In Vegas: Advice for tough times

Las Vegas -- Thriving during a downturn requires focus, research and commitment to key values, according to hardlines distributor Emery-Waterhouse CEO Steve Frawley.

Frawley, who has been with the Portland, Maine-based hardlines distributor since 1986, made his case during his presentation, "Marketing successfully during a recession," at the North American Retail Hardware Association's (NRHA) Village Stage at the National Hardware Show.

Among his key concepts: The home product and home improvement industry continues to be an industry full of opportunities, no matter what you might read. And in today's market, companies need to focus on a limited number of initiatives, as opposed to scattering their attention and resources.

"It's not business as usual," said Frawley. "That doesn't work. If you're going to hunker down and hope that the world is going to come back the way it was yesterday -- that's not going to happen."

Instead, Frawley presented the audience assembled in the National Hardware Show with some concrete advice for difficult times.

• Adjust product assortments

According to Frawley, products that offer reliability, durability, safety and performance have a long-term advantage in the market.

"We think most of our customers should be narrower and deeper," he said. "Focus on turnover, and focus on where you're going to make money. Gimmicks are out, and quality is in."

• Adjust pricing tactics

One of the keys here, he said, is to identify products for which customers are willing to pay full price. Then, be disciplined enough to maintain your price strategy, even if competitors cut prices.

"If you lose sales and you lose margin, it's a pretty fast end game," Frawley sad. "So you have to have the discipline to play your game."

Companies need to understand how they compete -- on price or service or quality -- and constantly communicate that strategy to the team.

• Support the best customers

In a down market, execution is more important than ever, and it has to be perfect, he said.

"All of our customers have downsized and have cut staff -- they don't have people sitting around checking to see if their order from Emery-Waterhouse is right. It's got to be right the first time."

By the some token, in an era of limited resources, it may be well for companies to drop weak customers and focus attention on those customers that support the business.

• Stress market share

His fourth rule for marketing in a recession, Frawley said now is a good time to upgrade management talent and invest in strong sales teams as companies are in a battle for market share and survival.

Frawley's idea of marketing relies heavily on the concept of research. Marketing must make sense and address customer needs before customers even articulate those needs. This kind of insight comes from the development of real-time, ground-level intelligence about what is happening to customers and suppliers, he said.

Hard times call for a hard look at the facts -- as opposed to outdated and often dangerous assumptions. He pointed to "The Emperor's New Clothes" as the best business book ever written. (It's about a leader who receives bad information from people who were afraid to be honest with him.)

In Emery-Waterhouse's experience, assumptions that all of the markets in the Northeast are reeling from the building bust has proven incorrect. Some pockets that avoided the boom are also insulated from the bust.

During his 60-minute presentation, Frawley repeatedly pointed to the long-term positive outlook for the home product and home improvement industry, which he described as large, essential and growing.

"How would you like to be selling corporate jets right now?" he asked the audience.

Frawley also pointed to the independent dealer to be particularly well suited in this industry. "There are fewer cookie cutter chains out there," he said, pointing to the demise of Circuit City and the long-term trend of personalization in retail. "I think it's a good time to be an independent retailer when you have the time to understand your customers and know your customers."

Emery-Waterhouse dates back to 1842 and has seen a number of historic business challenges from two World Wars, a depression and a devastating fire that struck Portland. In the 2009 economic challenge, Emery is focusing on three initiatives: executing category solutions for customers, helping customers maintain independence while growing their business, and increasing building material sales with existing customers.

"Those are just examples of what we mean when we say: 'Don't spread yourself all over the place,' " Frawley said. "Run a few initiatives, and run them well."