Hardy Competitors

Hardware stores have weathered the economic storm better than the Big Box home centres, according to a NRHA survey.
US hardware store sales have grown modestly in recent years, according a recent presentation conducted by the North American Retail Hardware Association (NRHA). The NRHA survey fielded responses from more than 450 retailers across all store types.

Traditional hardware stores fared better during the past three years than home centre and lumber-building material dealers, which were heavily impacted by the US housing industry’s downturn. New housing starts dropped dramatically, with thousands of home loan foreclosures causing many existing homes to be vacated as people lost their jobs and were unable to pay off mortgages. Consumers were not spending money to remodel, redecorate or add new features to their dwellings, and those attitudes are continuing now to some degree.

The following conclusions were drawn from the survey:

  • As a group, retailers are relatively happy with how the wholesaling community is meeting their needs. Wholesalers’ buying markets remain very important for retailers, with the average retailer attending two markets per year (15% attend three or more trade shows each year).
  • While the group is satisfied with how manufacturers are meeting their needs, there is room for improvement.
  • Retailers are concerned about how consolidations’ impact on their profits.
  • Retailers list of demands is growing.

    The North American hardlines industry continues to be dominated by home centres. Industry sales dropped from over $300 billion in 2007 to $294.5 billion in 2008 and $268.6 billion last year. In a rare piece of good news, however, the NRHA projected sales to lift during 2010 to $274.2 billion. Hardware stores account for just over 20% of those sales across some 20,000 retail outlets, with Home Depot (1,996 stores with $59.1 billion in annual sales), Lowe’s (1,694 stores generating sales of $47.2 billion) and the privately-owned Menards (252 stores turning over $7.9 billion in revenues) chain of stores accounting for approximately two-thirds of total home centre sales in nearly 10,000 stores. Consumers became more demanding during the downturn, seeking better value for every dollar spent. Stores able to provide better selection and service, as well as those whose employees had greater product knowledge, benefited the most. It was expected that DIY activity would increase.

The three dealer-owned wholesalers and Orgill, a privately-owned firm doing over $1 billion in annual sales, continue to dominate the wholesale distribution segment of the industry. Regional wholesalers represented 22% of the market against 8% for specialty wholesalers 8%. The NRHA found that retailers expect their website sales to increase. Their primary desires are prompt deliveries and accurate invoices from their wholesalers, who they want a broad selection of products offered, as well as low landed costs.

Retailers want high quality and innovative products from manufacturers and to be offered different products from those sold in big-box warehouses. An increasing level importance has been given to products being ‘Made in America’. Big-box home centres continue to dominate the fashion plumbing and electrical categories, while hardware stores thrive on maintenance and repair items in those categories.