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THEWAYISEEITIntroducing a Platform for Retailers to Talk to Retailers
This is my first official editorial, aptly named “The Way I See It.” I’m not a writer but rather a third-generation owner of a small hardware store in the Florida Keys. I like owning and running my own business (most days) and I enjoy associating with other independent hardware retailers like myself who truly understand the issues of owning and running a successful hardware store. I’m not particularly “tech savvy,” so it’s ironic that I’m involved with the hardware industry’s first dedicated electronic magazine, which will be published quarterly.
Since I grew up in the hardware industry and chose to make it my profession, you can imagine I’m more than a little partial to the independent hardware retailer. I’ve been a strong supporter of the North American Retail Hardware Association (NRHA) for more than 20 years, as I firmly believe independent retailers need an organization/association that advocates on their behalf.
I enjoy reading each issue of Hardware Retailing, the association’s monthly magazine, and also read several other hardware industry publications, gaining insight and a different perspective from each one. It is our belief that The Hardware Connection can complement the other hardware publications by presenting a fresh perspective from a retailer’s point of view.
By Tom Chasteen
We have chosen an electronic format for several reasons.
Cost is obviously one and a focused appeal to hardware store owners and managers is another, but the biggest reason is because an electronic publication allows for interaction between readers and the editorial staff and advertisers, something the print media cannot offer. For example, our articles and columns will feature a link where the reader will be able to ask questions and provide feedback on the content that concerns retailers. You’ll see that a major feature in this issue is written by a retailer, John Franklin, who will be a regular contributor. Every ad in The Hardware Connection will have two links the reader can click on to either e-mail the manufacturer directly or access that portion of the advertiser's web site that features more information about the product(s) in their ad. Retailers, manufacturers and wholesalers will have the opportunity to write a guest column that is pertinent to the twostep hardware channel and independent hardware retailers. Each issue will include in-depth feature articles that address ways you can improve your business, and we provide links to click on if you want to learn more about the topic. Again, that is something that is difficult for print media to accomplish.
As a retailer, I understand what kind of information is of interest to other retailers and we have a strong lineup of columns and regular sections to deliver that. “How’s Business” will take the pulse of retailers’ business around different regions of the country. “In the News” will provide a roundup of news items from the last quarter with links to related articles. “Retail Ideas” will look at ways retailers are attempting to grow their businesses. “Financial Management” will help you better understand the financial issues we all face in today’s difficult market. You can learn from other retailers with our Dealer Profiles and discover innovative products in the “New Products” section.
The Hardware Connection is focused exclusively on the two-step hardware channel, primarily for the independent hardware store owner and manager. And while we will be tackling serious business issues, we are also introducing a cartoon strip that allows us to step back and chuckle at the humorous things that happen in our stores. Unless you own or manage a hardware store you may not understand some of the humor that will take place at Digby’s Hardware store (the name of the fictional store depicted in our cartoon). If you have a humorous story you would like to share you can e-mail the cartoonist directly — who knows, your story could show up in a future version of “The Hardware Life” cartoon. All magazines are a direct reflection of the passion and knowledge imparted by their writers, and we’ve got ourselves a good one. Many of you know our editor, Chris Jensen, as he’s been in many of your stores. Chris directed publications at
NRHA for 21 years, serving as editor and executive editor of Hardware Retailing/ Do-It-Yourself Retailing. I’ve known Chris for over 20 years and am looking forward to working with him on this project. What some of you may not know about Chris is he is a huge baseball fan. If you’ve got an idea for a story or want to talk baseball, contact Chris, he’s very knowledgeable on both topics.
Our technology expert is another longtime friend, Harry Holmbraker. Some of you have met Harry, as he handles all the technology issues with The Hardware Conference. Harry doesn’t know much about baseball but is one of those guys who would rather fish, than eat. Having fished with him for many years I will tell you he’s a pretty good saltwater fisherman. Harry also knows a thing or two about hardware, having helped hardware dealers with PC technology issues for the past decade. If you’re like me and you still like to physically hold the magazine in your hands, you can do that with our publication, too. Simply click the PDF button at the top right corner of the page. You can print the whole magazine or just print certain articles. Let us know what you think of The Hardware Connection by clicking on our names and e-mailing us directly. If you would like to share this publication with another dealer just click the icon above. If you would like others on your staff to receive the magazine for free, then go to www.thehardwareconnection.com and fill out the form.
I hope The Hardware Connection lives up to its tagline: “Strengthening the TwoStep Channel.” I know how valuable your time is, so I thank you for spending some of it with us each quarter.
Welcome to the Zany World of Digby’s Hardware
Hardware retailing can be a funny business, and no one knows it better than the gang at Digby’s Hardware. You’ll find them hanging around “The Hardware Life,” a new cartoon feature that will appear in each issue of The Hardware Connection.
Owner/Manager Ed Digby is ostensibly in charge, though sometimes he finds himself wondering exactly what he’s in charge of. Dealings with vendors, salesmen, customers and his own staff give him plenty to shake his head at. He’s been doing this a long time, but he’s not set in his ways. Well, at least not all of his ways.
Hardware retailing is often a family affair, and that’s the way it is at Digby’s. Ed’s son, Alan, has worked his way up the career ladder from gofer to assistant manager (okay, that’s pretty much the whole ladder). Working for dad is not always easy, but sometimes it’s pretty darn amusing, and their back-andforth interactions will probably sound familiar to many.
Penny is the bookkeeper, which means she also works the floor, the storeroom and anywhere else there’s something that needs doing. She’s not family, but she’s tireless and wise, and those are pretty darn valuable qualities to have around the store. Her efficiency only makes the part-time kids who help on weekends look that much more hapless.
“The Hardware Life” is written and drawn by Scott Jensen, brother of Editor Chris Jensen. Scott started doing editorial cartoons for the local newspaper at the age of 14 and did a nationally syndicated cartoon for Grit newspaper while in college. He’s illustrated a line of humorous greeting cards (distributed by Oatmeal Studios) since 1986, and currently teaches visual communications at Cazenovia College in upstate New York.
Scott is familiar with the world of hardware retailing, having previously
worked for Agway Inc. and a businessadvertising agency, where his clients included Greenlee, OSRAM Sylvania, GEPlastics, Carrier, Sto Corp. and Southwire Co. He lives in rural Delaware County, New York, and loves his local independent hardware stores — all five of them!
Share your feedback and ideas for future cartoons by clicking on the box below or send comments to chris@thehardwareconnection.com
Sales this Year: We are down but not as much as the industry. Our business has been flat in the past 3 months and flat over the past month. Our paint and light bulbs and the core hardware items are still doing well. People are willing to spend money to repair or improve the existing space in their homes. People are not replacing items or remodeling. They would rather repair than replace.
downturn. This economic climate tests Darwin's theory of survival of the fittest. My dad (Les) and I are still standing and we plan on keeping it that way.
Jeremy Melnick Gordon’s Ace Hardware Chicago, IL ■
Sales this Year: Business has been down this year. We are down 3% for the year as of the end of September. September was up 4% but July and August were down about 10% each. October looks like it will end down about 15%. The first three months of the year started off good but then sales began to die. We have had a wet year without any floods or storms. Grill and patio furniture sales have been down for the year.
2010 Forecast: I can only hope 2010 will be better!
2010 Forecast: Cautiously optimistic. I am prepared for the worst but hoping for the best.
Local Market: The housing market and the rental market are still bad. We are not getting the turnover of people moving in and out of the neighborhood as we did before 2007. I am guessing a few more years (before local market rebounds).
Bottom Line: I have gone over my P&L line item by line item. I have followed my monthly budget for 2009 and am working on my budget for 2010. I am watching every financial aspect of my business very closely. If the economy does turn around my business is in a much better position to thrive than before the economic
Local Market: Our economy seems better than most areas with our housing market starting to move again these last couple of months, but the unemployment rate is still high at 8.4%. The reports are the recession will be over by the middle of 2010, but I don’t think we will see any big movement until the second quarter of 2011.
Bottom Line: Our bottom line is as good as it is because we have watched our expenses very close this year. If we can end the year flat or less than 5% down, I will be very happy.
Don Keller K&K True Value Hardware Bettendorf, IA
Continued on page 12
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How’s Business?
Continued from page 10
West
Sales this Year: Business has steadily grown month-to-month in 2009, although at a modest pace. As a relatively new business (2 years in Sept.), we would expect to see year-on-year measures increasing, so it’s difficult to truly assess the rate of growth, but improving nonetheless. September was slightly behind August, while October is tracking to modestly exceed both September and August. Paint sales consistently lead our gross dollar sales.
