardeners. About five months ago, we added SodaStream and that’s done well, too.

How have you streamlined your business? We’re going through and studying each department with location codes with inventory to measure the profitability. That way, we can see where we need to improve and what dead products we need to weed out.

Nick Kaplanis • Frager’s Hardware Washington, D.C.

South

How’sBusiness?

Sales first six months? It’s been slightly better than last year, and we’ve seen some signs of improvement. Last year we made cutbacks, reduced staff and attacked every expense we had. We learned how to operate in the economy, and it’s paying off this year.

How has the economy changed the way you do business? We realigned everyone’s responsibilities and that’s helped as much as anything else. Before, we had five people

in charge of sales and several people doing purchasing. Now, one person does all the purchasing and it’s streamlined the operation.

New initiatives? We’ve been working on a store redesign and when it’s finished our inventory will expand considerably — about 25 percent across the board.

Which niches are selling well? We have expanded our impulse aisle. Inexpensive items and hand tools have been popular. Grilling accessories have also been strong.

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What new ways have you reached out to customers? We have devoted a lot of energy to our loyalty programs. We created a kids loyalty program called Jay’s Kid Card, and it’s been great. Kids get a laminated card and every month they receive a free gift such as a tool toy or t-shirt. The gifts get better and better each month. It’s been worth it. The kids bring their parents back again and again.

West

Sales first six months?

We have multiple stores and we’re flat overall for the corporation. Our hardware stores are slightly up by 3-4 percent, but our lumberyard has been down. There has been no building going on at all. Most of the contractors are doing home repairs, and only a handful are working on new construction. And for the first time in our history, homeowner sales have surpassed contractor business. New initiatives? We just bought and opened a third store.

Jay Bullock

Jay’s Hardware and Building Center • Wrens, Ga.

We did a complete remodel and remerchandising in the lumberyard. We have also added a few new departments, such as major home appliances, and increased our clothing department. A local clothing store closed, so we expanded from workwear to a broader range of clothing.

Which niches are selling well?

Our dollar store niche has been doing very well. It’s a store-within-astore concept where we have a couple large aisles devoted to discount items. Also, our garden center and live plants have done well.

Alan Bryant Bryant’s True Value Oakhurst, Calif.

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From Tom’s Shop hardware products review

By Tom Chasteen

If you have a suggestion of a product to review or manufacture a product you would like me to review, contact me at tom@thehardwareconnection.com or call 305-852-6126.

product #1: the “Gulp” | conservco

The ConservCo has seen a need and has developed a product that really does help make potentially bad situations easier to deal with. They have taken the concept of a hand bilge pump from the marine industry, adapted it and made it better for DIY repairs.

The “Gulp” is a hand-operated suction pump that the user can use to empty water or fluids from areas that need to be repaired or worked on. What makes the “Gulp” different is that each stroke of the pump removes 12 ounces, so 11 strokes of the hand pump will remove over one gallon of fluid.

The pump shaft is stainless steel and the barrel of the pump is clear so the user can actually see that the pump

Tom Chasteen reviews 3-4 hardware products from “Tom’s Shop” in each issue of The Hardware Connection.

is picking up the fluid. The barrel of the pump also has a non-slip hand cushion with a strap. But, in my opinion, the best feature is that it comes apart so you can clean the pump thoroughly when you are finished. It’s also reasonably small, making it easy to store until it is needed again.

Let’s face it, removing water from a toilet before you pull it up from the floor or emptying the dish water from the sink before you snake the drain are not easy or pleasant jobs. The “Gulp” is also helpful when you need to remove water from a fountain or fish pond or water from a hole where a pipe has broken.

The “Gulp” could make a great add-on sale in the plumbing area next to the snakes or in the chemical area next to the drain openers. Their website is www.conservco.us.

review

From Tom’s Shop hardware products

product #2: thermaFreeze | thermaFreeze products

Recently, I was walking down the aisle of a wholesaler show when I saw a long-time industry friend, Barry Surran, who was representing ThermaFreeze Products. As with all good salesman, it was inevitable that Barry was going to tell me about this new line of products he was selling.

The ThermaFreeze line of products is a reusable ice alternative that definitely has potential in a hardware store that stocks sporting goods or seriously sells impulse items and changes out its endcaps on a regular schedule. The ThermaFreeze products are sheets of product that you dunk in water and then remove excess water with a paper towel. The product soaks up the water and then you freeze it.

Sounds simple, doesn’t it? But here’s the great part: unlike ice and ice packs, it doesn’t sweat! The ThermaFreeze products come in several convenient sizes. You can also cut them into smaller sizes to fit specific applications or cooler sizes. Barry was explaining that the ThermaFreeze product was great around any cooler application where

you wanted to keep food products cool and it is.

But here is another application that is not typically associated with hardware sales. I just had knee surgery and, as you can imagine, walking the show floor was not a part of what the doctor (or my wife) had in mind when he cleared me to go back to work. When I asked Barry if I could sit in his chair in the booth he also gave me a ThermaFreeze pack to wrap around my knee. It was just like an ice pack without any sweating or excess water from a leaking plastic bag.

ThermaFreeze makes a great impulse item for a hardware store for those customers who strain something or smash something in the process of their DIY project. For more information, go to www. ThermaFreeze.com.

product #3: v-pump | v-pump LLc

The V-Pump is a neat new product that I found while walking the National Hardware Show® this past May. It is designed to pump 1,200 gallons of water per hour, doesn’t have any moving parts or need electricity and will pump water as high as 40'. All you need to do is connect the plastic V-Pump to a water hose, hook up a discharge hose, drop it in to the area you want to drain and turn on the water to your garden hose. What the V-Pump does is create a vacuum from

the discharge of your garden hose that is filled by the water you want to drain. It comes with a quick disconnect garden hose attachment, then you have to supply the discharge hose and you are ready to go. The only potential problem is the water must be free of debris as it will plug up the pump, but the V-Pump is a neat little product that is great for draining hot tubs, small pools and fish ponds before winter. To learn more about this product go to www.v-pump.com.

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Issues Employee How to Solve Your

Get two retailers talking together and the topic of discussion will quickly turn to employees. How do you find good ones? How do you keep them off their cell phones? What’s the best way to motivate them?

When times are tough, employee productivity becomes increasingly important, as retailers look to stretch their payroll dollars without sacrificing service. All members of the staff need to carry their weight and work in unison to deliver exceptional customer service. Sounds good in theory.

The reality is that owners and managers are forced to spend significant time dealing with employee issues, leaving less time to handle things such as pricing, merchandising and strategic planning.

We don’t promise to solve all your employee problems, but the following pages contain helpful tips from retailers detailing how they handle specific employee issues.

Brandon Buckalew, who operates Hardware Hank in East Grand Forks, Minn., uses Facebook to attract good employees.

How Have your Hiring practices cHanged?

I used to hire guys with the most experience. Now, I hire happy people. I come from a food service background where being friendly and pleasant creates a culture where customers are viewed as clients. Our jobs are trainable. I’d rather teach someone how to fill up a propane tank than teach them how to be friendly.

— Jon Phillips, Phillips Hardware, Albany, N.Y.

Mike Ferrill (left), Foley Bell Holditch (center) and Chris Smith (right) help make sure Bell Building Supply stays connected to the next generation of customers.

We have posted job openings on Facebook and get quite a few responses. We found that we’re hiring the ones who respond through Facebook rather than the ones who answer a newspaper ad. They seem to know the store going into the job.

— Brandon Buckalew, Hardware Hank, East Grand Forks, Minn.

We depend heavily on parttime employees. We’re in a college town, so we get them as freshmen and many of them stay with us for four years. We also have a very good retiree population to draw from, which gives us a nice balance of youthful energy and experience. —

Ann Bell, Bell Building Supply, Starkville, Miss.

wHat’s your policy on employees using cell pHones?

