Hire & rental space proves profitable for hardware
The ‘Hire & Rental’ segment has shown a significant increase in popularity. It is for this reason that hardware retailers are shaking up their businesses and offering customer’s equipment for hire, particularly as the building sector continues to grow post-pandemic.
It seems that hiring and sharing products and services is now the way of the world, with consumers borrowing everything from cars, to properties, to push-bikes and caravans. Allowing your customers to have access to quality products on a ‘need-to-use’ basis is the perfect way to not only entice customers to the store, but also cater to their needs so they never have a need to go anywhere else.
The reasons behind the current upward trend for consumers to hire products are extensive. Some ‘Hire & Rental’ customers include tradies who occasionally use heavy-duty industrial gear but see no need in purchasing an expensive product and then have to store it in the work car for months on end before it is ever used on the job. The current shortage of tools, due to shipping issues, is also boosting demand for tradies who currently cannot purchase some of the tools they require for their jobs.
Then there are those tenants residing in rental properties who occasionally like to tidy up a small patch of grass or hedging but would rather hire garden products than have to purchase products that require storage at the home.
Ongoing emergency situations are also boosting the ‘Hire & Rental’ category after severe storms in the Melbourne metropolitan area saw 90,000 homes without power, some for weeks on end desperate for generators, while the catastrophic bushfires in 2020 also saw a severe shortage of pumps and generators also needed by those worst affected.
Now with so many Australian consumers renovating and upgrading their homes in leu of overseas holidays, it is no surprise that the need for hire equipment has exploded in Australia, particularly when considering how much a DIYer can save if they attempt to complete some of their DIY projects themselves.
Providing the right products
Providing products for rent not only ensures that hardware businesses remain agile in an ever-changing market, but also sees a segment of the business grow to become 100 per cent profitable once the product for hire pays for itself. Those retailers willing enough to dabble within this space are now finding success and are expanding their ranges as their hire business grows.
Traditionally, ‘Hire and Rental’ products consisted of heavy-duty equipment, such as carpet cleaners, floor sanders and any expensive garden equipment that can be too expensive to purchase if only used half a dozen times.
The stock of hire equipment also changes from store-to-store as the variety can depend on the geographics of the local area, with the needs of regular customers crucial in determining which rental products to select in-store.
When it comes to cashing in on the ‘Hire & Rental’ market, it really is just a matter of retailers having the ability to build up a reputation of hiring only reputable products and meeting the specific needs of their customers.
As with every business venture, there are always business challenges to navigate before a rental service proves profitable.
Initial challenges include the up-front cost of purchasing all equipment and also ensuring that department staff are properly educated, so they can adequately brief customers on how to safely use the product they are hiring.
‘Hire & Rental’ specialists recommend staff personally try out all the store’s products, outside of store hours, so they have hands on experience at using all products and can use this experience to easily explain the step-by-step process of using a product.
Hardware retailers also need to be particularly wary of hiring products that can be easily bought in-store. It is important to only hire out products that are high-end and are potentially required by commercial and industrial customers. Retailers also need to consistently review the performance of the products on hand, while also removing any products that are underperforming.
According to ‘Hire & Rental’ specialists, it is important to also promote products that comply with the seasons, including garden care products. Outside of popular rental months, specialists suggest the occasional half price promotion on seasonal specific products will maintain sales during the slower months.
There also needs to be a strong security plan in place to ensure products are only hired out to those with a licence and valid credit card, with retailers warning to be on the lookout for addresses located too far from the store or potential customers who show little understanding on how to use the product they are hiring.
To help easily keep track of products it might be as simple as asking your POS software provider if it is possible to manage rental assets by purchasing a rental plug-in – if available.
Marketing products for hire
One of the most important aspects of a ‘Hire & Rental’ business is to ensure products have pride of place within a store, along with decent signage so every customer that enters the hardware store knows – without question – that equipment is available for hire in-store. Larger pieces of hire equipment may also be strategically placed outside, along with a prominent ‘Rent Me’ sign to draw the customer’s eye.
Presentation should be neat and clean and easy to navigate – as well as guaranteeing products that are available for hire are in perfect working order. Some hardware retailers have established close relationships with local workshops to ensure that all hire equipment is well maintained, or they have even employed a mechanic in-store to not only maintain the working order of hire products, but also offer the mechanic’s service to customers who may need a product serviced or repaired.
There is also the opportunity to add-on sales when hiring out equipment, including all consumables. Fertilizers and cheaper garden equipment, such as pruners, could easily be a suggested add-on sale to lawn care equipment hired from the store, while floor polish, sandpaper and masks could also be suggested add-on sales when a customer hires out a floor sander or polisher.
