Hearthlist Digest #508 - Sunday, October 8, 2000 Re: Commodity hearth products and Big Boxes contd. by "Roger Sanders" <[email protected]>
(back) Subject: Re: Commodity hearth products and Big Boxes contd. From: "Roger Sanders" <[email protected]> Date: Sat, 7 Oct 2000 23:00:02 -0400 In a previous post, Ken Fulgione of Leisure Home Center asked: >Roger, the local hardware stores were specialty shops similar to us >in their day ..... they were not just sellers of commodities >>>> >and many of those that remain have only been able to remain >competitive because they joined forces through Hardware Hank, Ace, or >Our Own Hardware groups. Ken I agree with you that the local hardware shops were mostly specialty shops until they lost out to high volume, commodity retailers (Big Boxes) and that the hardware survivors have joined forces via Ace etc. to sell commodities. As Acers, they gained coop buying power and national recognition that helps them survive selling commodities. The best ones seem to be large operations now. They certainly are not like our specialty hearth shops any more for their commodity retailing. And that=92s my point. Specialty hearth shops should certainly sell commodities but not depend on them. They should reserve their financial investments, the floor space, the mental energy and enthusiasm for higher quality, better margin, non-commodities while they still have a chance. If they don=92t, it will be hard to survive in competition with multiple HVACers, insulation companies and the coming Big Box commodity hearth selling. Ken also asked: >Are you implying that we will ultimately meet a similar fate ..... as >the Walmats, Menards and Home Depots squeeze our market down to those >special-order-only items that they find unprofitable to sell & >service themselves..... Is that supposed to be enough for us ...... >to be able to sell the items that the large chains do not find >profitable or require too much service to gain their interest? Ken, in one sad word, yes. I think that we specialty retailers have to plan on changing from what we have been, or all we will get is the left overs. Whether we become organized like Ace hardware stores or we move more upscale, the choice is up to us. I don=92t think that many of us can stay the same. It appears that Big Boxes can now become successful in hearth product retailing, particularly in commodity hearth products. The handwriting is all over the walls. It=92s been a steady progression. Will they? Who knows for sure. Why can the Big Boxes do it now? Well, here are my thoughts: 1. They have the money! Big Boxes are still flush with Wall Street investor money. 2. They have a huge builder and remodel customer base. 3. They=92ve started selling and installing commodity HVAC products. 4. They are constantly experimenting and moving into higher priced products. 5. They know how to create upscale showrooms (and our older hearth showrooms are much easier to duplicate than many of the beautiful kitchen showrooms that they are now selling and installing from). 6. Gas hearth products are getting a little more reliable. 7. The hearth industry has an excess capacity to build hearth products. 8. Big Boxes don=92t need personnel with exceptional sales skills to sell specific commodity gas fireplaces to builders and remodelers. All they need is one motivated salesperson with a weeks factory training for each store. So far, the Big Boxes biggest problem has been that they have used a bunch of brainless coconuts to set up their hearth retailing, nor have they invested much money in hearth retail. Reality is that if Home Depot hired Dan Melcon as a consultant for a year, and did exactly what Dan recommended, they could quickly become profitable and dominate any local commodity hearth market they wanted. Please Dan, don=92t do it. Roger Sanders