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Reading between the data, optimism at home summit

BY HBSDealer Staff

Chicago — Mixed macroeconomic signals lurked behind many of the charts displayed at the Home Improvement Research Institute’s (HIRI’s) Industry Summit last month. But presenter J. Walker Smith stressed that the fault lies in ourselves, not the economy. He pointed to several companies outside the home improvement industry that have shown amazing growth — Apple, Hyundai and Zappos, for instance. “These companies have shown unprecedented success during the third-worst downturn in U.S. economic history,” said Smith, executive chairman of The Futures Co. He described innovation as the best antidote for sustained down markets.

Relative optimism for the home improvement market continued from an unlikely source: Zelman & Associates, a firm made famous by bearish and accurate outlooks on home builders before the downturn.

“Just like we were early on in the bust, the data supported the bust,” said Dennis McGill, director of research for Zelman & Associates. “And we feel the data today supports something more optimistic.”

“At some point, we have to get up to 1.3 million [starts],” McGill said.

The two-day event coincided with the release of the Commerce Department’s residential construction report, which showed a 15% increase in starts, countered by a 5% decline in permits, he said. “The housing starts numbers were good,” said presenter Joshua Rosenbaum, director of the Global Industrial Group at UBS. “Whether it’s real — we’ll find out next month.”

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HD prevails in Big Hammer lawsuit

BY HBSDealer Staff

The U.S. Court of Appeals for the 7th Circuit affirmed a lower court’s decision giving Home Depot the rights to Edgenet’s “Big Hammer” database classification solution, which the Atlanta retailer duplicated after hiring Edgenet to be its solutions provider for manufacturers’ products and their many attributes.

According to court records, Home Depot contracted with Edgenet in 2004 to develop a “taxonomy” that would organize Home Depot’s products database. Under the agreement, Edgenet owned the intellectual property that was licensed to Home Depot.

In 2006, the contract was extended under new terms. Home Depot could use the Big Hammer license with no fee as long as Edgenet remained the retailer’s sole data pool vendor and continued paying for services. The 2006 agreement also gave Home Depot an out: The retailer could terminate the contract and stop using Big Hammer if it purchased a perpetual license for $100,000.

By 2008, Home Depot was developing an in-house product database incorporating the Edgenet technology, according to court records. Upon learning this, Edgenet filed a copyright for its Big Hammer taxonomy 2008 solution. In February 2009, Home Depot sent Edgenet a letter saying their business relationship would end soon and enclosed a check for $100,000 to purchase the perpetual license.

Edgenet returned the check. Instead, it filed a lawsuit claiming that it had agreed to sell Home Depot the original (2004) version of the copyrighted product and not something they could use to create their own system, which ultimately became HomeDepotLink. In addition, the Atlanta-based firm accused Home Depot of working on HomeDepotLink long before it sent the $100,000 check.

A federal district court dismissed the lawsuit, and Edgenet appealed. On Sept. 2, the Chicago-based appellate court upheld the lower court’s decision.

“Home Depot didn’t do anything wrong by copying the taxonomy before paying $100,000,” the ruling said. Calling Big Hammer “a work in progress,” the higher court concluded that, “Home Depot has not been in violation of the copyright laws for even one day.”

When contacted by Home Channel News, Edgenet media director Greg Batiansila said he could not comment on the federal lawsuit because a decision had not yet been made on whether to appeal the decision. But he pointed out that Edgenet is also pursuing the case in a Wisconsin state court, where the company has prevailed in the lower courts.

“We’re looking at other cases like ours that have been successful,” Batiansila said.

Edgenet currently provides product data feeds and data feed optimization for Sears Holding Corp. and its subsidiaries, eBay, Fastenal, Interline Brands, HD Supply, Orchard Supply Hardware, Acme Tools, Google and Bing.

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Air-powered tools, by the numbers

BY HBSDEALER Staff

Channel analysis
Air-powered tools have a market size of $184,163,000, according to research from Port Washington, N.Y.-based research firm NPD Group. Consumer research also shows mass merchants and specialty stores are growing, while warehouse home centers dominate the field.

Product attributes 
Nailers continue to be the most popular air-powered tool type, growing in importance last year and declining slightly this year. Drills and sanders have made notable increases in sales in the most recent 12 months. The majority of air-powered tools are not sold as part of a kit, according to the NPD Group’s data, and this trend continues to grow.

Purchase motivators
Price is the primary factor determining which retailer is shopped, but proximity to home has grown in importance to 15.6% share. When it comes to the actual purchase, consumers put an emphasis on brand, price and features. Price declined slightly in importance over the past two years, while brand and features increased in importance.

Demographic analysis
Over the past two years, consumers age 45 and over have grown in importance for the air-powered tools category. Consumers with incomes under $15k and more than $100k have increased slightly in share, while those with middle incomes have held relatively steady from last year.

Methodology: NPD data are based on monthly tracking of more than 30 home improvement-related categories and 30,000 opt-in consumers.
*2011 data reflects the period October 2010 through September 2011.
**Key: WHC: warehouse home center; MM: mass merchant; DS: department store; SS: specialty store; HS: hardware store
*** More than one answer accepted

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s.rawat says:
Apr-20-2012 11:45 am

I wanted to thank you for
I wanted to thank you for this great read !! I definitely enjoyed every little bit of it and I have you bookmarked to check out new stuff you post. krav maga instructor los angeles

E.Marshall says:
Nov-07-2011 06:35 pm

Interesting to see that price
Interesting to see that price is decreasing in importance. I would think that buyers are starting to realize that paying more for a high-quality tool is worth the extra initial investment. Pay now or pay later... Eric @ Spanwell http://www.spanwell.com

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