Hardware Retailing

JUL 2017

Hardware Retailing magazine is the pre-eminent how-to management magazine for small business owners and managers in the home improvement retailing industry.

Issue link: http://hardwareretailing.epubxp.com/i/841186

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Page 70 of 96

HARDWARE RETAILING | July 2017 66 Tip 1—Make a brand commitment. Retailers who have strong power tool sales tend to make a strong commitment to a brand rather than carrying a sampling from several manufacturers. How many brands you can handle may depend on your available sales space. Early on, Dumont says his power tool department looked similar to that of a lot of other home improvement stores. He had several brand names scattered throughout the department, as well as a few private labels. But as he started listening to his contractor customers, he discovered they were usually brand loyal. With a limited amount of space to dedicate to the category, Dumont decided to go deep in a single brand name. A strong brand presence would give cohesion to his department and be more likely to attract the attention of his contractor customers. Power tool sales increased significantly after the change. While Dumont may only have had space for a single brand, Andrews took a different approach. After many years of only having a single brand name dominating the power tool area at Strasser Hardware, he decided it was time for a second. "I discovered we were missing a big part of the market," Andrews says. "There was a big segment of the pro-customer market that typically purchased a different brand of tool." He found customers in the building trades tended to be loyal to one tool brand, while those in electrical and HVAC tended to be loyal to a different brand. Bringing in both expanded his customer base. Tip 2—Build a reputation for low prices. Go with low prices—that's the reason Andrews is able to pull in such high sales numbers during his annual tool sale. He's willing to lose margin dollars and sell his tools below big-box prices just so he can get customers in the door. "I'm selling these tools cheaper than my customers can buy anywhere, even online," he says. "I decided that during the tool sale, I would run the most aggressive prices I could get." Margins are not what he's after in the sale, anyway; it's about establishing himself as a place to buy tools. As contractors buy tools at the sale and tell their friends, those friends come to the sale the next year. Some retailers could be concerned that having a low-price sale would cannibalize sales throughout the rest of the year when tools could be sold at full price. But Andrews has built a base of commercial customers who only buy tools when they need them. They buy them at full price, which could be any time of the year. Dumont's strategy is to price power tools as low as he can every day. "For every item in that area, I've already price shopped for the customer," he says. "I typically price about $2 below big-box and internet pricing. I never have any price resistance from the customers. I'd rather take less margin and build my customer base." He uses the low prices on tools to get customers in the door. Margins on accessories, a category that drives repeat business, are significantly higher. Travis Andrews chose to bring two major power tool brands into his store so he could widen his customer base. He uses manufacturer signage and a deep selection to express his dominance in the category.

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