:HOME GENTER MERGHANT

Bill Fishman

Bill Fishman & Affiliates

11650 lberia Place

San Diego, Ca. 92128 profit. They operate without offices, business stationery, business banking accounts or licensing. Many are the

70/30 ratio.

or 60/40 "retail" to contractor

They establish these ratios by assuming all charge sales are contractorlbuilder and all cash sales are retail. But when we dig deep, we find that an extremely large percentage of the cash sales business falls into the semi-professional category. Recently we've altered our consumer surveys to attempt to determine how much of the clientele really buy for resale. (Not an easy task in those states where the moonlighters are theoretically violating state licensing laws.)

Most consumer research classifies in two broad categories: (A) the ContractorlBuilder and (B) the Do-it-yourselfer (sometimes tagged the "consumer," "home-owner" or the "cash customer. ") In the metropolitan markets these broad categories are probably sufficient to determine a retailer's marketing position, merchandise mix, and most appealing operational policies.

However, in the rural areas a 3-way split would be more meaningful: (1) Builder/Contractor, (2) Do-it-yourselfer and (3) the cash customer buying to do a home improvement project for someone else.

This third group is comprised of semiprofessionals, building or installing for types picking up their second income doing home repair/home improvement jobs for friends and neighbors.

ESEARCHERS in the home center moonlighting policemen and firemen industry are overlooking a market segment that should be more independently identified.

With housing starts down, my office is receiving more and more calls to work with building material dealers who want to change their ratio of contractor to retail business. The reasons are obvious. The new construction industry is seasonal, greatly dependent upon fluctuating interest rates, and highly susceptible to bad debts. On the other hand, the trade papers boast about the higher margins and a more consistent cash flow in the do-it-yourself business.

Step one in capturing more d-i-y business is the taking of a mail, telephone, and in-store survey to determine the retailer's positioning in the marketplace. Heretofore we accepted management's typical estimates of a

Ironically, the home center industry almost totally neglects this market segment. They do a poor job of identifying them, acknowledging them, and promoting to their needs. By necessity, this group must buy sharper-and they have an understandable need for larger-thantypical short term but frequent financing.

Slowly, retailers are seeing a need to develop separate direct mail programs to this specialized market. The retailer's goal should be to keep these big ticket semi-professional buyers as captured accounts, and to eliminate their need to shop around town for the lowest bid on eaich commodity item. But, first they must be identified. It requires the alertness, tact, and cooperation of the birilding material dealer's retail countermen. They know who these customers are. Ask 'em!