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October 2003

Big Box Bulletin

Home Depot and Lowe’s 
Battle for Installation Supremacy

According to a recent article in The Atlanta Journal-Constitution, archrivals Lowe’s and Home Depot are seeking to expand the amount of business they get from installing wall-to-wall carpeting, floors, roofing, kitchen cabinets and other home improvement products.

Atlanta-based Home Depot, which began pushing its at-home services nearly two years ago, currently has a comfortable cushion in installation sales. 

“We see at-home services and the service sector as a tremendous opportunity to continue to grow our penetration and our sales using the platform we have in place,” said Bob Nardelli, chairman, chief executive officer and president of Home Depot.

North Carolina-based Lowe’s has plans to introduce a new installation sales model at locations across the country. The company believes the new system will enhance the services it offers and improve customer experiences by using infrastructure and technology to provide customers with consistent support and communication throughout the installation process.

Lowe’s aggressive play comes as Home Depot itself is counting on more revenue from installation services. 

According to Home Depot, the company does 2.2 million installations a year, or 10,000 each weekday, and in 2002, net service revenue was $2 billion. In the first quarter of 2003, service revenues at Home Depot jumped more than 35 percent, to $562 million from $414 million.

Lowe’s, which had $1.1 billion in installation sales in 2002, is counting on similar success.

“Our goal is to double this business by the end of 2005,” said Bob Tillman, chairman and chief executive officer of Lowe’s.

Polls Reveal Public’s 
Preference for In-Store Experts

According to a poll conducted by Ace Hardware of Oak Brook, Ill., two-thirds of U.S. adults believe “accessible employees with expert advice” provide the most help when seeking information at a hardware store or home center.

That number nearly doubles the second-ranked choice—free handout materialsHome Depot's Worksite CD is free to qualified customers. such as booklets and brochures—cited 37 percent. Other fact-gathering methods mentioned by respondents included information displays (28 percent), product demonstrations (27 percent), free workshops and seminars (20 percent) and informational videos (19 percent).

“Such information vehicles certainly are useful as supplemental aids, yet talking to an experienced and knowledgeable store associate often makes all the difference when people need help in product selection or when performing maintenance and repair tasks,” said Lou Manfredini, national home improvement expert and Ace’s “Helpful Hardware Man.”

“Having such a dialog enables a do-it-yourselfer to ask follow-up questions and describe aspects of the job that may be specific only to his or her situation,” Manfredini said. “With so many nuances one can have with a home project, this give-and-take with an in-store expert is invaluable.”

Swanson Benefits from Loyalty Program 
New Jersey-based Swanson Hardware Supply says its rewards loyalty program, launched in July 2002, is producing strong increases in spending from consumer and business members.

The retailers’ program has two distinct offers: one for general consumers and the other aimed at more than 500 local businesses. Program participants earn points for shopping in any of Swanson’s five business units: general hardware, communications, equipment rental, equipment repair and industrial supplies. 

“Enrollment rates have exceeded expectations and customer feedback has been enthusiastic,” said Phil Vitale, operations manager. “We identified the need for a loyalty program some time ago, mainly to protect against future competition, but also to boost our overall sales. We know we need to differentiate ourselves from the big-box retailers moving into this area, and a loyalty program is essential to this 
strategy.”

Logan Hardware Moves into Capitol City
Logan Hardware, a member of the Ace Hardware buying co-op, has opened a new location in Northwest Washington, D.C. The 5,000-square-foot, two-story shop was formerly a pizzeria.

“We know there are a lot of apartment dwellers in the neighborhood, so we’re also focusing on home storage, security and smaller appliances, plus blinds that can be cut for rental units,” Gina Schaefer, co-owner with her husband, Marc Friedman, told the Washington Post.

First Home-Themed Shopping Center to Open in Ohio
Plans are underway to open HomeWorks, the country’s first home-themed shopping center, in Jeffersonville, Ohio. 

“As Americans are spending more time cocooning at home, we felt it was the ideal time to introduce a unique retail concept to fit this emerging marketplace,” said Gregory Boyle, president of the Boyle Group, the Malvern, Pa.-based retail consulting firm assisting in the leasing of the HomeWorks center. “As of now there is no single home shopping destination in the country that will offer the variety and number of stores that will be featured at HomeWorks. What we will be offering is retail space for up to 75 stores, all selling a product or service that ties back to home life.”

The new HomeWorks will offer over 300,000 square feet of retail space, subdivided to accommodate a wide range of home-themed retail businesses.
 
“The types of businesses that we are looking for are really endless,” said Boyle. “It could be retailers in baby furniture, closets, appliances, gardening, sunrooms, drapes, bedding—you name it. We are looking for both local and national retailers to offer shoppers a convenient ‘one-stop’ location to buy virtually anything for their home.”

According to HomeWorks, the shopping center will enjoy an advantageous location, being in close proximity to the Ohio metro areas of Cincinnati, Dayton, Springfield and Columbus, as well as a number of colleges and universities such as Ohio State.

Home Depot Releases Worksite™ CD

The Home Depot, which is based in Atlanta, has launched its new Worksite CD, which it says enables professional customers to search for products, calculate estimates and order online. The CD is free to qualified customers, such as contractors, purchasing agents, government agencies, school districts and architects, and is available at the PRO Desk in Home Depot stores nationwide.

“This new CD responds to our professional customers’ needs with time-saving convenience in an easy-to-use format that can be accessed from most anywhere, including the customer’s place of business, the jobsite or the home office,” said Joe Dixon, vice president of PRO Business at Home Depot.

The new CD offers online ordering of nearly every product Home Depot sells, its entire “Maintenance Warehouse Catalog 53” and thousands of product images. Customers can search for products by category, description and SKU.

Ace’s Helpful Hardware Club Hits Five-Million Mark
Oak Brook, Ill.-based Ace Hardware’s customer loyalty program, the Helpful Hardware Club, hit its five-million-member mark in July. 

“Reaching the five-millionth customer mark is a remarkable achievement, considering we only began the program five years ago and the decision to offer the club rests on each independent retailer,” said David Hodnik, Ace president and chief executive officer. “We’re pleased that so many of Ace’s best customers are rewarded for their loyalty by enjoying the club’s many benefits.”

To celebrate, the company’s five millionth member, Roslyn Tobias of Jackson, Miss., won a 2-minute shopping spree at Revell Ace Hardware in Jackson on July 9. Tobias picked up more than $2,000 worth of merchandise and received $5,000 from Ace to donate to her favorite charity, New Mount Zion Missionary Baptist Church. 

 

 


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