The Home Depot is providing same-day and next-day local delivery; Stanley is bring out its new and revamped version of the Craftsman brand; Ace Hardware believes it is building an Amazon-proof business; Lowe's is using Pinterest to build customer intent; Reece-owned MORSCO HVAC Supply opens on the East Coast of America.
Same-day deliveries at Home Depot
Home Depot is meeting the needs of shoppers' "need it now" mentality and has begun express same-day and next-day local delivery to 35 major metropolitan areas across the US. This service is for online orders made before noon on more than 20,000 of its most popular items. Products include anything from Halloween decorations to power tools, that can arrive by van or car the same day, starting at a cost of USD8.99.
To use the service, customers simply choose "Express Delivery from Store" through the website homedepot.com or The Home Depot app, where available.
Mark Holifield, Home Depot's executive vice president of supply chain and product development, believes customers "want it cheap, but also want it to be quick". He adds:
We set an overarching goal for our supply chain to be the fastest, most efficient delivery in home improvement.
The big box retailer is partnering with start-up car and van providers, Roadie and Deliv to offer the new delivery options for smaller items and to quicken the shopping process. It is continuing to expand its supply chain network for faster shipments of large bulk deliveries.
Retailers are realising that to compete with Amazon they need to speed delivery of online orders, especially because web purchases are often the fastest-growing part of their business. Online revenue for Home Depot grew more than 20% in this year's first half.
Stores as delivery points
Many retailers are using stores to create an omnichannel network, because they are already closer to their customers than large distribution centres that tend to be on the outskirts of cities or in rural areas.
Using stores as distribution centres has created options that Amazon can't replicate, such as enabling customers to pick up online purchases at the closest location to avoid shipping fees. It has also given physical locations added value.
David Schick, director of research for Consumer Edge Research, told Bloomberg:
...This is the next iteration of giving consumers choice. If this decade proves anything, it's that consumers want control and choice.
But these kinds of deliveries can be inefficient and costly, with trucks not filled to capacity and taking longer in congested city streets. That's where start-up businesses like Roadie and Deliv come into play. They've created Uber-like online platforms that crowdsource delivery from drivers who are independent contractors.
While that helps reduce costs, Mr Holifield said the retail giant isn't passing all of the delivery expense to customers. Thanks to its size - USD100 billion in annual revenue and rising - the company can afford to subsidise some of it. He said:
Delivery can be expensive. What we look at is delivery helping us to make stronger customer relationships.
The expansion of its delivery offerings is part of the company's ongoing supply chain upgrade. This investment calls for additional direct fulfillment centres and more than 100 new distribution sites to further extend delivery speed and reach.
CEO Craig Menear recently said at the Goldman Sachs 25th Annual Global Retailing Conference:
About USD1.2 billion will go into our supply chain over the next five years that will allow us to essentially move to a same day, next day network for roughly 95% of the US population.
...the majority of that investment actually goes into the downstream network, which will move product from stores and distribution centres direct to customers' homes or job sites. And what we're building out is a direct fulfillment capability to handle all the variety of products that we sell in the project business in home improvement. That's everything from a small package that can be delivered in a car, for example, to a pallet of product that needs to be delivered on a flatbed...in a particular location on a job site.
Craftsman tool brand gets a reboot
The Craftsman brand has introduced 1,200 redesigned tools and products made by Stanley Black & Decker (Stanley). The latest range includes categories such as power tools, equipment and accessories, hand tools, storage and organisation solutions, lawn and garden power equipment, mechanic and automobile tools.
This line of products is the result of Stanley's purchase of Craftsman from Sears Holdings Corporation last year. When Stanley bought the Craftsman brand, the deal allowed both companies continue making and selling products under the Craftsman label. It also gave Stanley the right to sell Craftsman products outside of Sears.
That means a Craftsman cordless power drill or red metal toolbox can come from either Sears or Stanley, depending on where it's purchased. US consumers will continue to see Sears' version of Craftsman in Sears and Kmart stores, as well as Sears Hometown and Outlet.
