Hardware Connection November 2014

THE INDUSTRY’S DIGITAL LEADER

ALSO INSIDE:

Technology Trends That Are Driving Change

Product Reviews From Tom’s Shop

Bringing in Traffic With Pet Supplies

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By Chris Jensen

Redefining What it Means to Serve Others

As we approach Thanksgiving, a traditional time

to give thanks for our blessings, I wanted to take a moment to recognize all independent hardware retailers for their community service efforts. No one does it for the recognition, and we’d never have room to list all the activity, but each and every one is making a difference in their local community.

Some retailers extend that service beyond their trade area to help those less fortunate in far-flung areas. Take Ken Pitkin, owner of Callaway True Value in Nebraska, who has made three trips to Nigeria in the past five years.

While there he has helped build a school, a clinic and a number of deep water wells so the villagers have clean water to drink. One of the hardest but most important tasks was finding and training locals to maintain and manage the wells going forward.

His last trip was two years ago and lasted 17 days. Pitkin was quoted describing

his life-altering mission this way: “It is not so much what you give, it is also what you receive. There is a richness in their lives. The people are so incredibly happy, and they have nothing.”

Pitkin has been a Habitat for Humanity partner for more than 20 years, so his generosity extends to his local community. Despite the Ebola scare in Africa, Pitkin is planning another trip to Nigeria next year. Anyone interested in his deep water well project or other work in Africa can contact him at kpitkin@gpcom.net . n

By Tom Chasteen

Secrets to Hiring Good Employees

Idon’t know one hardware store owner who wouldn’t like to learn the secret to hiring good employees. Every hardware store owner I’ve known over the past 40 years has several employee hiring horror stories. Some are actually pretty funny and others are very sad and tragic. The fact of the matter is I don’t think there is a secret to hiring good employees, but I do believe there are things you can do to help increase your odds of finding the right people.

For me it starts at the selection and interviewing process. I attended an employee hiring seminar at one of my wholesaler shows years ago and I will never forget the presenter’s opening remarks. He asked the 50 or so people in attendance “How many people in the room have employees who aren’t very smart?”

About 20 percent of the people raised their hands. He then instructed everyone to keep their hand up and asked again in a humorous tone, “How many people have unmotivated employees?” As you can imagine, a few more people raised their hands.

Finally he asks, laughing, “How many people have one or two really dumb employees?” And a few more people raised their hands. At this point everyone

is smiling, as we have all felt those feelings at one time or another.

Then the presenter’s mood changed from humorous to very serious as he instructed everyone to keep their hands up and asked, “Who hired them?”

Everyone in the room suddenly lost their sense of humor as each of us realized the employer bears a large portion of the responsibility for having poor employees because we hired them.

For me the process starts when someone comes in for an employment application. We do not allow anyone to fill out the application in the store and hand it in. My thought here is I want them to take their time and fill out the form legibly and I want to see if they are serious enough about the job to make a second trip to the store to turn in their application.

I try to find people who have ties to the community—do they own a home, do they have children in school, how long have they lived in the community, how long were they at their previous job, why did they leave their previous employer? These are questions each of us ask in any interview.

I try to avoid interviewing people who I think are more likely to be transient. I also ask them why they applied to work at our company. If they answer they have to

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the way i see it

show they are looking for a job because they are receiving unemployment benefits, then it is definitely the wrong answer as it tells me their motivation is not finding a job but rather to continue getting paid to not work. This is not the kind of candidate I am looking to hire.

We try to follow up with their previous employers, landlords or references and I also assess how they are dressed. Are they neat and clean? How are their people skills? I look at their hands to see if they are clean and if their nails are trimmed, anything that will help me assess if they will be a good representative of our business to the customer when they come in our store. We also encourage an applicant to walk around the store and talk with other employees. I’m always amazed at how well the other employees can qualify a potential applicant.

Once we determine we would like to offer the person a job, I ask him or her to come back in and let them know what our expectations are so they can evaluate if our business is the kind of place they would like to work. I let them know I’m not a micromanager. I encourage them to use their head. I tell them that I won’t hire them if they don’t give a minimum of two weeks’ notice at their current job, if they have one. I ask them to refrain from making any suggestions on how we can better run our business until after their 90-day probationary period and we’ve had a chance to have their 90-day review.

In addition, I tell them that I will personally be a part of their training if they choose to come to work with us. I want them to know I’m an active owner in our hardware business and I won’t delegate anything that I won’t do or haven’t done in the past, including the cleaning of the bathrooms. This helps eliminate the people with the attitude “I wasn’t hired to sweep the floor or clean the bathroom.” In our family business we do it all and I try to instill that concept from the first day someone comes on board with us.

I try to give each new person as much latitude as possible, because we all absorb, comprehend and learn in different ways. However, I also make sure we are structured in our overall approach. Part of that process is each new employee is given an employee policy manual to take home and read. When they are finished they must sign off on a form stating that they have received our employee policy manual, they have read it completely (it’s only 20 pages) and understand it.

That sign-off sheet is then placed in their employment file folder. This helps to cover the basic information of where to park their vehicle, what the shift hours are, their responsibility for uniform shirts which we provide, paid vacation time, how many personal days off they are allowed (we don’t have sick leave anymore) and how they clock in (we use a fingerprint reader that is

the way i see it

inexpensive and prevents employees from clocking in anyone else).

It also covers employee issues concerning drugs and drinking, our policy of theft, paid holidays off and overtime. By having the sign-off sheet in their employment file it negates the employee excuse “I didn’t know that” or “No one told me that.” It also helps if we have to terminate someone with cause, if we can show they had signed off on our store policies.

There are not many things I find as unpleasant as having to fire someone—I just hate it. I consider it a personal failure on my part, since I should have never hired them in the first place. Fortunately, I’ve only had to fire a handful of people in my 40-year career and each time when I reflect back on the circumstances of their firing I can’t help but think if I had done a better job qualifying them I wouldn’t have had to fire them.

Anyone who is responsible for hiring people will admit hiring is still an “art” and not a science that you can reduce to an aptitude test score. In my humble opinion the secret to hiring good people is investing the time upfront before you extend the offer.

Of course after I have hired each new person I always say the employer’s prayer: “Oh God, I hope this one works out.”

Let me know what you think, from one retailer to another, at tom@thehardwareconnection.com. ■

Tom Chasteen, the publisher/principal of The Hardware Connection, operates Tavernier Hardware in the Florida Keys.

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HARDWARE HUMOR

HARDWARE STORIES Amazing but TRUE

We have a list of funny stories tacked up in the back room. Some customer quotes and stories from the list:

*Customer: “Do you have a foot valve for my sump pump?”

*Sales associate: “Do you need any help?”

Customer: “Yes, I know what I need.” Pause.

*A customer returned a propane blow torch twice because he said he could hear gas coming out of it.

*A man comes in looking for superglue—for his false teeth. Buys Loctite and says that should do the trick.

*A customer comes in asking for an “organ vacu- um.” He meant Oreck.

*A man walked out of the store with a pressure washer. As he passed the cashier, he said he had to make sure it works. We ran after him and caught him before he got too far.

Rick Schwartz

Schwartz Ace Hardware Fall River, Mass.

Just had a customer come in wearing a dental hygienist shirt and bring in a pressure washer wand for repair.

Acustomer put a bunch of plywood on the roof of his Lexus, then hit the brakes. All the plywood went across the hood.

Trevor Messa South Park True Value Fairplay, Colo.

IAllen

Biedrzycki

Huffman True Value Huffman, Texas

had a line of Snapper lawn mowers, and a customer claimed the mower wouldn’t go fast enough to make it up into the back of his pickup truck. Trying to ride up boards into a truck is just dangerous anyway. But he even called Snapper and complained about me. He kept complaining, so I told him to come to the store. I wrote him a check to pay for the mower, then asked him to sign a letter stating that he was no longer allowed to come back to the store and was barred as a customer.

Dan Boudreaux

Dan Boudreaux’s Ace Hardware Napoleonville, La.

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How’s

Business?

MIDWEST

Sales and customer counts so far in 2014? We have two stores in Paducah and sales have been up, but customer count is about the same from a year ago. Sales are up about 11 percent, mainly because we expanded our heating center. The sales in the rest of the store are about the same. Our area is still in a little recession. There have been some layoffs in the area and a college closed its doors, so we’ve lost a lot of jobs.

Best niche categories? Our heating center has been a good niche. We devote about 2,000 square feet to heating. During the holidays, our gift department is strong. We started our gift department with figurines and collectibles, but that kind

of petered out. Now we’re into specialty candles, crystals and Christmas gifts, even selling some jewelry. It’s really bringing in the female customer.

