By Luke Dunscombe
T
O DIFFERENTIATE THEIR STORES FROM THE BIG-BOX COMPETITION, MORE
independent hardware retailers are going back to the basics. They are turning already
strong plumbing and electrical departments into dominant categories.
Their basic success strategies revolve
around service and assortment. They make
sure their plumbing and electrical aisles are
staffed by knowledgeable employees, and they
beef up their inventory levels with a deep
selection of basic and hard-to-find items.
The ultimate goal is to make sure customers
leave not only with the products they need,
but also with the confidence that they know
how to tackle the project.
To discover more insights into how to turn
your plumbing and electrical departments
into category leaders, read on to learn the success strategies of other independent retailers.
Germantown Hardware
While plumbing and electrical don’t drive
the most sales of all the departments at Germantown Hardware in Germantown, Tenn.,
General Manager Justin Wagner says that
doesn’t mean the store skimps on its selection
or presentation.
“We are smack in the middle of big-box central here and we are selling to the home repair
and maintenance market,” he says. “That
means our selection and presentation in
plumbing and electrical has to be spot on.
These are the categories that really define
what a hardware store is for a lot of shoppers.”
Even though his store is surrounded by big
boxes, Wagner picked the areas where he
wanted to have a dominant assortment. For
example, in light bulbs, Germantown Hardware offers a broader assortment than even
the big boxes.
“We have everything you could want and
that is important,” he says. “With help from
our distributor we are able to offer a wide
range of light bulbs and still be very competitive on pricing.”
November 2006
SHINING THE
24
Learn How
to Stand
Out in
These Core
Categories
Hardware Retailing
on Plumbing
and Electrical
SPOTLIGHT
Retailers who excel
in plumbing, such as
Germantown Hardware,
say it’s important to
carry a deep inventory
of the basics in addition
to hard-to-find items and
to stay stocked up.
Electrical Wholesale Outlet
Complements Retail Business
atron’s Do it Center in
Bardstown, Ky., is more
than just a hardware store.
Connected to it is a full-service electrical wholesale store
called The Electric Outlet.
Owners Ron and Pat Birge
get 13 percent of their total
sales from plumbing, while
the wholesale electrical
business makes up 53 percent of sales.
The Electric Outlet gets the
majority of its business from
city and county agencies,
local factories and contractors, while the hardware
store’s plumbing sales are an
even mix of homeowner and
professional sales.
The Birges’ son-in-law,
Steve Foster, runs the electrical wholesale side of the
business, which tries to anticipate the needs of the local
factories that are located
around Bardstown. They
November 2006
P
26
Hardware Retailing
need a lot of fuses, light bulbs
and wire, he says.
“It’s convenient for them
that we’re here,” he adds.
“They don’t have to wait on
something. We keep up with
what they need, so we can
have it on hand. If I get a
call in the middle of the
night, I can come in and get
it for them so they’ll have it
in the morning.”
When the Birges bought the
business eight years ago, the
retail hardware store and the
electrical wholesale supply
outlet were operated as separate entities. After less than a
year of maintaining two different systems, the owners
combined them to make
everything easier on themselves and their customers.
“As soon as we could, we
put everything on the same
system,” Ron says. “That
really saved us from doing
double-duty on a lot of
things. Before, it was two
separate businesses. We had
to have separate inventories,
accounts payable and
accounts receivable.”
Combining the two businesses also turned Patron’s
Do it Center and The Electric
Outlet into more of a one-stop
shop for customer needs.
When the two were separate
businesses, the door between
them was locked. Now the
door is open and the two
businesses complement
each other.
“It’s easier for a customer,”
Pat says. “If someone is buying something on the wholesale side and needs a tube of
caulk, they can just come
over and get it.”
The Birges’ daughter,
Krista Foster, who manages
the hardware side of the
business, says the store’s
biggest assets are service
and knowledge. “We like to
say that you can come in
with a problem and walk out
with it solved,” she says.
The employee in charge of
plumbing, Vernon Watson,
has been with the store for 23
years. He does much of his
own plumbing work and even
thought about becoming a
plumber, but decided he’d
rather sell it than repair it.
“Vernon has a lot of knowledge about plumbing, and
he is great about keeping on
top of what people are asking
for,” Pat says.
“Most employees can
serve a customer in plumbing,” Krista says. “But we all
work together. We have the
philosophy that if you can
help the customer, then help
them. But if you don’t, then
be honest and get someone
who can.”