We do not require that employees leave their cells in their vehicles because many newer cell phones can be permanently damaged by the

Bob Burt (front row left) credits his dedicated employees with the success he’s had at Burt’s Lumber & Building Supply in Perry, N.Y. Front row, l to r: Sean Sickles, Sarah Burt, Judy Phillips. Back row: Jim Nowak, Craig Cox, Jeff Chamberlain, Dan Keenen.

summertime heat and harsh winter cold in this area. Cells are required to be safely stored away and out of sight (in a purse, employee locker, etc.) No cell usage while driving, no non-emergency personal calls while on the clock, etc. — Megan Stratton, Barker Lumber Co., Delavan, Wis.

How do you track sales by employee?

We’ve used the SKU variation in the past. To make it easier we assigned a bar code to each employee SKU and then printed a card for the salesperson to give to the customer to identify the salesperson for the cashier. The card reads “Thank you for allowing me to help you. Please give this card to your cashier.” The card was created in Label Design. The cashier can then scan the salesperson into the

transaction. We explained that it then allows the customer to know who helped them if they have questions later about the product they purchased. The cashiers collect the cards over the course of the day and they are recycled. — Helen Plunger, Royall Ace Hardware, Mt. Pleasant, S.C.

wHat’s your policy on bringing employees to wHolesaler sHows?

I started bringing an employee with me to each market a few years ago. There is a lot of good training and interaction with vendors that key employees can benefit from. They always thought that the market was one big party and that after partying all night I spent the days lounging by the pool. Before taking the employee to the market we reach an agreement that each day we’re gone will count as a normal work day. If they don’t want to do that then they don’t have to go. For my employees it’s a big perk — they get out of the store for a few days, attend training, see new products, talk with vendors, spend time at a nice hotel and go out to nice restaurants. They realize that I don’t have to take them and that I’m giving them an opportunity to see what goes on and have some input into what we bring into the store. — Rick Heuser, Handyman Do it Best Hardware, St. Cloud, Fla.

How do you deal witH an employee wHo Has Hygiene problems?

There is a very good podcast that I’ve been listening to for years called Manager Tools and they touched on this subject in several podcasts. They are very thorough and use step-bystep directions including suggestions on what to say. Click here:

http://tinyurl.com/3qwlok7

http://tinyurl.com/3mtjpob

Chad Barclay, The Tool Place, Kelowna, B.C., Canada

wHat safeguards sHould you follow wHen providing employees witH store keys?

Giving some employees the responsibility of opening and closing can really take the load off. It does open the door to other problems, but if you properly prepare for it things can go a lot smoother. A few things to consider:

n First, lay out the boundaries for when they can and cannot “open” the door. Is there any reason for the key holder to come to the store after hours? Make sure this is clear.

n Definitely get a camera system. Hook it up to the Internet so you can remote view. Every once in a while call up the store and say something so they think you are watching. Trust

me, word travels fast and they will be more careful about what they do.

n Upgrade your alarm system so it includes open and close reports. In addition, make sure every user has their own code so you can track who came and when and through which door.

n Even though we have a locksmith on staff and sell plenty of high-security locks the keys to our store cannot be duplicated at our store. A locksmith friend of ours up the street set us up with restricted Medeco keys that can only be duplicated at his shop.

— Matt Mazzone, Mazzone True Value, Brooklyn, N.Y.

How do you Handle vacation time?

We were letting folks earn overtime at an hourly rate. Problem is, when someone gets overtime they get even more vacation. We do everything we can to limit overtime. We aren’t afraid to shell out a few overtime hours but don’t think we should have to give them the vacation time as well. As long as someone is working an average of 32 hours a week we set it so they earn about 3.3-3.6 hours of vacation time a week. They get much less if they work less than 32 hours a week. They can spend it however they want, but can save more than 160 hours of vacation. On top of that they get 3 days (24 hours) for sick time each

year. That is handed out Jan. 1st every year. That can be used for kids being sick, doctor appointments or funerals. If they are gone more than 24 total hours for those occasions they can use vacation. It’s a system that works well.

— Brandon Buckalew, Hardware Hank, East Grand Forks, Minn.

How do you deal wit H employees w H o t H ink store prices are too H ig H ?

One of the best employees I have ever hired had a problem with pricing for many years. She would say something to management in front of the customer about something being “too high.” Over a period of several years she finally got the concept of “making money,” but honestly, it took years! But in all other aspects of employment she excelled. We kept on giving her more responsibility and making her understand that profits equaled salaries, etc., and finally one day, it just clicked. — Bob Brame, Cadiz

Do it Best Hardware, Cadiz, Ky.

We allow our employees the discretion to lower pricing when they feel it is appropriate. We have a standing (no manager approval necessary) “10% off” policy for most non-price sensitive items. We also allow our employees access to item cost records so they can check for themselves to see if the price

More than half the employees at Hartville Hardware in Hartville, Ohio, have been there more than 10 years.

has any flexibility. They are notoriously much more conservative on discounting than I am and almost never give larger discounts without consulting me first. The obvious rule of thumb is: don’t offer a discount unless the customer asks for it or it is imperative to making the sale. Employees are empowered with a lot around here. We trust them and they know it. When they see a price they think is too high or too low, they always bring it to my attention and usually they are correct and I change the price. — Linda Cottin, Cottin’s Hardware & Rental, Lawrence, Kan.

do you restrict employee use of internet?

We use a proxy server in each of our six yards and restrict Internet access to a white list of approved sites. The managers’ system in each yard has full Internet access. All of the POS systems and others have access to the proxy server, so that we have the benefit of employees being able

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to research products online at our suppliers for customers. We have had good luck with this and the incidence of malicious scripts or viruses on the systems has declined dramatically and productivity has improved. We do however have a lot of complaints from the employees about being on the “nanny system,” as they see it as a right to access the Internet. We restricted Internet access because of the costs of keeping nasties off the systems and the waste of company time by employees. — Cliff Howard, Frontier Building Supply, Anacortes, Wash.

What is your employee incentive program?

We do a monthly sales contest and whoever’s department increases in sales over last year by the largest percentage from each store gets a day of paid vacation. Whoever increases the most company-wide gets a $100 bonus. — Curtis Gillman, Gillman’s Do it Best Home Center, Batesville, Ind.

We just started an incentive system at our two stores. We currently measure:

n Sales increase over last year’s month (%)

n Items per transaction increase over last year’s month (%)

n Average transaction size increase over last year’s month (%)

n Shrinkage

n Inventory accuracy — comparing computer quantity on hand/retail price to actual quantity on hand and posted retail price

n Zero pegs

n Product of the Month sales increase over last year’s month (%)

n Ace Rewards %

n Small engine mechanic efficiency (Hours billed/hours worked)

The employees are provided the goals at the beginning of the month and can receive 2, 5 or 10 points in each area depending on their result at the end of the month. Not all employees share the same metrics and each metric can be weighted differently depending on their job title. This way I can place more weight in areas where they are performing poorly and less in areas where they are doing well.

The employees are able to achieve a maximum 10% bonus based on their gross pay for the month. This way it rewards those with more responsibilities or who work more hours. I print out a daily report so the employees know how they’re doing every day and managers can coach the employees as needed. — Brett Seright, Seright’s Ace Hardware, Post Falls and Coeur d’Alene, Idaho

&New Old

Something Something

Sheree Johnston

East Sac Hardware Sacramento, Calif.

The retro neon sign harkens back to the store’s formative years.

East Sac Hardware, owned by Sheree and Rich Johnston, underwent a 24-month facelift beginning in July 2008 that helped the store harken back to its 1950s roots. The retro redesign cemented its status as an old-fashioned neighborhood hardware store with modern touches and helped revitalize an established business that was suffering the effects of the recession.