New initiatives planned for 2015? We’re going to be adding the True Value Rewards program, which will give incentives for repeat customers. We’re looking to initiate that within the next four weeks. Also as part of the Rewards program, circulars are going to have extreme discounts for Rewards customers, so that will be nice going into 2015.

What new ways have you been implementing technology? We opened up a website. And we have been taking advantage of True Value’s e-commerce ability. Customers can order something and have it shipped here. We only

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How’s Business?

stock about 3 percent of the True Value catalog, but our customers can have access to everything. We are also using the Weber recipe app. When someone buys a gas grill and we deliver and install it, we’ll show them how to use the app. Customers receive recipes once a week and it’s a really neat feature.

Jim Hank Hank Brothers True Value Paducah, Ky.

NORTHEAST

Sales and customer counts so far in 2014? In the winter months, we had great sales because of the storms. Customer counts were up but we ran out of product. Spring was slow to start because of cold weather, and sales didn’t pick up until mid-May. But what’s been encouraging is that big-ticket items such as grills, fire pits and outdoor furniture have been selling strong. There seems to be a lot more consumer confidence. September and October have both been good. Through July, we were up about 3 percent.

Best niche categories? We are fairly diversified. Our two big niches are our fireplace shop and outdoor department. We’ve had the fireplace shop for about 14 years, and we happened to be lucky.

Bart and Diana Tyler have owned Kelloggs & Lawrence since 1996 but the business dates back to 1887.

There wasn’t a fireplace shop in the area, so we became that shop. We are the destination for fireplace products around here. It’s mostly cash and carry type products in the store, but we also do installs. We usually do about 100 installs a year, and that’s really helped our bottom line. In our outdoor department we have a lot of apparel and other small goods. We’ve had it for about five years, and it’s a nice niche that people are discovering.

New initiatives planned for 2015? We are probably going to have more focus on barbecue. We’ve been holding back, but we plan to be more aggressive with how we display, stock and market barbecue products.

What new ways have you been implementing technology? We are an Epicor client and use it extensively for analytics, ordering, stock maintenance and driving gross margin. We do have a wait-and-see attitude on some of the new technologies.

Bart Tyler Kelloggs & Lawrence Katonah, N.Y.

SOUTH

Sales and customer counts so far in 2014?

Sales have been picking up, and customers on account have been better about making payments on time. It seems the banks won’t let builders get any money.

Best niche categories? Heaters are really selling well now. We have gas logs displayed along with three feet of gas heaters. And this time of year, weather proofing, too. Lumber always sells good for us.

New initiatives planned for 2015? We are trying to get back on our feet as far as new products. First, we want to get the old ones selling back good. It seems like

it’s on its way. We sell a lot of house packages, providing the lumber from the foundation to the roof.

How’s Business?

What new ways have you been implementing technology? We are looking at getting a whole new point-ofsale system. The one we have right now is too small.

Jerry Shaw

Shaw Building Supply

Mt. Olive, Ala.

SOUTHWEST

Sales and customer counts so far in 2014? About like last year—nothing too exciting. We are up slightly from last year in customer counts and sales, maybe 1 or 2 percent. We had an early spring. Then our lawn and garden picked up earlier than last year and stayed steady. We got into the summer months and sales started to flatten out.

Best niche categories? Our green goods have done really well. Our garden center is about 7,500 square feet,

and we really push the green goods, annuals and anything with color during the spring. People are really into vegetable gardens now, too. Also, a few years ago we acquired the inventory of a feed store that went out of business. Now we’re heavily into horse and cattle feed. The pet area has also grown tremendously for us.

New initiatives planned for 2015?

We think that our rental business may come back a little bit. We haven’t had a lot

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How’s

Business?

of building here. But we think there might be a little more action in the coming year. We’ve seen more unfamiliar faces coming into town. So we started to acquire more rental equipment so we’re ready for that new action.

What new ways have you been implementing technology? At the True Value show we ordered some televisions that go on endcaps. They’re WiFi-enabled and can show specials. We can also download videos for product demonstrations. We are going to put those on some endcaps. They are going to be a key selling point for merchandise that needs more explaining. We also use the RF guns quite a bit and are on the latest version of point-of-sale software.

Doug Boston

Boston’s True Value Page, Ariz.

WEST

Sales and customer counts so far in 2014? Sales have been good, with double-digit growth from March to October. I mostly attribute it to weather. It’s been unseasonably warm and not as much rain. We have had an increase in traffic, too. We’ve seen more footsteps in lawn and garden and paint. Best niche categories? We do a really good job with bagged goods

and yard décor. Soils, compost and mulch sell really well for us. In the summer, fans and air conditioners have been really good sellers, where they weren’t in the past.

New initiatives planned for 2015? We plan to focus on customer service, clean up the store and work on product mix. We will be doing more training with some employees and more team building and team meetings. For the team building, we’ll get together and have pizza and relax a little bit away from customers and focus on what we need to do.

What new ways have you been implementing technology? We now have an iPad on the sales floor. We are using the True Value Net Warehouse app, which makes it easier to look up products for customers. We don’t have to go behind a monitor to help the customers now. Customers are responding and do like that accessibility.

John Horsman

Westmoreland True Value Portland, Ore.

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From Tom’s Shop hardware products review

By Tom Chasteen

Reviewing a New Technology Tool

When I first came to work in my family’s hardware store it was 1978 and I had just gotten out of graduate school. We didn’t have computers in our family business back then and the internet didn’t exist. My father taught me the finer points of the “squat and squint” method of ordering merchandise and inventory control. He also taught me the value of strong business relationships with the salesmen who came into our hardware store each week.

Always take care of the “problems” first, he used to tell me, which typically revolved around defective merchandise returns, merchandise ordering shortages/overages from the previous weeks’ orders and invoice pricing errors. Then we would get down to actually “squatting and squinting” as we checked the shelves and pegs hooks to see what merchandise we needed to order that week from our suppliers.

The formal mathematical concept of min-max was still years away, although every hardware store owner was thinking about it in a sense when they ordered their merchandise each week as they were “squatting and squinting” while counting the items still on the shelf.

Before the salesman would leave we would always check the “want book” for customer special orders or for merchandise for which we had several requests during the last week or month depending on the salesman’s route schedule.

The big technology challenge back then was figuring out how to change the sales tax percentage in the “new electronic” cash register when the sales tax rates changed. I’m embarrassed to say it typically took two of us to figure it out.

Then we got our first Telzon unit, so we now had to know the order number of each item we wanted to order and then had to enter it into what today looks like a big handheld calculator. God help you if you “fat-fingered” the wrong number into the Telzon unit or held your finger down too long on the number key when inputting the quantity you wanted to order.

For the first six months of using the Telzon unit when we received the order each week it was like Christmas—you were never quite sure what would come off the delivery truck or how many. Every retailer in that era has a story of ordering 500 of something when they only wanted five.

The uncomplicated and simplistic hardware business began to change and it has never stopped changing. Technology is often moving faster than our abilities to keep up. But the bottom line is I don’t know one hardware store owner today who when asked what would be the first thing they would buy if they were to open a new hardware store today who wouldn’t say a POS computer system.

Even if you have the best POS software system available it is worthless without good data. There is just so much information, so many products and so many different manufacturers that it is a challenge just to keep up with all of that information let alone get it into your POS system accurately.

Keeping with the main feature section of this issue, which relates to technology trends, I am reviewing a new technology tool that can help your business operate more efficiently, whether you are a retailer or a vendor.

The Vendor Center has been developing and fine-tuning a web-based program that helps not just retailers, but also manufacturers to share information, process orders and find new items. In reality The Vendor Center is a businessto-business (B2B) resource tool that I think could be extremely helpful to hardware retailers and manufacturers regardless of size or location.

It allows the sharing of information for everything from product information, product availability, downloadable

pictures of products (JPGs), product training videos and product merchandising planograms to the ability to contact manufacturers directly and see proprietary information like pricing and special order discounts predicated upon who the retailer’s primary wholesaler is.

It is available to retailers for free and it’s a resource tool that is available 24/7, so you can work when it’s convenient and not just when the salesperson shows up. Above all else it is secure, so no one can get to your information.

There are several other similar services on the market, but from what I’ve seen The Vendor Center is the most comprehensive program available to the industry today and it supports more than 50 distributors in the two-step hardware channel.

In my opinion, the big advantage of The Vendor Center is the ability to actually place drop-ship orders directly with a specific manufacturer over the internet. The order is then processed through the wholesaler designated by the retailer, who automatically receives an electronic copy of his or her order before it even ships. Retailers will also have the ability to see any special offers the vendor may be offering in “real time.”

