Having the latest equipment, newest display or most recent upgrade was once a badge of honor for hardware retailers and lumberyard operators. But times are tough, and everything is now viewed through the prism of cost reduction. Dealers spend money in order to save money, so new technology must first make a case for ROI.
Some benefits are more tangible than others, however. Payroll reduction is easy to measure; so is power tool shrinkage or the productivity of a warehouse worker. But what about the time it takes to drive a 20-foot header around a mailbox on a conventional forklift? Or the sales lost when customers get tired of playing phone tag? Should dealers invest in technology when all they have to go on is a gut feeling?
“Do it anyway,” advised Johan van Tilburg, president and CEO of Tindell’s in Knoxville, Tenn. “ROI calculations are only a confirmation of what your experience already told you. And at the end of the day, experience is everything.”
Van Tilburg warned, however, that even “gut” paybacks should have a time frame. Anything past five years may not be worth it. Buying technology to keep up with customers is also dicey. In a 2008 survey of home builders by the research center of the National Association of Home Builders, mobile data communications finished near the top of the list of technology adopted since the housing downturn. But when asked about technologies they planned to adopt in the future, builders were cool to mobile data applications; they ranked them at the bottom of their wish list.
The editors of Home Channel News have chosen 10 technology trends that make the grade.
1Work force management
National retail chains have long used sophisticated programs like Workbrain and People Soft Enterprise to deploy their workers based on store foot traffic and customer demand. But smaller retailers, feeling the pinch of labor and health care costs, are now taking a second look at the traditional employee schedule. Ace Hardware conducted a “labor optimization” pilot last year in more than a dozen members’ stores, and based on the results—increased productivity and lower labor costs—rolled it out to its members this year.
Union Ace Hardware, a Phoenix dealer that served as a pilot, uses radio headsets to deploy workers to different areas of the store, depending on whether the floor is “cold,” “warm” or “hot.” Sales associates can work the register if it gets busy. “It can change from minute to minute,” said owner Lala Van Camp. Employee scheduling is based on a daily, hourly and seasonal tracking of register rings. Van Camp has shrunk her payroll from last year by three full-time and two part-time positions.
Incoming phone calls, e-mails, IMs or text messages are routed according to where individuals are and what device they happen to be using. Employees can make them selves available (or not) during certain times of the day by typing in “find me, follow me” instructions. Sales reps can get technical questions answered by doing a “presence” check in the engineering department.
“People want to spend more time communicating and less time trying to communicate,” said Anders Mikkelsen, managing director for Berlin Pacific, a telecommunications consulting firm. Berlin Pacific offers a Unified Communications plan through the American Hardware Manufacturers Association’s GPO buying consortium; several members are contemplating it, according to Mikkelsen. “This is where things are heading,” he said.
Forklifts with multi-directional wheels have been used in warehouses and other industrial settings for sometime. But LBM equipment suppliers like Hiab and Palfinger North America are rolling out models that sit on the back of delivery vehicles. These diesel-powered models can handle the rough terrain of a construction site. But their main attraction is the ability to move sideways.
“[Lumberyards] are buying them to deliver engineered wood, floor joists or long lengths of lumber,” explained Scott Whitaker of Palfinger. “If you’re driving a 40-foot I-beam down the road, and you come across a mailbox or a car, you don’t have to lift it up and over. You just turn sideways.”
MTI, a company that specializes in consumer electronic displays, has branched out into the home improvement sector. By combining its Intuition program with its Freedom Core display, MTI has devised an interactive merchandising display for power tools. Products are protected by cables, electronic sensors and alarms. But consumers can handle the tools and when they pick them up, read a “sku specific” marketing message that pops up on a digital sign.
Eric Pitt, an MTI product manager, said that power tools didn’t need the same bells and whistles as camcorders or cell phones. “We stripped back all these high-end features and came back with a lower price point,” he said.
Radio frequency (RF) scanning can work well in warehouse receiving and stocking operations, but it can slow down order pickers who look back and forth between labels and bin numbers. Do it Best addressed this by adding voice instructions to its mobile computers. After testing “Jennifer” in its Dixon, Ill., regional supply center in 2007, the Fort Wayne, Ind., co-op rolled out voice picking to all its DCs this year. Jennifer tells order pickers the name and location of each item on their list. She also issues warnings on fragile items or three-piece picks like wheel barrows. Order fillers can ask her to slow down, speed up, repeat the order or omit repetitive words. Jennifer also understands Spanish, once you teach her a few phrases.
Lucas Systems worked with Do it Best to develop the software. “We brought in 10 order fillers to define how we wanted the software adapted,” said John Snider, Do it Best’s vp-logistics. Now that Jennifer boosted productivity, the co-op is discovering her other talents, like checking the accuracy of warehouse replenishment or new order pickers.