The electrical
department at Cox
Hardware and
Lumber in Houston
makes up 10 percent
of the store’s total
sales by targeting
both homeowner
and commercial
customers.
Because Germantown Hardware mainly
services d-i-yers, Wagner also makes sure
that, above all else, his presentations in
the plumbing and electrical departments
are clean, neat and easy to understand.
“The departments have to be easy to
navigate,” he says. “You can’t have product all jumbled up; everything has to
have its place and remain that way.”
To make sure his customers can find
what they need, Wagner also looks for
products with good, explanatory packaging. When the packaging isn’t so selfexplanatory, Wagner’s team puts signage
on the bins or displays to ensure that
customers know exactly what the product is and what it is used for.
“You have to help them through the
process, because a lot of times they might
not know exactly what they are looking
at,” he says. “Having good employees is
part of this equation, but not every customer will engage an employee with
their questions.”
In the plumbing area, Wagner is making a concerted effort to move many of
the items that he previously stocked in
bulk to a new, carded selection that he
feels is easier for his customers to shop.
“We just don’t sell to a lot of plumbers or
tradesmen who want to buy bulk out of
bins,” he says.
Northwoods True Value Home Center
Northwoods True Value Home Center
has stores on both sides of Lake Vermillion
in Cook and Tower, Minn. The one in
Cook has been open for 10 years, and
the one in Tower opened this past
May. The stores get a lot of vacationers
looking to fix up cabins during the
summer months.
The Cook store has 3,000 square feet
devoted to plumbing, while the Tower
store has 1,600 square feet for plumbing.
The electrical departments in both stores
are about 1,700 square feet.
To further enhance its already successful plumbing department the store converted space to be a showroom for
plumbing and kitchen and bathroom
products. Dan Julkowski, who owns the
stores with wife Jodi, explains he had
thought about expanding the department
for years, but lumber became a bigger priority when a competitor started adding
more lumber.
The Cook store displays 24 feet of
faucets so they can show what people
want and need.
“We’re a little different than some
stores,” Julkowski says. “We don’t just
stock the bestsellers. We carry a lot of
the oddball things that others don’t
carry. We really aim to have a wide
range of products.”
Vernon Watson, long-time
employee at Patron’s Do it Best Home Center
in Bardstown, Ky., helps a customer in the
store’s plumbing department.
FAR LEFT:
Manager Steve Foster talks on the phone
while two employees organize orders at The
Electric Outlet, a full-service wholesale electrical supply business attached to Patron’s Do
it Best Home Center in Bardstown, Ky.
LEFT:
November 2006 • Hardware Retailing
27
Plumbing Department
Snapshot:
Electrical Department
Snapshot:
Total Sales
% Net Sales
% Salesfloor
% Inventory
Sales per square foot
Gross margin
Sales to inventory ratio
Total Sales
% Net Sales
% Salesfloor
% Inventory
Sales per square foot
Gross margin
Sales to inventory ratio
$190,931
12.1%
11.4%
12.0%
$211.94
44.9%
5.08
$148,929
8.9%
8.9%
9.8%
$227.74
43.4%
4.77
Number of SKUs 2005
2006
Number of SKUs 2005
2006
Increase
Decrease
Remain the Same
37.3%
2.7%
60%
Increase
Decrease
Remain the Same
40.0%
2.7%
57.3%
50%
9.5%
40.5%
59.5%
5.4%
35.1%
November 2006
Source: NRHA 2006 Cost of Doing Business Study, composite numbers for hardware stores and home centers.
28
He explains that the key to their
plumbing department has been providing
a higher level of service. “People need
three things: quantity, quality and service. One thing the big guys often miss out
on is the service.”
Northwoods doesn’t have a training
program devoted to just plumbing or
electrical product knowledge, but
Julkowski says they make it clear to new
employees that they need to listen and
learn from more experienced employees.
Julkowski will occasionally hire an
experienced tradesman to help out in the
department. For instance, the electrical
department was run by a former electrician until he recently retired. “If we can
find someone who’s already knowledgeable in an area, we’ll bring them in,” he
says. “It’s easier to learn from someone
else’s years of experience and mistakes
than go through your own.”
The stores carry some plumbing products that are meant to attract professionals, such as septic system items and
urinals. “Many stores look at those items
as too costly to carry, but we want to
Hardware Retailing
carry more quality items to bring those
(professional) guys in,” Julkowski says.
