The art of association
Fasteners have applications in just about every hardware department, but few retailers are adept at highlighting the obvious synergies between fasteners and other product categories. John Power discusses ways of displaying fasteners throughout your whole store.
Walk into any hardware department and you will be impressed by lavish displays arranged according to specific classes of product. Tiles and ceramics, for instance, dazzle with gleaming rows of glossy, multi-patterned tile walls; plumbing aisles happily overwhelm customers with jumbled banks of white PVC fittings of all shapes, angles and sizes; while timber departments present stub-ends of piled planks and boards peering from dark, depthless shelves – but what about the myriad of fasteners used in the application of these materials?
In our fixation with product categories, we often forget the ‘projects’ in which the products are used, the majority of which require solutions involving fasteners. Tiles need to adhere to base walling; PVC piping needs to be primed and secured with appropriate solvent adhesives; and timber, it goes without saying, is bound to require fastening with a fixing of some kind.
Most of the time, retailers assume customers will visit separate departments, including fastenings, to fulfill their overall project requirements, but some clever associative marketing displays can maximise the value of this process.
All departments include ‘some’ spare space, even if it is only a building column or perhaps the edging of a rack or shelf. Why not use this space to exhibit common fasteners pertaining specifically to the building material or product at hand? It does not take much work, for example, to display (specially priced?) self-drilling wood screws alongside a relevant batch of product in the timber department. Such a straightforward strategy can achieve at least four positive outcomes:
- It reminds the customer that their timber purchase might ALSO involve the use of one or more specialised fasteners.
- It enhances the prospect of extra sales.
- Novice customers might be educated about a new class of product (such as ‘self-drilling’ screws).
- Customers are reminded to investigate relevant fasteners further, hopefully by visiting the department and scrutinizing displays more carefully.
Of course, the limiting factor here has always been fear of favouristism – how can a retailer showcase a particular fastener in a separate department without incurring the wrath of loyal suppliers from opposing companies? The secret is to think laterally. Change product placements regularly and according to defined schedules so all major suppliers benefit from the initiative fairly. And present different displays in the same place so there is no perception of bias. If limited space or fear of supplier backlash do not permit a branded product placement, then consider the presentation of generic signage like ‘See our range of PVC wood glues in Aisle 5’!
It is important to make sure this cross-referencing involves perfectly matched products or genres. So, if you wish to showcase screws alongside a range of corrugated metal sheeting, for instance, then choose roofing screws as the partnering fastener. Similarly, if you are presenting fasteners alongside outdoor home items like letterboxes or exterior storage boxes, consider stainless steel or marine-grade fasteners that might help create a weatherproof installation.
Be inventive: why not present fixings as well as metal brackets alongside typical shelving timbers? Or rugged bolts and hooks next to handheld garden equipment ranges to facilitate easy storage?
More than sales
By providing storewide displays of appropriate fasteners to match particular materials or products, the store benefits in another important way: it sends a clear message to customers that the store is eager to offer ‘solutions to projects’, rather than merely sell products.
This capacity to envisage end-to-end customer needs demonstrates that a retailer is sympathetic to the customer’s genuine project requirements, which can only result in enhanced sales through ongoing loyalty and respect.
Increase your ‘trade’ customer base
If your store prioritises a consumer client base, you really should consider diversifying into more trade sectors. John Power reports.
There are few grey areas when it comes to steering the direction of hardware retail outlets – proprietors tend to show clear affinities for both consumer or trade customers… and rarely the twain shall meet.
The rationale in favour of each market class is equally clear-cut: Consumer markets typically allow for greater margins and inventory diversity, particularly if there are few territorial competitors; whereas trade customers, though not necessarily as profitable per unit sale, provide long-term loyalty with fewer marketing overheads, greater average expenditures, less in-store attention, and a ‘no nonsense’ approach to business.
Both markets carry risks – consumer markets are fickle and vulnerable, highly sensitive to pricing and a range of complex marketing perceptions and biases; similarly, trade-based activity levels have always see-sawed depending on the local building and construction scene, economic conditions, and a slew of fragile government regulations and policies, as manifested in attitudes towards negatively geared property investment, minimum wage levels and first homeowner grants, to name a few.
In the past, retailing entrepreneurs might have favoured consumer markets purely on the basis of (perceived) elevated business opportunities – after all, brilliant advertising strategies and effective in-store experiences can increase DIY market share in unfettered fashion, but there is no way to control or influence trade activity in a given locality.
Nowadays; however, particularly following our sector’s recent experiences with the consumer-oriented Masters chain, the appeals of a balanced consumer-trade portfolio seem wiser than ever.
Big picture approach
Building construction activity is often cited as a litmus test of the health of the retail hardware industry, based on a correlation between building work and demand for building materials. But it is important to distinguish between new building works and renovations, as the future appeal of the trade customer base rests in the renovation arena.
On the face of it, this might seem like an odd statement, as new building construction activity – particularly in the apartment market – appears rosy. Indeed, recent media reports have highlighted a perception that developers are enjoying champagne conditions thanks to low interest rates, ‘supportive’ planning regulations, and steady demand for stock.
All booms; however, must bust, and the current era of rampant, almost formulaic unit development will inevitably end due to some or all of the following risk factors: rising interest rates, oversupply in specific regions, a toughening of planning regulations, a rise in the appeal of other forms of investment, a rise in labour costs, or social pressures for more creative types of private investment.
In other words, new construction activity is endangered because it is too easy.
Another risk pertaining to new construction markets, specifically in reference to the retail hardware sector, is that not all new building activity leads directly to increased retail hardware prosperity. As noted in the last issue’s Timber and Flooring feature, new prefabrication technologies are being introduced into world markets all the time, potentially bypassing the need for building supplies like walling, glazing and flooring from traditional retail outlets.
Renovation is king
All the above elements mean that the strong new construction market is not necessarily a safe indicator of future prosperity as far as the retail hardware sector is concerned. By contrast, the renovation sector – allied to more hands-on building services affecting older stock – is sure to become an even more important mainstay of trade building activity at a suburban level. Renovations account for approximately 15 per cent of all value-adding building works in Australia at the moment (a fourfold increase since the 1970s), and our nation’s long history of strict building regulations mean high-quality aging dwellings will remain genuine candidates for improvement (rather than replacement) for plenty of time to come. Add in other factors like exceedingly high stamp duties, which are already making many homeowners think twice about shifting into new premises, and the idea of home renovation to achieve lifestyle or investment ambitions makes perfect sense over the long term.
Most renovation dollars are spent constructing a fourth bedroom, and there is no reason to suppose this trend will decline as low housing affordability affects new generations of Australians.
This housing renovation market will fuel local trade markets and associated industries that use retail hardware supply chains well into the future, and storeowners should not ignore it.