Vendors can use The Vendor Center to place retailers’ orders at wholesaler shows through the Vendor Online Ordering Program (VOOP). Retailers will electronically receive a copy of their orders before they even get back to their stores. This is a positive feature that will

help trade shows reduce or eliminate much of the wasted paper while expediting the ordering process.

Darrell Wabschall and his team have been refining and enhancing The Vendor Center site for the past five years. Darrell has more than 40 years of experience in the hardware channel working with retailers, vendors and wholesalers as a manufacturer’s representative. Darrell knows firsthand how difficult it is for vendors to share their information with the retailer and wholesaler communities. He also knows how difficult it can be for new vendors to break into the two-step hardware channel.

If you are a retailer, vendor or wholesaler, please take a few minutes and look at The Vendor Center’s website at

www.thevendorcenteronline.com or click on the links below and see why I think The Vendor Center is one of the best technology-driven tools available to the hardware industry.

LiNKs:

• The Vendor Center Product Listing: http://www.thevendorcenteronline.com/demo-product.html

• The Vendor Center, Distributors/ Wholesalers: http://www. thevendorcenteronline.com/ wholesalers-list/

• Vendor Online Ordering Program: http://www.thevendorcenteronline.com/voop-page/

• To register: http://www.thevendorcenteronline.com/register-retailer.asp

technology trends

Technology Trends That Are Driving Change

As many retail experts have pointed out, the balance of power in the retail arena has shifted, perhaps permanently, from the retail sellers to the well-informed, connected and very mobile consumer, who is more fickle than ever.

Technology is boTh a blessing and a curse, as it can be the solution that drives greater efficiencies and profits in your business while at the same time be the source of many of your biggest challenges and problems.

Doug stephens, president of Retail Prophet consulting, offers insights into how retailers can keep pace with rapidly changing technology. stephens lists three big ideas for retailers to ponder:

• Technology is changing exponentially faster than at any point before.

• consumers have more choices. They are looking for technology that helps them filter their options.

• Two distinct streams of technology are developing to define the in-store experience: fully automated and fully animated. Retailers will need to decide which kind of experience they want to offer and then cater technology to deliver it. The fully automated experience will involve in-store systems that enable consumers to self-manage every aspect of their store visit, perhaps without ever coming in contact with staff, stephens points out. each element of the shopping experience will be self-serve, seamless and efficient.

lowe’s recent announcement that it would start using customer service

robots in four stores in california marks the first wave in the direction of fully automated.

by comparison, the fully animated experience will involve expertly trained staff catering to customers in a personal way, treating them to an enjoyable and engaging store experience for which they are willing to pay a premium.

“For many independents, the greatest opportunities to dominate in their market exist in creating an animated store experience, so the real question is what technology is required to support this kind of customer experience in a cost-effective way,” says stephens.

he named a number of technologies that independent retailers should be leveraging to support a fully animated customer experience, including local search using free services like the google Places program, social media, mobile-optimized website and portable point-of-sale.

independent retailers don’t necessarily have to lag behind everyone else when it comes to retail technology. For example, sunshine ace hardware in naples, Fla., has already adopted the apple Pay mobile payment system in its six stores.

“Frankly, it is going to be a long time before apple Pay, or any form of mobile payment, becomes a significant part of our sales,” said Michael Wynn, sunshine ace president, in an interview with the news-Press. “but, anytime there is something we can do to make

“We Will see more disruption in the next 10 years of retail than We did in the previous one thousand.”

—Doug STephenS, ReTAil pRopheT ConSulTing

the shopping experience easier or more convenient for our customers, we are going to do it.”

“although e-commerce is still a relatively small percentage of the total retail market, its global pace of growth is close to 20 percent year on year. in the first quarter of 2014, amazon.com registered 23 percent revenue growth while the retail market in general remained virtually stagnant,” points out stephens. “should e-commerce growth continue unabated (and there’s little to suggest that it won’t) it’s conceivable that by 2025, upwards of 30 percent of all retail purchases could be made online.”

according to stephens, stores will increasingly be filled with the same level of analytic intelligence that online marketplaces currently enjoy. Technologies such as video analytics, mobile iD tracking, and sensor networks will give the store a level of consciousness. “Their knowledge of who is in the store; where they move in the space; and the products they interact with, will all be instantly and continually calculated. hot and cold traffic zones of the store as well as the real-time performance of

technology trends

for more information on retail technology trends

• customer service robots tested by lowe’s. click here.

• see lowe’s customer service robot in action. click here.

• What apple Pay means for small business retailers. click here.

• apple Pay Q&a: What you need to Know. click here.

• Why one-fifth of online product prices will be different tomorrow. click here.

• 10 Technology Trends That Will Revolutionize Retail. click here.

promotions, personnel and displays will be evaluated,” he says.

“While the current onslaught of change provides plenty to be concerned about, it also brings enormous opportunity for those retailers with the courage to challenge industry, category and corporate beliefs,” says stephens. “some will use their energy to defend the past, while others dedicate it to pioneering the future. as with any evolution, survival is not linked to size or strength but to adaptability and the inherent willingness to change and change quickly.”

stephens concludes by saying, “We will see more disruption in the next 10 years of retail than we did in the previous one thousand.”

By Doug Smith

Business Intelligence is a Tool Every Retailer Can Use

If you want to move your retail business forward, you must understand how to effectively employ business intelligence tools. Whenever you choose to measure business processes you have the lengthy and tedious job of extracting and manipulating data or running various reports to determine performance metrics. in addition, there is always the question of accuracy. as business conditions become more competitive and the process of analyzing and compiling data into meaningful information becomes more cumbersome, it is no wonder that fully integrated business intelligence applications are gaining popularity.

you may be asking, “What is business intelligence, and how can i apply it to my business?” a good way to start is to begin thinking of business intelligence, or bi, as the tool to turn data into knowledge and actionable information about your business. a successful bi application can help you do the following:

• Forecast the impact that business decisions have on cash flow.

• increase profitability by adjusting margin thresholds on individual items or classes of merchandise.

• Respond to business performance outside of desired boundaries.

• effectively manage staffing requirements by analyzing transaction and traffic patterns over specific periods of time.

• Understand customer buying behaviors and trends to better serve and incentify repeat customers.

• Reduce or increase inventory investments based on inventory performance indicators.

bi applications don’t need to be cumbersome; they can be flexible and ver accessible for most retailers. bi is not entirely about the collection of data; bi is about relevant, actionable data that you can use tactically and strategically in your business.

The numbers don’t lie—if you collect data correctly and accurately, and have the right tool set to decipher those numbers, you will be able to progressively move your business to the next level.

analytics provide an added component in the struggle to understand customers, outservice your competition and strengthen areas of weakness in your business. This is a tool that can be applied across all facets of your business.

embedded analytics is a feature available within some computer pointof-sale systems that allows users to better understand customers’ behavior and buying patterns, and learn what incentivizes and brings them back. by

Research Shows:

• 87% of specialty drip oil users and 73% of specialty drip non/infrequent users are interested in the new 3-In-One line

• Consumers prefer the 3-IN-ONE product line versus competitive offerings

knowing who your best customers are you can determine what discounts or promotions are the most effective in bringing those customers back over and over.

you can also learn when a consumer buys item ‘a’ how often they buy items ‘b’ or ‘c.’ This knowledge can really assist you in planning your merchandising or promotional advertising and driving maximum profits.

analytics can extend to other areas of the business. Take seasonality or sales trends as an example. an analytical tool aids in sufficient staffing for certain times of the year by looking at sales trends month-to-month or week-to-week. accurately forecasting inventory demand, optimizing inventory and stocking the right items can lead to heightened service levels, because you will have what customers want, when they want it.

it also extends to growing profits and vendor analysis. you can look at how vendors are working in your business, and how items from certain vendors are performing and improving your bottom line. by looking at trends available in bi metrics, you will be able to negotiate better buying rates, drive down costs and grow margins. The aforementioned are only a few ways that you can really leverage that data and turn it into meaningful information. There are many more techniques that can be applied to your business that will help run the business more efficiently.

technology trends

the starting line: first steps in bi

When was the last time you took a holistic look at your business? a starting place to begin implementing bi is to define the goals for your business. What numbers are important to you? What goals and objectives do you have as a retailer? once they are defined you can work to improve those processes and look to gain efficiency through leveraging the data, and deploying it through best practices. it’s critical to know what it is that you want to measure, and then constantly monitor and figure out how to move that needle.

at this point, you are probably thinking about cost: “how much is a tool like this going to cost my business?” if you look at the ratio of cost to return on investment, then there’s no comparison. Perhaps one way to begin analyzing it is by taking a glance in your backroom. how much inventory do you have waiting to get placed on the shelves? how many shelves on the sales floor are empty? While inventory accuracy is just one piece of the bi pie, it is a good place to begin the review process. The question then becomes, “how can i afford not to invest in analytics to run my business?” in the end, every retailer is different, with diverse goals. it all starts with a strategy. From there you can put the right tools in place to accomplish those goals.