Wholesaler: Orgill, Ace Hardware and Jensen Distribution Services. I like to have breadth and some wholesalers are better in certain categories than others.

Year founded: 1951

Salesfloor square footage: 10,000. When we remodeled we couldn’t expand in an urban setting, so we made every space available for retail.

Number of employees: 7

Top core categories: Plumbing, electrical, lawn and garden and paint.

Dealer Profile

Most successful niches: Gourmet housewares and garden center.

What made you decide to go with retro look with your redesign? We wanted to focus on when the business was started, which was in 1951. It was the height of the recession (when remodel started) and people weren’t happy. You feel safe with what you remember from the past, and we wanted to bring people back to a simpler time. That’s why the theme of our remodel was “Something Old… Something New.” We updated our merchandise and changed the mix but still stock items for older homes.

What were the biggest challenges of the remodel? We self-financed it,

Above Right: The remerchandising project gave the store a fresh look and has resulted in a sustained increase in sales.

because you couldn’t get bank financing during a recession. Where we could we did the work ourselves — I refinished the entire concrete floor myself. I’m proud to say we never missed an hour of operation. It was my vision, but I had many people helping me execute the vision.

What impact has the remodel had on your business? We’ve had a huge uptick in business. We had the biggest year in our history in 2009 (up 21.7%). We were up 18% in 2010 and we’re up 8% so far this year. Prior to the remodel we had 12 straight

months of declining sales. Either you do something or you go out of business. We felt we had a responsibility to employees and to the community to stay open, so we went for it.

How did the remodel help you attract more female customers? We added a full garden center and expanded even more into gourmet housewares. We have classes for women on plumbing, electrical and home maintenance.

How do you build your store brand identity? People like coming to an old-fashioned hardware store. The recession made people realize if they don’t support these local businesses they won’t be there for them. We increased our advertising budget and increased support of the community. We donated to local causes and schools more than ever before. We wanted to let people know we were still here for them and going strong.

What’s the key to your success in housewares? We carry a lot of Made in America items such as Lodge Cast Iron Cookware and AireGourmet cookie sheets and we’ve expanded into canning items. We were striving to attract women, but we actually sell more housewares to men. They feel more comfortable coming into

a hardware store and buying housewares, plus we offer free gift wrapping.

Have you had much success selling green products? Yes, especially in the garden area. We’re focusing more on that. We do find that customers are willing to pay a premium for green products.

Has being a dog-friendly store paid off? Our store dog, Molly (a Cavalier King Charles Spaniel) has her own following. A lot of dogs can’t walk past the store without coming in for a treat. We carry great dog toys and support the SPCA.

How do you ensure your store’s customer service stands out? It’s our main focus. We do whatever it

East Sac Hardware features a strong niche in gourmet housewares.

takes. We got to a point where if it was nailed to the wall and a customer wanted it, we took it down and sold it to them. We also added in services such as rescreening, lamp repair and knife sharpening. When times got tough, we weren’t sure what to do. We just decided we needed to hunker down, take care of our customers and make the store the best we could.

Are there formal ways of developing that customer service mentality? Our employees are very aware that customers keep them employed. We never cut one employee or one hour during the recession. We wanted to keep our employees working, which helps to them loyal. I encourage them to offer suggestions and ideas, which makes them feel more connected to the business.

What lessons have you learned about retail? It’s hard being a small business, you are on your own. You get so wrapped up in the day-to-day operation, you don’t have time to think long-term. We never had a formal store manager before but now we have one. He handles the day-today while I’m the organizer and longterm planner.

What new initiatives are planned for 2011? We’re changing the paint department and bringing in Benjamin Moore paint to attract a higher-end clientele. I tried out the paint myself and I am impressed with the products. We’re always looking to bring in new merchandise and ideas. We are not taking time to rest on our success. n

By John Franklin

Experienced Employee How to Train an

John Franklin has nearly 40 years experience in hardware retailing, most recently as merchandise manager at Williams Lumber & Home Centers in upstate New York. He is available for retail consulting or you can contact him with questions or feedback at john@thehardwareconnection.com.

The bottom line is certainly enhanced by high employee productivity, so training is a valuable use of our time. All store managers know that employee training is important and do their best to improve the performance of new and inexperienced employees. However, we often don’t do as good a job training our more experienced employees. Why? Because we all know it is hard to do it well without just wasting time; or even worse, insulting our best employees.

Whenever you get a mixed group in the same room and begin a training class you quickly run into problems keeping the experienced staff awake. This is because the experience level of each of your employees may be vastly different for any given training topic. The more an individual knows, the less they need to know, and therefore the harder it is to find the missing stuff without boring them by repeating stuff they already know. Review is only good to a point and after that it becomes a waste of time. This makes training

classes mostly a waste of time for experienced employees.

So, how do you train an experienced employee? The answer comes in two parts. First you must find out what it is they need to know, and second, you must then create a suitable training program. It is easy to see that the first part is harder than the second.

Instead of wasting their time in a class where they already know 90 percent of what will be covered, the best way to train experienced employees is to test them and train only by exception.

For example, NRHA offers the online Basic Training Course in Hardware Retailing as well as the printed Advanced Course in Hardware Retailing. Sign up your experienced employees but do not follow the instructions that come with the study guide. Remember, this is not a school or college test, the initial test score is irrelevant. It is merely a benchmark. You want the employee to master all the information so the score at the beginning has no value, only the score at the end of the training.

The employee should not look at the online or printed training materials in the course. Just have the employee take the tests, score the results and then train only by exception. When you score the test, only record the wrong answers. Do not create a test grade. Just notate every wrong answer and then and only then,

have the employee open up the study guide or other materials and look up the correct answer to each wrong score.

Remember, the intent of testing is only to set a benchmark of current knowledge. Everyone gets a score of 100 percent at the end, so don’t waste time reviewing the stuff scored correctly. Your customers deserve all the right answers, not 70, 80 or 90 percent of the right answers. If they made any initial errors on the test, make them review until they get them all right. In any case, they will save 90 percent of the time it would have taken to sit through the whole thing.

I have always taken exception to those groups that produce study guides, generate tests, grade the tests, send you the scores, but never tell you what you got wrong. What is the point of sending you a grade of 85 percent but not telling you what you got wrong? 85 percent was a good grade in school or college, but not in your store. You can’t get any better if you never get the correct answer. Testing without correction is not training, it is useless benchmarking.

There are other great sources that also make very good product knowledge courses with testing. Check with your wholesaler or lumber association for more courses. In the same way, use these tests in other areas where you need confirmation and then additional training.

In the absence of some sort of testing, try another approach — just ask your customers. Take the time to stop a few of your best customers and ask them how your employees are doing. They know who the experts are and will gravitate to certain individuals when they need help. Ask them who they would avoid on a particular topic. These are the employees that need specific training.

Be careful when discussing customer feedback with an employee. Do not blame it on the customer or they will feel exposed if they feel that customers are ratting them out. Tell the employee that you understand they feel a little bit lost when working with the topic under discussion and then present additional training that will help them become more comfortable with the next customer.

The third way to determine training needs is to ask the employee. This is the most difficult method since most employees work to hide their weaknesses from others, especially bosses and managers. How often do your

Dock Hinkle (third from left) has employees with a wide range of experience at Hardware…That’s Us in Craigsville, W.Va., so he makes sure to tailor his training to each individual’s needs.

employees walk up to you and say “I need help with something”? Rather than admit they need help, employees will usually work hard to avoid any future situations involving this topic.

Here is a non-confrontational way to identify weaknesses. It usually won’t belittle the person or embarrass them, and you may get what you need. I call it the Joe Syndrome.