Retailers need to also bear in mind that starting up a ‘Hire & Rental’ segment is like starting up a mini-business in-store, with retailers suggesting that a decent business plan will potentially iron out any financial surprises once the hire shop is established.
One only has to look at a Bunnings’ Hire Shop, with all products available for easy viewing on-line to see how much the ‘Hire & Rental’ segment has grown in recent years.
With an online offer that includes everything from heavy duty products, general equipment as well as a Coates Hire shop available, all aspects of the hire industry has been covered with Coates well known for its wide variety of electric scissor lifts, cement mixers and impressive earth moving equipment.
Bunnings, along with larger hardware independents, now provide customers with everything from floor sanders, carpet cleaners, trailer and vehicle hire, as well as general hire equipment that includes air compressors, circular saws, lawn rollers and nail guns.
This is a clear example of how independent hardware retailers and trade centres could also partner up with the independent ‘Hire & Rental’ business in their local area. This could be easily arranged when considering there are currently over 3000 independent hire and rental businesses nationally.
Another option could see hardware independents to cross-hire equipment from local hire companies, and then sub-hire this equipment to hardware customers for a period of time. Independent hardware and rental businesses have a lot in common and together they have the ability to share many resources to service their respective trade and DIY customers.
Just some of the independents now dabbling in the hire space including Millers Mitre 10 Trade Centre in Narangba Queensland, just north of Brisbane. Boasting a one-stop-shop for its customers, Millers implemented the hire shop so customers were able to source all of the products they needed to purchase, as well as hire equipment from one place.
The store claims that “no matter how heavy the workload, Millers has the right tool for the right job.”
The store’s hire range is extensive and includes heavy landscaping equipment for local contractors including excavators, mini loaders, post hole augers and stump grinders. Cement mixers and quick cut saws are available for concreting, while mulchers, rotary hoes and pruners are also available for gardening. General equipment includes pressure cleaners, generators and compressors.
Looking to the US, Home Depot has also introduced an online rental service at many of its retail locations throughout North America, with the service using Home Depot’s new ‘Rent online, pick-up in-store’ technology. Offering a range of products aimed at pro and heavy DIYers, the rental service includes demolition tools, landscaping tools and moving vehicles.
Those already hiring product believe it is also crucial for retailers not to be afraid of hiring products outside of the traditional hardware store and consider products such as party supplies which are most likely used for special events by customers and also sporting clubs and schools in line with major community events.
If a store is in an area with a lot of rental properties, stores could then consider hiring products like window cleaners, mowers, and blowers which they would only use every few months by the tenants.
The opportunities are only as limited as a retailer’s imagination and innovative flair. The right products, alongside high quality, hands on training and great presentation can ensure a hire shop will always prove to be a positive asset to any hardware independent.
Bunnings partners with Coates to expand hire offer
Bunnings Services Development Manager, Karen Marshall, recently spoke with AHJ on the increasing popularity of Bunnings’ Hire Shop, saying much of the demand is coming from DIY customers wanting to complete projects at home post-pandemic.
“With many customers spending more time at home due to the ongoing pandemic, we have seen an increase in people investing in home improvement. It is for this reason that products from our Hire Shop that have had grown in popularity over the past year include landscaping equipment, carpet cleaners, floor sanders and skip bins. Customers have also enjoyed the convenience of our vehicle and trailer hire service,” Ms Marshall said.
Bunnings has plenty of exciting innovations planned for its hire space in the coming months, including the expansion of its partnership with Coates.
“Coates is an offer currently available in selected stores across Victoria and New South Wales. This partnership will eventually be rolled out nationally and allow us to offer an even wider range of equipment for hire that caters to our trade and commercial customers as well as those looking to tackle more advanced DIY projects,” she said.
“The Coates offer complements the in-store range of fleet and equipment, providing customers with an even wider range of hire equipment to make it even easier for them to access the products and equipment they need at the best price,” Ms Marshall said.
When choosing the most appropriate products to hire out, Ms Marshall said Bunnings’ core fleet of hire equipment supports customers in completing DIY projects, while also assisting trades in getting the job done.
“The Hire Shop offer complements our wide in-store range, while also giving customers access to fleet or equipment that they may only need for a once off use. We also have an extended range of fleet and equipment that can be brought in to meet more specific customer or regional needs,” she said.
Throughout 2021, Bunnings will continue to educate its Hire Shop team via a wide variety of training courses and resources to help ensure the team is knowledgeable and provides the best service to its customers.
“We have dedicated Hire Shop team members within each store that have a more in-depth knowledge of our fleet and equipment offering and can provide expert advice to customers looking for help,” she said.
Looking to the next 12 months, Ms Marshall said Bunnings will continue to look at opportunities to expand its core and extended range that not only complement its wide in-store range but also help meet its customer’s needs.