2010 Forecast: We expect 2010 to be a breakthrough year for us. As a newer business, we have been building our customer base and sales during one of the toughest economies in many years. As these conditions appear to be improving, we expect our business to improve commensurably.
Local Market: Seattle appears to be a bit ahead of much of the rest of the country. Construction is rebounding, commercial
activity in our market is active and housing (condo) purchasing slowly restarting. Jobs appear to be more available, too. We are looking to the third quarter of 2010 to see a marked and sustained recovery.
Bottom Line: One thing we’ve done this year to improve our bottom line is creative marketing. We have looked for and pursued alternative methods of reaching new customers, including innovative online marketing efforts with companies such as Groupon.
Marc Gimbel City Hardware Seattle, WA ■
Sales this Year: Our sales are down about 20% overall, with cash sales only off about 2%; the rest is in-store charges, which account for our non-building around here right now. My average ticket is down $9.56. On a brighter note, our customer count is only off 1%, which makes me happy to know the folks are still coming in — just not spending as much. And my margin is mostly holding up.
Bottom Line: We have cut payroll dramatically, but still not laying people off, just scrimping hours and not replacing folks when they quit.
Karla Robson Slavens True Value Cortez, CO
Continued on page 14
How’s Business?
Continued from page 12
South
Sales this Year: We’re down about 15% this year. It’s not as bad as it could’ve been because we didn’t abandon the retail business and are less reliant on the new home construction market, which has pretty much dried up in our market.
2010 Forecast: I thought business would get better in 2009 and it never did, but I’m hearing signs that things will start to pick up in the second half of 2010 and that seems right.
Niches: Even though our installed sales are down, we’ve added new products to install such as guttering. The margins are good and we continue to find new categories to add to our installed sales offering.
Bottom Line: We’ve cut our expenses where we could, but you have to decide whether you want to be a survivor. We increased our advertising this year from 4 circulars to 6 and continue to look for ways to position our business for when the economy picks up. We also decided to spend money on capital equipment. We sold some of our delivery trucks and modernized our fleet by taking advantage of good deals on used trucks. We heard there were new, unproven truck engines
coming out that are very expensive, so we decided to invest the money now.
Jim Croome
Sandersville Builders Supply Sandersville, GA
spring and summer. The weather was awful, colder and wetter than I've ever seen. September began the climb back
Jim Croome
up to normal and October was shaping up pretty well.
Niches: We sell home-brewing supplies which gets better every year. We've put more money in inventory of homebrew supplies. Sales of home canning supplies are also up a bit.
2010 Forecast: I'd be satisfied with a drop of 10 percent or less. That sounds like a pessimistic attitude but the renovation business in our area is at a standstill and we have a large brandnew Ace store about a mile away. We don't rely on new home sales because we are beyond built-out in our area.
Local Market: The local economy is affected greatly by what happens on Wall Street. Big bonuses at Wall Street firms trickle down to us as sales in every retail store and contracting business. Our housing market is more stable than most places, and local existing home sales rose last month. Our local economy is better than most. We are already recovering. I think attitudes are almost permanently changed about borrowing against home equity, so the slowdown in home renovations may become the new normal.
Bottom Line: We have cut the many small expenses that normally fly under the radar. I try to pretend I'm a farmer: frugal, frugal and more frugal. However, I have added money to the advertising budget.
Alan Talman Karp’s Hardware East Northport, NY
Sales last Year: In 2008 we suffered a record flood that filled our lumberyard with over 12' of water. Despite the hard times we came out ahead in 2008, increasing sales 22% and giving our store the highest recorded sales in its 64 years of existence.
Sales this Year: In 2009 we came in a little nervous knowing that the economy was on a downturn and real estate was at an all-time low. We were apparently nervous for no reason, because so far sales YTD are up 19% and our customer count has increased 26%.
Local Market: We have never had the extreme highs that the rest of the country has when times are good, but we also have never had the extreme lows either.
Industry Changes: Our store has changed dramatically in the last 5 years. The market has gone from the customer that walks in and buys what you have on the shelves, to the customer that comes in looking for something that they have seen on HGTV, TLC or DIY. The Internet has changed the way we do business. You can literally buy anything you want from anywhere you want. Customers have become less dependent on us and require us to be that much sharper on pricing and carry a larger selection. Customer service has and will be what separates us from the rest of our competition and big-box stores.
Justin Dubois Quigley’s Building Supply
Fort Kent, ME
Learn the Secrets to Inventory Management
By John Franklin
With sales soft, many retailers have found it necessary to reduce operating expenses, lower payroll, cut inventory and even raise prices. It is difficult to sell product without staff, and it is even more difficult to make payroll when you have most of your money tied up in inventory. A carefully thought-out plan is required to reduce inventory, because an inventory reduction plan can often negatively impact sales.
Ijust shutting off new purchases, this is exactly what you will get — sales prevention. All retailers know they have old, non-productive inventory, but most do not have a real handle on how much and where it is.
What follows are a few ideas that may help you better locate the nonproductive parts of your inventory. Once you locate problem inventory areas you can create a plan to eliminate them. How do you reduce your investment in inventory without cutting sharply into sales? The way the Romans did — divide and conquer.
Consider organizing your inventory into five distinct categories: Current Stock, Excess Stock, Out of Season Stock, Old Merchandise and Dead Merchandise. The reason I separate inventory this way is because these categories are quite different from each other and must be tracked and handled in a different manner. You cannot fix a problem unless you know what it is and where it is. If you lump your entire inventory into one big bundle, you lose valuable tools.
Current Stock
Current Stock is stock you have on hand that will sell within the next 4 weeks. Current Stock is the tenderloin of your inventory, because it generates almost all of your sales and profit.
Whatever you do, do not mess with success. Cutting back the inventory here by excessively lowering order points and running out of stock will only have negative consequences. By definition, you can’t have too much Current Stock as it is driven by the anticipated next 4 weeks’ sales, but you can often have too little. Having too little Current Stock means you have empty peg hooks or will soon because you don’t have enough stock to keep up with sales.
How do you track Current Stock?
John Franklin is merchandise manager for Williams Lumber & Home Centers in Rhinebeck, New York.
By department or category, run an inventory report for all items and compare the actual on hand with a new calculated order point based on 4 weeks of future sales. If your system will not allow for this type of report, you may be able to drop an inventory report into Excel where you can manipulate it as you like. Sort this report by all items that have actual on hand less than or equal to the new calculated order point. Total the inventory dollars for this list and compare to total inventory dollars in the entire category. This is your new Current Stock total — what you mathematically need for the next 4 weeks. This calculation is for analytical purposes only. Do not replace your current system order points with these new calculated order points at this time. Doing so forces your system to attempt to get 12 turns a year on every hardware item and this is not reasonable or even remotely possible. Don’t even try to get 12 turns a year on
Bottom Line
Learn the Secrets to Inventory Management
every hardware item. No one can do it. If you want to get 12 turns a year, you need to open a magazine shop, not a hardware store.
When you calculate the new 4-week order point mathematically, a huge part of your inventory will produce very small numbers for a 4-week period, usually 1 or often zero. Never allow the system to automatically give you an order point of zero without some manual review. It is reasonable and profitable to sell thousands of items in your store that only sell 2 or 3 a year, provided you stock only a few at a time. We will discuss order points in depth in a future issue, but for now just use the new calculation for your overall analysis.
To maximize Current Stock, you must do an empty peg hook check every time you place an order with your major suppliers. If an item appears often on the empty peg hook report, then it shows demand is exceeding your supply and you need to bump up the order point.
Excess Stock
Excess Stock is stock you have on hand that will eventually sell but not until 1 to 24 months from now. This is the fat in your inventory. It is there usually because we like it. Sometimes fat is good, as it makes your store look good. It fills the peg hooks and makes you appear to have more of what the customer needs.
If you bought a supply to cover sales for the next 3 months with 90 days dat-
ing, you usually can look good without feeling bad. If you get a 10-25% cost reduction and can afford to sit with a few extra months of stock on hand, it may be a great idea. If you are careful and take advantage of manufacturers’ special pricing options, you can make some additional profit with Excess Stock.
Sometimes fat is required because you have to order a factory carton of 12 instead of the 3 that you actually need or you order more than you need to make a reasonable freight level. If this is the case, it may still be the right thing to do — just pay close attention.
Sometimes fat is just plain bad. If you order a 1-year supply with only 90 days dating, you had better get a really deep discount or you are just loading up your store with 9 extra months’ worth of inventory on hand and paying for it long before you need it. It may sit on your shelf and collect dust and possibly get damaged before you sell it.