Actually, the paperless trend is more about simplicity. No invoices or purchase orders or job quotes to file, which saves on time and labor. “Document management” also allows everyone in the company to look at the same page—literally. “It’s a big change from having to buzz somebody over in receiving to ask what happened,” said John LaFave, marketing director of Spruce Computer Systems. The company’s ERP system has built-in document management that links up related paperwork. “If you look at one, you can look at all of them in the trail,” LaFave said. SpruceWare.net also uses a Microsoft Windows framework because it requires little employee training.
Executives can now get real-time data on everything from sales margins to customer returns. But dashboard controls do more than drill down: they allow users to leave behind automatic alerts or trigger points. A popular application in bisTrack deals with extending credit. “If a customer is hitting close to their credit limit, it can send up a red flag,” explained Paul Williams, director of marketing for Progressive Solutions. Or when a certain percentage of a job is shipped, the system sends a message to the accounting department, telling them to send an invoice. “You can bill for products at just the right moment,” Williams said.
Gas prices are making this once-optional software package a must-have capability. So when ECi 2 designed its latest version of Advantage, route optimization was included as a plug-in. LBM dealers can plan their daily deliveries by best use of time or shortest distance (and best gas mileage). “They can also put an important customer first and then [reorient] the rest of the day’s stops,” said Scott Stanford, president of the LBM and hardlines division for ECi 2. The new generation of Advantage always features an electronic signature capture for proof of delivery. “It helps with billing disputes,” Stanford added.
9Paint tinting machines
Having grown accustomed to trial-sized jars of paint, consumers now want the samples in whatever color they choose. This presents a challenge at retail, where most tinting machines are geared toward the larger sizes. CPS Color, one of the leading manufacturers of tinting machines, has come out with a model that can dispense colorant for a variety of containers. “They go from eight ounces to five-gall on buckets with no slowdown in speed,” said Daniel Bush, American region president for CPS Color.
CPS also offers a special attachment for low-VOC paint, which tends to dry out inside nozzles. “People do nasty things like shove paper clips up there,” Bush said. A better option is to add a humidifier at the nozzle to keep the paint liquid.
10 Marketing data pools
Home Depot and Lowe’s jump-started this trend by requiring that all their vendors participate in a centralized depository of product information. And they chose the same solution provider, EdgeNet’s Big Hammer, to gather up data on product dimensions, warranties, energy ratings, user manuals, marketing copy and images. But once manufacturers get past the retailer mandate, they’ll realize the benefit of having all the data in one, password-protected place, said EdgeNet marketing manager Rob Boughton.
“Trying to get all that data into all your channels is a nightmare,” Boughton said. New product releases or changes to existing products means going back to all your trading partners and making individual changes. With a marketing data pool, “You update it once, and it’s publishable everywhere,” Boughton said.
Around the Web: Obama tackles housing market
The Barack Obama administration started a temporary program to boost state and local housing finance agencies (HFAs). The purpose of the program is to spur lending and buying in a depressed housing market.
“Through this initiative, the administration aims to help HFAs jumpstart new lending to borrowers who might not otherwise be served and to better support the financing costs of their current programs,” U.S. Treasury Secretary Timothy Geithner said in a prepared statement.
True Value fall market held in Atlanta
When True Value president and CEO Lyle Heidemann addressed co-op members at the opening session of the 2008 fall market Oct. 17 in Atlanta, he stressed the importance of Destination True Value — encouraging retailers to adopt the new, more consumer friendly store format in one form or another.
“Much of our future is centered on Destination True Value, both for our existing stores as well as our growth with new ones,” Heidemann told the group assembled at the Georgia World Congress Center. “This year we will open, expand, relocate, convert or remodel more than 100 stores to the new format. In addition, another 75 stores will implement the DTV decor package.”
The point hit home with show attendees Kurt and Kathie Stringham, owners of Stringham’s True Value in Santaquin, Utah, which will undergo a DTV remodel starting next month. “Our sales are down this quarter, but we’re not pessimistic,” Kathie Stringham said. “I’m not sure about the economy, but for hardware stores, if you’re wise you can still do well.”
Carol Wentworth, vp-marketing, also addressed members at the opening session, trying to drive home the importance of national and local advertising in these tough economic times. She said stores that participated in three spring circular programs saw a 7 percent increase in sales and an average of $45,000 more in revenue during the spring season than stores that didn’t use the promotions.
“I think those numbers tell a pretty compelling story about using circulars to help you get ready for the spring selling season,” Wentworth said.
More than 1,000 vendors are introducing new items and offering market-only deals on merchandise from every major product category. Retailers attending the market will also have an opportunity to attend educational classes on everything from merchandising and marketing best practices to the True Value Rewards program and leveraging point-of-sale technology.
The market is open through Oct. 20.