Energy-efficient lighting products are beginning to catch on with consumers, and Congress has given the trend a big boost in recent years. In 1992, it passed the National Energy Policy Act, which required lighting manufacturers to replace outdated lamps with brighter, more energy-efficient models.
Three years later, Congress created the Federal Energy Regulatory Commission, which requires power utilities to sell their power on an open market. These steps have encouraged businesses and consumers to think more about the energy they consume, and manufacturers are developing new products to meet the growing demand for energy efficiency.
This trend prompted the National Electrical Manufacturers Association, using money from manufacturers, to begin a national campaign to inform consumers about the benefits of energy efficiency.
The Environmental Protection Agency (EPA) joined the fray in 1997 by creating its Energy Star[R] label, which manufacturers may voluntarily display on energy-efficient lighting fixtures if they meet program guidelines. Fixtures carrying this label can trim the cost of lighting high-use areas, such as bathrooms and kitchens, by 50 to 60 percent. And bulbs and lamps for these fixtures last three times longer than incandescent bulbs.
The Home Depot announced it is developing plans to test a convenience hardware store format.
This format, as yet unnamed, will be designed to serve the small-project do-it-yourself homeowner and other customers who prefer a convenient location and smaller store environment for purchasing home improvement and related products.
“The U.S. home improvement convenience market generated sales totaling approximately $50 billion in 1997, but the vast majority of those sales took place outside of larger home center stores such as Home Depot,” stated Arthur Blank, president and ceo. “This test will help us determine the best products, services and methods of gaining home improvement sales we would not be able to get inside our Home Depot stores.”
The test is being developed and will be run by Bob Wittman, senior vice president of business development and former coo of Orchard Supply Hardware Stores. It is expected that the first store will open in the Northeast during the first quarter of fiscal 1999, followed by three more stores in that region later in the year. (more…)
An increasing number of building supply retailers are hiring interior designers and decorators to strengthen their home decor departments. These designers and decorators are trained to assist customers with measurements and product coordination. While they are expectedly more expensive than ordinary sales associates, the added costs are offset by wider margins and add-on sales.
To further their edge in the home decor department, retailers are recruiting a new breed of associates
In the words of one home center executive, the decor department is “where the margins are.” But driving sales per square foot is more than just stocking the latest styles and offering the most special-order options.
For pacesetters in the category, the question boils down to who’s manning the shop.
A growing number of retailers are answering that question by hiring interior designers and decorators trained to help customers with measurements and product coordination in-store. These decorators are also capable of designing–and selling–in the home.
Retailers fork out a higher wage for designers, whose backgrounds make them more expensive than the average sales associate. But some say the costs are justified by attractive margins, plus add-on sales the designers bring.
The expense of house calls, which some retailers are beginning to offer free of charge, is further offset by the bigger sales ticket the service generates, they say.
Retailers are betting that their lower prices and one-stop shopping environment will eventually secure them a place as the interior design destination for the middle-income consumer.
Since Builders Square introduced its Idea Center two years ago, the company has gradually begun attracting associates with degrees as varied as architecture and interior design. These employees have specialized backgrounds in cabinets, drapery, wallpaper and floor coverings. Some have experience as contractors, says Marilyn Schultz, director, Idea Center.
When wooing job candidates, Square receives the greatest response from people with interior design degrees. Retailers provide recruits with a wider range of experience than large design firms, where designers often specialize in a single area, says Schultz. At Builders Square, they take ownership of an entire project.
“They develop the package themselves, from windows to cabinets to accessories, and then sell it to the customer,” she says.
The one-stop training experience for designers translates into a one-stop shopping experience for customers–an experience the company hopes will encourage middle-income consumers to think of Builders Square when they decorate. “We want [customers] to understand that our people can take them through a project from start to finish,” Schultz says.
Builders Square employs eight to 12 designers per store, hiring associates with a mix of backgrounds so they can cross-train each other in various specialties, she says. The object is to unleash associates ready to recommend and sell a range of related merchandise.