The absolute kiss of death for some retailers in a tough spot is buying product on dating that they cannot afford now and will have to pay for before they can sell enough to pay the bill. If you are in a poor cash flow position, look long and hard before you buy anything on dating. You must be convinced that you will be able to turn the new product into cash before the bill is due or this potentially great deal is really an iceberg lurking in the dark water in front of you.
How do you track excess goods?
Use the same report you just ran for current stock but use the part that shows all items with actual on hand greater than the new calculated order point. Subtract the new calculated order point from the actual on hand and you will arrive at the excess amount. Total up the dollars in this report and compare to your whole inventory. This is stock you have on hand but won’t sell for months from now. The first time you run this analysis you will be amazed at how much stuff you actually have on hand that is over the order point.That’s why this area needs constant attention.
Once you locate problem inventory areas you can create a plan to eliminate them.
profitably sold at all until next year in the same season. This is the grizzle in your inventory. It provides almost no good and must be avoided. You will have to pay for it before you get paid. It will get dirty, it will get damaged, it will possibly be replaced by a newer or better model next season or it may even become unsalable. Buy seasonal goods for a sellout and watch all purchases of seasonal goods as you get late in the season.
Out of Season Stock
Out of Season Stock is stock you purchased for a season that did not sell during the past season and cannot be
How do you track Out of Season Stock? If you have a way, load user codes in all seasonal items so you can track by season. Once you have coded all seasonal goods, it is possible to pull them down periodically and review the status both in season and at the end of the season. When the season is over, run a report that shows all seasonal items that are on hand but out of the season. Sort and total this report for your out of season totals.
Bottom Line
Learn the Secrets to Inventory Management
Old Merchandise
Old Merchandise is stock that failed to sell in the last 18 months and is still on hand. This is the bone in your inventory. If it did not sell in the last 18 months, something is wrong with this product. It may be damaged, overpriced, out of style or it’s just a matter of having a two-year supply. Since you paid for it, the meter is running and you need to get it out of your store. If you monitor this category as it happens, you may be able to sell it without a serious loss.
How do you track Old Merchandise? Run a report that sorts all items with a last received date more than 18 months old. Logic says: if you have not bought it in the last 18 months and you still have it on hand, it is most likely at least 18 months old.
If reducing the price is required, get it done and get it gone.
There are often system inconsistencies with locating old merchandise by received date extraction but this is still a valuable report to run. Every quarter you should run an Old Merchandise report and make a plan to get rid of the items you identify. If reducing the price is required, get it done and get it gone.
Dead Stock
Dead Stock is stock that won’t sell under any conditions. This is the lead in your blood. I have seen thousands of dollars of absolute crap sitting in some retail store inventories. It is all unsalable junk sitting around taking up space where a profitable item could be displayed or stocked.
How do you find Dead Stock? A lot of dead stock will actually show up in the old merchandise report and will be accounted for there. You will know what it is when you can’t sell it for any price. There is usually additional dead stock sitting in most stores that is not in any inventory report but is still physically there. You will find more dead stock easily by just walking around looking at your stock. Look for the boxes that have been there for years in the same place. Look for open product covered with dust. You may have a sign on it that says NIV — no inventory value. If it has no inventory value does it need to be there at all?
In conclusion, when working to reduce inventory, don’t just lock the receiving room door, work to get rid of the real problem inventory. If you can identify it, you can fix it. In the next issue of The Hardware Connection, we will discuss how to follow up on the tracking reports we talked about here and some other inventory control issues.
How Does Your Store’s Inventory Stack Up?
Organizing inventory into five distinct categories may sound good in theory, but what does this inventory management system look like with a real store’s inventory? Here are some graphic examples to show what an inventory could look like. Try seeing how your store compares in these categories.
■ This store is a very efficient operation. It has 30% of its inventory that will sell in the next 4 weeks or less. It has 70% of its inventory tied up in Excess Stock and stock that will not be sold for as much as a year or more from now, but it is doing a fabulous job of keeping the Dead, Old and Out of Season merchandise to a minimum. If the 67% Excess Stock category is there because it was well planned with deep discounts and dating, this store is in for a very profitable future.
■ This store is a good operation. It has 22% of its inventory that will sell in 4 weeks or less. It has 78% of its inventory tied up in Excess Stock and stock that will not be sold for as much as a year or more from now. It is doing a moderate job of keeping the Dead, Old and Out of Season merchandise to a minimum. The 66% category of Excess Stock is hurting this store a bit because there is just too much stuff here before it is needed. Dead Stock, Out of Season and Old Merchandise need work as well.
■ This store is not doing well. It has only 10% of its inventory that will sell in 4 weeks or less. It also has 90% of its inventory tied up in Excess Stock and stock that will not be sold for as much as a year or more from now. It is doing a very poor job of keeping the Dead, Old and Out of Season merchandise to a minimum. This store may be having trouble making payroll or buying new inventory. It probably has a lot of empty peg hooks at this point and could soon fail if it does not convert some of the Excess Stock, Out of Season Stock and Old Merchandise to cash and buy more Current Stock.
SOCIAL MEDIA
Is It Time to Rethink Your Marketing Strategy?
How to Use Social Networking Sites to Connect with Customers
By Chris Jensen
Let’s say a foot of snow is about to hit your town. As luck would have it, you’re stocked up on snow shovels. The only problem — how to let customers know you’ve got what they need.
There’s no time to put out a newspaper ad, because your customers need to know this information RIGHT NOW!
Andy Carlson, who operates Ace Alameda Station in Denver, was faced with this exact situation as his area
braced for a snowstorm in early October. So he let his customers know on his Facebook site (which is linked to his Twitter site) that he had plenty of shovels available.
Carlson probably would have sold out of shovels without posting to Facebook, but to him the important point is that he was proactively engaging his customers to meet their needs, hoping to beat his competition to the punch.
Co-owners Steve and Sue Fusek, along with Chief Technology Officer John Thieling (right), are finding success using social networking sites such as Facebook and Twitter to promote their bricks-and-mortar store, Fusek’s True Value in Indianapolis, as well as their e-commerce site, www.ronshomeandhardware.com.
Wouldn’t it be nice to know in advance every time someone in your area was in the market for a new grill or mower? Or to know when a customer is having a problem with their lawn so you could suggest the right product?
That day is coming. Welcome to the new world of hardware retailing, where conventional thinking about marketing, advertising and customer interaction can cause your business to become an after-thought to a new generation of demanding customers living in the now.
Read on to learn how some hardware retailers are using social networking sites to promote their stores and connect with customers on a more meaningful level. Attention was focused on Facebook and Twitter because they have emerged as the dominant sites. Start taking baby steps and you just might stumble onto a new, cost-effective way to build store traffic while developing a loyal group of followers.
Most young people (let’s say those under 30) spend a large part of each day immersed in a fast-paced social environment of their own design, bouncing back and forth between texting on their cell phones, posting updates on their Facebook site and tweeting their Twitter followers.
“The days of just talking at someone are long gone—they’ll tune you out. Customers appreciate being able to tell you what they think.”
—John Thieling
When they’re in a store and see a great deal, they tell all their friends about it — right then! They won’t see your circular inserted in the Sunday newspaper, because they get all their news online from non-traditional sources. They may not be your customer today, but they definitely won’t be your customer in the future unless you take steps to communicate with them on their terms.
Start Experimenting
It’s not that traditional methods of advertising such as newspaper ads and circulars don’t work; the reality is that retailers need to do more to engage customers and build top-of-mind awareness with an increasingly distracted and fickle group of consumers.
“What we’re doing right now is experimenting,” explains Carlson. “When that next generation of customers gets their first home in three to seven years we’ll have no clue how to talk to them. Social networking may be the only way to reach these potential customers,” he adds.
Carlson had a problem this past fall — he needed to get rid of 30 shrubs… fast! So he posted an incredible deal to his Facebook and Twitter sites: buy one shrub, get three free. “I had seven or eight people come in and take advantage and I got rid of my shrubs right
away,” he says, adding that some of the customers had been told about the deal from someone else on Twitter. “I couldn’t have done this any other way,” says Carlson, who has 417 followers on Twitter. “Even an e-mail promotion takes an
Twitter at a Glance:
hour or more to put together and it costs money.”
