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Slide show: Scenes from the National Hardware Show

BY Steph Koyfman

The annual National Hardware Show was in full swing May 4-6 in Las Vegas, this year with a brand new Wednesday through Friday schedule.

As usual, dealers, suppliers and industry enthusiasts crowded the show floor at the Las Vegas Convention Center. So did interesting products and displays.

Here are a few of the highlights.

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Retail profile: Reflections on hardware leadership

BY Ken Clark

There was no mention of Peter Drucker or any other business theorist during the retail leadership panel discussion here at the National Hardware Show. Neither were there any platitudes like "one plus one equals three."

Instead, three retailers shared their real-world thoughts on what has led to inspired teamwork based on their own experiences in the home improvement industry. 

Mentorship was a clear common theme expressed by all the panel members, including Jim Rivas, director of store operations for Friedman's Home Improvement. Family values, business passion, and a drive to succeed were also cited as key ingredients.

In Rivas' case, mentorship began when his career started at The Home Depot. A driven employee, Rivas rose to a position of store manager at the age of 24. "I was in charge of $68 million business a clue of what to do with it," he said. "Couldn't have survived without help along the way and good people in my path."

The panelists — also including Josiah Gates, VP of retail innovation at Aubochon Hardware, and Christian Herrick, president & CEO of Randy's Do it Best — took very different paths during their careers. Gates pointed to his early life on a farm as an important education. And Herrick was a missionary in Alaska before turning to business and home improvement. But the panelists share many common ideas on leadership and success.

And according to Rivas, one of the biggest steps taken on his own leadership journey was journey into fatherhood. "The change for me in my leadership role and growth was becoming a father, probably changed me the most out of everything in my life," he said.

That type of embrace of family values can be seen at Aubuchon Hardware, said Gates. "What got us where we are today are strong family values," he said. "That's attitude and willingness to learn."

Gates pointed to trust, integrity and authenticity as key qualities of leadership. As a store manager, Gates said this reputation can be nurtured by never asking employees to do things that you wouldn't do yourself. And when the move to the front office occurred, the challenge was to build trust with a new group — all the store managers and the people in the head office.

"When you have that it makes it so much easier to move the company forward," he said.

Building trust Is one of the keys to the leadership style of Herrick, whose life experience includes missionary work in Alaska. Also important: empathy and flexibility.

"As a business we always say family first, and we really live that," he said. And support for employees who suffer illness in their family is one of the reasons for high morale at Randy's Do it Best, he said.

On the question of hiring for attitude or hiring for aptitude, Herrick had this advice: "You can't teach attitude. We learned that the hard way."

Inspiring trust across a business produces the very tangible benefit of open and honest communication.

"Silence is the worst thing that can happen in your business," said Rivas. "A bunch of people nodding their heads and agreeing with you, that's not going to get you where you need to go."

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For clues about the vitality of home improvement, ignore the rest of retail

BY Steph Koyfman

Las Vegas — To take a broad look at the U.S. economy at the moment is to walk away with some fairly discouraging conclusions.

But according to Cleveland Research's Mark Herbek, that's the wrong approach to take if you're in the business of building supply and home improvement retail.

During an educational session here at the National Hardware Show, Herbek discussed the disparity between the home improvement end market and U.S. retail in general, and he advised retailers to plan for growth in the next two to three years.

Currently, the U.S. economy is contracting on several fronts, according to Herbek. There's been a contraction in the industrial end market since June of 2014 that's only just beginning to experience an uptick over the past 45 to 60 days. However, industrial activity impacts employment and, in turn, consumer spending, and the environment is still a challenging one.

Additionally, spot freight demand is below what we saw in 2014 and 2015, and rising capital goods inventory is often the next shoe to drop, prompting executives to make decisions to spend and expand less.

"There's no better read on the U.S. economy than watching how much the trucks and trains are moving across the U.S.," he said.

Herbek also touched on the positive state of unemployment, though he noted that most of the jobs being added are jobs that pay significantly less than the average wage, which is a sign that employment is about to roll over.

With S&P 500 earnings on the downswing, and consumer confidence contracting over four consecutive months, things don't necessarily seem encouraging for retail.

However, home improvement is on the opposite trajectory. Though total brick and mortar U.S. retail saw 0.4% growth in Q4 of 2015, brick and mortar growth for home improvement was up 6.2% that same quarter.

For ecommerce, home improvement is growing 25% per year, versus about 15% for the economy at large.

In view of 2016 so far, the industry is outpacing expectations. Last year the average building supplier saw 6% growth, and the expectation for this year was around 5.4%. Core building products are up 6.4% so far, and even though April's 2% growth rate is down from the first quarter's 12% pace, May, June and July are expected to be strong months for the industry.

Herbek noted that we're still 30% below a normalized growth rate in housing, and that the recovery has gone on largely without the help of entry-level buyers. However, household debt is at an all-time low, and home prices are back to an optimal appreciation rate of 4-5%.

Herbek's advice for retailers who wish to capitalize on these headwinds? Invest in digital and bring in a fresh set of eyes. Many suppliers are dedicating between 37% to 51% of their resources to growing online marketing, and 84% of the recent quarter was driven by online in total U.S. retail. What's more, a third-party associate who audits existing programs and assortments can drive double-digit comp improvements and better train sales associates.
 

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