Marketing to Home Improvement Retailers

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Home improvement retailers are a distinguished marketing channel for a variety of types of construction and remodeling products. Such products include: building materials and supplies, lighting and plumbing, lawn and garden, construction tools and equipment, and much more.

In the new whitepaper, “Marketing to Home Improvement Retailers”, we provide a snapshot of the home improvement industry, along with the results of the 2011 survey, conducted by the Construction Marketing Association, which reveals valuable insight regarding best retail practices.

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Marketing to Home Improvement Retailers

  1. 1. Marketing to HomeImprovement RetailersConstructionMarketingAssociation.org Building Expertise™
  2. 2. Marketing to Home Improvement Retailers Home improvement retailers are a specialized marketing channel for many types of construction and remodeling products including building materials and supplies, lawn and garden, lighting and plumbing, construction tools and equipment, and more. This whitepaper provides a snapshot or basic statistics on the retail home improvement industry, along with the results of a 2011 survey on home improvement retail marketing practices conducted by the Construction Marketing Association. In addition, three important aspects of home improvement marketing will be considered: merchandising, packaging and retail line reviews. Retail Snapshot Retail home center and home improvement stores have a combined revenue of $132.54 billion in 2011; with overall home improvement channel sales totaling $205.9 billion in 2011. (Source: Home Channel News). The retail home improvement category consists of several segments including big box home centers like The Home Depot and Lowe’s, hardware cooperatives including Ace Hardware and True Value, Lumber and Building Material dealers (LBM’s), mass merchants like Walmart and Sears Holdings, and specialty retailers that sell products such as paint, flooring, and farm goods. The following chart identifies the top ten largest home improvement retailers in North America by number of stores and earnings in 2011 (Source: Home Channel News). Retailer Sales ($M) 2011 # Stores 2011 1. Home Depot $70,395 2248 2. Lowe’s $50,200 1749 3. Walmart* $19,400 3868 4. Sears Holdings* $12,200 3510 5. Menards $8,800 263 6. Shermin-Williams $4,780 3450 7. Tractor Supply $4,230 1085 8. ProBuild Holdings $3,300 439 9. Harbor Freight Tools $1,650 380 10. 84 Lumber $1,430 258PAGE 1 /// Construction Marketing Association | Marketing to Home Improvement Retailers
  3. 3. * Note: Mass Merchants like Walmart and Sears Holdings were not included in past rankings. However, they are included today because the influence of these stores on home improvement is so large. Mass merchants generated $33.12 billion in revenue, or about 16% of overall home improvement channel sales in 2011. Home Improvement Retail Marketing Survey The Construction Marketing Association recently conducted a survey on retail marketing practices to shed insight into this important channel. The following questions were asked: • What retail channels do you sell to? • What approximate percentage of sales are retail (vs. non-reital)? • What types of retail initiatives do you undertake? • What types of products do you sell to retail? Retail Channels Sold To HOME CENTERS/BIG BOX 70% HARDWARE CO-OP 40% ECOMMERCE 40% LUMBERYARDS 30% OTHER 20% Home centers/big box home centers were the top retail channel sold to with 70 percent, followed by hardware cooperatives and ecommerce with 40 percent each. . Percentage of Retail Sales 100% 53% 15% HIGH AVERAGE LOW On average, 53 percent of respondent’s sales are retail. Responses went as high as 100 percent, and as low as 15 percent.PAGE 2 /// Construction Marketing Association | Marketing to Home Improvement Retailers
  4. 4. Types of Retail Initiatives MERCHANDISING DISPLAYS 90% PROMOTIONS 80% PROPOSALS/RFPS/BIDS 70% PACKAGING 60% LINE REVIEWS 60% OTHER 40% Merchandising displays, promotions, and proposals/rfps/bids ranked as the top three types of retail marketing initiatives. . Types of Products Sold 50% BULDING MATERIALS 30% TOOLS 10% EQUIPMENT 10% OTHER Home Improvement Retail Merchandising Merchandising is the visual presentation of products in the store including all types of displays, signage, and in-store promotions. Planograms are used to specify merchandise sets by department and stock keeping unit (SKU), and corresponding point-of-purchase (POP) signage. Typical merchandise sets include in-line (bays for home centers), end caps and solution centers; promotional displays include in-aisle stack outs, quarter pallets (QPs), bin merchandisers, clip-strips and various dispensers.PAGE 3 /// Construction Marketing Association | Marketing to Home Improvement Retailers
