Ghallenging hardware opportunities ahead

By Roger E. Peterson President Ace Hardware Corp.

be characterized by many challeng- ing opportunities. These oppgrtunities require an extraordinary effort to be successful, whether it be at the wholesale, manufacturing or retail level.

Contributing factors include our economywhich has become more complicated than ever before, along with the complexity of today's tough comPetition. Today, we have price wars, better educated consumers and a thriving do-it-yourself market that, despite some maturity, will continue to expand because of more households participating in d-i-y projects.

This increased participation has led to consumers tackling bigger and more complicated projects. The result is a wiser, more knowledgeable consumer who demands quality products in a significant number of categories, along with competitive pricing.

This evolutionary demand for quality should help U.S. manufacturers whowith a concern for cost controlstend to have better quality products than comparable ones produced offshore. Medium to upper priced/quality products have proved to be most poPular in hardlines retail outlets, indicating that consumers do want a choice.

Hardlines retailers who have made a definite effort to offer a selection of products at various quality and price levels have reported consistent, profi table growth in the sale of hardware items for many years.

Story at a Glance

Expanding d-i-y market. more consumer demand for quality, competitive Pricing slow growth in number of stores. . . increased volume per store. . stores need bet' ter identity.

overcome reluctance to make new purchasing commitments.

Home additions and remodeling will compensate for the housing decline by adding an estimated 60lo to the over-the-counter distribution markets. Another 5oh increase in nonresidential can also be seen next year as industrY Promotion senerates new business in the comirercial roof deck sector and other areas.

Story at a Glance

1.75 million housing starts

.. .10o/o increase in PlYwood production remodeling will add 6% to over-the-counter distribution . . timber suPP|Y clouds bright future.

Overseas, too, the outlook is brighter. Markets have Pulled out of a long slump, and recoverY is evident in Europe and elsewhere. Offshore shipments were 800/o ahead of 1985 for the first eight months of 1986.

A maior cloud that could come in the way of an even brighter future is in the area of timber suPply. In the Pacific Northwest, there appears to be more concern in certaih circles for the welfare of the Spotted Owl than for thousands of wood industry emploYees whose livelihoods are threatened by plans to over-protect the owl. In the south, harvests in some areas are just beginning to overtake net -annual growth. What's needed is renewed commitment to timber management on the 700/o of southern forest lands that are held by small private owners. Our industiy must not give uP the fight for capital gains relief on long-range forestry investments, desPite the setback it has received in the recently approved Tax Bill.

A sobering reminder is needed, though, that our immediate Problem is to do all in our power to assure there will continue to be an adequate raw material baseand at the same time to create markets in the short-term for the 5 billion square feet of unused caPacitY. We've got the ideas, we've got the programs and we've got the energy. A world of fresh opportunity awaits us.

Recent studies indicate the emphasis among consumers is definitely switching away from price alone and toward qualitY and added values. Added values, of course, include what. hardware/ home center stores are known for: a source of knowledgeable, helPful sales people willing to take the time to advise their customers on their intended projects. with the popularity and growth of the d-i-Y movement, this has become more important than ever.

The outlook for our industry for the next few Years indicates a slower growth in the number of stores but an increase in the average volume per store. This means hardware and home improvement dealers will have to increase their penetration into the d-i-y market segment. Their goals should include increasing the shopping frequency among exisit-ng d-iy households, along with efforts to increase the average transaction per sale.

Afocus toward betteruse ofsPace and inventory, rather than on managing new store unit growth, will be the key to successftrl retailing over the next five to l0 Years.

Successful dealers will keep Pace with developments in their marketplace. They will be able to offset competition by offering increased service and value and by forging a real identity for their particular stores in the community they serve.

Wickes Cos. is acquiring Collins & Aikman Corp. (textiles and wallcoverings) for $1.6 billion and has made an offer of $ 1.7 bil. for Lear Siegler,Inc.(aerospace and automotive), but is having trouble lining up financing for the second acquisition due to the Boesky scandal.

