Pet supplies are one of the many non-traditional categories found at Bering’s Hardware in Houston. “People love their animals, and they take good care of them,” Augie Bering Jr. said. “You may not come to Bering’s for pet supplies, but when you walk by our department, you may think, ‘You know, I should pick up something for my dog while I’m here.’”
This is not the only retailer reaching out in ways a traditional hardware store might not.
Motor oil in Lowe’s. Paper towels in Home Depot. Groceries in Menards.
Is channel blurring a fad, or is it simply the new way of business? One leading analyst suggests more likely the latter. “The non-traditional merchandise movement is part of a broader trend for retailers to stay relevant in this post-housing-bust environment,” said Steve Spiwak, the lead home improvement analyst at Kantar Retail, which studies the home improvement channel.
Rich Russo, event director, said the theme of this year’s show — “A New Way to Market” — is geared to helping retailers find new products and customers, as well as to increase outreach to existing customers. Russo said the National Hardware Show is mirroring what hardware retailers are seeing — and asking for — in their markets. The demand includes product sub-categories such as “Tailgating,” “Staycation,” “Camping” and “DIY Security” — earmarked as new targets for home centers. “These new categories have opened the door for us to include a much wider variety of exhibitors at the show,” Russo said.
Russo said the emphasis on the tailgate products and display “is a reaction to the fact that more than 50 million people engage in tailgating each year, and hardware retailers and home centers are designating a space in their stores for the category.”
Products and Market
In the evolving retail landscape, the industry’s biggest players are at least kicking the tires on new products and categories. Lowe’s is re-setting the merchandise at test stores to include auto supplies, Spiwak said. Meanwhile, cleaning supplies and paper products are in the mix at other home centers. “Retailers are taking on products they wouldn’t have ever thought of carrying five years ago,” Spiwak said.
Menards has been one of the boldest home centers to embrace the non-traditional merchandise trend. “They have supersized their supermarket format,” Spiwak said. In select markets Menards has introduced large two-story centers, with the slower-moving goods on the upper level and making room for experimentation. Menards carries materials and tools for home improvement, name-brand appliances, pet products, lawn and garden supplies, and some grocery items for a “one-stop shopping experience.”
Spiwak said hardware retailers will be testing non-traditional product categories in what he termed “a market-by-market” approach. “They will look to tailor the market. What does my local customer want? This is the question Ace, Home Depot and Lowe’s are asking,” he said. “Home Depot is honing in on local markets to meet the demand of its customers. We will be seeing some heavy testing of these [new] products in the coming quarters.”
ACO Hardware is an extreme example of a traditional hardware retailer moving into non-hardware categories. ACO, which calls itself “more than a hardware store,” offers food, furniture, apparel, toys and other items in an effort to distinguish itself from big-box competitors.
The move is part of ACO’s strategy to become a neighborhood general store, a departure from its roots 65 years ago of being the local store for hand tools. ACO is diversifying its merchandise to attract a new demographic of shoppers, particularly women between ages 25 and 40. “Our customers never know what they are going to find,” said ACO president Dick Snyder, who spent 18 years at Wal-Mart Stores before joining ACO two years ago.
Risks and Rewards
Analysts and retailers alike say there are risks inherent in this non-traditional approach, arguing that hardware stores that sell general merchandise run the risk of confusing customers and losing their identity, which can distract the retailer from what they’re supposed to do.
While Spiwak allows that “traditional ways of marketing and merchandising are fading fast,” he said successful home centers will find a way to stick to their core products and beliefs, while blending in new merchandise that make sense for their markets.
He sees “store-within-a-store” formats emerging. Menards is selling apparel, for example, and Kantar believes setting up dedicated areas to sell professional garb for gardeners, landscapers and carpenters will be one concept worth testing. “Other stores, depending on their market, might have big-ticket items like tractors in a store-within-a-store format,” he said. “You will see a lot of creativity.”
Home Depot, which is paring down its kitchen displays and vignettes, has increased in areas like cleaning suppliers and paper products. “Those products will see better positioning on the retail shelves, and retailers will drive more awareness to their sales associates. “Five years ago, cleaning supplies were peripheral,” Spiwak said. Not so much anymore.”
At the National Hardware Show, organizers have expanded the Lawn & Garden/Outdoor Living area to include more outdoor furniture, decking, fencing and accessories vendors. Russo said the move is a result of Americans “turning their backyards into an extension of their homes.”
According to Russo, a growing awareness of the need to conserve resources has ushered in hundreds of “green” products. The National Hardware Show created an energy-efficient product designation for the first time in 2011. Storage and organization has also continued to grow as a category. “These are just a few examples of our reaction to the hardware retailers’ expansion into different markets,” he said.