  5. 5. Typical POP includes channel headers and posters, laminated how-to instructions, shelf-talkers, banners, ceiling danglers, and floor decals. Each retailer has departments and guidelines. Sometimes a retailer will appoint a category captain to oversee category management. Following is an example of category management for The Home Depot “Tool Corral”. Following is an example of category management for Lowe’s tool department, or “Tool World”PAGE 4 /// Construction Marketing Association | Marketing to Home Improvement Retailers
  6. 6. Following is an example of a category management planogram for power tool accessories from Vermont American. To the left is an example of a merchandising planogram brochure for hardware chain Do it Best from National Div. Stanley, created by Construction Marketing Advisors. Following is an example of a category management planogram for RIDGID jobsite and truck storage equipment by Construction Marketing Advisors.PAGE 5 /// Construction Marketing Association | Marketing to Home Improvement Retailers
  7. 7. Following is an example of a Home Depot end cap with quarter palette display, and “conversion cart” portable display. Retail Packaging Each retailer will have packaging requirements related to bi-lingual or tri-lingual, bar codes, and for some products, security strips (Sensormatic). Following are examples of home improvement packaging including blister card packaging for Ideal Industries, Bosch and Vermont American.PAGE 6 /// Construction Marketing Association | Marketing to Home Improvement Retailers
  8. 8. Home Improvement Retail Line Reviews Retailers continually evaluate their vendors and merchandising mix with point-of-sale (POS) data, margin analysis, and supplier performance (fill-rate 95%+, inventory turns, sales per square foot). Depending on the product category and/or department, line reviews are typically 1-year contracts, but could be up to 3-5 years. For certain product categories or departments, the retailer will hold online price auctions.: Depending on the product category, a retailer will often seek one or more national or pro brands, and a price brand, which often is a proprietary (house or private label) brand. Some line review trends to consider: • Retailers focused on SKU rationalization and vendor consolidation • Retailers are requesting more frequent line reviews, and demanding more support • Note that home center retailers seek pro contractor business, and likewise seek pro contractor brands A challenger brand (not in the retailer) can win placements with special promotions: • Approach differs based on narrow or broad line supplier • Identify the department or category merchant and pitch • Provide market intelligence (share, equity, brand support) • Hardware co-op is different; pitch individual stores, as well as corporate buyers Incumbent suppliers and challenger brands can defend or gain placement with home center retailers through proactive merchandising and/or promotional support. Below is a USG cirular ad for Lowe’s.PAGE 7 /// Construction Marketing Association | Marketing to Home Improvement Retailers
  9. 9. Following is an example of a bi-lingual free-standing insert (FSI) announcing a promotion, (buy a truck box get a free vacuum cleaner), in support of a merchandising display placement for Ridgid Truck storage. NeW from NeW from NOVEDAD DE A HolidAy Present It would be a shame to throw A HolidAy Present It would be a shame to throw all those nice tools and supplies all those nice tools and supplies in the back of your truck in the back of your truck for yourself! exposed to weather and thieves. for yourself! exposed to weather and thieves. Especially when you can pick Especially when you can pick up the pro-grade RIDGID® up the pro-grade RIDGID® 4100/4105 Truck Saddle Box 4100/4105 Truck Saddle Box Buy a ridgid truck saddle Box – Get a ® Buy a ridgid truck saddle Box – Get a at such an affordable price. ® at such an affordable price. ridgid wet/dry vacuum free! ridgid wet/dry vacuum free! • Locking systems that are   ® ® • Locking systems that are     virtually tamper-proof    virtually tamper-proof  • Full weather seal protects   • Full weather seal protects     against the elements   against the elements • Easy Find organization for   • Easy Find organization for     storage of small parts and tools   storage of small parts and tools • Heavy-duty reinforced   • Heavy-duty reinforced     aluminum diamond plate     aluminum diamond plate     construction with powder     construction with powder     coat finish   coat finish • Full 10-year warranty! • Full 10-year warranty! free ridgid model ® free ridgid model ® Wd1250 Wet/dry vacuum Wd1250 Wet/dry vacuum $ 79.97 retail value $ 79.97 retail value tHe neW ridgid truck sAddle BoX ® tHe neW ridgid truck sAddle BoX ® AvAilABle At select locAl tHe Home dePot stores** AvAilABle At select locAl tHe Home dePot stores** PurcHAse: RIDGID® Model 4100/4105 Truck Saddle Box.* PurcHAse: RIDGID® Model 4100/4105 Truck Saddle Box.* receive: RIDGID® 12-Gallon High Performance Wet/Dry Vacuum Model WD1250 or similar.  receive: RIDGID® 12-Gallon High Performance Wet/Dry Vacuum Model WD1250 or similar.  