Stanley's take on the brand are being sold through Lowe's and Ace Hardware stores. Metal storage products will go on sale on Amazon later this year, with more added in 2019.
Competing versions of a brand sounds like a recipe for customer confusion, but Stanley spokesman Tim Perra said the company isn't concerned.
Both companies have agreed to a set of brand standards and guidelines, Sears spokesman Larry Costello said.
Regardless of where the product was purchased, customers can expect that these tools meet the highest performance standards.
Under the deal, Sears will benefit from Craftsman tools sold by Stanley, which will pay royalties for 15 years.
In addition to the opportunity to expand Craftsman's reach, Stanley saw an opportunity to update the brand's look and feel, though the red colour scheme will remain, Mr Perra said.
Among the revamped products is a battery that can be removed from a drill and installed in a lawn mower, eliminating the pull start that makes it easier for users. The battery also can be used for other garden tools.
Other updated tools is a new Craftsman wrench, with its 27 tooth gear design increased to 120 teeth. And 30 Craftsman drills are smaller, lighter and feel better in the hand.
Stanley also wanted to make more Craftsman products in the US, though it wasn't a response to the Trump administration's protectionist trade policies or an effort to avoid tariffs, Mr Perra said.
In an interview with The Street.com, James Loree, Stanley chief executive officer said "one of the strategies behind rebooting Craftsman is to revitalise the products and make as many (of) them in America as possible".
We ended up simply buying the brand because the products had been left to devolve over time to the point where they weren't high-quality, respectable products they once were. They had migrated from made in America to virtually everything being made in China and Mexico.
Initially, 40% of the products will be made in America, with the share rising to 70% over the next few years, Mr Loree said.
Ace Hardware invests in supply chain, digital
The hardware retailer reported record second quarter revenues of USD1.59 billion, an increase of USD95.5 million, or 6.4%, from the second quarter of 2017. Net income was USD54.8 million for the second quarter of 2018, an increase of 7.2% from the second quarter of 2017. Same store sales were up 3.3%. President and CEO, John Venhuizen, said:
We continued to see revenue growth across all of our business units in the second quarter, with the strongest results coming from our local owners in the domestic business which increased almost 6%. And I'm delighted with our 7.2% net income growth despite the expense pressures from our material investments in both our wholesale infrastructure and our digital expansion. We successfully shipped our first order from our new 1.1 million square foot retail support centre...and launched our new hyper-localised Acehardware.com website...which was up 34% in the second quarter.
Mr Venhuizen told the Fox Business channel that the company is having success taking on Amazon. He said:
Don't misunderstand. We all know Amazon is the most disruptive company in human history. But there is a desire of ours to be owning the home preservation business - and a lot of that has to do with feel and touch. And we are sort of blessed that tends to be a little bit more insulated from the convenience of commoditised one-click ordering.
Ace Hardware currently operates 5,161 stores worldwide. It opened 39 new domestic stores in the second quarter and closed 34 stores. The company's total domestic store count was 4,423 for the second quarter, which was an increase of 66 stores from the second quarter of 2017. On a worldwide basis, Ace added 59 stores in the second quarter of 2018 and cancelled 35.
Ace "most helpful"
The Illinois-based hardware cooperative also topped a recent survey about US consumers' favourite home improvement chains.
In a new Market Force Information poll of more than 4,000 consumers, Ace earned a score of 68% on the composite loyalty index, far exceeding that of competitors Menards (57%), Lowe's (54%), Home Depot (53%) and Walmart (36%).
It ranked first in scores for many of the store attributes that matter most to consumers, including value for the price, store cleanliness, checkout speed, store layout and merchandise availability.
Respondents, with 64% identifying themselves as DIY enthusiasts and 68% saying they've watched a DIY tutorial video, especially love Ace's loyalty program, at 70%. And while Lowe's ranks second by that measure and has invested heavily in promoting MyLowes, its score was just 28%.