He finds it easier to post to Facebook, with all posts then linked directly to his Twitter account. Carlson tries to post twice a week, once to plug what’s
Twitter lets you write and read public messages up to 140 characters to answer the basic question: what are you up to right now? Learn more about Twitter and its applications for business by clicking on the following link: http://business.twitter.com/twitter101
■ Founded in 2006
■ 6 million unique monthly visitors and growing at monthly rate of 1382%
■ Estimated 26 million U.S. adults will use Twitter in 2010
■ Median age of users is 31
■ For “50 Ideas on Using Twitter for Business” click here: http://www.chrisbrogan.com/50-ideas-on-using-twitter-for-business/
Check out these independent retailers on Twitter:
■ Ron’s Home and Hardware, Indianapolis—1,081 followers http://twitter.com/rons
■ Ramsey Hardware, Front Royal, VA—126 followers http://twitter.com/ramseyhardware
coming up that weekend and something informative during the week. “I can promote upcoming events and post photos. I’ll do my end of winter closeouts on Facebook and Twitter,” he says.
Earlier in the year Carlson promoted a 20% Off Bag Sale to his e-mail list and with a Facebook event. Results were eye-opening — sales were up 100 percent and transactions up 72 percent compared to the previous year.
Facebook gives retailers the ability to interact more directly with customers than Twitter, according to Carlson. “I posted about the new Benjamin Moore paint we’re carrying and had a customer come
Rather than just continually blasting out information to customers, Carlson finds it’s more valuable to listen to the talk on Twitter and respond if it’s relevant. “In the early summer there was a lot of Is It Time to Rethink Your Marketing Strategy?
in and say they like it. That kind of feedback has happened maybe 10 times,” he says. Carlson and his 60 fellow Ace members in the Rocky Mountain Hardware Stores dealer group are devoting a growing percentage of their marketing budget to new media promotions. “We find there’s good long-term potential with social networking. We all do it as a dealer group so we can learn together,” he says.
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chatter on Twitter about miller moths. We responded with some tips and it got picked up by the local news,” he says. “We try to get people to respond to issues and then we respond to them. They really appreciate that extra effort.”
It’s Not a Fad
When the Internet first burst onto the scene, lots of people were quick to call the World Wide Web a fad. No one’s calling it a fad now, as it has transformed how individuals and businesses share information around the world. Social networking promises to be transformative as well, with its application in everyday life still evolving.
“Social networking is definitely not a fad; it’s an evolution of human communication,” says John Thieling, chief technology officer for Fusek’s True Value in Indianapolis. “You can’t just be that hardware store with creaky wood floors that relies on four newspaper ads a year to bring in customers — you have to be where the customers are. If they’re on Twitter, you need to be, too,” he adds.
Not many hardware stores have a chief technology officer. But then again, not many hardware stores are using technology like Fusek’s. Maybe it’s time to start thinking less like a traditional hardware retailer and more like a cuttingedge technology company. That approach seems to be working for Fusek’s.
Co-owners Steve and Sue Fusek are selling products all over the country, which is a neat feat for a 10,000square-foot store. After seeing their online sales grow through Amazon.com, the Fuseks decided to extend their store brand by partnering with Thieling to
Continued on page 29
“Social networking is definitely not a fad; it’s an evolution of human communication.”
—John Thieling
Hardware retailers are increasingly discovering the benefits of using social networking sites.
Facebook at a Glance:
Facebook is an Internet-based social utility that facilitates real-world social connections with family, friends, coworkers and customers. Learn more about Facebook by clicking on the following link: http://www.facebook.com/press/info.php?factsheet
■ Launched in 2004
■ More than 300 million users worldwide
■ Median age of users is 27 but fastest-growing demographic is those 35 and older
■ 65 million users access Facebook through mobile devices
■ 50% of users log on in any given day
■ 8 billion minutes spent on Facebook each day
■ More than 350,000 active applications currently on Facebook platform Check out these independent retailers on Facebook
■ Umber’s Do it Best Hardware, Fort Wayne, IN—203 fans http://www.facebook.com/pages/Fort-Wayne-IN/Umbers-Do-It-BestHardware/109671971657
■ Rocky Mountain Hardware Stores, CO & WY—64 fans http://www.facebook.com/pages/Rocky-Mountain-Ace-HardwareStores/96403430256
Is It Time to Rethink Your Marketing Strategy? Continued from page 27
launch an e-commerce site, www.ronshomeandhardware.com.
These days Thieling is using social networking sites more to promote the online store — there’s already more than 1,000 followers of their Twitter site — but he sees great potential to grow the bricks-and-mortar business that way, too. “The advent of social media allows you to extend out beyond the store in the most cost-effective method. It’s cheaper than e-mail,” he says.
Fusek’s e-commerce site made national news, thanks to Twitter. After a conservative blogger encouraged people to buy rock salt and send it to Maine Senator Olympia Snowe because she voted for the health-care bill, it got mentioned on Twitter and picked up by a reporter from The Wall Street Journal. In the end, 1,200 pounds of rock salt were purchased from ronshomeandhardware.com and shipped to Senator Snowe, which generated another mention on “Hardball with Chris Matthews.”
That’s the sort of power Twitter wields in the marketplace.
Thieling has picked up insights into what not to do by monitoring Home Depot’s social networking efforts. “They’re all business all the time with their posts, while I try to be funny,” he says. “The days of just talking at someone are long gone — they’ll tune you out. Customers appreciate being able to tell you what they think.”
He advises other retailers to spend 80 percent of their social networking activity on engaging people with posts and 20 percent on marketing their business.
“Don’t just be a billboard — share an interesting article you’ve read,” he says. “Otherwise you’re just generating spam. We try to be respectful of people’s time.”
Up next for Fusek’s is a project blog with links and video that will give customers a place to go for sound advice while promoting interactive discussion. “As a small, agile business, we can do better at marketing,” says Thieling. “We need to get our message out and listen to people. Retailers can only hope to reach a small percentage of people by any traditional means.”
Promote Events and Specials
Chad Ayers of Allendale True Value in Allendale, Mich., has been experimenting with social media for about five months. “We haven’t messed with Twitter yet, because we want to maximize Facebook first,” he says, adding that his business has already attracted more than 100 fans there.
“Facebook is a very powerful social networking tool that lets us stay current with generational changes,” Ayers says. “It’s free and people are there for a reason. Everybody reacts to marketing differently, so we have to pick our battles.”
Allendale True Value uses its presence on Facebook to talk up events like its “Best Seats in the House” promotion, in which Ayers gives away 30 tickets to the local college football team’s games. Two of the tickets are given away via Facebook. “We also make announcements about new products and post project tips. It helps us stay in touch with customers,” he says.
Doug Bowen, owner of Ramsey Hardware in Front Royal, Va., learned quickly about the allure of Facebook — he had to block Facebook from his store’s firewall to keep his young employees from wasting their day on it.
He started using Twitter this past spring and Facebook over the summer. “It’s hard to see how effective you are with Twitter, while Facebook lets you see how many interactions you get from posts,” Bowen says. “It’s a new marketing tool to go with circulars and e-mails.”
In October he posted information on
fire safety while November’s topic was how to keep drains clean. Bowen also promotes specials and posts Twitteronly coupons, taking note that several coupons got redeemed that way. “We’re trying to get more interaction with customers and give them valuable information so they’ll become followers,” he says.
His advice to other retailers is to have a semi-defined plan for what you want to accomplish with social media and post every couple of days to keep your store top-of-mind.
PROFILE Dealer
Reaching New Heights in the Rockies
Bryan Hutchison Hutchison Lumber Pine, CO www.hutchisonlumber.com
Founded in 1979 by Robert Hutchison, Hutchison Lumber has always operated on solid business ethics based on customer service. Hutchison’s son, Bryan, has been carrying on the family tradition since taking over as company president in 2005 at the age of 25. The Hutchisons remain committed to supporting the communities they serve through charitable donations and community service.
Bryan Hutchison is president of Hutchison Lumber, a Do it Best member with three stores in Colorado.
PROFILE Dealer
Under Bryan’s guidance, the three-store company has embraced technology and successfully executed an ambitious expansion in 2006 that added a 12,000-square-foot hardware store to the Pine Junction location along with a new design center.
Hutchison Lumber, a member of Do it Best Corp., received the Outstanding Achievement in Safety Award from Federated Insurance and The Mountain States Lumber and Building Material Dealers Association in 2007.
Read on to learn more about Bryan Hutchison…
Age: 30
# stores: 3 — Pine, Fairplay and Florissant, Colo.
Wholesaler affiliation: Do it Best
# employees: 25
Other family members in business: Robert Hutchison, father and founder
Salesfloor square footage (average): 6,250
% Sales Pro vs. DIY: 70/30
Top categories: Paint/Electrical/Builders Hardware
Most successful niche: Siding Stains
Business forecast for 2010? We see increases in new builds and remodels. Steps taken this year to cut costs? Shopping more vendors for competitive value.