Doug Smith is a senior product manager for Epicor Software Corp.

technology trends

What’s With All This Credit Card Talk?

It seems like every week there is another company that discloses a credit card or security breach. Twenty million here, 32 million there, letters from your bank that your credit card is being replaced, purchases being declined on your card that you thought were good. These are major corporations with large iT staffs that are supposed to know what they are doing.

What is going on? There are terms flying around like chip and Pin, eMV, Virtual Wallets, nFc, QR codes, P2Pe, ach Funding, Pin steering, apple Pay, PayPal and the terms go on. Do you know what any or some of this is all about?

companies are getting “hacked” everyday. how does this happen? The World Wide Web is a double-edged sword. We cannot do with it and we cannot do without it. it is the ability to rapidly communicate or transfer information from point “a” to point “b.” in the old days we took a credit card and then a three-part form and imprinted the card information with the card number on the form. We then took the card to the bank and some days later received the funds.

By Fred Fischer

Today, we swipe a magnetic strip on the back of the card through a card reader and transmit that data to the issuing bank. in as little as a second, that data goes across country to your bank. They look at your credit limit, determine you are good for the purchase and create an authorization number, then send it back to the merchant so you can make the purchase. as a merchant, you usually receive the funds within 24 hours.

There is one little glitch. The bad guys get into the merchant’s computer system and with many systems today they can record that data. They then sell the data on the black market. one of the most recent breaches was done by bad guys from overseas (their government does not try to stop them) by using the computer access that the heating and air conditioning company used to monitor all the equipment nationwide. by using that portal, they were able to install software to record and hack the card information on all the Pos terminals.

The biggest ongoing attempt to stop hacking is called chip and Pin (eMV), and if you own a retail business october 2015 is a big date to remember. by that date you must replace your current mag-strip readers with the new chip and pin readers. your customers will then insert their card into a slot and enter a pin number to authorize the transaction. For hardware and lumber retailers, this will be straightforward because you just mount the device on your checkout counter. it comes with a cost, because the devices are somewhat expensive.

This change is more challenging for restaurants. Where else do you hand someone your credit card and they walk off with it? Restaurants are going to need devices that they bring to your table so you can insert your card and enter the pin number.

october 2015 deadline

Do you have to make this change? not really, but there is one little problem. after october 2015, if 80 percent of your transactions are not chip and pin, you will be responsible for any fraudulent charges as the bank will no longer cover or refund that loss to you.

Where is all this going? no one really knows. it is a big war out there and everybody in card processing wants to be a winner. What are the options? First of all, you want to adopt chip and pin into your Pos system. There are good

and better ways to do that. Most Pos companies are making chip and pin as part of their credit card processing process.

at J3 we chose a different route of P2Pe (point-to-point encryption). This process does a number of good things. it takes our Pos software “out of scope” for our merchants. This means the liability is now with the card processor, not us or our retailers. This is good for everybody. you can sleep at night because all transactions are communicated to our Pos software using a “token.” The nice part is there is no credit card data at the merchant level or in the computer software.

There are other processes out there. nFc (near Field communication) is a process that has been around in a number of forms to include android devices. its most recent big push has been the apple iPhone 6, which uses this technology. customers register their credit cards in a wallet (using an application on their smartphone) and then use the phone to communicate the card info to the processor. you do not have to use the actual credit card. not everyone has or wants a smartphone.

Virtual Wallets using QR codes is the same process as nFc except instead of using radio communication to deliver the data, it uses a token that is a QR code. The customer then uses their camera in their smartphone to communicate the data.

technology trends

ach funding is the guys trying to offer really low rates. beware, as this is the same as taking a check. your customer has to provide the processor their checking account information (not everyone wants to do that) and when the transaction is authorized, it is only looking at the funds at that moment. it is usually the next day when the actual transaction is presented at the bank and if funds are not there at that time, you the merchant are stuck with the equivalent of a bounced check.

beware of the door-to-door or phone solicitation of salespeople offering big savings on credit card processing. if it

looks too good, it probably is too good. They will promise and say anything, because they get a big check to sign you up. Usually the contracts are longer term and the processor can raise the rates at any time and they often do, sooner than later. Meanwhile the salesperson is long gone.

Research card processing. Make sure your Pos vendor has options that are in your best interest and flexible. There is not a clear path as to what is going to be the best way to go. Most likely it will be a combination of processes.

Fred Fischer is president of J3 Point-of-Sale – Ganymede Technologies Corp. He can be contacted at fred@j3pos.biz.

What You Should Know About Internet Prices and Online Sales

For years, you have been reading and hearing about how much online sales have grown and how people are checking prices on items via the internet. Maybe you have occasionally checked out the prices of some items you sell to see how your prices compare, but have you been doing it on a regular basis? you should. according to a recent article in The Wall Street Journal, e-commerce sales totaled $283 billion in the 12 months ending June 30, 2014, up from $138 billion five years ago. amazingly, amazon accounted for $74.5 billion of that amount, but there are literally thousands of online sellers, most doing far less than amazon, of course, yet some of them could be selling the kinds of items you stock.

Fortunately, many of the items hardware stores and home centers sell are not the hottest sellers on the internet. however, some are or at least the internet provides a way for consumers to check prices before they make an instore buying decision.

Therefore it is important for retailers to know how their in-store prices compare with online pricing. There is an amazing tool available free to help you check pricing among multiple online sellers. go to www.getinvisiblehand.com and you will be able to attach free software

to your Firefox, chrome or safari browser and it will automatically check the web for other prices when you check out pricing on an item from any online retailer, showing other sources and prices in a drop-down menu.

Today, some of the major competitors you face as a local retailer come not only from online retailers such as amazon and overstock.com but also from major chains such as home Depot, lowe’s or Walmart, all of whom are working hard to increase web sales..

Those last three now offer ship-to-store buying options that minimize or eliminate shipping charges and encourage in-store pickups, which generate increased store traffic and more impulse purchases when customers pick up their online buys.

To their credit, most of the leading wholesalers serving the hardware industry are also offering ship-to-store services for the benefit of their affiliated retailers. ace, Do it best, True Value, orgill and house-hasson are among the wholesalers offering this service for their retailers.

technology trends

ship-to-store builds traffic for participating retailers. Retailers need to take advantage of in-store pickups by welcoming customers and explaining that they will be able to satisfy many of their other needs because of their convenient location, experienced staff and extensive inventory.

in other words, retailers need to establish a relationship with these customers when they come into the store, not merely serve as a pick-up station. What amazes some retailers is that local customers sometimes buy through their web sites items that the retailers regularly stock. as noted previously, most of the products hardware/home center retailers stock are not among the most popular online sellers, so the threat is not as great for them as it is for some other kinds of merchants, but every retailer needs to know that customers might be checking prices on the items in the store’s inventory.

To help readers compare their prices with some of the major competitors,

we checked internet prices on 11 items from several sources in the chart below, with a fill-in space for you to enter your own retail. We checked two online-only retailers (amazon and overstock.com), the two big-box chains and one of the hardware wholesalers with a ship-tostore program. you can see the various prices and items in the accompanying spreadsheet. in some cases, quality of the items might vary, which would affect prices.

While there are hundreds or thousands of web sites offering some of the items you sell, many of them do not offer as wide a range of products as you do or as amazon does. For example, Wayfair, whose sales are growing rapidly and have reached $1 billion, limits its hardlines offerings to bigger-ticket or more stylish items. overstock.com does about $5 billion in sales.

in order to evaluate your own ability to compete with web merchants, it also is important for you to know the shipping costs for various merchants.

They can vary substantially, and online buyers do not always take this into account before hitting the “click to buy” button.

amazon offers free two-day delivery for a yearly fee of $99, called Prime. otherwise, delivery costs $4.99 for up to 75 pounds as a standard charge. overstock.com offers free shipping for purchases of $50 or more, or only $2.95 on smaller purchases.

among hardwarerelated sellers with shipto-store offers, home Depot’s explanation of its non-pickup charges are the most complicated to understand and probably were written by some attorneys. They offer two hours for some in-store pickup, some free shipping, as well as three-tofive-day delivery and free ship-to-store within three to five days.

lowe’s explains it much simpler—free ship-tostore or free on $49 or more, excluding some huge items like major appliances.

ace hardware’s web site, similar to those of other wholesalers, offers free ship-to-store and direct shipment cost to homes is based on product weight.

you might want to establish a spreadsheet of your own on

some of your bestselling items and make it a regular practice to check pricing of major online sellers. a nd if you are using one of the browsers to which i nvisible h and can be added, be sure to add this helpful tool. n

Congratulations to the 2014 Beacon Award Winners

How do you win a Beacon Award? By being the “best of the best” among independent hardware and home center retailers. These five businesses earned that honor for 2014 and received their awards in September at The Hardware Conference. We congratulate them all and say a special thank you to the three winners who use Epicor ® Eagle® business management software.

