Co-ops try to nailthe best price on tools

HERE does a dealer go to buy tools low in price ?

The ideal price on hardware would naturally come through elimination of the middleman and hardas-nails negotiation. Unfortunately, the independent dealer will most often find the hardware manufacturer's door closed to him.

"We don't sell direct to dealers. In fact, I don't know any power tool manufacturers that do," says David Tatem, marketing manager for AEG Power Tool Corp. "Here everything is priced by quantity, and to an extent everyone in the industry must buy on the basis of volume."

Story at a Glance

With tools priced by quantity purchased, independents seek co-ops for increased buYing power. members Permitted to shop around Price not the only benefit.

The struggle to maintain indePendence and find a good price has led more than 20,000 dealers across the country to join buying cooperatives. The retailers each receive a share in the profits plus the combined buying power of the hundreds to thousands of stores in the grouP.

Co-ops claim to have an inherent advantage over buying groups comprised of regional wholesalers. A spokesman for co-op Servistar, formerly American Hardware SuPPIY Co., explains: "Co-ops make moneY for their members, whereas buying groups make money for independent wholesalers."

Still, many co-op members achieve the best price on tools by shopping around. "ln some instances, there are local suppliers who can make a special deal," says John Cameron of Ace Hardware Corp. "We'd like retailers to buy everything from us, but we can't do anything about that."

Although Central Builders Supplies Co. is one of the smaller co-ops, it successfully sells the most merchandise per member. It does this by holding operating costs down to l/2 of 1% of sales. "We are I000/o dealerowned," says Brett Pobanz, general manager of the non-profit organization. "Whatever price we negotiate is the price the dealer pays. There is no up charge."

Other co-ops make up the slack with a more extensive list of extras: lower minimum orders, national advertising, computer systems, insurance programs, store designs, merchandising literature and displays, video training programs, etc.

A co-op also offers the recognition of a chain, providing a respected name and often exclusive products. And these house brands have an added appeal. "ln many cases, the private label product will be less expensive," says a Servistar spokesman. "But unlike generic groceries, it's not so much a matter of price. It's an assurance of a high level of quality, ensuring we specified with the manufacturer a product we'd care to stock."

A co-op's whole reason for being is to get the price down as low as possible.