Hardware Show goes green
For both vendors and retailers, the growing “green” movement can present as much of a challenge as it does an opportunity. To address the issue, the National Hardware Show will feature a “Green Product World” this year, the first of its kind at the show, in addition to a host of other new offerings on the popular topic. Green Product World is an offshoot of the show’s New Product World—both highlight a sampling of products from the show floor.
“We’re really focusing on the business side of green,” explained Dean Russo, group vp for show organizer Reed Exhibitions.
The Green Product World showcase will feature around 100 products, and in conjunction with the Green Product World, the show will announce winners of its first annual Green Innovation Awards. Judged by representatives from retailers such as Sears and Northern Tool, the awards are similar in scope to the Homewares Show Awards, which also will be introduced this year.
“It’s obviously a major trend,” Russo said. “There’s sort of two components to green. There’s the socially conscious aspect, part of the driver on the consumer side, and the opportunity for sales on the vendor and retailer side.”
In promoting its green programming and products, the National Hardware Show highlighted results from a recent industry survey that indicated 88 percent of households in the United States have members who say they are “likely or very likely to purchase at least one additional energy-efficient product or undertake one additional energy-efficient activity” in the near future.
Energy-efficient products have probably been the most visible new green products in the past two years. Record-high fuel costs have made the bottom line benefits of these products much more visible to the consumer.
Heavy promoting of energy-efficient products by retailers has followed suit, with a prime example of such promotions in compact fluorescent light bulbs (CFLs). Home Depot, Wal-Mart, Ace, True Value and other high profile home improvement companies have offered various free light bulb promotions. Federal and state agencies have stepped in as well, helping subsidize the costs of the bulbs in many communities.
Products like CFLs, where the cost and energy savings benefits are relatively well established and easy to understand (despite the higher upfront price tag of a CFL), have proved attractive to consumers. But with many other product categories, from cleaning products to gardening goods, many consumers remain skeptical.
According to a study by research firm NPD Group, consumers are “clearly struggling with the green price [and] value relationship.” Of the issues consumers encounter, some reported believing “retailers may be taking financial advantage of this movement to increase their margins.” Others are turned off by the often higher price for a green product, especially if they don’t have a clear understanding of said product’s cost-savings benefit.
Additionally, many consumers are skeptical of products that claim to be green, according to NPD Group. “Consumers cite some product packaging choices as contradictory to the cause,” the study says. “Other issues, such as outsourcing, cheap labor and public corporate commitments to the environment are very much top of mind for consumers.”
To help gain perspective on how to cater to those consumer questions, the National Hardware Show will offer green learning sessions for both vendors and retailers.
First, a vendor-focused program will offer advice from Robert Hrubes, senior vp-Scientific Certification Systems (SCS). In the home channel, SCS is well known for working with Home Depot as the source of third-party certification for the retailer’s Eco Options line of products. In that role, SCS tests and rates purported eco-friendly products that don’t fall under other federal guidelines—such as the Environmental Protection Agency’s Energy Star or WaterSense programs—to see whether they meet acceptable green criteria.
Hrubes will speak on what constitutes a credible green claim and how manufacturers can use green labels to differentiate themselves in the marketplace. The seminar also tackles the role of third-party certification and risks associated with “greenwashing.”
The SCS seminar, titled “Going Green—Third Party Certification and Credible Logos,” will take place on May 8 at 11 a.m. in room N242.
A second seminar will tackle the green issue from the retail side—specifically, lawn and garden retail.
Stan Pohmer of Lawn & Garden Retailing will talk about how older consumers appear to be more tuned-in to the green movement when it comes to outdoor purchases, with lessons on how retailers can make it easier for those consumers to “be green.”
Indeed, baby boomers and older consumers make up a larger market for green products. According to another NPD Group study, environmental friendliness is something that appears to grow with age.
For example, in the category of home insulation products, 82 percent of survey respondents 55 years and older said they believed buying eco-friendly materials is important. Comparatively, just 70 percent of those aged 35 to 44 agreed; and 63 percent of those aged 18 to 34 agreed. In major appliances, 79 percent of respondents over 55 said going green is important. Sixty-seven percent of those aged 35 to 44 agreed, and 62 percent of those aged 18 to 34 agreed.
“The information in the report is somewhat contrary to the belief that it’s the younger generation who is more concerned about going ‘green,’” said Mark Delaney, director of home improvement for NPD Group. “It may be that the older generation is now looking to leave the planet in better shape for their children and grandchildren.”