Retail Beacon Award

Complete Home Center, Hernando, Mississippi

True Value of Concord, Concord, North Carolina

University Ace Hardware, Auburn, Alabama

Best New Store Under 20,000 Square Feet

Gecko True Value Hardware, Dallas, Texas

Best New Store Over 20,000 Square Feet

Geneva Ace Hardware, Geneva, Illinois

To learn more about Epicor software visit us at www.epicor.com/eagle or call 888.463.4700 today.

CustomerMakingServiceStand out

Click to Learn Why

Schnarr’s Hardware is So Intensely Focused on the Customer Experience

Frank Blair served on the board of Do it Best Corp.

Schnarr’s Hardware Company

has been serving Ladue and the surrounding communities for more than 50 years. The Schnarr family started in business by repairing wagons and Model T cars and Schnarr’s Market was later built. In 1960, the grocery store was changed to a hardware store. Frank Blair went to work for the Schnarrs in 1974, and after 20 years of learning the business, purchased the store from Bill Schnarr in 1995.

Dealer Profile

Frank Blair

Schnarr’s Do it Best Hardware

St. Louis, Mo.

www.schnarrs.com

Salesfloor square footage: 5,000

% Sales DIY vs. Pro: DIY 90% and Pro 10%.

Estimated 2014 sales: $2 million

2013 sales: $1.9 million

Number of employees: 18

Top core categories: Lawn and garden, electrical and cleaning supplies. Most successful niches: Package Express, decorative door and cabinet hardware. We’ve been doing Package Express since 1992 and do 10,000 packages a year. One-third go out around the holidays. It is a traffic builder. 95% do not make a purchase then but they have to walk through the store and see what we have to offer. We sell a lot of packing materials at good margin.

How do you ensure customer service stands out? We put the team in red shirts. Seriously, that makes a difference. Customer service is what everyone throws out there, but most don’t know how to do it. Having a greeter at the door is not service. We train our staff to be intensely focused on the needs of our customers and to

Schnarr’s Do it Best Hardware does $2 million in sales out of a 5,000-square-foot store.

serve others the way they’d like to be served. I came up with an employee orientation packet that says who we are, what we do, what services we offer and then trains on each service. We preach to employees a team focus on customers. I’ll leave a conversation with an employee in mid-sentence to go help a customer, which may seem rude but is what we’re about.

What are biggest challenges facing your business? Finding and training the right team members and escalating cost of providing health benefits. I believe health insurance is something I should offer, but I can’t afford it much longer. If that piece of your business goes up 70% you can’t replace that money. You don’t attract more

customers because you have a more expensive health plan.

How worried are you about online sellers like Amazon taking business from you? Our decorative hardware niche experiences the most “showrooming,” which is quite a challenge. My biggest worry with online sellers is figuring out the items or categories customers would rather buy from a bricks and mortar store and giving those customers a reason to buy from us.

Any new initiatives planned for 2015? No new initiatives but just looking for ways to enhance what we do here. We reset a different department each year.

How do you approach competing against the big boxes? Big boxes are sloppy eaters and if you’re quick and agile you can live off their scraps. They leave a lot of scraps on the floor. With our radio ads we try to tell the story that we’re different.

Left: A strong niche has been developed in decorative door and cabinet hardware.

Right: Cleaning supplies is one of the topselling categories.

What’s your pricing philosophy? I have a value pricing philosophy. We use Margin Master and look for blind items to maximize margin. When you’re putting in a new item you can go online and see what it’s selling for.

How did serving on the Do it Best board benefit you? Serving on the Do it Best board was an extremely rewarding experience. It gave me an insight into the co-op structure and operations from a level I would not have experienced otherwise. Moreover, when I joined Do it Best I felt there was a sincere commitment to serving the membership, and a focus on long-term financial stability. My service on the board verified and quantified those things, and my belief in the value of Do it Best as the best co-op for my business.

What lessons did you learn about retailing from your mentor, Bill Schnarr? How to run a business. Listen to customers and they’ll tell you what to carry and how to serve them. I remember there was a local hardware owner who felt that advertising a lot was the way to go. Mr. Schnarr did not agree. He said ‘I don’t worry about people who are not in my store but concentrate on taking care of those who are in the store.’

Dealer Profile

Left: Employees in their red shirts are trained to be intensely focused on serving customers.

Below: The store’s mission statement is posted for all to see.

cashiers, making the schedule and other tasks to help the manager.

Are any other family members involved in the business? My five kids have all worked here some. My daughter, Melissa, works now in the business and handles events, training

You bought the business after spending 20 years as an employee. Do you have a succession plan ironed out yet? No, but we’ve set out the ironing board and we are warming up the iron. I have so much confidence in Melissa and I know if I got run over by a truck tomorrow she would be fine. n

By John Fix III

Rationalizing to Theft & MarketingRecyclers

As we approach the crazy retail holiday season it seems like a good time to browse some of the topics discussed on the Hardlines Digest during the past few months.

rationaliZing theft

Lex Stevens of Back Bay Hardware in Massachusetts started a lively discussion about “borrowing” merchandise.

“While one of my managers and I were being interviewed by a marketing student this afternoon, the subject came up of buying something, using it and returning it. In the student’s experience, it was buying clothes, wearing them to a party and returning them. My manager said, yes, the women in his life do that quite often. In my business, I most often see it with tools. I pointed out to them that doing so was theft. No, they both said, it was different.”

Stevens continued, “Since I can be obtuse at times, I wanted to present my

Stores become recycling centers to generate more foot traffic, but it takes extra effort to generate profits.

arguments as to why I think that buying something with the intention of returning it after use is theft. If I am wrong, please point out my mistakes.

1. The seller of new goods offers their goods and services in good faith, fulfilling their legal, moral and ethical obligations to the customer. The buyer willfully and deliberately deceives the seller, having no intention of keeping the goods and returning them in their original, unused condition. The buyer lies to the seller when the goods are purchased and when they are returned.

2. The seller of the goods is denied compensation for their labor and any other expenses incurred in presenting and selling new goods to the public. Workers who are paid on commission are also denied compensation for their labor. The seller is also denied the opportunity to sell the goods to someone else while they are out ‘on loan’ to the deceptive buyer.

3. The deceitful buyer also steals from the next, unsuspecting buyer who purchases the goods, paying full price for what they think are new, unused goods.

Am I out to lunch on this?” Stevens asked.

Alan Talman of Karp’s Hardware in New York had these thoughts on the topic. “Theft or fraud, it’s a fine line. When you sell a new product you have an implied contract to provide just exactly what you have on the counter for a certain amount of money. Your posted return policy no doubt says (express contract) you accept the return of unused items in their original package. So you either have ‘Theft of Service’ or ‘fraud’ if someone returns the item after

using it, because they claim that they did not use it. Either way, you are correct in assuming that the customer is rudely and criminally beating you out of your money. You did not offer to rent this item, but to sell it to them forever.”

Karp continued, “This is why we sticker a ‘NO Return’ bright-colored sticker on pumps, bolt cutters, water street keys, certain large sockets like 32mm sockets and a few other items that customers regularly like to rent. During storms when batteries and chain saws fly out the door we sticker the receipts with these large green stickers so the receipt could not be more plain. We sticker the receipts directly over our store name. This has saved me tens of thousands in returns over the last few

hardlines digest

hurricanes. (Without unhappy customers at the counter.)

You owe it to your employees to make a profit. Their jobs depend on it. Defend yourself whenever possible. You don’t have stockholders willing to pay 40-times earnings as Home Depot does, you are your employees’ only line of defense.”

Paul Dye of Brimfield Hardware in Illinois shared his thoughts. “I agree with points 1 and 3, but as for number 2 I think it is way off base. As a retailer the public owes me nothing, and when I think the public is in my debt my doors will not be open too long after.”

Lex clarified his position in a follow-up post. “My second point isn’t about the public owing me anything, it’s acknowledging that most returns (as opposed to exchanges) are net negative. The loss may be something as minor as a swipe fee, but my time and my employees’ time is not free. Nor is the cost of any damaged or unsaleable merchandise. Time and money spent on good customers has the potential of producing future profits. Time and money spent ‘lending’ merchandise to these frauds is money that will never be recouped. Because of that, it is something that I want to be wary of, and certainly not a behavior that I want to encourage.”