Next time you talk to one of your employees and ask them to cover for someone else, ask them the following question. “You need to cover while Joe is out. To help provide the best customer service, what is the last thing you hope a customer will ask you to help them with?” The answer to this question will indicate an area in which the employee does not have full confidence and a great opportunity to train by exception.

On the occasion when you do hold store-wide training classes, the most important thing to remember is the room is filled with individuals. Effective training is directly proportional to the existing experience level

of each and every individual employee in attendance. Remember to adapt your training to the situation as well as to the individual in attendance.

To better understand the theory of situational training, consider this: Suppose you held a store-wide training meeting on use of the telephone. You could pick up a telephone in your hand and say “This is the telephone, these are all the buttons. You need to push these buttons in the right order to make a phone call.” If you did this, how many people in the room would be paying attention? Most would probably be thinking “What is wrong with this idiot? He thinks he is training us on a telephone.”

Alter the situation just slightly with almost the same conditions and audience, but this time you have in your hand, not a phone as before, but the launch controller of a portable laserguided missile system. You say “This is a laser-guided missile launcher controller. These are the launch code keys and arming buttons. You push these buttons in this order to file the missile.” Everyone in the room will be paying complete attention to your every word. What’s the difference? You did the exact same thing and had a completely different result.

What is different is the situation. When you hold a class on a known item like a telephone, the experience

level of each of the individuals is already so high that they can no longer be trained on this topic. Since everyone in the room is already an expert in the use of the telephone, none of them think there is anything more they can learn. Your best direction on training an expert is simply this: stop teaching and start coaching. Ask them if there is anything else they need to do a better job, give it to them, and then get out of their way and let them do it.

When we are beginners, we let ourselves be told what to do. Once we think we have become experts, we must be guided or coached if you want us to learn more. This is the difference between a teacher and a coach. Teachers with tests and study guides work well on new students. But when the student gets good at the job, and possibly better than the teacher, they need to have a coach rather than a teacher. Experienced employees need coaches rather than teachers and they should only be trained by exception.

In conclusion, you can improve your bottom line by making your employees more knowledgeable and efficient. An effective trainer’s most important asset is to know the audience well and know the strengths and weaknesses of every employee in the room. Then they will be able to present the information in the way that will work for all. n

Best Industry’s is the The Hardware

The Marco Island Marriott is a world-class resort located directly on the beach.

If you haven’t already, make plans to come to Marco Island, Fla., for a fun and unique event that will have a powerful impact on your business. The 2011 Hardware Conference will take place Sept. 9-11 at the Marco Island Marriott. It’s a chance to bring your whole family to a five-star resort right on the Gulf of Mexico with many miles of beautiful white beaches.

The Hardware Conference is for all independent retailers and their families. For the past 23 years, The Hardware Conference has provided a forum for retailers, regardless of wholesale affiliation, to get together and discuss ways to face common challenges. Attendees come away reenergized and filled with new ideas to take back to their stores.

Tom Chasteen, a third-generation hardware retailer from the Florida Keys, has been putting on the Conference

Conference Bargain

with his wife, Dale, since 1988. “The Hardware Conference is the only industry event where the focus is on building relationships between dealers, manufacturers and wholesalers, which is why our theme has always been ‘Where relationships are formed.’ You won’t find a better deal in the industry,” says Tom.

Key vendors participate in The Hardware Conference with tabletop booths showcasing their product lines, and dealers get a chance to have informal conversations with vendors without the pressure of buying. Another hallmark of the event is the Open Dialogue sessions, where dealers from all over the country join vendors and wholesaler representatives in a lively discussion of topics of concern to all.

“The opportunity to develop personal relationships in a relaxed atmosphere with the industry’s leading manufacturers is something you simply cannot do anywhere else,” says Tom.

“I think this will be our 20th year of attending. My wife is not in the

Above Upper: Dealers have plenty of opportunity to mingle casually with retailers from around the country.

Above Lower: The two Open Dialogue sessions are a chance for retailers to speak out about topics of concern and share feedback directly with vendors and distributors.

business with me, but the conference is the first item on our calendar each year. You have the opportunity to see new products, talk to other dealers and learn from both dealers

aGenda

wednesday, september 7

Vendor Only Meeting

10:00 a.m.–3:00 p.m.

Epicor/Activant Training Seminar

8:00 a.m.–5:00 p.m.

Epicor/Activant Cocktail Reception

7:00–8:30 p.m.

thursday, september 8

Epicor/Activant Training Seminar

8:15 a.m.–4:45 p.m.

Vendor and Dealer Registration

9:00 a.m.–12:00 p.m.

Vendor Set Up

9:00 a.m.–4:00 p.m.

Vendor and Dealer Registration

1:30–4:00 p.m.

Hardlines Meeting

4:30–6:00 p.m.

All–Industry Cocktail Reception

6:30–8:30 p.m.

friday, september 9

Vendor Set Up

8:00 a.m.–12:00 p.m. Vendor and Dealer Registration

8:00 a.m.–6:00 p.m.

Ace Hardware Dealer Meeting/Luncheon

8:30 a.m.–1:00 p.m.

True Value Dealer Meeting/ Luncheon

8:30 a.m.–1:00 p.m.

Do it Best Dealer Meeting/ Luncheon

10:00 a.m.–1:00 p.m.

Dealer Seminar–Vendors

Welcome

2:00–3:15 p.m.

Cocktail Party

6:00–7:15 p.m.

Key West Buffet Dinner & Awards Ceremony

7:15–9:30 p.m.

Hospitality Suite Open

9:30–11:30 p.m.

saturday, september 10

Breakfast

7:00–8:00 a.m.

Exhibit Areas Open

8:15–10:00 a.m.

Open Dialogue

10:15–11:30 a.m.

Trolleys leave for Krylon Golf Outing

12:00–5:45 p.m.

Wooster Brush–Day at the Beach

12:30–4:30 p.m.

Hospitality Suite Open

1:00–5:30 p.m.

3M Tennis Outing

2:00–4:00 p.m.

Minwax Shelling Trip

2:30–4:30 p.m.

Kids’ (ages 4–12) Night Out

6:15–10:30 p.m.

Cocktail Party

6:15–7:15 p.m.

Dinner Party and Auction

7:15–10:30 p.m.

Hospitality Suite Open

10:30 p.m.–1:00 a.m.

sunday, september 11

Breakfast

7:00–8:00 a.m.

Exhibit Areas Open

8:15–10:00 a.m.

Open Dialogue

10:15–11:30 a.m.

Closing Remarks

11:30 a.m.–12:00 p.m.

Dealers can learn about new products from leading vendors without the pressure of ordering since it’s not a buying show.

and vendors in a very relaxed setting,” says Rick Heuser of Handyman Hardware in St. Cloud, Fla.

Dealer registration for The Hardware Conference is one of the best bargains in the hardware industry — $139 per person. The fee covers:

• Three cocktail receptions, two dinners and two breakfasts plus access to the hospitality suite all weekend.

• Your choice of golf, tennis, shelling or beach activities Saturday afternoon.

• Access to manufacturer booths and new product area Saturday and Sunday.

• Open Dialogue sessions on Saturday and Sunday.

• Dealer-only seminar on Friday afternoon.

• Wholesaler luncheons on Friday. For more information on attending the Hardware Conference, call Tom or Dale at (305) 853-0049 or go to www.thehardwareconference.com. To register go to www.thehardwareconference.com/ register.html.