Consumer sales still drive the majority
of the business, so Northwoods carries a
wide range of faucets ranging from $20
up to $300 and also stocks almost any
size in galvanized steel or copper piping
someone might need.
As Julkowski points out, “It’s
become our reputation to have everything that you need. We want to keep
customers local and be known as an
anchor of the town.”
He is planning to build more storage
so he can keep water heaters, showers
and toilets in inventory. “There’s nothing
worse than having people walk out
because you didn’t have what they
need,” he says.
Wagner Hardware
Plumbing is the number one department for Wagner Hardware in Austin,
Minn., accounting for 26 percent of the
store’s total sales while its electrical
department is not too far behind at 17
percent of sales. The 10,000-square-foot
store devotes half its salesfloor to these
core categories—2,800 square feet for
plumbing supplies and 2,200 square feet
for electrical products.
Owner Matt Wagner points out that
plumbing is a category that can be intimidating to some people, so it’s his job to
encourage them and give them the confidence they need to complete the project.
“Anybody can do a basic plumbing
project; it doesn’t matter if you’re a man
or a woman,” he says. What’s even better
is that most plumbing products are blind
items, according to Wagner.
When it comes to electrical projects,
customers are less worried about making
mistakes and more concerned about getting hurt. Having knowledgeable employees available to answer customer
questions has helped Wagner Hardware
alleviate some of those fears.
On weekends, Wagner keeps a senior
employee in these areas so they are available to answer questions. “They don’t
stock the shelves or anything else.
They’re just there to answer questions
and help customers. If one needs to go to
the bathroom, another senior employee
has to take his place until he gets back,”
he says.
In addition to having an informed
staff, Wagner makes sure he maintains a
deep inventory of basic and hard-to-find
products for plumbing and electrical
projects. Carrying a wide assortment is
especially critical because 60 percent of
his plumbing and electrical sales come
from commercial accounts. As a result,
he stocks heavier gauges of wire and lots
of fuse boxes and shut-offs.
“Some retailers carry enough for a job,
but you’ve really got to have more than
that,” according to Wagner. “Customers
don’t want to piecemeal projects together running around to different places to
get what they need. If you don’t have
enough of what they need, they’re going
to walk out.”
Pipe fittings of all
sizes and shapes fill
the shelves at Cox
Hardware and
Lumber in Houston.
To reinforce his store’s reputation as
the problem-solving headquarters, Wagner
has employees answer the phone with
taglines such as “No matter what you got,
we can take care of it.”
Keeping up with local building codes
can lead to more sales. “When the code
changes, people are forced to upgrade
and that generates a lot of new sales for
us,” Wagner says. “People still have to
maintain the older stuff they have, but if
something is built new or being inspected they have to buy the new parts.”
As for the future, Wagner hopes to
expand plumbing to include bathroom
accessories such as cabinets and related
items. The store already carries about a
dozen toilets and sells three or four toilets a day.
“That takes up space and you need the
room to do it,” he says. “One thing about
those items is that the price is not typically as important as the color and style a
customer is wanting for their bathroom. If
you don’t have it, they’ll likely walk out.”
Cox Hardware and Lumber
For Cox Hardware and Lumber in
Houston, both the plumbing and electrical departments are solid core product
areas for the store. Plumbing represents
about 11 percent of sales.
“These two departments are core staples of our everyday business,” says
Owner Virgil Cox. “They’re consistent
revenue generators for us.”
Having depth of inventory is important, especially in plumbing where some
projects may require several parts. “In a
market like this, everything is available
in a 30-minute drive. Someone is not
going to buy a few of an item from me
and a few more from another store; he’s
going to go someplace where he can buy
all that he needs.”
With a salesfloor of 20,000 square feet,
the store’s plumbing and electrical
departments are substantial at 4,000
square feet. “I’m a firm believer in having
depth of product,” Cox says. “Some of
the things have flat demand. Our strategy
is to have enough items for the guy who’s
going to have a large project. Having 400
of something sitting on a shelf really
makes a statement. If a customer sees
that you carry that much, he’s going to
think that it’s a good place to buy it.”
While he cannot anticipate the
demand for every item, Cox operates
under the philosophy that having a little
too much inventory is better than running out. “It makes an impression on
people. You don’t want to walk into a
grocery store and buy the last four
apples. The same is true for pipe fitting.