Houseworksi home center operation is being sold by W. R. Grace to Bernard R. Kossar and a management investment group for about $10 million; Handy Dan Home Center and Handy City chains are still on the market

Moore's home centers has been divested from Evans Products Co. in a spinoffof their company and Grossman's Inc. .

Hechinger Co. t Greenville, S.C., store has had its grand opening; Fredericksburg, Va., Fayetteville, N.C., and Roanoke, Va., stores are under construction. . . Diamond Lumber has reopened a remodeled and remerchandised store in Lee's Summit, Tx....

Builders Square, Inc. 's right to use that name was upheld by a jury in a suit brought by Builders Choice in San Antonio. Tx. . Payless' Cashways, Iic. has closed its Furrow Building Materlals store in North Houston.

IV'arner Robins Supply Co., Warner Robins, Ga., has added a 10,000 sq. ft. truss plant behind its retail unit and is adding 12,500 sq. ft. to its window and door manufacturing plant; the company is observing its 40th year..

Lowe's has opened retrofitted stores in North Greensboro and North Wilkesboro, N.C., and Orlando, Fl., while closing a store in Moore, Ok.; with two recently opened stores in the Sarasota, Fl., area, the chain is negotiating to purchase a l6 acre site in Stuart, Fl., and has purchased land to expand the Salisbury, N.C., store.

Mountcastle Lumber Co.Newport News, Va., has closed its retail unit and sold the sawmills to third generation family members, Richard and David Mountcastle... The Paty Co., Piney Flats, Tn., is sponsoring the "This Old House" tv program for the fourth season.

Home Depot is considering sites for a third store in Jacksonville, Fl., and will anchor a shopping center in Palm Beach Gardens, FI.... Scotty's Hardware will open in the new Springs Plaza Shopping Center, Inverness,Fl....

84 Lumber, Salem, Va., plans a major remodeling next year Wickes Lumber has expanded and remodeled its Lexington, Ky., store the Murfreesboro. Tn., lMickes Lumberis celebrating its 20th anniversary.

Pelican Cos. is planning a new store in Pawleys Island, S.C., as well as remerchandising l6 stores in the N.C. and S.C. chain.

Morgan Technologies Ltd. has been formed by Morgan Products Ltd. and Dyonix Greentree Technologies, Inc. to offer a computerized estimating system Ibr building material retailers

Building Products Digest

. Wasco Products is building a new 40.000 sq. ft. plant for manufacturing skylights.

Porter Paint has completed a $ I million expansion at its Louisville, Ky., manufacturing facilities .. MM Systems Corp., Tucker, Ga., has acquired Perma-Clad, no price revealed Tilden Industries, an English cabinet manufacturer, has opened a marketing ofTice in Atlanta, Ga..

The Sranley Workswill sell four of its businesses to focus on products and services for d-i-y and professional building markets. . Owens-Corning Fiberglas will sell its Meridian. Ms.. plant. . .

Security Lawn & Garden Products Co., Ft. Valley, Ga., has been acquired by S.C. Johnson & Son, Inc., Racine, Wi.... U. S. Plywood has opened new sales offices in Mobile, Al., Nashville, Tn., Richmond. Va.. Miami, Orlando and Tallahassee. Fl. ..

River City Moulding has been formed in Memphis, Tn., by Jerry Rose, Wally & Robbie Fields; the Fields are still associated with Walter M. Fields Lumber Co., Memphis. .. Custom Wood Products Countertop Div., Roanoke, Va., has acquired Save Supply Inc.

Scotty's will fell or close its Winter Haven, Fl., truss and millwork facility by rhe end of the year Robinson Lumber Co., New Orleans, La., is moving its headquarters to Tchoupi- toulasSt....

Housing srarrs for Oct. (latest figs.) dropped to a seasonally adjusted annual rate of I,648,000 unlts . . . singles starts edged up 0.50/o: multis slid l.8o/o permits dropped 2.90/o .. . starts in the south were up l.3o/o economists predict the multi housing decline will continue because of overbuildine and elimination of tax advantaies