He continued, “In a way, the inverse of this is the old guy in the screw aisle. He has nothing better to do than spend half an hour looking for the perfect nut and bolt to repair his problem, and he is more than happy to have one of the (usually

young) guys hang around and figure it out with him. Monetarily, it’s a losing proposition any way you look at it. Yes, I want to treat my customers well, and I want the old guy to tell his buddies at the coffee shop how great the folks are down at the hardware store. But I don’t want him telling all his friends that we will spend as much time as needed, no matter how little the purchase.”

Bruce Phillips added, “The money taken at the time of sale and the money returned at the time of return is a wash, unless it was a check or credit card purchase where you might be dealing with service fees. But the time invested by the store and the employee cannot be returned.”

recycling drop- off Marketing

Many stores now accept drop-off items to be recycled, such as CFL bulbs, rechargeable batteries and paint. Chet Chomka of Vose True Value in Rhode Island wondered how to handle paint recycling visitors to the store. “We’ve recently become a drop-off site for paint recycling and the biggest complaint I have about the program is that folks (not customers) drop off their paint and barely enter the store, let alone shop. I’m wondering if anyone has ideas about getting them into the store or turning them into customers. We try to at least get them to take the current flyer, but am wondering if I should be handing them a coupon or sending them to some ‘designated drop-off spot’ at the far back corner of the store.”

Ken Walchak of Clark-Devon Hardware in Illinois thought Chet was on the right track. “I think that both of your ideas are the right ones. I’d make them walk to the drop-off spot in the far corner of the store, where they could get a coupon good for a discount on a paint purchase. If there was a way to keep it neat, maybe the drop-off spot could be in the paint department, giving you an opportunity to talk about your brands, and also to see what other brands people are using. That’s the information that we always want, but never seem to have a way to get.”

Brandon Buckalew of East Grand Fork Hardware Hank in Minnesota had a suggested script. “You could always tell them that you need to collect a name, phone number, address, email address and what not for auditing. Boom, you now have a promo list. Even if you only used that list to send a paint flyer to them in April/May, you would get some traction from it. You could even have some of your reward applications next to your log sheet. Tell them that you’ll fill out the application for them from the info they gave you for the recycling but that you just need their signature on the reward application.”

John Keely expanded on Brandon’s idea. “Just tell them the truth. ‘We’re putting together a mailing list for extra discounts for recyclers. We won’t flood you with junk e-mails, just look at the flyer and great if you can use it, toss it if you can’t.’ Nothing ticks me off more than having contact with a company

and then seeing emails from them without choosing to opt in/out.”

Keely added, “Recycle some paint, sign up for rewards card and get a free cheapie something or another. Your staff has an opportunity to then build a relationship while they are doing this. ‘What projects you have coming up?’ ‘Did you see we are closing out garden hoses for the season?’”

Jim Ertzman from South Hills True Value in Pittsburgh had limited success with drop-off services in his store. “We were an AT&T phone leasing depot. We did UPS and FedEx shipping, fishing licenses, lottery scratch-offs and an ATM machine. The office paperwork they created was another negative. These are standalone, low-profit services that consume a staff member for too long that could otherwise be making more profitable sales.”

Ertzman continued, “If they are dropping off paint they are probably just cleaning out the garage or have just finished their painting project so I don’t know that a paint coupon would be successful. I wouldn’t get my hopes up of this being a profit generator. Maybe a 5 off 25 coupon or having your current sale flyer at the drop-off would be better. The best is always positive interaction with a staff member that hopefully can get them to at least look around.”

To read more or subscribe go to www.hardlinesdigest.com. n

John Fix started the Hardlines Digest in 1996. The list was run for many years using servers in John’s hardware store, but the list recently migrated to Google Groups. There are currently more than 1,500 subscribers reading the Hardlines Digest.

Be Part of the Hardware Industry’s Exclusive and Professional Women in Hardware Program!

Designed for professional women and men in the two-step hardware industry to exchange ideas, educate, network and provide support and access to opportunities to further careers and help grow the independent channel.

Who’s Eligible to Join?

• Independent Hardware Store Owners and Managers

• Vendors Involved in the Two Step Hardware Industry

• Service Providers Involved in the Two Step Hardware Industry

• Wholesalers/Distributors

• Industry Professionals

Activities

• Membership benefits include up to six networking events per year held in conjunction with other industry events.

• Each event will have a business focus offering direct and immediate benefits.

• Vendor and Service Providers will have the ability to interact with business owners and others in management positions sharing experience, concerns and solutions.

• While focus is on women and their opportunities, men are welcome and encouraged to participate to better understand and lend their perspective of the industry.

Winter Retailers Bracing For Another Harsh

Last winter was great for retailers across the United States who were able to keep up with record demand for ice melt and snow shovels, but not so great for the people who had to endure the frigid impact of the polar vortex. Most retailers did not want to risk being short of inventory this winter, so they stocked up on ice melt, snow shovels, snow blowers and related winter products. Retailers who attempt to buy ice melt the rest of the winter will discover that supplies are virtually gone.

Using forecasts from the National Oceanic and Atmospheric Administration (NOAA), The Hardware Connection will keep bringing you short-term and long-term weather projections throughout the year. What follows is the Winter Outlook, which was recently released by NOAA’s Climate Prediction Center.

Below average temperatures are favored in parts of the south-central and southeastern United States, while above-average temperatures are most likely in the western U.S., Alaska, Hawaii and New England.

While drought may improve in some portions of the U.S. this winter,

Source: National Oceanic and Atmospheric Administration

California’s record-setting drought will likely persist or intensify in large parts of the state. Nearly 60 percent of California is suffering from exceptional drought. Winter is the wet season in California, so mountainous snowfall will prove crucial for drought recovery. Drought is expected to improve in California’s southern and northwestern

Weather monitor

regions, but improvement is not expected until December or January.

“Complete drought recovery in California this winter is highly unlikely. While we’re predicting at least a two-inthree chance that winter precipitation will be near or above normal throughout the state, with such widespread, extreme deficits, recovery will be slow,” said Mike Halpert, acting director of NOAA’s Climate Prediction Center.

El Niño, an ocean-atmospheric phenomenon in the Tropical Pacific that affects global weather patterns, may still develop this winter. While strong El Niño episodes often pull more moisture into California over the winter months, this El Niño is expected to be weak, offering little help.

The Precipitation Outlook favors above-average precipitation across the southern tier, from the southern half of California, across the Southwest, Southcentral and Gulf Coast states, Florida, and along the eastern seaboard to Maine. Above-average precipitation also is favored in southern Alaska and the Alaskan panhandle. Below-average precipitation is favored in Hawaii, the Pacific Northwest and the Midwest.

Last year’s winter was exceptionally cold and snowy across most of the United States, east of the Rockies. A repeat of this extreme pattern is unlikely this year, although the Outlook does favor below-average temperatures in the south-central and southeastern states.

In addition, the Temperature Outlook favors warmer-than-average temperatures in the Western U.S., extending from the West Coast through most of the inter-mountain West and across the U.S.-Canadian border through New York and New England, as well as Alaska and Hawaii.

The rest of the country falls into the “equal chance” category, meaning that there is not a strong enough climate signal for these areas to make a prediction, so they have an equal chance for above-, near-, or below-normal temperatures and/or precipitation.

The U.S. Seasonal Drought Outlook, valid through January, predicts drought removal or improvement in portions of California, the Central and Southern Plains, the desert Southwest, and portions of New York, Connecticut, Rhode Island and Massachusetts.

Drought is likely to persist or intensify in portions of California, Nevada, Utah, Idaho, Oregon and Washington state. New drought development is likely in northeast Oregon, eastern Washington state, and small portions of Idaho and western Montana.

This seasonal outlook does not project where and when snowstorms may hit or provide total seasonal snowfall accumulations. Snow forecasts are dependent upon the strength and track of winter storms, which are generally not predictable more than a week in advance. n

HARDWARE PROGRAM Ambassador

The Hardware Ambassador Program was created to bring the hardware industry together to promote the independent hardware retail channel as the most efficient and profitable channel to distribute hardware and home improvement products and services.

• View Vendor Product Listings by Wholesaler

• Ability to Download Product Listings by Wholesaler Directly into Retailers’ Point-of-Sale Computer Systems

• Check Out Vendor Profiles, Informational Videos & Product Reviews

Click Here to Learn More and View Vendor Product Listings by Wholesaler

BRINGING IN TRAFFIC WITH PET SUPPLIES

Lots of people love pets, and if they own pets, they spend money on them— sometimes lots of money and repeatedly.

