(continued
from imex.com)
STORY:
120109-ATDAHHCM
by
Bob
Vereen, Worldwide
DIY Council
ANALYZING
THE DIVERSIFIED AMERICAN HARDWARE/HOME
CENTER MARKETPLACE.
In
America, perhaps more than in most
other countries, hardware, tools and
many of the other products stocked
as basic merchandise by home centers,
hardware stores and lumber-building
material dealers can be found in all
kinds of stores-from supermarkets
to service stations, from drug stores
to mass merchants, although the bulk
of the business, of course, is still
to be found in traditional retail
channels. Those other retailers do,
however, provide convenient alternatives
for many consumers.
Home
Channel News, a trade publication,
recently provided information on the
500 largest retailers of all types
selling the kinds of products stocked
in traditional outlets such as hardware
stores, home centers and lumber-building
material outlets.
Those 500 retailers accounted for
sales of $237.4 billion, and ranged
in size from Home Depot, the world's
largest home center chain, with $71.3
billion in sales to 11 stores at the
bottom of the list, each producing
a modest $23 million in annual sales.
The magazine said the US Commerce
Department estimates of the total
market size to be $381.3 billion.
The fact that retailers doing only
$23 million make a list of the Top
500 demonstrates how diversified the
industry is. In fact, the stores at
the bottom of the list do less annually
than the average sales-per-store of
any of the home center's big 3 retailers-Depot,
Lowes and Menards.
It is because, in addition to these
500 firms, there are thousands of
other smaller hardware stores, home
centers and building material dealers
serving America's 300+ million consumers.
There are more than 15,000 hardware
stores, maybe 3,000 small home centers
and another 15,000 or more lumber-building
material dealers, which focus on local
builders but who also supply local
DIYers to some extent.
It is not unusual for many local hardware
or lumber-building material stores
today to generate $1 million or more
in sales. Large hardware chains are
very rare, but there are hundreds
of smaller chains, operating from
2 to 10 stores-just much too small
to appear in the Top 500 listing.
Reflecting the tough economic conditions
retailers are facing around the world,
the combined sales of the Top 500
U.S. firms declined 5.4% from the
preceding year. Home Depot's sales
fell 7.8%, whereas Lowes, #2 worldwide,
slipped only 0.2%.
Not every retailer suffered declining
sales. Among those actually increasing
sales were Walmart, up 4% overall;
Menards, America's third largest home
center chain, up 1.3%, an Tractor
Supply, a farm/ranch retailing giant,
up 11.3%, plus countless others of
much smaller size.
Hurt the most were those retailers
serving home builders, whether giant
builders or local builders. Stock
Building Supply of Raleigh, North
Carolina with 285 stores saw sales
plummet by 24.5% and 84 Lumber, a
Pennsylvania-based building material
dealer, lost nearly a third of its
business (32.3%) and had to close
a number of stores. BMHC, a chain
based in Boise, Idaho, lost nearly
half its business (42.2%). It too
closed stores.
As would be expected, home centers
accounted for most sales of the listed
retailers-55.9% of the Top 500 total,
primarily due to Depot, Lowes and
Menards. Pro dealers (serving builders)
accounted for 14%. Home center sales
as a group declined 4.5%, but those
of dealers serving home builders (pro
dealers) fell 16.4% as a group.
Collectively, pro dealers produced
$33.2 billion in sales, less than
half that of Home Depot and about
two-thirds of Lowes' sales, showing
just how dominant those two chains
are.
In its compilation, Home Channel News
included flooring and décor
specialty stores, paint stores and
farm & fleet stores. Flooring
and décor stores racked up
nearly $16 billion collectively, and
paint stores accounted for $8.5 billion
as a group.
The magazine estimated Walmart's hardgoods
sales at $26 billion (out of $400
billion total), and Sears, with its
hardware stores and other outlets,
at $8.9 billion.
One of the more interesting class
of retailers in America these days
is what is called "Farm &
Fleet" or farm/ranch stores-stores
located either in suburbia or smaller
towns and focusing on serving the
needs of regular farmers or so-called
"gentlemen farmers", who
maintain small acreage for gardens
and some crops. These retailers, headed
by Tractor Supply, fared far better,
on average, than most of the other
kinds of retailers listed.
They carry basic hardgoods, plus larger
power equipment and other needs of
the farm/ranch trade. Tractor Supply,
a publicly-owned chain, is the dominant
retailer in this class, even more
dominant than Home Depot is in the
home center category.
ADDITIONAL
ANALYSIS FOR COMPARISON
Based on Home Channel News' research,
we were able to compile average sales-per-store
figures, as well as sales-per-employee
for the top stores in each trade channel.
The comparisons are very informative
and can be helpful to you in evaluating
your own business.
Virtually all retailers in America
now use a large number of part-time
employees because they are open so
many hours each day (sometimes all
24) and often 7 days a week.Consequently,
the numbers shown in the accompanying
charts understate the sales-per-employee
since it considers all employees as
full-timers. However, if all the part-timers
were pro-rated to the equivalent of
full-time personnel, average sales-per-employee
would be considerably higher. Given
the data provided on total number
of employees, this was the only number
that could be computed.
The difference is particularly understated
for Home Depot, Lowes, Menards, Walmart
and Sears and the 4 hardware chains,
which employ so many part-timers.
The per-employee performance for paint
specialty retailers is more accurate
since these retailers generally operate
fewer hours and need to rely more
on well-trained full-time employees.
Sherwin-Williams, America's largest
paint manufacturer, manufactures a
number of different paint brands,
and sells its products through other
retailers, so its numbers are distorted
because of its huge employee manufacturing
base.
Of special interest to readers will
be the performance of 3 On-Line/Catalog
retailers, Northern Tool & Equipment,
Harbor Freight Tools and Woodcraft
Supply. Northern Tool, based in Minnesota,
and Woodcraft Supply, headquartered
in West Virginia, both operate a small
number of retail outlets but primarily
do business over the Internet and
via direct-mail catalogs. Harbor Freight
Tools operates far more outlets but
most are little more than one or two-person
small convenience outlets. Not having
to operate long hours, as typical
retailers do, enables Northern Tool
and Woodcraft Supply to achieve high
sales-per-employee.
So fill in your own figures and compare
yourself with some giants.
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