Idea Center designers are paid according to their education and the going market rate. They also earn incentives for sales in certain product categories, Schultz says.
HomeBase, which first tested its program last year, has also found it relatively easy to attract designers, says Mark Baker, VP-merchandising.
The company’s 200 designers typically have college or vocational school design degrees and at least two years’ experience selling with such companies as J.C. Penney. Some have worked for large office complexes or for tract builders such as Kaufman & Broad, he says.
“We’ve found that we can recruit [designers] quickly because we sell at a very competitive rate and we compensate them very fairly,” Baker says. Designers draw base pay plus a commission based on sales and margin.
House calls pay off
For some retailers, the decor sales game plan is inextricably linked to home consultation, and that’s where the big-ticket sale is to be gained, says Jim Schaffer, president of Schaffer Associates, a Forest, Va. consulting firm.
Adding house calls brings the staff designer strategy a step forward, according to Schaffer. Previously, the customer bore the burden of taking measurements and bringing them to the store.
At Builders Square, which is testing a house call program, an associate may have an 80 percent closure rate in the home compared to a 50 percent rate in-store, says Schultz.
House calls are the foundation of HomeBase’s no-fee design service, Baker says. The strategy dovetails neatly with the company’s special-order program, which generates 70 percent to 80 percent of its decor sales.
HomeBase designers, from one to four per store, generally receive referrals from customers who come in to look for window treatments, carpeting and wall-paper. They make five to eight house calls per day and arrive loaded with sample books, says Baker.
Hechinger’s Home Project Centers have also begun using designers. The company recently rolled out in-home design services at its Laurel, Md. store and will send decor department associates out as far as 21 miles on calls.
“When you’re in the store, you’re dealing with perceptions,” says Ken Cort, president of Hechinger Stores. “When you’re in the home, you’re dealing with the reality of what the home is. The ability to close the sale once you get to the home is infinitely greater than your ability to do it at the store.”
Hechinger decorators, five per store, not only help with measurements and coordinating but also “give customers a sense of what they could do a year from now,” says Cort. One key to ensuring repeat business is to remember that many customers “aren’t going to be able to do everything they want to do, when they want to do it,” he says.
Using staff designers to boost sales is not the exclusive province of the big box retailer. Three-store National Lumber, a builder-oriented retailer in Mansfield, Mass., has tried the strategy with equally lucrative results.
National’s Newton, Mass. store, which caters to a 35 percent consumer, 65 percent builder customer mix, is the area’s exclusive Benjamin Moore dealer, says president Steven Kaitz.
National added window treatments and wall coverings to the paint department in 1991, repositioning the department as the Newton Design Center. A year later, the company brought on a full-time decorator. The service was a natural adjunct to the expanded product mix and a way to draw new retail customers, says Kaitz.
Decor sales have picked up dramatically since the designer, Cathy Anderson, came aboard. Sales doubled in 1993, and Kaitz expects them to double again when he hires another designer soon. The store now attracts more female and senior customers, Kaitz says.
Anderson makes house calls at no charge once she qualifies a customer. She draws a straight salary with no commission.
The center has not attracted builder customers yet, mainly because there is little new residential construction going on in Newton, Kaitz says. And it’s not something he’d add to his other two, more builder-oriented, yards. But Kaitz says he would like to explore a designer-builder relationship someday, adding that the center “has a lot of potential.”
At this stage, it’s still unclear whether staff designers will help retailers carve out a competitive niche among specialty design firms and specialty retail stores.
National goes head-to-head with local design shops by advertising its design center as a separate entity from its lumberyard, Kaitz says.
The Newton store does not match the specialty boutiques in terms of square footage or upscale inventory. But the design center is more convenient than Boston–where most of the competing services are located–and offers free consultations that customers would be hard-put to find elsewhere, he says.
It differentiates the company from Home Depot as well. Depot has a new store nearby in West Roxbury and plans to build more, Kaitz says.
