CREST HARDWARE INTIATIVES IN SUSTAINABILITY FALL 2012
BROOKLYN NEW YORK
TABLE OF CONTENTS
2/3 System Diagram
4/5 Business Model Canvas
5/6 SWOT Analysis
Key Leverage Points
TABLE OF CONTENTS
Crest Hardware was founded in 1962 in the Williamsburg neighborhood of Brooklyn by Manny Franquinha. Through out the 1960’s and 70’s, Crest garnered the support of the orginal locals of the neighborhood, primarily serving the large Italian population of mid and late 20th century WIlliamsburg. As the company grew, the need for a larger space became more and more prevalent and Crest moved across the the street into its’ present location at 558 Metropolitan Avenue. Manny’s son, Joe Franquinha took over the store in the early 2000’s breathing new life and energy into a company that although still functioning perfectly was not adpating to the rapidly changing neighborhood around it. WIth the inflix of young artistic types into Wlliamsburg, a store that had always been welcoming and accomdating to the neighborhood original creative types, was seeing a enormous shift in demographic, while the Italians that had sustained the business for the past 40 years were still actively shopping at Crest, thousands of young people were migrating across the East River from lower Manhattan into large loft spaces in the industrial and blue collar WIlliamsburg neighborhood and Crest responded to its’ new neighbors in a myriad of postive and innovative ways. Within this document you will find an exploration into the sustainability intiatives that are being conducted within Crest’s current business practice as a well as a detailed formulation of recommendations to be enacted at Crest developed after an extensive case study of the company was conducted. LOOKING TO THE FUTURE
SYSTEM D I A GRAM
HARDWARE RETAIL MANUFACTURERS SUPPLIERS WHOLESALERS
MASS NATIONAL MARKETS
CORPORATE PUBLICLY TRADED
L O E W S HOME DEPOT
SHIPPING COMPANIES/ TRANSPORTATION OF GOODS HARDWARE COOPERATIVES
PRIVATE OWNERSHIP LOCAL
CREST HARDWARE: 1962
CREST ARTS: 1994
MANNY (FOUNDER) JOE (SON/CURRENT OWNER)
SMALL LOCALIZED MARKET LOCAL SUPPLIERS (GARDEN CENTER)
GENE POOL (LOCAL ARTIST, FOUNDED CREST ARTS)
LIZA SHIELDS (CREST ARTS COORDINATOR)
YOUNG LOCALS -PROFESSIONALS -ARTISTS -FAMILIES OLD WILLAMSBURG FILM AND PRODUCTION STUDIOS CONTRACTORS LOCAL BUSINESSES
EMPLOYEES URBAN GARDEN CENTER
BUSINESS MO D E L CANVAS
selling product maintaining storeâ€™s needs maintaining garden center planning and executing social events interacting and engaging with customers
suppliers shipping companies community museum/ reliquary artists (example: Gene Pool) neighborhood/local businesses converse rubber tracks recording studios
CHANNELS sales hardware/tools crest merchandise crest events relationships with local businesses
BUSINESS MODEL CANVAS
employees garden space revenues from asset sales physical brick and mortar store
huge community customer base close relationship with cutomers many on a first name basis high customer retention implementation of multiple categorical customer relationships
CUSTOMER SEGMENTS broad spectrum of clientale caters to two distinct customer segments -young, hip williamsburg -older williamsburg natives
unique shopping experience attentive staff urban garden center local small business two large scale annual community events philanthropic business practice curated selections in both hardware and plants urban Americana/ nostaliga
REVENUE STREAMS asset sales
COST STRUCTURE emphasis on value, not only in goods but also in customer service and satisfaction
S W O T ANALYSIS
STRENGTHS - local community/sponsors (â€œconverse rubber tracksâ€?) - local supply chain - relationship with community museum/ reliquary - true value - urban garden center - crest fest/art show - family business - low employee turnover - wide loyal customer segments - word of mouth marketing - press coverage - social media presence (wordpress, facebook, flickr) - cheap alternative artspace
WEAKNESSESS - Dependent on providers outside local community because of lower costs - Does not have all the services that big box home improvement stores offer - Only one revenue stream (asset sales)
THREATS - local competition (benjamin moore) - gentrification - environmental damages -changes in market prices -does not have a big monetary buffer if crisis were to hit
OPPORTUNITIES - encourage creativity among younger people - expand social events - create a service / workshops -found and operate small boutique marketing firm