Brad Christian, chief customer officer for Market Force, highlighted what may cause a retailer like Ace to score markedly better than competitors in surveys:
Service is of the utmost importance in any retail situation, but particularly in the larger-format stores that are commonplace in home furnishings and home improvement. The customer experience relies on being able to find what you need and someone to help. Otherwise customers can quickly become frustrated and that can lead retailers to a missed sale.
The Market Force survey was conducted online in June 2018. The survey represented a cross-section of the four US Census regions and reflected a broad spectrum of income levels, with 55% reporting annual household incomes of more than USD50,000.
Lowe's suggests purchases on Pinterest
For the past five years, social media platform Pinterest has been helping Lowe's customers visualise home improvement projects by serving up products or collections that appeal to them based on their Pinterest profile interests.
Now the retailer will be adding transaction data to customer Pinterest profiles so it can suggest products as advertising, according to Digiday.
Transaction history will further personalise suggestions for customers based on data. For example, if the home improvement retailer knows a customer repeatedly purchases living room furniture, it can offer up pins that align with these interests.
The retailer wouldn't say if the test would be applied to all customers who are Pinterest users or a selected group of them, but Lowe's is growing Pinterest as a product discovery tool to learn more about customers' future intent - a way to target sponsored ads and content as it builds its relationships with customers and prospects. Shannon Versaggi, vive-president of targeted marketing at Lowe's, said:
One of the things we're exploring is the value of sharing our transactional data. We think there's an opportunity to better understand the customer journey using that combined data, to show interest and inspiration and when they pull the trigger to buy.
Lowe's plans to test the addition of transaction data with customer Pinterest profiles in 2019. It is also partnering with a location-based data provider to test the relationship between Pinterest interactions and traffic to physical stores.
Retailers that are selling or marketing home improvement projects to consumers are increasingly looking to Pinterest to assess and build customer intent to purchase products.
In June, Home Depot rolled out a feature called "Shop the Look" that lets customers peruse through curated Pinterest boards that suggest and pair products of interest to customers.
HNN covered this story earlier this year:
Home Depot expands decor strategy - HI News, page 71
For Lowe's, Pinterest stands out among platforms because customers keep coming back to it as they plan their projects. According to Ms Versaggi, many customers who use Pinterest look at the boards months later - a strong signal of future intent.
Customers on Pinterest are also more likely to click through ads. For example, Lowe's said customers on Pinterest have a 20% higher click-through rate on shoppable pins compared to the average rate from Pinterest campaigns.
While customers searching on Amazon or Google likely already have an idea of what they're searching for, Pinterest lets customers get creative with design and conceive of ideas even though the purchase may take place months after the initial Pinterest exploration.
While customers don't directly convert from initial interactions on Pinterest, it's an early indicator of future intent that's measurable and where customer journeys can be mapped. Pinterest also has the added benefit of not presenting sponsored pins or ads in an obtrusive manner for the customer. Instead, it is just seen as part of the product discovery process.
Despite the brand lift with Pinterest, the challenge is to generate the level of interaction to ultimately build a noticeable bump in sales. Lowe's Pinterest page has more than three million followers and 10 million monthly viewers, according to the company.
East Coast expansion for MORSCO
US distributor of commercial and residential plumbing, waterworks and heating and cooling equipment (HVAC), MORSCO has acquired Ott Distributors, through its subsidiary MORSCO HVAC Supply. Texas-based MORSCO is owned by Australia's Reece Group.
In the transaction, all Ott Distributors staff and its location in South Carolina will operate under the Ott Distributors/MORSCO HVAC Supply brand. This will be the first MORSCO HVAC Supply branch on the East Coast.
Ott Distributors has been serving Charleston and the surrounding area with parts and equipment for more than 40 years.
MORSCO launched the MORSCO HVAC Supply brand in April 2018 to better focus its HVAC operations. Jim Mishler, president, MORSCO HVAC Supply, said:
The acquisition of Ott Distributors establishes our presence on the East Coast, where we see a large, attractive opportunity to expand and reach new customers.... We are excited to continue our growth strategy within our organic markets as well as expand into new markets via additional acquisitions and new locations.
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USA Update - HI News Vol. 4 No.7