The one-stop niche
HomeBase competes with Home Depot and specialty shops by offering “extremely competitive” prices and by positioning itself as a “complete host” that offers paint, plumbing and electrical in one spot.
While it caters mainly to consumers, HomeBase also works with commercial property owners. Vendor volume discounts allow further price breaks for customers who are decorating apartment complexes and condominium developments, Baker says.
Builders Square competes within the industry and with small design firms as well, even recruiting from them on occasion. Schultz says she’s reaching a niche that’s still wide-open for the taking.
“Middle-of-the-road consumers can’t afford an interior designer,” she says. “They feel comfortable going into a home improvement center, where they get the same high-quality product and they can do everything in one place. It saves them driving and shopping time.
“We can decorate any room in your house. This is the future, and this is where we’ll fit in.”
Paint is one of the top-selling departments at most hardware/home improvement stores
But that doesn’t mean retailers can take the sales for granted. Becoming a destination store for paint and decor products involves presenting a visual look that entices customers, backed up by employees who know how to sell the customers everything they need for the project.
A strong paint department has enabled Grassy Creek Hardware in Spruce Pine, N.C., to attract male and female customers, both professionals and do-it-yourselfers, according to co-owner Dean Pittman. Female customers are especially attracted to hands-on displays such as the standalone merchandiser they have featuring paint color samples. “Women really like to take those home and test them out before they decide what color they want,” he says.
Carrying a broad selection of quality products is important when it comes to selling paint and decor products, Pittman says, but service is still the main ingredient for success. “Quality service–that’s our strongest niche,” he says. “You have to instill people with confidence that their project will turn out right.” (more…)
Nancy Davis spared little expense when she remodeled her kitchen last year.
The Indiana homeowner treated herself to euro-style laminate/almond cabinets with oak trim, a work station with an oak back and teal countertops.
Davis is like many consumers, according to Gerald Johnson, president of the National Kitchen and Bath Association (NKBA), Hackettstown, N.J.
“When they replace cabinets and vanities, they want better-quality, high-end products,” he says.
The 1991 Trends Survey, just released by the NKBA, reveals that between one-fourth and one-half of money spend on kitchen and bath projects is spent on cabinets. The trend toward luxury kitchens and baths has made a big impact on retailers’ margins in cabinets and vanities.
Dave Fultz, buyer for Ace Hardware Corp., Oak Brook, Ill., says Ace dealers are selling opening price point vanities. “We’re selling more combo vanities with tops,” he says. But Fultz cautions that marketing upscale cabinets and vanities isn’t for everyone. “We are seeing a move toward upscale, but it has yet to really hit middle America.”
He suggests retailers take a close look at their market before investing in high-end lines. “While whitewash look and champagne finish look good in the showroom, these products don’t always move well.” (more…)
Builders hardware in d-i-y stores is like bread-and-butter in a grocery store – customers need it, but they also want products with good taste.
Consumers spent $8.49 billion on hardware products in 1989 have helped create those sales.
Upscale storm doors and home security have locked in new opportunities for decorative, high-end entry hardware. Remodeling has maintained the market for kitchen and bath cabinet hardware. Locksets, hasps, hinges, door knobs and drawer pulls are standard hardware, but specialty imports and designer items are creating fashionable margins.
A BRASS ACT
Retailers located in historic and affluent neighborhoods are finding specialty niches for builders hardware.
Traditionally, upscale, solid brass hardware has been used primarily for older home restoration projects, but is now popular for new homes as well, says Chuck Frederick, associate buyer for builders hardware, Hardware Wholesalers Inc., (HWI) Ft. Wayne, Ind.
An increasing number of retailers are finding a solid niche with brass entry door locksets, interior door handles, kick plates and cabinet hardware.
Buena Park Lumber & Hardware, Buena Park, Calif., launched a month-long grand opening of its new “Brass Works” showroom on March 1.
Opening the specialty showroom is a “natural extension” that fits the store’s image, says John Nelson, president. The upscale hardware matches the store’s upper-end cabinets, doors and windows, Nelson adds. (more…)