Attendees have the opportunity to stay at a world-class resort, The Marco Island Marriott, at greatly reduced

Marquee SponSorS

The Hardware Conference would like to thank and recognize its Marquee Sponsors for their support over the years. It is with their cooperation and that of all of our sponsors, vendors and retailer attendees that The Hardware Conference has become the largest annual dealer event in the hardware industry. The following companies are Marquee Sponsors of this year’s event:

hardware conference

Tom Chasteen, who is a thirdgeneration hardware retailer, has been conducting The Hardware Conference with his wife, Dale, since 1988.

rates. The Conference rate is $157 per night double occupancy (with no resort fee) and the rate is good three days before and three days after the Conference, so you can come in early or stay late and pay the same low rate. Call the hotel at (239) 3942511 and ask for the “The Hardware Conference” block.

hardlines digest gathering

A special get-together (sponsored by Centurion) is planned for dealers who participate in Hardlines Digest, beginning at 4:30 on Thursday, Sept. 8. “It is a good chance to meet and get to know, in person, those names and comments we see on the web. And best of all, Hardlines Digest’s founder and facilitator, John Fix, will be joining us,” says Bill Zeithammer of Isles Do it Best in Punta Gorda, Fla.

After the Hardlines meeting there is the All Industry Cocktail Hour. It has been suggested that the Hardliners meet after the cocktail hour for dinner at Quinn’s, which is on the beach at the Marriott. For more information

on the Hardlines gathering, contact Zeithammer at islesdoitbest@aol.com.

Another highlight is the Saturday evening banquet, when the vendor booths are auctioned off with all proceeds going to support the Miami Children’s Hospital Foundation. Last year’s auction raised $40,000, bringing the total fundraising amount over the years to over $700,000.

eagle Users groUp conference

Epicor (formerly Activant Solutions) is returning with a two-day Eagle Users Group Conference preceding the 2011 Hardware Conference. This program was so successful last year they have expanded it for this year.

The Epicor-Activant Eagle Users Group Conference will start with a full-day training session on Wednesday, Sept. 7, followed by another all-day session the next day. Grow your business expertise, share ideas with colleagues and get more from your Eagle investment.

Activant users can register for the user meeting and that also includes the cost to attend the Conference, which makes it an even better deal for dealers. In addition to a cocktail reception on Wednesday evening, those participating in the Activant-Eagle event will be offered breakfast and lunch on Thursday. To register for both events go to www.activant.com/userconferencemarcoisland. n

By Fred Fischer

POS System Don’t Overlook Staff When Selecting

AFred Fischer is president of Ganymede Technologies Corp. in Bucyrus, Ohio, which markets the J3 Point-of-Sale retail inventory management system. He can be reached at fred@j3pos.biz.

re you looking to purchase a point-ofsale (POS) system for the first time or maybe ready to upgrade your current system or replace it completely? Take a look around your store as the day progresses. Really look at what all goes on and who is involved in the tasks that keep your store running smoothly every day. These are your employees, and they will be significantly impacted by your choice of point-of-sale system.

Your staff will be using your new system every day, so should you involve them in the process of choosing a point-ofsale system? There are many questions a store owner is

faced with when considering a point-of-sale system but this is a critical question many store owners will overlook.

Sometimes a store owner has the mentality of “I know what is best” or “I know what I want for my store.” The reality is that your staff will spend countless hours using the system you choose to purchase. Allowing your staff to be a part of evaluating a point-of-sale system is vital in not only the decision-making process but also in the successful implementation of a new point- ofsale system.

To successfully include your staff, ask each of them to make a list of all the things that your current point-of-sale system

does that they like. Then have each employee make a list of the things they would like your current system to be able to do. If this is a first-time purchase of a point-of-sale system, then the questions should focus on what they think would help them work more efficiently.

This process will provide two valuable pieces of information. First, it will allow management to evaluate who is really knowledgeable about the daily activities of the business operation. Secondly, as you combine the data into a single list, it will give the owners the opportunity to identify the real needs of the store. By using this process, all areas should be addressed by your potential point-of-sale system, including ordering, inventory management, receiving and back office accounting. At the appropriate time when reviewing competitive point-of-sale systems, there is a good baseline to compare each of the potential products that are being considered. Many times one or two staff members may have considerable knowledge about computers that can add significant input into the process and make sure that the best value is being received once the purchase is completed.

Including all staff members ultimately makes the purchase of a pointof-sale system a team process. More importantly, they now have ownership in the process of purchasing and

the implementation of the point-ofsale system.

Training and installation can be shared with all staff members. Not all staff personnel need to learn all aspects of a point-of-sale system. Instead, identify the specific responsibilities of each area of the store and the needs of each of those staff members.

Take advantage of the on-site training that your point-of-sale vendor provides by utilizing a team approach to include multiple staff members in the training of each of those areas of specific duties. All staff members can know how to utilize those specific areas for training and then teach additional staff members. This will provide adequate redundancy for future use of the point-of-sale system by reducing questions and misunderstandings later in the process.

Involving your staff in the process of purchasing, upgrading or replacing your point-of-sale system is critical to the future success of your business. The staff members provide multiple sets of eyes and ears to make sure that as the store owner you get the best value for your money. The right pointof-sale system will have a significant impact on the future profitability and success of your business so use all possible resources including your own staff members. Your future depends on the ultimate choice. n

What’s the Latest on Hardlines Digest? Buzz

John Fix started the Hardlines Digest in January 1996 and continues to run the servers out of his hardware store in Eastchester, N.Y. There are currently over 2,400 subscribers to Hardlines Digest. Go to www.hardlinesdigest.com.

Afew months ago we were all waiting for spring to arrive, and now as I type this most of the country is sweltering through heat and drought. The high temps outside are as good a reason as any to dive into the past few months of Hardlines Digest postings to highlight some of the more interesting discussion topics.

internal theft

We’d all like to think our staff members are honest and trustworthy, and most of them probably are. However, every once in a while a news article appears to remind us to always be vigilant. Dick Beal found an article that described one such incident:

http://www.shawangunkjournal. com/2011/06/30/news/1106304.html

“A manager of Ace Hardware in the village has been charged with stealing more than $14,000 from the store in the past six months. During the investigation, police discovered another employee had stolen power tools.”

Lex Stevens of Back Bay Hardware in Boston has had a similar experience. “I just went through this myself. Fortunately, this time, we caught it early. As best as I can tell, it had only been going on for a couple of weeks, and the employee stole a couple of hundred dollars. What I hate more than the actual theft is all of the blowback. All the systems have to be reviewed, more

Hardlines digest

constraints have to be put into place, more overtime paid until someone new is hired and trained, locks changed, my vacation plans cancelled, etc.

This kid had come in with a black eye a couple of weeks ago. After I fired him, I remembered that an old boss of mine used to fire anyone who came in with visible signs of having been in a fight. I never asked why, but I guess his reasoning was that if your life was such that you got into fights, then you were going to be more trouble than you were worth.

Maybe it’s time to drug test, CORI search and credit check all of them. I’ll bet putting that in a ‘Help Wanted’ ad seriously cuts down on the applications that have to be reviewed.”

Matt Mazzone from Mazzone True Value in Brooklyn, N.Y., related his story and wondered about the challenges faced by multi-store operations: “Several years ago one of my more trusted cashiers was caught stealing. It’s a shame that so many safeguards have to be put in place. We all would like our employees to be ‘free’ enough to take care of customers without so many safeguards in place — manager overrides, etc. Unfortunately, when things like this happen even more safeguards have to be put in place and customer service can potentially suffer.

I once asked someone who owns many stores — how do you do it? How can you trust so many people on a

Retailers tend to pay more attention to shoplifters, but employee theft accounts for 47 percent of all retail shrinkage.

day-to-day basis with all that cash and inventory lying around? His answer: you have to accept the fact that people are going to steal and you’ll never know it all or catch it all. I just opened my second store and I’m already having nightmares. I can’t imagine those of you out there that have 10 or 20 locations — I would never sleep!”

