Co-ops hammer home power tools
Power tools are considered one of the sexiest categories in home improvement. Just witness the fact that Home Depot and Lowe’s give power tools dramatic treatment in their respective boxes with special store-within-a-store approaches to merchandising.
The hardware co-ops are also beginning to place more emphasis on power tools, encouraging their members to give the big boxes a run for their money in this category. While the co-ops may not be able to compete head-to-head on product depth and selection, they can offer a high level of service, special order options and a large enough assortment to be taken seriously by consumers and professionals alike.
“I think one of the things I try to get through to the stores is that you can’t just dabble in power tools,” says Jeff Frazier, Do it Best’s merchandise manager for power tools. “You have to commit yourself if you’re going to do any volume in the category.”
Do it Best offers various assortments and planograms to its retailers—depending on whether they’re hardware stores or LBM dealers. Frazier suggests the store devote at least eight to 12 feet to the category to do it justice and encourages stores to have sample products available so consumers can touch and feel the grips and push the buttons.
“It’s important to get tools out of the package and in front of the consumers so they can hold the drill,” Frazier said. “You’re much more likely to sell it that way.”
To stay price-competitive, Do it Best members are urged to take advantage of promotional opportunities, such as market specials and “Tool Guys,” a program put together earlier this year to give members four to six “hot specials” each month. For example, if a member buys a Bosch pocket driver, he gets a free I-Driver, which compares to a 50 percent discount, according to Frazier.
“These are very attractive specials, and it gives them an opportunity to beat the pricing of the big boxes,”
The specials give dealers an opportunity to compete effectively on price, he said. “We’re seeing members come back into tools. We work with some who were never in it, or some who are getting back into it because they see an opportunity here.”
Cindy Brasic, power tool associate buyer for Ace Hardware, also notices more Ace stores entering the category. As power tools have become more lightweight, ergonomic and user friendly—encouraging DIYers to attack more home projects without the help of a professional—demand for the category has continued to grow within the hardware store setting, Brasic said.
Ace offers major brands like Black & Decker, DeWalt, Makita, Porter Cable, Milwaukee, Bosch and Skil at three different price levels: value brand, medium tier and advanced. The company offers three planograms, depending on the store’s size and particular customer base, and Brasic encourages members to commit anywhere from eight to 20 feet to power tools and 20 to 32 feet to power tool accessories.
“The market is driven by brand recognition, and our stores have to have breadth of selection in order for the consumer to realize we can be a destination for power tools,” she said. “We definitely work out deals to be very competitive in the marketplace, and the consumer is getting the customer service we’re able to give them.”
True Value is also encouraging members to make a commitment to the power tool category. At the co-op’s spring market in March, members were offered special deals that gave them a chance to make up to 50 margin points on items that carry a usual margin of 10 to 15 points. It was one way to give these stores an incentive to take a chance on the category.
According to Alex Ogle, True Value’s divisional vp-merchandise supply chain, it’s important to get members to take advantage of the breadth of product in the warehouse, including brands like Irwin, Skil, Bosch, Makita and DeWalt. He said that—despite public perception—True Value has more power tool skus than the big boxes and carries more units in its warehouse than Lowe’s, Home Depot and Menards combined.
Therefore, True Value has stepped up its merchandising by developing a special order program similar to the ones the co-op launched recently in decorative hardware and lock sets. It’s based on the philosophy that a store can deliver the shopping experience and breadth of offering without the on-hand inventory.
According to Ogle, special order sales (SOS) are more efficient for a co-op hardware store than a national chain because the hardware store is getting product from its own distribution centers, not from the vendor. He said True Value is working to dispel the notion that SOS is time consuming and carries with it a significant cost premium.
“Power tools can be merchandised in a manner to deliver the perception of a broader assortment, keeping the True Value member’s on-hand inventory investment at a minimum and delivering more value to the consumer,” he said.
True Value is also in the process of putting touch screen computers in its stores to give consumers the ability to access dozens of products and accessories. The co-op premiered the concept at its spring market and plans to present an updated version later this month at the Atlanta fall market.
“At first, it may sound a bit far fetched, but imagine a consumer being able to have the easy shopping experience and expert help of True Value store associates, while experiencing an assortment the size of every power tool sku we carry in our distribution centers,” Ogle said.
James True Value in La Habra, Calif., is an example of a store that has committed to the power tool category and is reaping the benefits. The 9,000-square-foot store devotes about 200 square feet to power tools, featuring about a dozen sanders and drills, six saws and several cordless drills and compressors. Brand names include DeWalt, Makita, Milwaukee, Hitachi and True Value’s own brand, Master Mechanic.
The department is very visible, positioned about 20 feet off to the left side of the store—which is anchored on the other side by the paint department. According to Rob Wall, the tool manager, there are two kinds of customers: brand loyal and those who are open to suggestion. For the second group, he tries to present the tools as attractively as possible, using hands-on displays to give them a chance to check out the grips for themselves.
“If it’s up there in a box, it doesn’t catch the eye at all,” Wall said. “Men come in, grab what they need, but for women especially, this slows them down, makes them take a look.”
Wall agrees that it’s important to commit to the category, finding a product mix that works for homeowners and light professionals and not to limit themselves to accessories—which encourage customers to buy their big ticket items at the big boxes.
“The consistency is that the customer comes in and knows he can shop for everything here,” he said. “Tools might be a little cheaper at the big boxes, but the convenience factor—the fact that you’re in and out quickly, and that you can call on us and we will meet your special needs—means a great deal.”
Third-quarter earnings up at 3M
St. Paul, Minn.-based 3M had record third-quarter sales and earnings, with earnings growth of 7.4 percent to $960 million compared with $894 million in the same period last year.
The company had net sales of $6.2 billion, up 5.8 percent from $5.86 billion last year.
George Buckley, 3M’s president, chairman and CEO, said the company saw gains across all its business segments. In consumer and office products, 3M saw sales grow 5.9 percent to $898 million compared with $848 million in the same period last year. The company’s safety and security products business saw sales rise 10.9 percent to $766 million from $691 million last year.
“The strength of the 3M portfolio was evident in the third quarter as we again generated record sales,” Buckley said. “Geographic diversity was also an important factor. We continue to accelerate investment in research and development, sales and marketing and in simplification of our supply chains.”
3M has business offices globally, with operations in other industries including industrial and transportation; health care; display and graphics; and electronics and communications.
Weyerhaeuser to shutter three iLevel plants
Federal Way, Wash.-based Weyerhaeuser will “indefinitely curtail” operations at three iLevel building products plants because of “slow customer demand.”
The curtailments include an oriented strand board (OSB) plant in Drayton Valley, Alberta; an OSB plant in Wawa, Ontario; and a laminated strand lumber plant in Deerwood, Minn. Work will halt at the plants before the end of the year, the company said.
“The decline in North American housing starts has reduced demand for wood products, requiring us to rationalize our supply of OSB and engineered wood,” said Steven Rogel, chairman, president and CEO of Weyerhaeuser. “We remain committed to these markets. This move enables our remaining plants to better execute our customer strategies.”
The Wawa and Drayton Valley plants are two of nine OSB mills in the Weyerhaeuser system. Wawa has an annual production capacity of 470 million square feet of OSB, while Drayton Valley has a capacity of 415 million square feet annually, the company said.
The Deerwood plant can produce six million cubic feet per year of engineered strand lumber and is one of three such plants owned by Weyerhaeuser.