Hardware industry risks are financial

By Valerie Caldwell Manager, Marketing Planning Schlage Lock Co.

EXT year combines the traditional crisis elements of risk and opportunity. The door hardware industry in particular will be walking this narrow dividing line for most of the year. The key to success will be identifying exactly what the risks are and where the opportunities lie.

The risks facing the industry in 1983 are primarily financial. While the cost of credit remains high, inventories will continue at low levels. The volatility of interest rates will dampen any renewal of confidence. With bankruptcies forecast to be at a record high in 1983, everyone should approach his business with an air of caution.

Ignoring changes in consumer needs is a risk. Quality is increasing in importance. People are staying longer in their homes and as they invest in d-i-y and remodeling projects they want things to last. They will pay more for quality, but only to the extent that they feel they are getting good value. In 1983 watch carefully as the market pushes further away from the traditional "good-betterbest" buying attitude, and settles at the "good" and "best" ends.

Those parts of industry prepared to look to less traditional areas could be the ones to come out of '83 as the winners. We are going to be operating in a "fast track" world. That means having the right product in the right place at the right time. The builder could well be looking for non-traditional sources of supply as his lead times shorten up, i.e. retail outlets.

There is an increasing pull towards two step distribution as more retailers see the value of going through a wholesaler. The benefits

Story at a Glance

Volatile interest rates will dampen confidence.. record number of bankruptcies . . more two step distribution. . hardware retailing up 5o/"-8a/o more builder buying from retailers possible.

include fast turnaround on orders, single sourcing, better overall discounts and less need to carry inventory. Careful examination of gross return on margin investment often brings surprising answers.

The female consumer, long a strong influence on d-i-y purchases, is becoming an active participant in the market. The DIY Research lnstitute estimates that 3890 of "home improvement and repair d-i-yers" are female.

1983 will see a growth in hardware retailing; forecasts vary from 290 over 1982 to as high as 1690. Somewhere in the 5-890 range seems a likely outcome. National Retail Hardware Association 1982 Marketing Surveys showed 7.2t/o of all hardware retailing outlets as feeling "very optimistic" about 1983, and 46.20/o are feeling "moderately optimistic."

Every part of the industry-manufacturers, wholesalers, retailerswill be forced to work together, becoming partners in success. Competition at all levels will be leaner and meaner. We need survival management techniques-but there are opportunities in the market for those who are prepared to go after them.