Pat Maahs of Beisswenger’s Do it Best in New Brighton, Minn., captures some additional information at POS when handling returns: “One thing that works for us (or at least we haven’t caught anyone for awhile) in the body of the return transaction we have the ability to type in notes. We ask the customer for their driver’s license and enter DL# name and address and ask for a phone number. Then we print a receipt and have them sign. All returns are verified against the drawer totals. Then we randomly pick a couple and call to verify. All you have to do is call on them right in front of a cashier and the word spreads. We do this after we hire a couple of new cashiers so they learn they are being watched and this is not a way to steal.”

Lex Stevens posted a follow-up, wondering how to balance customer service while also preventing refund abuse and employee theft: “I do accept that there is going to be a certain amount of employee theft. My idea has always been to keep it to a minimum.

I realize that I pay more attention to my employee’s customer service skills than I do to returns and voids. Why did that customer you were helping leave and not buy anything? You should have told that customer that, even though we don’t sell what they were looking for, they can get it at the store across the street. What was the customer on the phone looking for? You didn’t thank them for calling. You didn’t say ‘please’ when asking for the money and ‘thank you’ as they were leaving.

Maybe if I paid as much attention to refunds and voids, my losses at the cash register would be as low as my customer service scores are high.”

Hardware Movie Moguls

Art Ruggiero of Gilbert Ace

Hardware in Arizona wondered about doing business with movie studios: “We are being approached to open up house accounts with some movie studios and I was wondering what kind of experiences you all have had with that industry. What kind of terms do you offer and how far out should I expect their payment to be? Any tips you can offer would be a bonus.”

Dan Schiffman of Pasadena True Value in California had some good advice and some personal experience to pass along: “Are these actual production companies with sound stages and production facilities or are these production companies out shooting on locations?

If the potential customer is going to be using products at a known, consistent address, a house account (you extend credit and could be left holding the bag) could be in order. Naturally, standard credit application procedures must apply. If these organizations are regulars in the area filming, they have credit cards or wads of cash. Offering them an attractive discount for COD would remove any and all credit risks. Discounts could be all they are really asking for.

I have had a few commercials filmed at my home. The production is always run by a production company for an ad agency who is representing a customer. Feature film and TV production works in a similar way I believe. On top of all of this, there are all different trades working on a production who could be subcontractors for other production companies — it can get very complicated. Have you ever noticed how many different production companies and producers are listed in the credits of a movie?”

Bob Brame of Cadiz Hardware sees it as similar to dealing with other commercial firms:

hardlines digest

“This day and time almost all companies that are credit worthy and move around the country provide credit cards to their employees. We will have a company come in doing a construction job, maintenance job and the lead man will come by and give us his credit card to put on file (correctly where it cannot be accessed by employees or others) and tell us which employees can charge, then if he sends another employee we call. Not much for sending a bill to California from Kentucky. “

Maurice White of White Hardware was surprised to get some movie business: “One scene of ‘That Darn Cat’ was shot across the street from me. I wasn’t warned and came in with the street blocked and a big generator at my front door. They did a fair amount of business but put everything on a company card. I get suspicious when someone, on a one-time job, wants an open account.”

Matt Mazzone chimed in with his brush with movie magic: “We get this on a fairly regular basis and have never had an issue. In fact, last week parts of MIB 3 was filmed in front of our store — they actually put a fake subway station on our sidewalk which drew a lot of attention. I always make them fill out our normal credit app or a credit card authorization form and take an imprint of their card.”

Ken Stewart of Stewart’s Hardware in Southport, N.C., also has had positive

experiences: “We have had several films made locally, and some commercials, and the film folks have been very generous to us. One Tree Hill used our store for two days, and did not bat an eye when I quoted them two times my average daily gross per day. And we only had to stop selling for a few minutes at a time while the cameras were rolling. Film people are the most polite and pleasant I have ever dealt with. I seek them out when I see them in town.”

I also chimed in with some thoughts about movie producers: “I will echo what some others have already said. If it’s a ‘permanent’ studio that is located nearby, then extend credit per your normal procedures. If it’s a movie production that is setting up in town for a short time (days, weeks) then handle it via bankcard or cash.

We’ve had a number of films done locally and I make it a point to visit the location ASAP with a stack of business cards. Pass out the cards, ask for to speak to an assistant director and introduce yourself. I write my cell number on the cards, tell them if they need items outside of our normal store hours to give me a call and I’ll help them out (I live five minutes from the store). They appreciate the offer and rarely bother me after hours (happened one time). We’ve usually picked up some nice extra business for high-ticket items.” n

Tools & Hardware Trends

Door Lock Sales

(Independent Hardware Channel)

12 Months % Change vs. Year Ago

Source:

Unit Sales Breakdown in Door Locks

Total of 2,650 Items with Sales

tools & Hardware Buying update

n The trend in decorative hardware is toward a cleaner and simpler look but with a contemporary design. Shapes such as ovals, triangles, squares and rectangles are popular.

n Concealed fastening systems are in demand by homeowners, particularly for decking applications, so manufacturers are introducing innovative clips that can be installed with pneumatic guns.

n Vendors continue to develop hand and power tools that allow contractors to perform more tasks with one tool, allowing them to work faster. For example, wire strippers that can be used for wire connecting and crimping and construction lasers that perform function of standard laser but also act as square, cross-line laser and plumb bob.

n Cordless and power saws are featuring tracking devices to enable more accurate cuts.

n Demand for thermal imaging tools is increasing due to the growing number of applications for them and the fact they offer a safer and easier way to perform diagnostics.

n Woodworkers no longer need to choose whether to buy a planer or a drum sander. A sanding and planning tool is now available that

Cole’s Home Solutions in Millington, Tenn., offers a tool demo area so customers can try out tools before buying.

Hartville Hardware attracts as many as 10,000 people to its semiannual tool sales. The Hartville, Ohio, retailer is an authorized repair center for all major tool brands and stocks over 1,100 parts.

performs both functions with a quick change of the sanding drum.

n Although women are buying more hand and power tools, they are not looking for stylish products designed just for them. They want to use the same tools as men but seek out products that are light weight, easy to use and feature a comfortable, ergonomic grip.

n Manual staple guns are being developed that offer more power and versatility on the job site, are easier to squeeze and less apt to jam and can even fire up to 1" brad nails. n

speed® bevel

n First tool that transforms instantly from a Speed® Square into a sliding T-bevel, two of the most used tools by builders, remodelers and carpenters.

n It’s actually five tools in one — a framing/ rafter square, a try square, a miter square, an angle finder/ protractor and a T-bevel.

n Its composite nylon-filled material is ultra durable and won’t mar wallpaper, paint or other delicate surfaces.

n It folds to just over 1" high, so it fits easily in a toolbox, tool belt or even a pocket.

n Comes in high-visibility orange color with easy-to-see markings on both sides so you’ll never strain to see a measurement.

SWANSON TOOL COMPANY

www.swansontoolco.com | 800-291-3471

AlphA™ shAstA® pAintbrushes

n Wooster now offers 20 different Alpha brushes for use with all paints. New 3-1/8" Shasta® and 2-1/2", 3" and 4" dowel-handle varnish brushes mean that the Alpha™ line now has even more high-production choices.

n Alpha paintbrushes feature exclusive Micro Tip™ technology that produces a finer finish than any other brush available on the market today.

n Shasta brushes have a unique “diamond cut” handle end with a thicker shoulder just above the ferrule. Slim dowel handles make the brush easier to rotate and direct.

n Both new Alpha styles have thick brush heads for excellent paint capacity and fast coverage.