People want to buy from full shelves.”
Plumbing items can weigh a lot, especially having a deep supply of them,
making specialized shelving necessary.
“If you don’t have something that can
support all the weight, you could come
in one morning and it’s all over the
floor,” he says. Cox uses reinforced fixtures that will hold 1,100 to 1,600
pounds per arm, compared to 300 to 500
pounds per arm on a normal shelf.
Cox says the store gets a lot of commercial business, so he has been stocking
products that many hardware retailers may
not carry such as schedule 80 pipe for
high pressure, which is sometimes needed
for machines with a high-volume input.
“That’s based on the market here,” he
says. “People were asking for it, so we
started carrying it.”
Cox says his electrical department,
which is 10 percent of the store’s total
sales, is doing well despite some challenges lately. For instance, the high price
of copper has affected sales of items such
as copper wire. “People who want or
need it will buy it. If a can of Coke is
going for $8, a lot of people will start
drinking tea. You can’t do that with
building wire, but what you can do is
not build,” he says.
November 2006 • Hardware Retailing
29
Cox Hardware and Lumber’s plumbing
department is headed up by a long-time
employee, while the electrical department is under the direction of an
employee who has a current electrician’s
license, according to Cox.
Experience in those fields has helped
both the store and customers, as many
questions often accompany projects for
both electrical and plumbing. “People get
nervous,” Cox says, “and having an
employee who knows what they’re talking about really helps.”
Wattier True Value and
Laurel True Value
Kim and Scott Wattier own and operate two hardware stores in Nebraska:
Wattier True Value Hardware in Randolph and Laurel True Value Hardware
in Laurel. While running two hardware
stores is enough to keep most people
busy, the Wattiers also operate a complementary service business on the side.
Before the couple opened their first
store, Scott Wattier had worked in the
heating, air conditioning and plumbing
Shopper Demographic Snapshot (Indexed to 100)
TOILETS
LIGHT
BULBS
FLASHLIGHTS
67
97
123
122
106
71
100
124
116
116
85
46
84
94
99
118
109
94
140
116
103
101
87
54
51
69
98
103
115
144
153
68
55
94
99
104
145
160
69
75
92
96
109
118
156
105
99
102
107
98
95
91
26
164
63
111
119
46
154
52
81
119
81
178
53
77
108
130
162
64
110
90
FAUCETS
AGE
18-24
25-34
35-44
45-54
55-64
65+
INCOME
under $15,000
$15,000 - 24,999
$25,000 - 34,999
$35,000 - 49,999
$50,000 - 74,999
$75,000 - 99,999
$100,000+
DWELLING TYPE
November 2006
Apartment
Condo/Town House
Duplex/Triplex
Mobile Home
Single-Family Home
30
Source: Vista Information Services, a group within Activant Solutions Inc.
* Compares the category to U.S. Census, with sales through chain home centers, independent
hardware/home centers, lumberyards, mass merchandiser and specialty/other retailers.
Hardware Retailing
service industry. He used that experience
to build a service business the Wattiers
operate out of their store in Randolph.
While there’s not a special area for customers, they can call into the store to
arrange for service and the technicians go
to the site.
“It’s kind of like running three businesses sometimes,” Kim says.
As for retail sales, the stores carry the
basic products most do-it-yourself customers would need, along with some heating and air conditioning products at the
Randolph store. Kim explains that some
items the store carries because they are
needed for the service business, and if the
service business needs a product it is likely that consumers may need it as well.
“People know that we do the work, so
we have the product for it,” she says.
Plumbing retail sales make up 10 percent of the store’s total sales, largely from
homeowners. Kim points out that the
stores do carry PEX (cross-linked highdensity polyethylene) products, which
not all stores carry.
The key to success in retail plumbing,
according to the Wattiers, is to have all
the different sizes and fittings, so when
customers come in the store and need
anything from a quarter inch to an inch
and a half, they can get them.
“You don’t want to send them someplace else for something you should’ve
had. And the prices on these items aren’t
often a concern. People want what they
need and will pay for it,” she says.
To keep their service levels high, the
Wattiers have monthly night meetings for
specific departments to keep everyone up
to speed. “It’s important for all employees to be knowledgeable,” Kim says,
adding that customers often have questions regarding plumbing and electrical
projects. “We don’t have someone come
in for sink repair everyday, but when
there is we have to know what we’re
talking about.”