HOME GENTER MERGHANT

Bill Fishman

Bill Fishman & Affiliates

11650 lberia Place San Diego, Ca.92128

ITHIN days after we engaged author Tom Peters 0n .Search of Excellence/Passion for 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 "fact sheets" and a letter assessing the industry.

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 manage- ment. 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 $10,000 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. Un-

1o Largest Retailers

like in the food or health and beauty industry, it is difficult to pass along l0% to 25% increases to home center customers.

Increases in minimum wage affect home centers, just like other retailers, by raising total payrolls or cutting the available store help and customer service.

The industry is still hurting from lack of qualified management. 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 December, 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.

Major markets are saturated with warehouse outlets and national and regional chains. Independents who had found a niche in smaller rural markets now feel the hot breath of the chains and

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