That basic fact is why many hardware stores include a pet department. A pet department brings people to the store repeatedly, especially if the hardware store sells pet food, which needs regular replenishment.

Total U.S. pet industry expenditures are estimated to reach $58.5 billion in 2014, according to the American Pet Products Association, up 5 percent from 2013. Pet food accounts for 39 percent of the total. Those figures are not surprising when you realize that 68 percent of U.S. households own a pet, including 56.7 million households that own a dog.

For most retailers, pet supplies serve as a convenience category, occupying about eight feet of shelf space with a limited assortment usually focused only on supplies for cats and dogs.

However, some stores contain sizeable pet departments that serve as a destination department. Several facts seem to dictate whether a store includes a major pet supplies department:

1. Management has determined there is a market opportunity— either a lack of competition or weak competitors.

2. Management and other store personnel personally like pets and feel a kinship toward other pet owners, so the department gets special attention.

In a spot check of some retailers with good pet departments, it is clear that there are many opportunities for special promotions that will attract pet owners and generate repeat business and visits.

Here are some examples of what hardware retailers are doing to promote pet departments:

• A costume contest for dogs and sometimes for cats;

• Trick-or-treat promotion for dogs and providing free treats for all kinds of pets;

• Keeping dog treats at the checkout station to give to pets;

• Allowing customers to bring pets into the store;

• Special events such as vaccination days, rabies clinics, adoption days, first aid clinics, etc.

Most departments concentrate on items for dogs and cats, the most common pets, but many also offer items for a wide range of other pets, such as harnesses for rabbits, food and other needs for fish, supplies and feed for birds, etc.

“We first got a small four-foot section of beds and another four feet of food, and we have always had pet doors,” says Karla Robson of Slavens True Value in Cortez, Colo. “Last year we put in leashes and collars. I am very pleased with the increase.”

Some stores have their own pets on site, usually a dog, though sometimes a cat. Having a pet as a store mascot seems to be helpful in promoting a pet department, because pet owners feel “you are one of them.”

Melissa Brett of Welden Hardware in Simsbury, Conn., uses their store pet to market the business. “Our Corgi, Grace, has been awesome with kids and adults. Now customers feel comfortable bringing their pooches in to visit. She is our mascot as well as advertising branding, as all our ads start with a photo of her and the phrase ‘Gracie says.’”

The pet supply department at Moore’s Feed Store in Pontotoc, Miss., carries everything a pet owner might need, whether it’s for a dog, cat, rabbit or horse.

Pet departments generally need to occupy 15 feet or more of fixtures to accommodate an adequate assortment, especially if pet food is included. Some dealers have departments of 25 feet or more, and do as much as 15 percent of all their business in pet supplies and pet food.

“We recently refreshed our pet assortment with 16 feet of accessories and toys and treats,” says Walt Thomas of Handyman True Value in Florissant, Mo. “We have experienced an uptick but most likely due more to the advertising we’ve done in our circulars to bring awareness. The bulk of our sales are in tie-outs and the promoted toys and treats, and overall worth having the 16 feet dedicated to it.”

Pet food is the most competitive item, since it is often stocked in grocery stores and mass merchants such as Walmart or pet chain stores. However, here is where the personal relationship

a growing community of thousands of

“I created Hardlines Digest in 1996 as a way for my fellow retailers to swap tips about the nitty-gritty of running an independent hardware store. Today, it’s grown to a community of thousands of independent hardware store owners just like you. I hope you’ll join today and start sharing your own expertise.”

John Fix Owner, Cornell’s

Hardware Eastchester, NY

Dog food is a consumable category that keeps customers coming back.

between customer and retailer becomes a factor, since it will be present in hardware stores and lacking in grocery or mass merchant shopping.

Food prices need to be competitive, but not necessarily the lowest in the trading area. Knowing pet owners, and maybe the names of pets and allowing them into the store, establishes that personal relationship between pet owner and retailer.

Many full-line hardware wholesalers provide pet department items, but if a retailer’s department is designed to supply needs for any kind of pet, retailers often rely on specialty distributors as well.

Those retailers with substantial pet departments advertise the department regularly, using wholesaler-supplied direct mail promotions as well as their own, and often emphasizing the department on Facebook, in e-mail marketing and with loyalty programs. On Facebook, for example, stores have developed “furry friends” photo albums by taking pictures of customers with their pets.

Supplementing in-store sales, some retailers are also selling pet supplies through their websites. Doing so can

offer a broader assortment of merchandise than might be exposed in in-store displays. One such store doing this is Klem’s. Its web site is www. klemsonline.com and viewers can click on the web site to view the online inventory.

A clever idea from another retailer was to develop a coupon book, which was given to a local animal shelter. Staff there then gave a coupon to anyone adopting a pet, with the coupon giving that person a discount on pet products. New pet owners immediately knew that the local hardware store had a pet department.

Another idea that has been used is to participate in agriculture shows and offer discount coupons to create dog tags for pets.

As Jessica Bettencourt of Klem’s in Spencer sums up: “Staff in the pet department needs to be knowledgeable and they need to have a passion for animals. They must be able to recommend products that make sense for each customer and their pet.”

She adds, “Customers come to us and ask questions about their pet’s health, happiness and well-being. We must advise them correctly or refer them to a vet, if needed. A customer’s pet is a family member and needs to be treated as such. You are dealing or recommending products for a living animal and have to respect that as a great responsibility.”

CHEW STICK DOG TOY

• Comes in large and small sizes.

COMBI CRATE

• Is a carrying crate and freestanding gate all in one.

• Great indoors and outdoors in any configuration.

• It features fill grooves so you can fill with your dog’s favorite treat.

• It helps promote clean teeth and gums while keeping dog entertained.

• Made of rubber.

Pet

• Made of steel and high-impact plastic that is sturdy, durable, leadfree, non-toxic and chew-proof.

• Offers complete portability and sets up easily in less than a minute.

IN THE NEWS

NEW STORES:

· Mark Driscoll opened 16,000-square-foot Sugar Grove Ace Hardware in Sugar Grove, Ill., in September.

· Blake Burgess, owner of York Ace Hardware, purchased True Value Hardware in David City, Neb.

· Elizabeth McDade has opened Courtland Ace Hardware in Spotsylvania, Va.

· Battle Ground Ace Hardware moved to a new, bigger location in Battle Ground, Wash., in August.

· Sunshine Foods has added an Ace Hardware store to its location in Dodge Center, Minn.

· Joan Sallach has purchased Albion True Value Hardware in Albion, Neb., and renamed it Main Street Hardware.

· Brian and Carol Watson have opened Watson Ace Hardware in Jefferson, Wis.

· Collin and Taylor Morrison have opened Bolivar Hardware in Bolivar, N.Y.

· H.A. Pippen Hardware Supply has moved to Town Creek, Ala.

· Robert and Kyle Gibbs have opened Gibbs Family Hardware Store in Brooks, Maine

· Jeff and Julie Kegler are the new owners of Capac Do it Best Hardware in Capac, Mich.

KUDOS TO:

· Jim Goyer, owner of Goyer Ace Hardware in Fort Atkinson, Wis., was presented with the 2014 Small Business Person of the Year Award by the Fort Atkinson Area Chamber of Commerce. His late father, Tom Goyer, received the same honor in 1992.

· John Mahler is celebrating the 75th anniversary of Hoy’s Ace Hardware in Sweet Home, Ore.

· The Williams family is celebrating the 65th anniversary of Leeper Hardware in Jefferson City, Tenn.

Lisa and Brian Williams of Leeper Hardware

· J.D. Saunders , president of Economy Lumber in Campbell, Calif., has been elected the new president of the National Lumber

and Building Material Dealers Association. Scott Yates of Denver Lumber is the chair-elect.

· Tom Wolf, former CEO of Wolf Distributing Co. (now Wolf Home Products), has been elected Governor of Pennsylvania.

· Carol Purser and Bobby Bright are celebrating the 75th anniversary of Bible Hardware in Abilene, Texas.

· Channellock, Char-Broil, STIHL and Simpson Strong-Tie were among the 2014 Vendors of the Year recognized by Do it Best Corp.

PEOPLE ON THE MOVE:

· True Value Co. has hired Jean Niemi, formerly of The Home Depot, as senior director-corporate communications.

· Robert Scoble has been promoted to president of Hyde Group Inc.

Robert Scoble

· Marc Powers was named executive vice president-U.S. stores for The Home Depot.

· Michael Marchi was named president and CEO of Amerock Hardware.

· Ace Hardware Corp . has hired Steve Locanto as corporate controller.

