Adventures in human resources
“Why can’t I find qualified help?”
“With all of the unemployed people out there, why can’t I find the skills I’m looking for?”
These are questions we hear every day from industry employers. And with unemployment rates ranging upward from 7.5% since early 2009, they’re not illogical. So what’s the reality?
Simply stated, there have been a number of changes in the employment market since we entered the Great Recession, and hiring managers today need to be aware of them in order to compete.
As our industry entered the downturn, we began to see a “talent gap” emerge as the skill sets of those seeking employment often fell short of employers’ requirements. This was not totally unexpected, as the first baby boomers moved into early retirement as we entered the recession.
And since our industry was more negatively impacted by the economy than most, this problem was exacerbated by another reality. With layoffs and downsizing, many of our younger, upwardly mobile employees left for opportunities in more secure, growth-oriented industries.
But with the unemployment rate being so high, shouldn’t there be others just waiting to be hired? Unfortunately no, as there is yet another issue compounding the problem. Although difficult to believe, adult men have been dropping out of the workforce at an alarming rate. While more than 95% of men between the ages of 25 and 54 were active in the labor force 50 years ago, according to the BLS, less than 65% are active now.
So where have they gone? Many are on extended unemployment, many on long-term disability (more than 3 million men, according to one source), and many have just given up and become dependent on their wives’ income or content with part-time positions. In the accompanying graphs, one can see how labor force participation has remained somewhat constant for all adults over the past 20 years, but note what has happened to adult male participation.
The reality? The “labor pool” in 2013 isn’t as deep as one might think. So, as we begin to rebuild our employment base, we need to be creative and look beyond traditional recruiting scenarios, considering other options: part-time executives, contract and project employment, shared employees, virtual management, etc. And we need to consider the entire employment market, not just the “typical” candidates we considered exclusively in the past. Remember, with this smaller “labor pool,” recruiting has become a competitive process. We need to make sure we’re prepared for it.
In rain or snow, customers are buying at ‘need’
Late winter snowstorms in the Midwest and Northeast and the prolonged coolness that is forecast to stretch into April will impact several home improvement product categories this spring — some favorably, some not so — according to Planalytics, which provides “business weather intelligence” to companies worldwide.
“Weather conditions are a primary driver of consumer buying decisions as people focus on products or services related to products like lawn and garden, or other ‘maintenance needs,'” said Scott Bernhardt, president of Planalytics, during the company’s Business Weather Intelligence Outlook webinar in late March. “Weather can drive purchasing decisions by creating a basic need, an elevated want or an immediate problem.”
Bernhardt said today’s consumer is more “cautious, planned and price-sensitive” in their spending. “Prudence is trumped by what a consumer needs or wants now,” he said. “They are shopping closer to ‘now’ and buying at ‘need.’ The weather window of opportunity closes quickly.”
The winter and early spring of 2013 have trended several degrees colder than the comparable 2012 period; for example, last year’s spring temperatures began in February. By contrast, this year’s normal readings are not supposed to occur until late April. “The extended cold and wet weather has put yard work on ice,” Bernhardt said. “It’s a difficult time for spring products.”
The 2012-2013 winter/early spring has been characterized by more precipitation than the year-ago period. For the lawn and garden category, Planalytics predicts a 1% drop in sales for the month of April compared with a year ago.
While there are numerous positive indicators — stock market and housing recovery stats among them — spring demand is slow to start in most of North America because of the harsh weather that has postponed purchasing decisions.
The good news, according to Bernhardt and Maria Maldonado, a manager of client services, is that once the spring weather breaks, it will lead to a flurry of business activity. “In the Northeast especially, but other parts too, consistently colder temperatures will keep spring demand depressed, but a warmer late April will unleash pent-up demand for spring categories,” Bernhardt said. “There is a lot of pent-up demand in many of the large population centers.”
Weather: It’s all regional
Jeff Doran, a manager of client services, said retailers should never plan their spring inventory based on the previous year’s weather. “Last February felt like spring in many markets, and March-April was the hottest in 118 years,” he said. “March 2012 is very unlikely to happen again; therefore, if you based your planning for 2013 on 2012 numbers, you’d be in trouble.”
Due to the colder and wetter 2013 spring, the firm is predicting that lawn mower sales will be up 1%; however, lawn irrigation products will be down 4% and air conditioners down 2%.
As market turns, a ‘big’ threat emerges
Does the independent lumberyard compete with the big-box national retailer? The answer might surprise you.
It surprised Jim Robisch, senior partner at The Farnsworth Group. His recent presentation during the LMC convention was titled “The Future Threat of Big Box Home Centers in the Pro Market,” and it spelled out the case that Lowe’s, Home Depot and Menards are not to be underestimated as LBM competition.
“Big boxes are becoming more relevant,” Robisch told HCN. “Not as the initial provider for the framing package, but for just about everything else. All of a sudden, they’re on the list of places where builders say they buy.”
Based on Farnsworth research of pro purchasing habits, Robisch said he is seeing diminished market demand for some of the traditional strengths of the independent channel. Until very recently, lumberyard dealers would hang their hat on customer service and quality products. But those are declining as important selection criteria for today’s builders and remodelers.
Meanwhile, the criteria of low price, convenient location and product availability are generally growing, and that recent shift plays into the hands of the big box, Robisch said.
What happened? Several things all at once. The housing downturn forced many dealers to cut heavily, lowering inventory levels and staff, he said. A dearth of starts forced many builders to take on remodeling jobs. The nature of their work led them to the big box, while in some markets, independents closed. The influence of the big-box home center gained traction with the pro market as this was happening.
Combined with all the above is a new landscape where dealer loyalty isn’t nearly what it used to be. “Competitive cross shopping is probably two times what it was before 2008,” Robisch said.
For the independent pro dealer, it adds up to a growing competitive threat. But there is a response to big-box encroachment. The Farnsworth presentation offered strategies that minimize the competitive impact of the big box. Successful dealers focus on existing customers, increasing their average ticket, while pursuing profitable new customers.
Farnsworth research also recommended:
- Consider restructuring the sales team for the tech-savvy future generation of builders, for whom site visits are low value, but strong inside sales support are high value.
- In the product assortment arena, maintain in-stock positions at all times with signature products.
- Experiment with nontraditional merchandise, such as apparel.
Also understand that where big boxes are weak, that’s where the independent is strong. “Independent lumber and building supply dealers continue to maintain a differentiating advantage perception in areas of service, quality and business partnership that can still be leveraged if enhanced and refocused to today’s contractor needs,” Robisch said.
— Ken Clark