Evolution in the power tool aisle
Power tool retailing is not for the faint of heart, and there is no shortage of well-funded competition. But given consumer expectations, it's an arena in which hardware stores must play to claim relevance.
Plus, think of all the accessories like tool bits and saw blades that represent margin-rich products in the hardware retailer’s sweet spot.
This is part of the thinking behind the major overhaul of True Value Company’s revamped power tool business — a “core business” for the Chicago-based co-op, according to VP and Chief Merchandising Officer Heath Ashenfelter.
“The overall margin on power tools isn’t tremendous,” he said, alluding to competition from big-box and online retailers. “But we know that as we sell more power tools, then it will lead to more sales of higher margin products in categories that we feel we compete very well in, including hand tools and power tool accessories. That’s the path to success.”
The new-look tool assortment for the co-op is based on several ideas at the intersection of price, value, national brands and private label assortment.
The True Value approach begins with national brands, or as Ashenfelter describes it, “giving an appropriate share of the shelf to brands that the consumer cares about.” He points to Milwaukee and DeWalt among power tool brands that generate loyalty. (And Estwing in the hammer category, for instance.)
The national brands and creative merchandising — and an approach that comes very close to a store-within-a-store type setting — combine to validate that the category is a core business for a True Value store, he said.
Of course, pricing plays a major role in the new approach. “Price optimization is a key component,” Ashenfelter said. While power tool prices are generally going to have to be “right on top” of national competition, “the opportunity is for us to make more margin in the supporting businesses.”
And then there’s the matter of private label. For True Value, Master Mechanic has carried the load in both power tools and hand tools. For 2017, the True Value strategy is to upgrade the product, while reducing its presence in the aisle as national brands expand.
“Historically, we just quite frankly had way too much private label,” he said. “The price strategy was to drive a lot of margin. The problem was it was at the expense of relevancy.” Today’s mix is more relevant, he said, with prices that are more competitive on the SKUs that are most price-sensitive.
The upgrade in the Master Mechanic brand includes a new line hand of power tools, with a new logo, and new brand image across the board.
“Our goal for the private label brand is to provide a relevant mix of really good, high quality products that are priced at a value to the national brands, but right-sized.”
On top of everything, True Value is emphasizing creative merchandising and support for the core category. The result: “We’re growing rapidly and inspiring more confidence in our retailers that we can sell these categories,” he said.
Major hardware co-op earns a customer experience ranking
Supermarkets and fast-casual restaurant brands took the top positions in an annual ranking of customer experience. Ace Hardware cracked the top 10.
Publix, Chick-fil-A, and H-E-B earned top three positions in Temkin Group’s 2017 Temkin Experience Ratings, a cross-industry benchmark of customer experience.
Publix had a score of 84%, closely followed by Chick-fil-A and H-E-B, which both scored 83% in the seventh annual rating.
The other restaurant and retail brands that scored high and made the top 10 were Hardees, Chipotle Mexican Grill, and Hannaford, which all scored 82%; Subway, QVC, BJs Wholesale Club, Ace Hardware, Food Lion and Trader Joe’s, which all scored 81%.
To generate the ratings, Temkin asked 10,000 U.S. consumers to rate their recent interactions with 331 companies across 20 industries and then evaluated their experiences across three dimensions: success, effort, and emotion.
Hardware chain adds retail management platform
Hefner Ace Hardware knows the only way to expand its breadth is to have data integrity and inventory accuracy.
This was not an easy task for the family-owned, independent operator. When the retailer become an official Ace Hardware dealer in 2015, the retailer tripled its inventory, “and now we maintain 30,000 SKUs,” said Jason Hefner, owner, Hefner Ace Hardware. “Because of that jump in our inventory levels, we needed a system that was better equipped for inventory management and analysis.”
Becoming an Ace Hardware dealer also revealed other deficiencies. The company lacked overall systems support, as well as Ace-specific capabilities, security, and multi-store functionality — all pre-requisites if Hefner wanted to expand his business. These factors pushed him to adopt the Eagle N Series retail business management platform from Epicor, a solution designed to improve inventory management and scale the business.
“Our operations are better protected with an actual server; the Ace catalog and respective data is seamlessly integrated into the software, allowing quick and easy access; and we get quality support when we need it,” Hefner said. “And when we are ready to move forward with a new location, the software will grow with us.”
With better insight into inventory, the retailer expects to minimize carrying costs and maximize profitability, “while gaining deep insight into our business that will help us grow,” he added.