Bryan Hutchison makes customer service the number one priority at Hutchison Lumber, believing that personalized attention resonates with shoppers who are looking to tackle more d-i-y projects themselves.
How would you characterize your retail philosophy? Service based on providing quality products and knowledgebased staff.
Smartest thing you've ever done as a retailer? Hire great people.
Lessons you've learned about retailing? Retail is a double-edged sword — it is as easy as buying something for a dollar and selling it for two yet you must first earn the trust of the customers and vendors to be successful.
What initiatives have you undertaken since taking charge in 2005? Employee and company policies…Safety and EAP programs…moving from a lumberyard to home center platform… centralized accounting/ buying/marketing…web site and e-commerce… new computer systems. Best advice to other retailers facing big boxes? Find three niches and be creative in marketing (hire professionals).
Doing anything different to promote your business? We have a fully functioning web site, due for an update, and utilize Do it Best’s e-commerce, social networking and community blogs.
What's one technology gadget you can't live without? My iPhone. I can log in to our systems (point of sale, Do it Best, etc.) almost anywhere and also search for a multitude of issues (pricing, product info, how to's, etc.). Recently I bought an app that lets me scan any product and find out what other
Forced to take over as company president at the age of 25 when his father experienced health problems, Bryan Hutchison quickly demonstrated his ability to lead effectively. He spearheaded a major expansion project in 2006 and has looked for ways to implement and use technology more effectively.
retailers are selling it for nationwide.
What can vendors do to make your life easier as a retailer? Product knowledge meetings, keep diversified and hire knowledgeable workers.
Biggest challenge facing your business? Economic times. Short-term goals for the business? Hire 10 more people over two years.
Books you've read recently that have helped you in business?
“Outliers” by Malcolm Gladwell and “Getting Things Done” by David Allen.
What’s on your iPod these days? The Swell Season, Edith Piaf, Muse, Dave Matthews with podcasts and audiobooks.
What do you do for fun? Family time, playing sports, listening to live music (Denver is home to The Fray, 3OH!3, Flobots and of course John Denver) and watching the Rockies and Broncos.
Mission Statement: Building communities through personalized
Where Relationships Are Formed
Annual Hardware Conference in Marco Island Brings Industry Together
Just like the swallows returning each spring to Capistrano, hardware retailers return each September to The Hardware Conference in Marco Island, Fla. This year’s event, which took place Sept. 11-13 at the Marco Island Marriott, attracted dealers from California, Wisconsin, Illinois, Kentucky, Michigan, Virginia and points in between in addition to a large contingent from Florida.
Cocktail parties are held every evening of the Conference to give attendees a chance to visit with old friends and make new ones. The Hospitality Suite, sponsored by Duracell, was also available for attendees to enjoy at no cost.
Retailers come back year after and year because it’s like a family reunion to them and they want to catch up with their “hardware family” — fellow retailers and industry manufacturers they’ve met over the years at the Conference.
While manufacturers are in attendance with tabletop booths displaying products, it’s not a buying show. The Hardware Conference, now in its 21st year, is an opportunity for dealers to gather in a casual setting to share ideas with other dealers — regardless of their wholesaler affiliation — and meet oneon-one with manufacturers without the pressure of negotiating deals. It’s the place “where relationships are formed,” as past attendees can attest.
Conference Director Tom Chasteen, who operates the Conference with his wife, Dale, called the 2009 edition a huge success. “Attendance was actually up as dealers came from all over the United States,” he said. “The open dialogue sessions were very frank on a wide range of issues.”
Ken Lawson, president of Thriftway Supply in Owensboro, Ky., attended the Conference for the first time and came away impressed. “I really like how it’s organized. It’s a great opportunity to network with other dealers from around the country and visit a beautiful place,” he said.
“I really like the openness of the Conference. You get to meet dealers from different distributors and there’s a lot of sharing of information,” said Rick Heuser, a long-time attendee who operates Handyman Hardware & Supply in St. Cloud, Fla. “You get a chance to talk
with manufacturers and get to know them on a more personal level so if there’s a problem you can just call them up,” he adds.
One of the most significant developments of this year’s Hardware Conference was the dealers’ desire to honor outstanding wholesale buyers with Industry Buyer of the Year Awards. Any independent hardware retailer can nominate a buyer from any wholesaler from whom they purchase products. We will accept nominations for the next six months and the buyers with the most nominations will be selected to receive the Industry Buyer of the Year Award during the 2010 Hardware Conference. We anticipate honoring eight buyers the first year. To make your nominations, simply e-mail your nominee and the wholesaler they work for to tom@thehardwareconnection.com
“It was very interesting that the attending dealers did agree on one issue,” Chasteen said. “Everyone agreed that the buyers in our industry have the most difficult job trying to satisfy such a diverse group of independent retailers who sell products in every conceivable market segment in the world.”
RETAILER COMMENT IN OPEN DIALOGUE SESSION
“We make sure we have the right mix of stuff, so we’re always evaluating our product mix. Then we kill ‘em with kindness.”— Mark Madden, Madden’s Ace Hardware, Daytona Beach, FL
Mixing Business with Pleasure
To kick off the Conference on Thursday evening, the North American Retail Hardware Association (NRHA) sponsored its first All-Industry Reception. The event, hosted by NRHA’s Director of Publishing Dan Tratensek, was very well-attended.
NRHA recognized seven retailers with Beacon Awards for their efforts both within the industry and their respective communities. The honorees were:
Joe DeRoest, Joe’s Hardware, Fallbrook, CA
Dan Hitchcock, Palmetto Ace Hardware, Miami, FL
Rick Heuser, Handyman Hardware, St. Cloud, FL
Bob Silverman,KLISupply, Key Largo, FL
Kevin Bolender, Executive Do it Best, Fort Lauderdale, FL
Alan Baro, Baro Hardware, Miami, FL
Bob Michaels, Dixie Aluminum True Value, Tavernier, FL
NRHA also recognized Ace Hardware’s Ken Nichols with a Lifetime Achievement Award. Nichols is retiring after 35 years in the hardware industry.
Key Issues Discussed
During the two open dialogue sessions, all segments of the channel get to participate in the discussion and offer up questions, comments and ideas. Dealers overwhelmingly said they are looking for niche products to increase sales. They are also re-evaluating their stronger departments to see if they are missing items that would make good add-on sales or make the product offering more complete.
Retailers said they are scrutinizing their purchases more than ever to maintain adequate cash flow. The general consensus was that most dealers expect to start seeing a consistent improvement in business within the next 12 to 18 months.
RETAILER COMMENT IN OPEN DIALOGUE SESSION
“I don’t care if they’re a factory rep or an independent rep; I just want someone who understands our business and their business.”— Dave Warren, Dave’s Ace, Milton, WI
Another interesting issue raised was dealers’ desire that their wholesaler only conduct one show a year. Not surprisingly, there was no consensus on whether it should be a spring or fall show. “When people are running lean, they don’t feel they can get out of the store more than once a year,” commented Dan Hitchcock, an Ace dealer in Miami.
Most dealers in attendance agreed that inventory turns have been reduced by at least one turn a year due to soft sales and the inability to reduce inventories quick enough. Some retailers noted they are leaning more to dating programs than in the past and all said they would like to see reduced minimums on pre-paid freight minimums for drop shipments from vendors.
“I like extended dating more than reduced price,” said Alan Baro of Baro Hardware in Miami. Dick Schroeder of Schroeder’s Ace in Lombard, Ill., said
consignment is the best way to get him to take on new items.
As for private-label merchandise, one retailer noted he has started reducing his private-label assortment because the price gap is less pronounced with national brands. “We’ve still got to have both, because we’ve got to have something for the customer that wants price,” he said.
Another dealer pointed out he would like to see training videos on new products, which could be used to train employees and then maybe placed on the shelf to spark sales.
Thanks to Sponsors
Special thanks go to the marquee sponsors: NRHA, Liquid Nails, Activant, Irwin, Skil, Eazypower, The Hillman Group, Wooster Brush and Miami Children’s Hospital Foundation. Additional sponsorship support came from 3M, Cooper Tools, WM Barr & Co., Duracell, H.D. Hudson, Krylon, Minwax, Honeywell Generators, Pinnacle Digital Surveillance, Poms & Associates and Thompson’s Water Seal.
“We couldn’t put on this Conference without the wonderful support we receive from these sponsors, and we are fortunate to have so many vendors who are willing to step up and support the independent channel,” said Chasteen.
