Fastenal Company nails growth in Q3
With onsite locations and vending machines driving growth, Winona, Minn.-based Fastenal reported net sales of $1.13 billion in the third quarter. That’s an increase of 11.8% compared to the third quarter of 2016. Net earnings increased 12.7% to $143.1 million.
“Our growth drivers, combined with a solid economy, are resulting in great growth,” said CEO Dan Florness.
Two notable growth drivers are industrial vending and onsite locations, the later defined as dedicated sales and service provided from within, or very close to, the customer’s facility, the company said. Fastenal’s installed vending machine count on Sept. 30 was 69,058, up 14.3% compared to a year ago. Sales through the vending machines continued to grow at a double-digit pace in the third quarter of 2017, primarily due to the increase in the installed base. As for onsite locations, the company now points to 555 active sites, up 47.6% compared to the same time last year.
The distributor of industrial and construction supplies said the pace of daily sales was groing at 15.3% in September, a pace unseen since late 2014.
The company opened 5 branches and closed 36 branches in the third quarter. In addition to the 555 onsite locations, Fastenal operates 2,418 public branch locations.
Navigating the market forces
The pleasant duty of passing out $100 million in member rebate checks during the Do it Best Corp. Fall Market in Indianapolis falls upon the capable shoulders of Dan Starr.
Sort of. The checks will actually be distributed at tables arranged by member number in a ballroom at the Indiana Convention Center, but Starr will certainly allude to the distribution during the annual CEO’s speech to shareholders. Heading into Indianapolis, Starr has more competitive duties on his mind, as well, such as nurturing prospects, gathering feedback, and generally promoting growth.
And while the company believes a strength of the co-op is the ability of members to make their own decisions, Starr says the co-op has begun a subtle but important shift toward active engagement with members to take up growth-inducing programs – as opposed to just placing them on the menu and hoping dealers will see the light.
“Today, our members are expecting a higher degree of consultative guidance from us,” Starr said.
Here are the CEO’s thoughts on the co-op’s role in a changing world, as well as a number of short-term and long-term matters:
Goals for the upcoming market in Indianapolis
For me, the markets are always a great time to connect with all of our member-owners. There’s no better way to get a feel for our industry than to talk directly with the people who are on the front lines. And our members are very candid about what they need to be successful — what’s working, what we need to do more of and where we can improve. I’m also excited to connect with all our visiting prospective members. Their experiences add to our understanding of how we can be an even better co-op for everyone striving for excellence in this industry.
Key message to members
This market is all about the highlighting the many ways we’re driven to be the best co-op for our members. And that touches on so many areas. It includes the many opportunities we see for them to drive growth in their stores, like our new paint department concept The Color Bar, (see article) or our Connected Home interactive exhibit that features four living spaces of connected
And for me, against the backdrop of Harvey and Irma, I’m looking forward to sharing how all of us — our team, our vendors and our members — worked together to respond to these devastating storms.
On the services dealers expect from their co-op — delivery, quality, rebates, low prices, low overhead
Of course, it’s all of those things. For us, we know our members expect us to be an excellent wholesaler skilled at blocking and tackling…that we’re the best at all the core elements that make a co-op a powerful partner. Then, they’re looking to us to help them grow. And here’s where there’s been a shift in our approach.
We’ve always taken great pride in the breadth of our customizable menu of program and service options, rather than pushing our own agenda with a bunch of mandates. And we’d go to them with a long list of all the things they could do to grow their businesses. But today, our members are expecting a higher degree of consultative guidance from us. So instead of us wowing or even overwhelming them with all the things they could do in their stores, they’re looking to us to recommend the things they should be doing.
The Color Bar is a great example. We know our members can win in their markets with the strong branded paint programs we offer and The Color Bar was created to spotlight that strength in a way that will work for nearly any type of store. While not mandated, we’re reaching out to the majority of our members to show them why The Color Bar is something they should be implementing.
As CEO of Do it Best, what’s the best advice you’ve received so far
I’ve gotten lots of great advice … from our team, our members, my predecessors, community leaders, other business leaders, and my wife, of course. But as I just recently turned 50, I’ve been a bit introspective, and my thoughts go to my dad (he just turned 80) and the things he instilled in me as a young man. My dad demanded excellence and he impressed that upon me not only by his instruction, but through his example and accountability.
There were times where I tried my best. The effort was there, but the result wasn’t perfect. Ultimately, my dad taught me that the pursuit of excellence was enough. In fact, at those times when he knew I was giving my all he didn’t seem to care about the result. He believed the result was inevitable, that getting the right result would come if you’re pursuing excellence. It was just a matter of timing. Those two lessons, taken together, really helped me then — and still do today.
Growth opportunities for dealers
Our members’ agility in the marketplace allows them to quickly adjust to trends and market niches in serving their customers. That was proven out with their overhaul of the lighting category and the move to LEDs. At this market, I believe the same will hold true with connected home technology. This is a growing category that requires more personalized service and product knowledge, something our members are exceptionally great at providing.
The same goes for The Color Bar. We know that customers generally lack confidence when it comes to making color choices, so with all the instructional components and elements within the department’s design, we’re equipping our members to be seen as their community’s best resource when it comes to paint.
Growth can also come from enhanced marketing efforts and really connecting with customers in the right way, at the right time and with the right deal. We’ve seen tremendous growth in Best Rewards, our loyalty program, as more members discover just how powerfully they can connect and market to their best customers. At this market, we’re also debuting our Digital Dashboard. This online tool complements our members’ consumer marketing plans with digital ads, email and social media content, and the ability to boost their visibility in their customers’ Google searches.
On competitive threats in the online and big-box retailing
In a world where everybody sells a lot of the same stuff, I believe we’re all asking “How do I stand out?” The lanes are definitely blurring. Our industry has to be agile and operate with a sense of urgency. So it’s more important than ever for independent retailers to identify the things they can excel at and do those things especially well.
Ace’s ‘Makers to Market’ winners
A biodegradable BBQ called Casus Grill and a 3D-printed phone case that holds four tools were winners in the Ace Hardware Maker to Market Contest. In the eyes of the judges, the two products stood out in a contest that attracted more than 60 “makers” – the fashionable term for creative inventors.
The winner from the New to Consumer Market category is Casus Grill, an inexpensive and biodegradable BBQ that retails for $12.99. The 2.2lb grill is portable, quick to heat and ideal for anyone in need of a temporary grill. It can be disposed of in a bonfire and leaves no trash.
The winner from the New to Hardware category is Stowaway™ Tools from the makers of Klecker Knives. The product is a 3D-printed phone case that holds four tools, all conveniently stored within the phone case.
Both winners will be given the opportunity to present and market their products at the upcoming Ace Hardware 2018 Spring Convention in Dallas.
“The goal of Ace’s Maker to Market event is to establish a pipeline of new, differentiated and innovative products from independent Makers,” said John Sommers, VP of merchandising, Ace Hardware Corporation. “We had an extremely successful first Maker to Market event, with a dynamic lineup of new products. We look forward to bringing many of them to market through Ace stores.”
The two featured winners pitched standout products grounded in key Maker to Market values, including sustainability and small business entrepreneurship. In addition to the category winners, Ace experts identified a number of new products from the 2017 Maker to Market event that will be pursued and brought to market through the Ace Hardware innovation platform. Distinguished products included Plugfones, Screw it again and Coverware, the company said.