Stores rev up impulse item sales
Lauren Wagner, supervisor, category management for Do it Best, has a simple definition for the term “impulse item:” “something you don’t know you need until you see it.”
Falling into this category is a wide variety of products, most of them relatively small, in expensive and easy to throw in with an order at the checkout counter. Examples include super glue, painter’s tape, night light bulbs—even ice cream—items that can be marketed on counter displays, dump bins, endcaps and clip strips. Major hardware co-ops and wholesalers have stepped up their impulse item programs in recent years, trying to capitalize on these last-minute sales.
“We’re really trying to bring the point across to members that this is an area they need to focus on,” Wagner said. “The margins are good—50 percent or better on clip strips—and there’s quite a good turnover rate.”
Do it Best also offers “Problem Solver” planograms for each of the four seasons, including garden gloves and glass cleaner for spring; bleach pens and mosquito repellent for summer; chore gloves and lawn and leaf bags for fall; and extension cords and storm window kits for winter. The co-op also put together a series of planograms that represent the co-op’s best $1 programs, including “best of” hand tools, “best of” paint accessories and “best of” winter car care. Do it Best encourages members to market these not only as $1 items but as “10 for $10.”
“Like one sees in the grocery industry, this multiple price point really does encourage shoppers to buy in multiples of 10,” Wagner said.
Orgill also recently “reenergized” its impulse item program, according to Brett Hammers, vp-marketing. The product catalog contains more than 500 skus of clip strip, dump bin and endcap merchandise and bucket displays to help the store capture impulse sales at the product display and the point of purchase.
“We’re selling water, Gatorade, candy and other products, and we’ve expanded the program to include several drop-ship programs,” Hammers said at the company’s fall market in Chicago last month. “The nice thing is you can get in to it easily. It’s more driven by customer demand than anything.”
True Value offers more than 200 planograms with more than 800 impulse items under its Visual Merchandising program, including batteries, candy, magazines, light bulbs, tape and flashlights. According to Rick Suptic, True Value’s planogram manager, industry studies have shown that items merchandised on endcaps can show a 25 percent increase in sales; items stationed at well-maintained checkouts can show an increase of more than 30 percent; and items placed in dump bins can produce a sales increase of more than 400 percent.
“We are continually updating our Visual Merchandising program and our offerings with new products and visually appealing displays, allowing our retailers easy access to the latest impulse ideas,” Suptic said.
Griffin Ace Hardware, a chain of three stores in Southern California, has two shelves of impulse items in the front of the store that vp-merchandising Kelly Hollingsworth changes frequently. There are practical products like batteries, light bulbs and tape, as well as fun novelty items like playing cards and cell phone cases—most of the items retailing for under $3. There are also six to eight clip strips at the front of each aisle related to the corresponding merchandise in those categories.
Absecon Do it Best Hardware in Absecon, N.J., carries impulse items near the main checkout counter as well, including candy, cold drinks and dollar store items. Because the store is located in a shore area, it also carries sunglasses, hats, bandanas and other related products.
“Actually, we find that the front counter is a great spot to add some extra dollars to the sale,” said owner Marilyn Weisman. “We show those inexpensive knives, the floral tools for ladies, new items, seasonal items, bug sprays, charcoal lighter, anything that the customer might have forgotten.”
Wagner believes impulse items—if done correctly—can account for 7 percent to 8 percent of a store’s sales. “They help build the average sale—and sales in general,” she said. “In challenging economic times, it’s an opportunity to continue sales as usual by looking outside the realm of traditional products.”
Former Westlake execs open True Value store
Former Westlake Ace Hardware executives Brian Richards and Scott Westlake have formed their own True Value hardware chain, called SCW. The first store opened Aug. 30 in Overland Park, Kan.
Called Nuts and Bolts, the store is 51,000 square feet, about three times the size of a traditional True Value outlet. A second, 28,000-square-foot Nuts and Bolts is set to open sometime in September in Independence, Mo.
Both stores are based on the Destination True Value format, which emphasizes small projects and offers a broad product selection in core hardware categories that can be adapted to the needs of the individual store.
In addition to the traditional hardware departments, Nuts and Bolts offers a 4,000-square-foot customer service center where customers can get glass and keys cut, window screens repaired and knifes and scissors sharpened. The store has about 40 employees.
Richards, the company president, spent more than 30 years with Westlake — a 90-store chain with stores in Missouri, Kansas, Nebraska, Iowa, Oklahoma, Texas and New Mexico — before partnering with Scott Westlake, the grandson of Westlake Ace’s founder.
Toll Brothers posts third-quarter loss
Toll Brothers, one of the nation’s largest home builders with a specialty in luxury homes, saw third-quarter losses of $29.3 million, plummeting from earnings of $26.5 million in the same period last year.
The Horsham, Pa.-based builder recorded a hefty $139.4 million pre-tax charge, $33.4 million of which was attributed to failed joint venture agreements. For the first nine months of the fiscal year, the builder has generated losses totaling $219 million.
Home-building revenues totaled $1.24 billion in the third quarter, down 31 percent from $1.8 billion in the same period last year.
Robert Toll, chairman and CEO for Toll Brothers, pulled no punches in his assessment of the results: “We are now completing the third year of the worst housing market since we started in 1967,” he said.
“Weak consumer confidence has kept many potential buyers from taking advantage of the current buyers’ market,” he noted. “We believe that most big public builders have sold off most of their inventory, which eventually should help stabilize home prices. However, we currently have to contend with foreclosures as the new low-priced competition.”