· Jared Hufford is the new manager of Do it Best’s INCOM Distributor Supply.

WHOLESALERS IN THE NEWS:

· Ace Hardware Corp. reported total revenues rose 9.1% in the third quarter to record $1.13 billion. Net income was up 8.4% to $37.3 million. Ace added 48 new stores and cancelled 22 stores in the quarter, bringing total global store count to 4,903, up 138 stores from the third quarter of 2013. Retail revenues from Ace Retail Holdings were up 1.1% to $55.1 million.

· Do it Best Corp. announced gross member purchases rose 2.6% to $2.87 billion for the fiscal year 2014. The year-end rebate of $115.4 million marked the 11th consecutive year of rebates over $100 million.

· House-Hasson Hardware introduced a new Dollar House program for dealers at its October market, a turnkey program offering about 300 SKUs.

House-Hasson’s new Dollar House program

· True Value Company reported gross billings of $466.4 million for the third quarter ended Sept. 27, up 2.4% from a year ago. Revenue was up 1.0% to $350.6 million and net margin dropped 35.3% to $12.1 million due to the timing of the fall show. Revenue for the fi rst nine months of 2014 was up 3.8% to $1.11 billion. Comp-store sales are up 4.1% YTD.

OTHER NEWS:

· STIHL Inc. is celebrating its 40th anniversary of manufacturing in the U.S. Today, STIHL manufactures more than 275 model variations, exports to more than 90 countries and employs more than 2,100 people. During the anniversary Oktoberfest celebration, STIHL Inc. hosted those who have contributed to its success in American manufacturing, including two generations of the Stihl family from Germany, as well as employees, distributors and others, and announced that the company was enjoying record sales.

· ENAP and Progressive Affiliated Lumbermen (PAL) have agreed to merge, subject to shareholder approval. Combining the two LBM buying co-ops will create

a $1.5 billion company with 447 member companies operating 742 lumberyards in 33 states.

· Central Network Retail Group has acquired Hiawassee Hardware of Hiawassee, Ga., and Taylor-Foster Hardware in Manchester, Ga.

· Westlake Ace Hardware announced it would be closing its distribution center in Lenexa, Kan., by next July.

· The Vendor Center™ announced an alliance with Val-Test

Group

. Val-Test vendors will be able to use the secure businessto-business website to allow qualifi ed independent retailers to access a wide range of vendor information. Val-Test President Russ Meeks said, “The Vendor Center will be a great help to our distributor salesmen and we look forward to the opportunity that it represents.”

FOR THE FULL STORY:

· Will the Millennial Generation kill Home Depot. Click here.

· Voting begins Nov. 24 for the 2014 Independent We Stand Small Business of the Year, and a number of hardware retailers are among the nominees. Click here.

· Lowe’s has opened two small-format stores in Manhattan. Click here.

DECEMBER

Wallace Hardware Fall Dealer Market

December 2-4, Le Conte Center, Pigeon Forge, Tenn.

JANUARY 2015

Do it Best Winter Conference

January 22-24, Walt Disney World Swan Resort, Orlando, Fla.

Handy Hardware Spring Market

January 8-10, George R. Brown Convention Center, Houston

HDW Spring Market

January 23-25, Jackson Convention Center, Jackson, Miss.

House-Hasson Hardware Spring Dealer Market

January 8-10, Opryland Resort Hotel, Nashville, Tenn.

International Buildersʼ Show

January 20-22, Las Vegas Convention Center, Las Vegas

Kitchen & Bath Industry Show

January 20-22, Las Vegas Convention Center, Las Vegas

Monroe Hardware

January 24-25, Raleigh Convention Center, Raleigh, N.C.

United Hardware Spring & Summer Buying Market

January 9-11, Minneapolis Convention Center, Minneapolis

UPCOMING EVENTS

FEBRUARY

Northeastern Retail Lumber Association LBM Expo

February 4-6, John B. Hynes Memorial Convention Center, Boston

Orgill Spring Dealer Market

February 19-21, Orange County Convention Center, Orlando, Fla.

MARCH

Ace Hardware Spring Convention

March 18-20, Las Vegas Convention Center, Las Vegas, Nev.

Blish-Mize Spring Dealer Market

March 20-21, Overland Park Convention Center, Overland Park, Kan.

International Home + Housewares Show

March 7-10, McCormick Place, Chicago

Reliable Distributors Management & Marketing Conference 2015

March 12-14, Embassy Suites Orlando/Lake Buena Vista, Orlando, Fla.

True Value Spring Reunion

March 6-8, Kay Bailey Hutchison Convention Center, Dallas

retail ideas

Wish list proMotion is a hit

Brandon Buckalew of Hardware Hank in East Grand Forks, Minn., shared the following details, in his own words, of a very successful promotion.

The best promo we have ever done is the “Wish list promo.” We divided our store into eight parts. We were willing to give away any item in each department up to $200 (Unofficially we would put $200 toward an item that retailed for more than the amount). We made a spreadsheet that had those eight sections. On the sheet in each section there was a space for their name, phone number, description of the item and item number (optional).

We had someone standing at the door offering this sheet to every person that walked in and they would explain it to them. We told the customers that it’s a wish list and that we want them to walk up and down every aisle to look for any item they wish to win up to $200.

At the end of the weekend we would cut up every sheet and draw a different one for each section. This gave them eight chances to win. We told them that they had to fill out every section to be eligible to win (but we took incomplete ones too). Our budget was $1,600. It ended up costing us around $600 since most of the wish lists weren’t $200.

We had one lady who asked for help filling out a sheet because she didn’t know what the name of a certain yard

Hardware Hank in East Grand Forks, Minn., came up with a creative promotion that got customers shopping all aisles of the store.

hand tool was. She was going to ask for the $20 one that she would have bought. I showed her the Stihl one and asked why she didn’t just ask for that. She started laughing and said, “Yeah, since you are giving it away, I suppose I should wish for the good stuff.”

If you do this, print it on a bright neon sheet of paper, and you’ll be amazed at how many people you see walking around with these sheets.

This gets every customer to walk up and down every aisle and look at every item you have. It really lets people know of all of the products you carry. It will put you at the top of mind for next time. Had a lady come in for a specific item. She was going to be in the store for two minutes. She was there for an hour and a half. When she was leaving she told me that it was a lot of fun and that she normally didn’t shop at our store but her regular place was out of what she needed. She said she never knew how much we carried and now that she knows everything we have she’ll be in our store way more often.

Using Facebook to do geographic targeting

For retailers who have a presence on Facebook, there is a way to target customers geographically on the social media site. Phil Brakefield of UniSource in Illinois shares the following link that offers step-by-step instructions for geographic targeting for special offers on Facebook. You can even send out separate promotions targeting English or Spanish-speaking customers in their native language. Click here.

spreading the holiday cheer

Fishers Do it Center in Fishers, Ind., held its 25th annual Holiday Open House on November 13, which provides an early jump-start to holiday sales. The event featured food, prizes, demos, wreath decorating, ribbon and bow tying and of course a visit from Santa.

To further promote holiday sales, Fishers Do it Center has created a “Holiday Décor Board” on Pinterest that features items available for purchase at the store. More items are added throughout the week. Click here.

The previous week the store was one of a select few places across the country to host a special test drive preview event for Ford Motor Company’s new 2015 Ford F-150 truck. These special events have helped create excitement and drive traffic to Fishers Do it Center. n

Left: Santa was in the house for Holiday Open House at Fishers Do it Center.

Top: Festive holiday decorations get customers in the shopping spirit. Middle: Fishers Do it Center has been holding a Holiday Open House for 25 years.

Bottom: Creative merchandising displays are important to drive holiday sales.

Behind the Numbers

65%

Rate of increase in population aged 65 and over by 2030, according to study by the Joint Center for Housing Studies at Harvard University.

45%

Number of consumers who would “definitely not” or “probably not” do their holiday shopping at stores like Home Depot or Target that have been victimized by hackers, according to a survey by CreditCards.com.

87%

Number of shoppers who research online before visiting a store, compared to 35% who research afterwards, according to an online survey of smartphone users by Google, Ipsos MediaCT and Sterling Brands.

58%

Number of small business owners who said access to capital was the biggest challenge facing their business, according to The State of Small Business Report for Sept. 2014 released by the Small Business Research Board. The number two challenge was burdensome government regulations at 35% followed by the U.S. economy at 34%.

6.3%

Increase in housing starts for September to a seasonally adjusted rate of 1.017 million units, according to the U.S. Commerce Department.

9.6%

Percentage of small business owners who said the proposed minimum wage increase was a concern, according to The State of Small Business Report for Sept. 2014 released by the Small Business Research Board.