The wholesale segment also lends its support to the Conference each year, with representatives from Ace Hardware, Do it Best, Orgill and True Value in attendance and conducting meetings with their members and customers.
The participating wholesalers along with The Hardware Conference made a
combined contribution of $4,000 for the NRHA Retail Training program.
Although the weather did not cooperate with the planned recreational activities, such as the 3M-sponsored tennis outing and the Minwax shelling excursion, the Krylon Golf Outing and Wooster Brush Day at the Beach sailing activity were able to take place. Chasteen points out the Conference is designed so dealers and vendors can bring their whole family and take advantage of the Marriott’s beautiful facilities and waterfront location.
At the end of the Conference the vendors auction off their display merchandise and all the money raised is donated to the Miami Children’s Hospital Foundation. This year’s auction raised more than $28,000, bringing the total fundraising amount over the years to nearly $600,000. “That’s an amount that all of us in this industry can be very proud of,” says Chasteen.
Start making plans to attend next year’s Hardware Conference, scheduled for Sept. 8-12, 2010, at the Marco Island Marriott. For more information, call Tom or Dale Chasteen at (305) 853-0049 or go to www.thehardwareconference.com.
RETAILER COMMENT IN OPEN DIALOGUE SESSION
“A customer told me, ‘You know what I want? I want to be treated special.’ My job is to figure out what special is for that customer.”—
Richard Johnson, Bailey’s True Value, Sanibel, FL
Tom Chasteen has been running The Hardware Conference with his wife, Dale, since 1988.
When the exhibit area is open the ballroom is filled with activity as dealers and vendors get to know one another while discussing business issues.
Retailers love the opportunity to meet vendors face to face and learn more about their products without the pressure of buying.
Kevin Bolender of Executive Do it Best in Fort Lauderdale was a Beacon Award recipient. Also shown is Jim Troiano of Do it Best and NRHA’s Dan Tratensek.
The Hardware Conference joined Ace Hardware, True Value, Do it Best and Orgill in contributing $4,000 for the NRHA Retail Training fund.
Rick Heuser of Handyman Hardware in St. Cloud, Fla., was one of the Beacon Award winners.
Meals at the Marco Island Marriott are always a treat.
and
From left: Burt
Ira Kozak of Eazypower with Lori and Dave Warren of Dave’s Ace in Milton, Wis.
Retailers and distributors gain insights into decisions made by vendors during the Open Dialogue sessions.
Dale Chasteen makes sure every little detail is taken care of so attendees can sit back and enjoy the Conference.
The Open Dialogue sessions provide a chance for retailers and vendors to say what’s on their minds with no topic off-limits.
Bob Michaels of Dixie Aluminum True Value in Tavernier, Fla., received the Beacon Award. Also shown is Jim Powers of True Value Co.
The exhibit area is open each morning so retailers have a chance to see manufacturers’ displays and have one-on-one dialogue with vendors in a casual setting.
NRHA’s Dan Tratensek presents Ace Hardware’s Ken Nichols with a Lifetime Achievement Award.
Dan Hitchcock of Palmetto Ace Hardware in Miami received the Beacon Award from NRHA. Ace’s Hank Kerry is on the left and NRHA’s Dan Tratensek on the right.
Bob Silverman of KLI Supply in Key Largo, Fla., receives the NRHA Beacon Award from Tom Chasteen.
Alan Baro of Baro Hardware in Miami receives the Beacon Award from Conference Director Tom Chasteen.
Left to right: CJ Cipparoni (Motsenbocker’s Lift-Off), Debbie and Mark Bergman (Bercom) and Greg and Lisa Jorgensen (3M).
From left: Gerri and Mark Madden of Madden’s Ace Hardware in Daytona Beach, Fla., along with Lisa Roberts and Kevin Parker of Palm Bay West Ace Hardware.
Florida Keys dealers Bob and Jacqueline Silverman of KLISupply and Dale and Pat Baker of Marathon Lumber.
Joe DeRoest of Joe’s Hardware in Fallbrook, Calif., was honored with the Beacon Award. He is joined by Paul Dupont of Orgill and NRHA’s Dan Tratensek.
From left: Cheryl Schroeder (Schroeder’s Ace); Gary, Mary Ann and Jennifer Krier (Cummins Onan); Dick Schroeder (Schroeder’s Ace); and Wayne Schauer (Schauer’s Do it Best Hardware).
Gary and Judy Copeland of Valley Supply in Rising Sun, Ind., along with Carol Noonan (right) of Noonan True Value in Illinois.
Where Relationships Are Formed
New Stores:
● Jeff and Deane Pfeil opened Pfeil Hardware in Troy, N.Y. Check out the details of the Pfeils’ restoration project to open in a historic downtown location by clicking here: http://pfeilhardware.com/about/
● Miner’s Ace Hardware opened its sixth store in Nipomo, Calif.
● Claude Stutts bought a hardware store in Linden, Mich., and renamed it Ace Village Hardware of Linden.
● Lewis True Value, owned by Dave and Pam Lewis, more than doubled the size of its store by moving to a new location in Middle Smithfield, Pa.
● Steve and Karen Simonson opened Trimble True Value in Dalton Ranch, Colo.
● Christopher Kretz opened Alamo Ace Hardware in Alamo, Calif.
● Jim Daddario opened Daddario’s Do it Best Hardware in Franklin, Mass.
In the News...
● After closing three years ago, Ace Hardware of State College (Pa.) is reopening at twice its former size. The new owner is Grant Rosenberger.
● Edward, Dorothy and Ian Pitochelli opened Ace Hardware of Newtown (CT).
● Jason Rasmussen is the new owner of Gordy’s True Value in Chippewa Falls and Lake Wissota, Wis.
People on the Move:
● Westlake Ace Hardware has named Rob Easley chief operating officer.
● Michael Cassidy is the new president of TW Perry, which has 6 locations based in Gaithersburg, Md.
● John Somerville Jr. has been named president and CEO of Lumbermens Merchandising Corp.
● Do it Best Corp. has named Mike Altendorf vice president of information technology, and promoted Tim Miller to vice president of marketing to replace Bill Zielke, who is retiring.
Kudos to:
● Bill Englert, president of City True Value Hardware in Bristol, Conn., received the annual Humanitarian Award from the Boys & Girls Club of Bristol for his community service initiatives.
Mike Altendorf
Tim Miller
In the News...
● Beacon Paint and Hardware in New York City was one of three finalists for the Shine A Light award, recognizing small businesses for inspirational stories. President Bruce Stark received a $10,000 marketing grant for being a finalist in the contest, sponsored by American Express and NBC Universal. Jeff Cardwell of Cardwell Do it Best in Indianapolis was also nominated for the award.
● Ellis Ace Hardware, Rental and RadioShack was honored with the Illinois State Historical Society’s 2009 Centennial Award. The Ellis family has operated the business continuously since 1872.
● Fourth-generation owner Sam Kraemer is celebrating the 100th anniversary of Kraemer's True Value Hardware in Minnetonka, Minn.
● Patricia and Davin West of Scott City True Value in Scott City, Kan., were named Young Entrepreneurs of the Year
by the Small Business Administration, Kansas City region.
● True Value Building Materials in Clarksdale, Miss., operated by Ginger Johnson, was honored as Small Business of the Year by the Clarksdale/ Coahoma County Chamber of Commerce. The store underwent an extensive expansion and remodeling this year.
● Lyanne and Det Haislip are celebrating the 50th anniversary of True Value Hardware in Aiken, S.C.
● Stears True Value Hardware in Romulus, Mich., marked its 60th anniversary.
Get the Full Story:
● Confused about the proposed health-care reform? Rising healthcare costs are a growing concern for independent retailers, but some worry the government’s plan might make the situation worse. Sort out the facts and join the campaign started by the National
Federation of Independent Business to adopt a sensible solution by clicking here: http://www.nfib. com/issues-elections/ healthcare/
● Ace Hardware Corp. faces a lawsuit from members who say they were misled about the financial performance they could expect from their new stores. See the Quad City Times article at: http://www.qctimes. com/business/article_71 b5fd94-bde9-11de-b69d001cc4c002e0.html
● House-Hasson Hardware has acquired the assets of Moore-Handley Inc., including the Hardware House line of private-label products. For more information, go to http://m.knoxnews.com/ news/2009/oct/31/hardware-firm-gets-bigger/
● True Value Co. reported a 12.4 percent decline in revenue and a 3.9 percent drop in net margin for the third quarter. To see the full financial report, click here: http:// truevaluecompany.com/ab out_true_value/releases.a sp?DocId=454
● The Stanley Works has agreed to acquire Black & Decker in a merger of two of the industry’s largest and most iconic brands. For more information on this $4.5 billion all-stock transaction, go to www.stanleyblackanddecker.com.
