HomeCenter Merchant

Bill Fishman

Bill Fishman & Aftiliates

1'1650 lberia^Plagg -- raising total payrolls or cutting the availSan Diego, Ca.92128 able siore trilpanO customer service.

ITHIN days after we engaged author Tom Peters (ln .Seax'h ttl &cellence/Passion lbr Excellence) as a speaker for the National Home Center Show, he asked for specific details about the industry. With a little research we prepared the following "lact sheets" and a letter assessing the industry.

1o Largest Retailers

The industry is still hurting from lack ol qualified managemenl. Very little is available in structured through-theranks schooling for store management. Pirating is prevalent and so is recruiting from outside the industry.

The industry is at the threshold of available technology to assist stores in maintaining a consistent in-stock condition. Just-in-time inventory management. UPC and EDI are brand new terms to most retailers.

The home center industry still slumps badly in November and l)ecember, while other retailers post their highest volume. Trim-a-tree and gifty home care merchandise do not compensate for loss of home improvement sales during this gift-giving season. Warm weather months continue to post the highest volumes.

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Maintaining competitive prices has played havoc with the bottom line. The giants, warehouse operators and national chains, are battling for market share in major markets, catching the independent retailer in the squeeze. In the search for increased margins, retailers have taken over the distribution functions, buying direct. The past few years have seen the demise of independent distributors. The domino effect has cut channels of distribution for some suppliers.

Governmental regulations have added new responsibilities for retail management. Hot products such as treated lumber are being legislated out of some markets and in some states OSHA holds the authority to issue fines up to $ I 0,000 per day to stores violating complex hazard communication standards.

Margins for manufacturers have been rocked by the squeeze by retailers and the skyrocketing cost of insurance. Unlike in the food or health and beauty industry, it is difncult to pass along l0% to 250lo increases to home center customers.

Increases in minimum wage affect home centers, just like other retailers, by

Major markets are saturated with warehouse outlets and national and regional chains. Independents who had lound a niche in smaller rural markets now feel the hot breath ofthe chains and warehouses. Rural home centers are also affected by the sales pricing in metropolitan newspaper inserts that find their way into rural households.

1o Largest Programmed Wholesalers

Before the advent of the warehouse operators, "professionals" (smaller contractors, commercial and industrial users, property managers, etc.) were the customers of the conventional lumber dealer. Today these high volume users are being solicited by distributors, specialty retailers, and by manufacturers who bypass conventional channels of distribution.

Taking the lead from WalMart, a few major national retail chains are refusing to deal with manufacturer's reps, disrupting normal distribution channels