THE WOOSTER BRUSH COMPANY

www.woosterbrush.com | 800-392-7246

new products

wire stripping BrusH witH scraper

n Carbon steel stiff wire stripping brush with scraper has 1-1/4" stiff wire bristles and a wide block brush area for big cleaning jobs.

n Offset handle with rubberized grips protects knuckles.

n Carbon steel scraper on nose for tough removal of rust and paint.

n Brush area measures 1-1/4" x 5".

n Part of a new line of mid-price grade wire brushes featuring a unique packaging design.

Hp7 Led FLasHLigHt

n Pure Beam™ focusing system produces a pure, bright consistency across the entire beam. Unique spot-beam optics provide a clear, bright center, while also showing a wide angle “halo” so you can see what’s going on around your primary target.

n Fingertip Speed Focus Control™ allows user to keep one hand free while focusing the flashlight with thumb or finger, by moving the front bevel forward or back.

n Beam Lock™ System — with just a twist of the front cylinder, you can lock your light into the precise beam size for your task, from focused spot beam to broad flood beam.

n A conical aluminum pedestal sits below the LEDs and decreases heat buildup, facilitating maximum light output and increasing LED lifespan.

n Fixed beam optics deliver maximum light output for any application, at any beam setting.

n Comes in a rugged 5.5" aircraft aluminum casing and projects 195 lumens of bright light output and lasts almost two hours.

IN the NewS

New StoreS

n Rosalie Martinez opened Ace Hardware of Alamosa in Alamosa, Colo.

n Rich and Sharon Malasics opened Phoenixville True Value in Phoenixville, Pa.

n Kent Cohee, owner of Shady Cove Hardware in Shady Cove, Ore., plans to open a second Do it Best store in Eagle Point, Ore., in October.

n Kuiken Brothers opened its ninth store in Succasunna, N.J.

n Dunn Lumber opened a new store in Mill Creek, Wash.

n Laron and Beau Porter opened Payson Home Center in Payson, Ariz.

n Denis Tanner opened Ace Hardware of Kamas in Kamas, Utah.

n Eric Toth and Wes Hager opened Blackland Building Supply in Ennis, Texas.

n Raymond Dondlinger is opening Williams Ace Hardware in Andover, Kan., this fall.

n Skip King opened his third Kings Ace Hardware in Billings, Mont.

PeoPle oN the Move:

n Do it Best Corp. named Marty Bailey director of commerce sales; Ken Sorg supply chain and inventory replenishment manager; Doug Roth director of financial reporting; Brian Eichman director of financial analysis and Nick Talarico internal audit manager.

n Handy Hardware Wholesale named Kenneth White CEO.

n DELTA Power Equipment Corp. has named Mark Strahler director of new product development.

KudoS to:

n Stony Point Supply and PRO Hardware in Sugarcreek, Ohio, owned by Mark Schrock, was named the 2011 Paul L. Cosgrave Memorial Award Winner by PRO Group Inc.

n Phillips Hardware, with seven stores in the Albany, N.Y., area, is celebrating 125 years in business. Jon Phillips is fifth-generation owner.

n Spencer’s Do it Best Hardware in Marion, N.C., owned by Nancy Spencer, was honored as “Small Business of the Year” by Marion Business Association.

in the neWs

n Quality Hardware in Saratoga Springs, N.Y., is marking its 35th anniversary.

n William P. Farrell has retired as vice chairman of the American Hardware Manufacturers Association after 31 years of service.

n Hammer & Wikan in Petersburg, Alaska, is marking 90 years in business.

n Major Lumber Co., based in Smithfield, Mo., celebrated its 115th anniversary in late June.

n Towle Hardware, operated by Butch and Donna Towle in Dixfield, Maine, celebrates 100 years in business.

n Tuttle Lumber of San Marcos, Texas, owned by Don Gilbreath, was voted “Best Hardware Store in Town” by readers of the San Marcos Daily Record for the third straight year.

n Miller Supply Ace Hardware in Northampton, Pa., was named “2011 Business of the Year” by the Northampton Area Chamber of Commerce.

n Jeff Rauh, owner of Robertson’s Hardware in Wauwatosa, Wis., is celebrating the store’s 90th anniversary.

n Mazzone True Value, owned by Matt Mazzone, was named the best mom-andpop hardware store in Brooklyn, N.Y.

n Paul Straus, president and CEO of Home Hardware Stores, was inducted into the Retail Hall of Fame by the Retail Council of Canada.

Wholesalers in the neWs:

n Gina Schaefer and Jim Ackroyd were re-elected to the board of directors for Ace Hardware Corp., while David Karsten was elected to his first three-year term.

n True Value Co. reported revenue of $529.5 million for the quarter ending July 2, 2011, an increase of 0.4 percent for the same period a year ago. The co-op posted a quarterly net margin of $21.8 million, a decrease of 16.8 percent versus $26.2 million one year ago. For the six months ending July 2, 2011, True Value reported revenue of $977.3 million, an increase of 2.2 percent from a year ago. The 2011 year-todate net margin was $29.8 million, down 13.1 percent. Total debt increased $34.8 million to $179.8 million compared to a year ago.

n PRO Group Inc. named Stony Point Supply and PRO Hardware, Welches Mountain Building Supply, PRO Hardware and Industrial Supply and Danny’s Builder’s Supply as 2010 PRO Hardware Retailers of the Year.

n At its May Market Do it Best Corp. announced the creation of a world-class Commerce Center, a single best-in-class online merchandise, sales and information catalog for members and customers.

Another new initiative is the Performance Satisfaction Guarantee. If a new member, within three years of converting, is not completely satisfied with Do it Best and wishes to return to their former co-op, Do it Best will pay them an amount equal to 10 percent of their average

annual warehouse purchases.

n At its Summer Dealer Market in Atlanta, House-Hasson Hardware introduced a comprehensive insurance program for its dealers offered through Addison & Associates. Dealers will be able to group together in a pool to reduce their health, property and casualty insurance costs.

Other News:

n Sears Holdings Corp. plans to spin off its 89-store Orchard Supply Hardware division into a standalone company.

n US LBM has acquired six-store John H. Myers & Son, based in York, Pa.

IN

MeMOry:

n Wayne Schauer, who spent 60 years in the hardware industry and was the long-time owner of Schauer’s Hardware in Forest Park, Ill., passed away at age 71. He is survived by his wife, Sandy, and sons Rich and Scott, and will be sorely missed by his many friends in the industry. Read more: http://forestparkreview. com/main.asp?Section ID=1&SubSectionID=3 8&ArticleID=5781

Get the Full stOry:

n Ace manager charged with stealing $14,000. Read more: http:// tinyurl.com/3c9ywn5

in the news

n To view marketing consultant John Jantsch’s tips on how to dominate local product searches, click here: http://tinyurl.com/4b5u4qg

n Dorvin Lively, CFO of Ace Hardware Corp., is leaving the coop after three years. Read more: http://tinyurl.com/3f9jbsx

n Browse population growth and decline, changes in racial and ethnic concentrations and patterns of housing development from 2010 U.S. Census. Put the cursor on your county and the latest census percentages will be displayed. Click here: http://tinyurl. com/4p6b7mh

n Cole Hardware Owner Dave Karp marks 95th birthday with special sale. Read more: http://tinyurl. com/3k8hkqn

n Retailers need to start reporting business income from credit and debit card payments annually to the IRS beginning in 2011. Read more: http://tinyurl.com/5ls4ft

n California mandates carbon monoxide detector installation. Read more: http://tinyurl.com/3tbas6u

n Tortoise’s artificial limb came from Ace Hardware. Read more: http:// tinyurl.com/3hevl6t

n Learn how Hardware Plus II is surviving despite being surrounded by big boxes in Wayne, Pa. Click here: http://tinyurl.com/3nlh7ht

n President Barack Obama visits Fred’s PRO Hardware in Toledo, Ohio. Read more: http://tinyurl. com/3jrfhx4

n Sears has sold $2 million of overstock Craftsman inventory to Menards. Ace’s Senior VP-Merchandising John Surane told Ace dealers it’s an isolated incident with limited SKUs and that Ace would protect their stores with price matching. Click here: http:// tinyurl.com/3p46s3g

n Akers Joins Magazine as Principal Dan Akers has joined The Hardware Connection as a principal in the business, joining principals Tom Chasteen and Chris Jensen . His title is marketing and creative director. Akers spent five years at NRHA serving as art director for Hardware Retailing and director of creative services and new media. He previously served as graphic designer for Riley Children’s Foundation and is a graduate of the Savannah College of Art & Design.