Nolan Archibald (left), chairman, president and CEO of The Black & Decker Corporation shakes on the deal with John Lundgren, chairman and CEO of The Stanley Works (Photo: Business Wire).
Upcoming Events
JANUARY
Emery-Waterhouse Marketplace 2010 ■ Jan. 15-16, Rhode Island Convention Center, Providence, R.I.
International Builders’ Show ■ Jan. 19-22, Las Vegas Convention Center, Las Vegas ■ www.buildersshow.com
True Value Rental Market ■ Jan. 6-8, Morial Convention Center, New Orleans
United Hardware Spring and Summer Buying Market ■ Jan. 8-11, Minneapolis Convention Center, Minneapolis
FEBRUARY
Handy Hardware Spring Market ■ Feb. 4-6, George R. Brown Convention Center, Houston
Orgill Spring Dealer Market ■ Feb. 25-27, Orange County Convention Center, Orlando
MARCH
Ace Hardware Spring Convention ■ March 25-28, New Orleans
Blish-Mize Spring Dealer Market ■ March 19-20, Overland Park Convention Center, Overland Park, Kan.
Hearth, Patio & Barbecue Expo ■ March 10-13, Orange County Convention Center, Orlando ■ www.hpbexpo.com
International Home & Housewares Show ■ March 14-16, McCormick Place, Chicago ■ www.housewares.org
True Value Spring Market ■ March 19-21, McCormick Place West, Chicago
RETAIL IDEAS
Allendale True Value Discovers
Creative Way to Secure Catchy Jingle
Chad Ayers had been thinking about coming up with a jingle for his store, Allendale True Value in Allendale, Mich. As luck would have it, the Allendale High School jazz band was itching for the chance to create a jingle and was hoping a local business would let them experiment. It turned out to be a neat experience for all involved.
After meeting with Ayers this past February to get some direction, band director Tony Bush broke up the students into four or five groups and told them to have fun with the project. Thirteen musicians got to work writing lyrics and improvising musical riffs.
With feedback and input from Ayers throughout the process, the students ended up with a catchy tune that met with his approval. They went back into the production studio to polish the jingle,
which was completed in late summer. It’s been playing over store announcements and while callers are on hold since.
“I grew up playing in the band, so it was fun for me to be involved in a project like this,” says Ayers. “I’m really pleased with how it turned out — the kids did an amazing job with it.”
Starting with the True Value slogan — “Start right. Start here.” — the jingle goes on to include such lyrics as: “Our prices are down…so when you’re around… come on down…to Allendale True Value.”
overloop upcoming specials and events and use it for radio ads. To hear the jingle and see scenes of the student musicians creating and performing the jingle, go to http://www.youtube.com/ watch?v=JOzo6RwfiPc).
Members of the Allendale High School jazz band created a catchy jingle for Allendale True Value, all at no cost to Owner Chad Ayers.
Ayers has received a lot of positive feedback about the jingle since he started playing it. “I’ve had parents in the store who will hear the jingle and say, ‘That’s my daughter singing.’”
He says the next step is to do a voiceover for the jingle so he can
What Message Does Your Store’s Signage
Convey?
Signage can do more than direct customers to the right aisle or tell them the price of an item. Done properly, signage can communicate a competitive price image, convey a commitment to
Photo courtesy Grand Rapids Press
customer service and tell customers what’s unique and different about your store.
Look around your store. How many signs do you display with a negative message? No returns after 30 days. No returns without a receipt. No personal checks. No rainchecks on sale items. $10 minimum on credit purchases. Shoplifters will be prosecuted.
While such signs are all representative of valid store policies that are necessary to protect your business’ interests, step back and think about it from a customer’s perspective. When they are inundated with negative messages while in a store, it creates an
Dock Hinkle, owner of Hardware…That’s Us in Craigsville, W.Va., shows off a sign prominently posted in his store that reflects his appreciation for customers.
unfriendly and unwelcoming atmosphere for them.Rather than using a sign that says “No returns without a receipt,” try
putting a positive spin on the situation by having the sign read: “Your money cheerfully returned with a valid receipt.”
Virgie Brewer’s customers know she’ll do whatever it takes to meet their needs — the sign on the front door of The Hardware Store in Arvin, Calif., tells them all they need to know. “In emergency or desperation call…” followed by her home phone number. Now that’s a positive message.
Lehman’s in Kidron, Ohio, shows its commitment to selling American-made products by placing a total of 112 “Made in the USA” signs around the store.
Scotch-Blue™ Painter’s Tape could lead the category on the strength of its adhesive technology alone. Yet for us, creating the most reliable, innovative products just isn’t enough. We also back them with superior brand support, aggressive merchandising programs and national advertising. While other companies try to copy our products, we know that our values and our commitment to retail success simply can’t be matched. For more information on all of 3M’s category-leading products, call 1-800-494-3552. www.scotch-blue.com Making your job a whole lot easier.
Making the Case for Optimism
By Cale Smith
It’s difficult to imagine any businesses more vested in the outlook for the country’s housing market than those in the hardware industry. From retailers to wholesalers to manufacturers, no companies in the hardware industry have remained unscathed over the last 24 months. Hardware companies — not to mention their owners, employees and largest customers — have taken the brunt of the downturn like few others. First came the collapse in housing, affecting product demand across the board. Next came the credit crisis, which often meant seeing lines of credit suddenly and inexplicably being revoked. Then, the ensuing recession, causing inventories to run dangerously low as cash
is conserved, good employees are let go and belts are pulled even tighter. I get the impression that some of you are too fatigued to even muster the question, “When will this finally pass?”
Forecasting a rebound in housing is extremely difficult. Not even our best economists can predict the bottom with a high degree of confidence. Yet you don’t have the luxury of waiting until an obvious turning point has arrived. I’m guessing that you probably need an estimate for the sake of your business, your retirement plans and your own sanity. So, here are some thoughts on the state of the industry.
First, a couple of confessions, starting with the most obvious — I am not an economist. My impressions of where we are in the housing cycle are shaped less by raw macroeconomic data and more by the filings, research and reports I read related to hundreds of public companies. That brings me to my second caveat: many of my impressions about the hardware industry are influenced strongly by one company in particular, which I have followed from a distance as a potential investor for some time now. That company is Home Depot. But, wait — holster those staple guns. In a bit I’ll also share a quote that may indicate smaller hardware companies will emerge from this recession better positioned than the big-box stores.
Of all the economic data released these days, there are two critical pieces to watch for those in the hardware business. And it’s not the numbers themselves that are important as much as it is their trends.
end of March 2009, that number had reached 2.7 percent.
I think that recent 2.7 percent number means two things. The first you already know in a way a statistician will never fully appreciate — namely, the recent contraction in your business has likely been immense. The second conclusion is that I believe it’s logical to assume the worst is behind us. The law of averages says that the serious, jaw-dropping decline in the industry is over and that — dare I say — a recovery is in sight. It’s hard to say exactly when, of course, but I’d look for a recovery to start being felt at the store level in early 2010. So I’d advise staying conservative in your business planning for at least a few more months. Should a recovery happen earlier than expected, you’ll be pleasantly surprised.
When it comes to business planning, keep an eye on foreclosure trends.
A statistician will tell you that the revenues of companies in the hardware industry appear most correlated to a ratio called “private fixed residential investment as a percentage of GDP.” Again, how that ratio is determinedis less important than what it may mean. Over the last 60 years, that number has averaged 4.8 percent. When the homebuilding market was soaring a few years back, it stood at 6.3 percent. More importantly, though, at the
The other key metric that bears watching across the industry is that of foreclosures. There appears to be some statistical evidence indicating that retail and wholesale companies’ year-over-year sales comparisons are strongly influenced by foreclosure trends in the local area. Companies operating primarily in areas where foreclosures are accelerating, like California, will likely continue to see their year-over-year sales struggle. On the other hand, companies based in states
The big-box companies are starting to realize they need to act more like smaller ones.
where the rate of foreclosures is slowing, like Indiana, are likely to see improvements on a comparable basis. And keep in mind that there is an eventual silver lining even in areas with negative foreclosure trends — foreclosed homes will eventually need a lot of repairs. So when it comes to business planning, keep an eye on foreclosure trends.