The retailer-focused green seminar, titled “The New and Changing World of Sustainability,” will take place Wednesday, May 7 at 10 a.m. in room S223.
Green products from numerous vendors will be spread throughout the show floor—watch for new offerings in categories including lighting, Energy Star appliances, building materials, WaterSense plumbing fixtures and natural outdoor gardening products, among many others.
Home Depot to close 15 stores
Home Depot will close 15 underperforming stores, the company has announced, and remove 50 future openings from the new store pipeline. The closings will include layoffs of about 1,300 employees.
The closings, at locations in the Midwest and Northeast, will generate approximately $547 million in pre-tax charges in the company’s first quarter. The company will release first-quarter results on May 20.
The stores to be closed are as follows:
• Store no. 2015 in East Fort Wayne, Ind.
• Store no. 2032 in Marion, Ind.
• Store no. 2310 in Frankfort, Ky.
• Store no. 379 Opelousas, La.
• Store no. 2819 Cottage Grove, Minn.
• Store no. 6901 East Brunswick, N.J.
• Store no. 6904 Saddle Brook, N.J.
• Store no. 6171 Rome, N.Y.
• Store no. 3702 Bismarck, N.D.
• Store no. 3874 Findlay, Ohio
• Store no. 3865 Lima, Ohio
• Store no. 4552 Brattleboro, Vt.
• Store no. 4932 Beaver Dam, Wis.
• Store no. 4933 Fond du Lac, Wis.
• Store no. 4913 Milwaukee, Wis.
Home Depot said in a statement it still intends to build 55 new stores this fiscal year, including 36 new stores in the United States.
As for other stores in the works, the company said it has “determined that it will no longer pursue the opening of approximately 50 U.S. stores that have been in its new store pipeline, in some cases for more than 10 years. Accordingly, the company will record a charge of approximately $400 million related to capitalized development costs and ongoing obligations associated with those future store locations.”
“This is a continuation of our disciplined approach to capital allocation that we outlined last year,” said Frank Blake, Home Depot chairman and CEO, in a statement. “We will invest in our core retail business, in this case our existing stores, which drive our most profitable sales. Our capital efficiency model will also provide improved returns for our shareholders through dividends and share repurchase.”
Home Depot added that investments in existing retail stores will continue to include “maintenance, merchandising resets and other initiatives to improve all elements of the customer’s shopping experience.”
The company reiterated that its total capital spending for the current fiscal year is projected to be approximately $2.3 billion, down from $3.6 billion last year.
Sherwin-Williams earnings fall in the first quarter
Sherwin-Williams saw earnings fall in the first quarter of 2008, but the worldwide paint and coatings giant is still seeing strength in international sales.
Earnings fell 30.3 percent in the first quarter to $77.9 million from $111.8 million in the same period last year. Net sales grew just over 1 percent to $1.78 billion from $1.76 billion in the same period last year.
The stronger net sales were in large part due to strong Global Group sales, as was the case last quarter. Favorable currency rates and eight acquisitions since last year’s first quarter helped aid international sales, according to the paint company.
In the company’s retail Paint Stores Group, net sales were $1.031 billion in the quarter, 1.9 percent lower than in last year’s first quarter. Sales were weak due to “soft architectural paint sales and weak sales in non-paint categories partially offset by improved industrial maintenance product sales.”
Same-store sales decreased 6.5 percent compared with last year, and earnings decreased 31.9 percent. Earnings were weaker because of increased product and freight costs, the company noted.
The company’s Consumer Group, which includes paint products like Dutch Boy, saw sales decrease 4.8 percent in the quarter to $286.9 million. The sales decline was due primarily “to soft DIY demand at most of the segment’s retail customers.” Earnings in the Consumer Group were down 23.7 percent due to higher raw material costs, as well as a lower volume of movement at the company’s distribution centers.
The Global Group’s net sales increased 14.8 percent to $461.9 million due to market share gains, selling price increases, favorable currency translation and acquisitions. Earnings for the Global Group increased 21.7 percent to $7.7 million.
“Paint demand in the domestic new residential, residential repaint, DIY and commercial markets was weaker during the first quarter than we had anticipated at the start of the year,” said Christopher Connor, chairman and CEO of Sherwin-Williams. “We continue to be pleased with the strong sales improvements of the foreign business units in our Global Group and the continued growth they have been achieving in the architectural, industrial maintenance, OEM and automotive finishes product lines.”
Connor also noted that the Paint Stores Group opened 17 new stores in the first quarter and closed 23 “redundant stores.”