AUGUST

n Handy Hardware Wholesale Fall Market

Aug. 18-20, Henry B. Gonzalez Convention Center, San Antonio

n Orgill Inc. Fall Dealer Market

Aug. 18-20, Boston Convention & Exhibition Center, Boston

SEPTEMBER

n Blish-Mize Fall Dealer Market

Sept. 16-17, Overland Park Convention Center, Overland Park, Kan.

n Florida Building Material Association Gulf Atlantic Building Products Expo

Sept. 21-24, Gaylord Palms Hotel, Kissimmee, Fla.

n HDW Fall Dealer Market

Sept. 10-11, Shreveport Convention Center, Shreveport, La.

n Home Hardware Fall Dealer Market

Sept. 18-20, National Trade Centre, St. Jacobs, Ont.

n Horizon Distribution Annual Dealer Market

Sept. 9-11, Convention Center, Yakima, Wash.

n House-Hasson Fall Dealer Market

Sept. 30-Oct. 1, Sevierville Convention Center, Sevierville, Tenn.

n Jensen Distribution Services Marketplace 2011

Sept. 14-16, Spokane Convention Center, Spokane, Wash.

n Monroe Hardware Co. Fall Dealer Market

September 24-25, Greensboro Coliseum, Greensboro, N.C.

n The Hardware Conference

Sept. 9-11, Marco Island Marriott, Marco Island, Fla. www.thehardwareconference.com

n True Value Buying Market

Sept. 23-25, Pennsylvania Convention Center, Philadelphia

OCTOBER

n Ace Hardware Corp. Fall Convention

Oct. 15-17, Denver Convention Center, Denver

n Do it Best Corp. October Market

Oct. 8-10, Indiana Convention Center, Indianapolis

NOVEMBER

n PRO Group and Distribution America 2012 Executive Planning Conference

Nov. 2-4, Naples Grand Beach Resort, Naples, Fla.

n STAFDA Annual Convention

Nov. 13-15, Henry B. Gonzalez Convention Center, San Antonio

Send calendar dates to chris@thehardwareconnection.com

GrowinG SaleS by TurninG To ebay

K&K True Value Hardware in Bettendorf, Iowa, has figured out how to grow sales by $100,000 a year without adding any inventory. The retailer has one person, Chris Gaura, dedicated to selling items on eBay. “It has worked great for us. You would be surprised how old stock sells to other parts of the country,” says Owner Don Keller.

They started with closeout and high-margin items but kept expanding and now sell everything from trimmers and paint to one of the most popular items — U.S. mailboxes. “We’ve become an international store, selling to Iraq, Afghanistan, Brazil, Germany, China and all over the world,” says Gaura. He spends time planning seasonal and holiday items in advance but otherwise relies on a gut instinct of what will be popular.

K&K currently has 1,800 listings covering 2,200 SKUs on eBay and Gaura processes 15 to 20 sales on a typical day. “Last month we had 22,000 views from 15,000 different people and our listings were viewed in 67 different languages,” says Gaura, who adds that 92 percent of their sales come from people who found them by searching eBay. Returns are handled just like they are in the store, with refunds via Paypal minus the shipping costs. K&K is able to get a 20 percent discount of eBay’s

selling fees because they enjoy a 99.9 percent positive feedback. “Customer service is just as important with online selling as it is with customers in the store,” Gaura says.

Gaura feels he’s made a positive impact on the business. He looks forward to coming in each day and seeing what sold and where it needs to be shipped.

CoST-CuTTinG ideaS ThaT Pay off

Amy Earls of Page Hardware & Appliance in Guilford, Conn., offers the following tips on ways to reduce expenses:

n If you have company vehicles, look into a fleet gas card that gives a discount on gas purchases.

n Sign up for a credit card that gives an early pay discount or some other percentage back, as opposed to giving points or miles. We use an American Express plum card to pay as many vendors and utilities as possible to gain a percent or two.

n Look into having an energy audit. Improving the efficiency of the light fixtures, furnace and A/C would likely make a significant difference. Programmable thermostats and light timers work wonders, too. If your state has unregulated electricity, shop rates.

n Reduce the frequency of your pay days. Moving from weekly to biweekly or biweekly to monthly can save on payroll costs, if your employees don’t revolt.

Marketing to Hispanic custoMers

Cox Hardware & Lumber in Houston attracts a customer base that is 75 percent Hispanic, largely because owner Virgil Cox has learned how to communicate well with Latinos. “We show it throughout the store and speak it to customers,” Cox says. Here are Cox’s other secrets:

n Over half of our staff speaks Spanish well enough to sell a toilet or upsell paint. It may not be perfect, but we can make a sale.

n There are always several people who can speak to non-English speaking telephone callers.

n All the lumberyard loaders speak Spanish. Our forms out there are all English/Spanish.

n There’s always a Spanish-proficient manager on duty and the cashiers all speak Spanish.

n Our store is set up to serve shoppers who bring their children. Some Hispanic customers bring the whole

family when shopping. We also have some benches for older shoppers by the front of the store.

n We have a television on at the front of the store, near the cash registers. When there’s a big sporting event we try and have that on, especially World Cup games and the local pro soccer team. Baseball is big too.

n All of our permanent signs are in English and Spanish. Returns policies and those types of publicly posted signs are in two languages.

n Other policy documents, like the terms on the back of the invoice, are in two languages.

n Important exterior signs are bilingual (“Parking / Estacionamiento”).

tH e t wo-Man r ule of c usto M er s ervice

Willie Hudson, owner of Mineral Wells Hardware and Rental in Mineral Wells, Texas, follows what he calls the two-man rule. “No one person can tell a phone caller or a customer in the store that we don’t have it, don’t stock it or cannot get it,” he says.

A 3x5 index card is put on Hudson’s desk with the item and request of the customer. This card also starts the special order process, or the review to see if it is an item the store needs to stock.

“I make those decisions based on product knowledge, experience and cost,” Hudson says. n

Behind the

Numbers

56%Percentage of manufacturers in June who said they expect sales to be above current levels in six months, up from 42% in May, according to the AHMA Home Improvement Industry Confidence Index. Just 4% of respondents expect sales to be below current levels.

museum’s oldest hammer was used around 2500 BC by ancient Egyptians and is associated with building the third pyramid at Gaza.

a study by the National Retail Federation and the University of Florida. Employee theft accounted for 44% of shrinkage.

90.8

e Industr y Advantage.

1,500

Number of hammers on display at The Hammer Museum (www.hammermuseum. org) in Haines, Alaska, which features a nearly 20-foot hammer statue out front. The

8.7 million

Additional households that will be over age 65 by 2020, up 35% from 2010, according to the Joint Center for Housing Studies of Harvard University.

1.58%

Retail shrinkage as a percent of sales in 2010, up from 1.4% the prior year, according to

NFIB’s monthly SmallBusiness Optimism Index reading for June, a 0.1 drop from the previous month and further indication that small business owners are largely pessimistic about future business conditions.

50%Percentage of Facebook’s 750 million users who log into the site on a given day.