Fighting on every front
It’s an article of faith among independent dealers that while the smaller guy can’t beat the big guy on price, he can win on customer service.
But at Marvin’s, a 25-unit independent DIY retailer based in Alabama, executives had a different response—yes, we can compete on price.
“Honestly, it’s sort of tough to get paid for service when your customers are struggling,” explained Boyden Moore, president and CEO of Marvin’s. “Our LBM—the core stuff that we sell in stores—is what’s really taking a hit. So, we really put it on our buyers’ backs to do something different, to get exciting promotional stuff and to bring deals into s tore s. We have to compete on price.”
The retailer has also instituted several initiatives in recent years to help revitalize stores, capitalize on real estate and move with agility in a constantly changing marketplace. But much of what the retailer does always comes back to pricing, especially in the current consumer environment.
Moore emphasized that while the retailer does focus on what he called “aggressive service,” with the aim of having every customer “spoken to several times,” low prices are a necessity. The “low-price” moniker is being reinforced through out the markets served by Marvin’s, said Craig Cowart, vp-merchandising and marketing for the chain.
“We are a low-price leader. We’ve seen the consumer dollar tighten, so we decided to go out with extremely strong promotions in all markets,” he said.
Moore said the retailer charged its merchants with the heavy responsibility of seeking out unique and value-driven promotional items, while also challenging Orgill—of which Marvin’s is a 12-year customer—with the same goal.
“So we said, ‘You guys could help us get focused on emphasizing value.’” At the same time, Moore said they knew they had to get “something special, something that the big box won’t even think to have.”
Those items have ranged from specials on five-shelf steel racking to ceiling fans. And these deals are particularly important, he said, in market s served by Marvin’s, including Alabama, Mississippi and the Florida panhandle, where fuel today accounts for approximately “13 percent of house-hold income,” Moore said.
“Commute times are bigger in those states,” he added. “The housing market in Alabama is off, new home permits are down 35 percent. It definitely affects us—people spend more when they move, from getting a house ready to sell to painting and cleaning.”
That’s a common story, of course, from coast to coast. So to further compete, Marvin’s executives have kept an eye on a more controllable factor: geography.
For instance, the company’s sole Florida location is 60 miles inland from the coast. That store didn’t necessarily serve the customers who flocked to the Florida be aches during the housing boom and so has not been as affected by the subsequent housing bust there.
But that’s just one example—overall, the company’s 25 stores are located off the main highways in smaller towns, further away from the main connector roads that attract Home Depot and Lowe’s stores.
The company keeps a close eye on demographics as well, another more controllable factor in the turbulent present-day DIY market. The retailer most recently closed a location in Sheffield, Ala., in the northern part of the state, bordering the Tennessee River.
“This store had been open since the’80s and was not located on a main traffic flow through town,” he said. “There has been a general retraction in this market with several businesses and other retailers. We decided to close this location as we reached the end of our lease, and at this time, did not have a strong plan for growth in this particular market.”
Cowart went on to discuss the reworking of several older format store s, which the company is revamping, especially in cases where “we feel strongly about the long-term potential of the market.”
“If we close a store like we did in Sheffield, we simply reinvest the dollars in a new store in another market,” he said. One example has been investing in a new-format store in Oneonta, Ala., in the third quarter of 2007, followed by the closing of an older store in Scottsboro, Ala., the same year.
But competing well is not merely a matter of geography, nor of price. The retailer offers other features as well to attract and keep its customers.
One primary example: All Marvin’s stores feature drive-through lumberyards, as well as another special feature for the car-bound—drive-through nurseries. The latter feature came in particularly handy this spring season, Cowart noted.
“Definitely, anything that involved spring lawn and garden were big sellers,” he said. Chief among the reasons: drought and subsequent water restrictions across much of Marvin’s territory in last year’s spring seas on. That took a toll on lawn and garden sales in 2007.
This year, however, not only were customers hungry to get back into the gardening groove, but weather conditions were ideal, creating a very strong market in that category.
The strength of the 2008 spring lawn and garden season for Marvin’s illustrates one important point—in the competitive marketplace for smaller retailers, agility is paramount. The marketplace changes, literally, as often as the weather, and adding and subtracting new items quickly is imperative.
Marvin’s began testing small appliances this year, for example, a category that represents a very small part of the retailer’s business, but nonetheless offers growth potential, Cow art said. And, those small items translate back into the special promotions Marvin’s has been emphasizing. Seasonal items also have been doing well.
Cowart said the retailer supports these promotions in store, through the marvins.com Web site, customer e-mail lists and via news paper ads on key sales weekends.
Moore said the promotions always focus on value. “For the stores to be more relevant in today’s environment, it makes sense that a $200 grill is going to be more desirable then a $2,000 huge gas grill. We did a push on our season a l products and live good s. We brought in a lot of promotional products—tool sets, hand tools, bins, shelving.”
All in all, Cow art said he expects the coming year to continue to be difficult, while Marvin’s will continue to focus on price matters and seasonal quirks.
“There’s not a whole lot of success that’s being handed to us by market conditions,” he said. “We will be continuing doing what we’ve been doing for the first half of the year, focusing on a lot of the success that we’ve had in this past first -half and the very hard work by our merchandising team. We’ll stay on course with those two things, and the goal is that consumers will do their shopping with their feet.”
PRO Group makes key promotions
Denver-based PRO Group has promoted Brendan Sullivan to director of merchandising, a new position, according to the company.
Sullivan is a 21-year industry veteran who has served in various merchandising and business development positions for Servistar/Coast To Coast and True Value prior to joining PRO Group in 2005.
“Brendan Sullivan’s experience and work style makes him ideally suited to a merchandising director role,” said Steve Synnott, president and CEO of PRO Group, in a statement. “Brendan has worked as a buyer and merchandise manager, and since he joined our company three years ago he has taken a leading role in providing progressive ideas and programs on the merchandising side.”
In addition, PRO Group managing director for the PRO Hardware and GardenMaster divisions, Shari Kalbach, has been named managing director for the company’s Farm Mart division, which supplies independent farm supply retailers.
Kalbach joined PRO Group in 1997 and is responsible for all of the Group’s distributor relationships.
“Shari Kalbach has a proven track record as a highly effective executive working with PRO Group distributor members,” Synnott said. “Adding Farm Mart to Shari Kalbach’s scope of work is a natural progression of her role. She excels working closely with our distributor members.”
Design Within Reach narrows losses
Design Within Reach, the San Francisco-based specialty home decor retailer with around 70 locations nationwide, saw net losses of $159 million, narrower than the $575 million in losses recorded in the same period last year.
Net sales for the second quarter decreased 3.7 percent to $47.3 million, compared with $49.1 million recorded in the year-ago period.
Still, the retailer saw an improvement in gross margin, a measurement of earnings that takes production and service costs into consideration — gross margin improved to 46.4 percent in the second quarter, compared with 44.3 percent in the same period last year.
In-store sales were $32.6 million, up 2.2 percent from last year. Sales from phone and the dwr.com Web site decreased 17.5 percent to $10.4 million.
DWR also said it predicted that “in light of the challenging economic environment, the company believes revenue will be flat year over year.”