send: This completed form and original (Home Depot) receipt showing the RIDGID® Model 4100/4105 Truck Saddle Box and date of purchase to:  send: This completed form and original (Home Depot) receipt showing the RIDGID® Model 4100/4105 Truck Saddle Box and date of purchase to:  Customer Response Center • RIDGID Redemption Program • 2917 N. Latoria Lane, Franklin Park, IL 60131 Customer Response Center • RIDGID Redemption Program • 2917 N. Latoria Lane, Franklin Park, IL 60131 Promotion vAlid: On purchases dated 12/01/10 to 12/31/10. Entry must be postmarked by 1/15/2011. Promotion vAlid: On purchases dated 12/01/10 to 12/31/10. Entry must be postmarked by 1/15/2011.     Name:  ____________________________________ Email Address: ________________________________ Street Address:  ____________________________________  Name:  ____________________________________ Email Address: ________________________________ Street Address:  ____________________________________  City/State/ZIP:  ______________________________ Purchased From:  ______________________________ Questions? Call 866-481-0212 (8 am - 4:30 pm CT) for more info. City/State/ZIP:  ______________________________ Purchased From:  ______________________________ Questions? Call 866-481-0212 (8 am - 4:30 pm CT) for more info.     *Promotion form must be postmarked on or before January 15, 2011 and received by January 25, 2011. One submission per handwritten addressed envelope and must be sent by individual consumer purchasing product. Limit ONE  *Promotion form must be postmarked on or before January 15, 2011 and received by January 25, 2011. One submission per handwritten addressed envelope and must be sent by individual consumer purchasing product. Limit ONE  request per name and address. No group submissions. No copies of receipts. The promotion form must be filled out completely and legibly. Visibly altered documentation will not be honored. Requests from PO Boxes will not be   request per name and address. No group submissions. No copies of receipts. The promotion form must be filled out completely and legibly. Visibly altered documentation will not be honored. Requests from PO Boxes will not be   honored. Use of fictitious names, addresses or organizations to obtain additional vouchers or premiums is fraud and is in violation of Federal Law and may result in prosecution and a term of imprisonment, fine or both. Offer void   honored. Use of fictitious names, addresses or organizations to obtain additional vouchers or premiums is fraud and is in violation of Federal Law and may result in prosecution and a term of imprisonment, fine or both. Offer void   where prohibited, taxed or otherwise restricted by law. This offer cannot be used with any other RIDGID® Brand Promotion. Please retain a copy for your records. RIDGID® and its employees and affiliates are not responsible for   where prohibited, taxed or otherwise restricted by law. This offer cannot be used with any other RIDGID® Brand Promotion. Please retain a copy for your records. RIDGID® and its employees and affiliates are not responsible for   lost, late, damaged, illegible or misdirected mail or forms. AFFIDAVIT OF ELIGIBILITY & LIABILITY/PUBLICITY RELEASE. **Limited to in-store inventory. lost, late, damaged, illegible or misdirected mail or forms. AFFIDAVIT OF ELIGIBILITY & LIABILITY/PUBLICITY RELEASE. **Limited to in-store inventory.The Construction Marketing Association Achieving Retail Marketing Successprovides professional development andmarketing training, resources and information, Manufacturers and brands that market to home improvement,networking and recognition including the hardware and related retailers are challenged with competitiveConstruction Marketing Blog, the annual CMA threats, eroding margins and demanding merchants. These challenges are more than offset by the sheer volume opportunitySTAR Awards, and the Certified Construction from these retailers.Marketing Professional (CCMP) program. Formore information, visit the website. How brands navigate retail line reviews is dependent on the specificConstruction Marketing Advisors is an agency product category, as well as the brand’s position as incumbent orspecializing in construction product and retail challenger. Effective merchandising, packaging, promotion, and linehome improvement marketing. For more review management can determine success or failure.information, visit the website. This whitepaper provides rare insight into this specialized industry with a snapshot of the top retailers, the results of a national survey, followed by examples of merchandsing and packaging, along with line review tips. Following are additional resources. Additonal Resources: American Hardware Manufacturers Association (AHMA) Hardware Retailing (magazine) Home Improvement Research Institute (HIRI) North American Retail Hardware Association (NRHA) Technology Trends in Home Improvement RetailPAGE 8 /// Construction Marketing Association | Marketing to Home Improvement Retailers

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