Finally, a point about competitive advantage. For many years in the hardware industry, the big-box stores created a moat around their businesses through economies of scale and their sheer size in the industry. Their obsession with growth may be waning, as those management teams appear to have figured out something I suspect you knew all
along. Namely, that customer service matters. Here’s a recent quote from Home Depot’s CFO:
“You can't win the game by squarefootage growth.You win by the customer experience, making sure that service is there and the products are there at the right price.We realized over the years that you could continue square-footage growth because there's plenty of real estate out there, but you'd dilute returns. That is not in the best interest of the customer.”
In other words, the big-box companies are starting to realize they need to act more like smaller ones.
So while the next few months still won’t be easy, they should soon get easier. And there may be more reasons than you realized to be excited about this industry’s future.
Cale Smith is the managing partner of Islamorada Investment Management in Islamorada, Fla. His firm’s web site is www.islainvest.com.
Technology Update How the 80-20 Principle Applies to Inventory Management
By Karl Preuss
Having the right product at the right place at the right price is the objective of the channel partners in the home improvement industry. Each partner wins when the consumer is in your store and finds the particular product they are looking for. One retail challenge is determining which products to stock as it is impossible to carry all products within a particular category.
One framework on which to base your stocking decisions is the 80-20 Rule. Also known as the Pareto Principle, it holds that the minority of causes, input or effort usually lead to the majority of results, outputs and rewards. Examples of this principle have been cited in many areas including business, where 20% of the products often account for 80% of the profits and 20% of the customers often account for 80% of the sales dollars.
The purpose of this article is to look for evidence of the 80/20 Principle within the home improvement industry and describe some of its implications. To address this question, a representative category was selected from each of the major departments within a hardware store: electrical, hand tools, hardware, household products, lawn and garden, outdoor power equipment, paint sundries, power tools and plumbing. It is important to note that the selected categories are fairly large in size, both in terms of annual dollar sales and the number of items sold at retail in the past year.
For each category, the individual items were identified and ranked on their annual dollar sales. The items were then aggregated into groups of 10%, i.e. those items accounting for 10% of all the items, those items accounting for 20% of all items and so forth until all items for the category were accounted for.
The percentage of sales volume done by each 10% group was then calculated for each category. The individual 10% groupings were then totaled across each of the nine categories. An average was then calculated for each of the 10% groupings.
Findings
It is significant to note that the top 20% of the items accounted for 86.5% of the annual dollar volume, lending further credence to the 80/20 Principle.
Implications
Each of the 10% groupings is shown in the graph in the next column above. Note that the top 10% of the items represent 72.4% of the annual dollar sales. Conversely, 90% of the items drove 27.6% of the annual dollar sales.
Decisions regarding the items that are to be manufactured, distributed and available at retail should be made within an overall context that addresses the consumer’s requirements, e.g. the category management process. Specifically, assortment planning decisions and the 80/20 Principle should be made in the context of the category’s role, strategy and tactics. The home improvement industry has seen the emergence/growth of the category management process. This trend continues and, one might predict, will accelerate as channel members recognize the increased importance of factbased decisions, particularly in light of today’s lagging economy and sluggish comp-store sales.
The home improvement industry has seen the emergence/growth of the category management process.
Technology Update
Determining what role the category is to play within the retailer is an important starting point in the category management process. For example, does the retailer position it as a destination or a convenience category to the consumer? That decision impacts the breadth and depth of the items available to the consumer.
The decision on the category’s role ties into determining the resulting category strategy (e.g. traffic building, transaction building, cash generating, turf protecting and image enhancement) which, in turn, leads to determining the category tactics — the best assortment, price, promotion and shelf placement.
Information plays a crucial role in these assortment decisions. It is important to know the individual items that drive 80% of the consumer’s purchases for not only the category but for the individual segments within the category. For example, ball pein, claw, framing and rip are segments within the hammer category. Assortment decisions can then be made that address the full range of the consumer's requirements, across all the segments.
Conclusion
The 80/20 Principle has been identified, at least in the aggregate of these nine representative categories, in the home improvement industry.
One of the key questions emerging from this approach is determining how much of the 80% can one afford to eliminate without risk of losing customers. As the industry addresses this question, information will play an increasingly more crucial role in both the 80/20 Principle and in the category management process.
This importance can best be summarized by author Peter Drucker in his book “Managing in a Time of Great Change:”“For what a business needs most for its decisions — especially its strategic ones — are data about what goes on outside of it. It is only outside the business where there are results, opportunities and threats.”
Karl Preuss is national sales manager for Vista Information Services, a division of Activant Solutions Inc. For more information, call (847) 768-3122 or visit www.vistainfoservices.com.
ProductsNew
Sand & Tack
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■ The extra-fine 220 grit sandpaper side is designed for finish sanding and last-minute touchups. It smoothes small areas after repairing nail holes, scratches or bumps.
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THE WOOSTER BRUSH COMPANY www.woosterbrush.com — 800-392-7246
WD-40 Trigger Pro™
■ A non-aerosol product with the same WD-40 formula designed to better meet the needs of industrial end-users.
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■ Designed for on-the-job versatility, its trigger format gives users more control — a few drips at a time for drilling and cutting, or more for spraying down large surface areas.
■ Off position on the nozzle means no accidental spraying. WD-40 COMPANY www.wd40.com/products/trigger-pro — 888-324-7596
ProductsNew
Bosch PS70 Metal Shear
■ The power needed to perform controlled, precise metal cutting is now available in a convenient cordless package.
■ Bosch PS70 Metal Shear is built on the manufacturer's award-winning 12V Max Litheon battery platform. Users can expect fast charges, exceptional run-time and the best battery life in the industry.
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■ The PS70 effortlessly cuts sheet metals up to 18 gauge thickness.
■ The light weight of the tool, a comfortable ergonomic grip — featuring the only overmolded soft grip in the segment — and a top-mounted switch that facilitates ambidextrous control also reduce fatigue and keep users moving forward comfortably in all applications.
ROBERT BOSCH TOOL CORP. www.boschtools.com — 877-BOSCH-99
Green Envy Muriatic Acid Replacement
■ Environmentally friendly way to clean and prepare concrete prior to coating and sealing.
■ Safer to use as it features 90% less fumes than muriatic acid.
■ Lowers pH in swimming pools.
■ Cleans and brightens brick and concrete.
■ Available in gallon and quart sizes.
■ Green Envy product line also includes environmentally friendly paint thinner, drive-way cleaner, house wash, penetrate and prepaint cleaner and surface deglosser.
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■ 99.8% energy efficient, allowing users to save up to 60% on their water heating bills.
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■ Point-of-use line of products covers any need including whole house, commercial, industrial, boats, pool heating, radiant and hydronic floor heating and more. ECOSMART U.S.
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BucketVac
■ You can work smarter with the BucketVac, a uniquely designed and patented product that snaps onto any standard 5 gallon bucket, transforming it into a professional wet/dry vacuum.
■ It can suck up a gallon of water every 2 seconds and can easily recover chunky debris thanks to its 2" hose. It will handle a variety of wet and dry material.
■ Features a commercial-grade motor and simple disposable filter that eliminates messy cartridge filter cleaning.
■ BucketVac only weighs 7 lbs., and it can be quickly changed on and off.
■ Includes: BucketVac, 5 gal. bucket, wide 2" x 2' flexible hose (extends to 6'), crevice tool, bulk pickup tool, floor tool, brush tool, two 12" extension wands and three standard filters.
41% 30%
BEHIND THE NUMBERS
Percentage of small business owners reporting sales declines in the third quarter compared to 21% reporting sales gains, according to the National Federation of Independent Business (NFIB).
Percentage of consumers planning to spend less this holiday season, up 4 points from last year, according to the NPD Group’s annual Holiday Survey. Only 11% plan to spend more while 59% intend to spend about the same.
34.2 0
Index level for future remodeling expectations in the second quarter, up from 30 in the previous quarter, according to the National Association of Home Builders. NAHB’s Remodeling Market Index for current market conditions rose from 34.5 to 38.1 in the same period, suggesting the remodeling market is rebounding.
115
Number of years Taylor Hardware has operated in Belmar, N.J. Long-time owner Bill Connor has turned over the reins of the business to his son, Joe.
$28,000
Number
of stores Home
Depot opened in the United States in September and October. The retailer did open one store in Duncan, British Columbia, in those months. Home Depot anticipates sales for 2009 will end up down 9%.
Amount raised for the Miami Children’s Hospital Foundation by The Hardware Conference, held Sept. 10-12 in Marco Island, Fla. The Hardware Conference, under the direction of Tom and Dale Chasteen, has raised nearly $600,000 for charity over the past 21 years.