LEVERAGE POINTS (in order of effectiveness)
12. Constants, parameters, numbers (subsidies, taxes, standards) Crest Hardware is a True Value business and must conduct itself within those set constraints of that business. Despite the goals of wanting to establish itself as a beacon in the community, Crest must all still turn a profit. 11. The sizes of buffers and other stabilizing stocks, relative to their flows. Crest is careful to observe the needs of the community when ordering inventory. They’ve recently noticed an interest in mixed paint from customers looking for alternative ways of shopping from the Sherwin Williams store across the street. Keeping a constant eye on the pulse of their customers allows them to jump at hidden opportunities by keeping a stead flow of inventory their customers make known is necessary. 8. The strength of negative feedback loops, relative to the impacts they are trying to correct against. Pulling from local businesses is an important part of Crest. There have been times however when staying local isn’t exactly the smartest way to conduct business when it comes to numbers. Sometimes suppliers nearby charge much more than suppliers in other states. The customer’s needs are still met but Crest can’t necessarily stay local when it comes to their inventory.
6. The structure of information flows. Few businesses know customers by their first name, let alone their pet dog they bring with them inside. Maintaining these close relationships with customers breeds loyalty and trust. These relationships also give Crest a good name. Word-of-mouth works in favor for this business as well as the press from their pig mascot, Franklin, and popularity from Crest Fest and Crest Art Show. 5. The rules of the system. Crest must be able to not only play within the boundaries of True Value, as I mentioned previously in number 12, but also the regulations of the city when it comes to staying green. Joe had expressed to us the power limitations of NYC and the problems they faced of keeping their store lights bright. By switching to a more green bulb, they were able to defeat the problem as well as keep within the green guidelines of the city.
2. The mindset or paradigm out of which the system arises. The mindset of Crest is in line with it’s goals but also to maintain that pure nostalgia that seems to be lacking in many aspects of business today. Things like knowing customers by their first name and remembering the last project they worked on results from their mindset of being authentic to the community and customers. 1. The power to transcend paradigms. One of Crest’s strengths is it’s longevity. Being open for nearly forty years proves its resilience to hard times and changing public opinion. There have been times when Crest has been tempted to turn quick profit but the idea of long-term commitment to customers out weighed any short-term prizes. For instance, when hurricane Sandy hit battery prices skyrocketed. Instead of gaining from that quick moment, Joe decided to take a monetary hit knowing that customers would remain loyal in the long-run.
K E Y LEVERAGE POINTS
7. The gain around driving positive feedback loops. The community is of the utmost importance for Crest. Two festivals, Crest Fest and Crest Arts Show, work to inspire members of the community to re-purpose seemingly useless items. Crest Fest also gives proceeds to the local NYC museum which works to exhibit the lost histories of the city that are often overlooked. By showing so much concern for the neighborhood, Crest manages to stay authentic to their customers.
4. The power to add, change, evolve, or self organize system structure. Crest is a small, family owned business which works tremendously in their favor. There is less turnover for employees which means they save money and time that would otherwise be spent on searching for and training new employees. Joe told us that one of their own, Tony was his name, had been working there for 40 years. This goes to show that despite the change in economy and time, the timeless goals of the business have remained the same and continue to work in today’s world.
KEY LEVERAGE POINTS
3. The goals of the system. As I mentioned briefly in the last leverage point, Crest’s goals are timeless. They revolve around it’s customers and the community they all live in. Being authentic in every gesture creates loyal relationships with their customers. Their goals aren’t purely to gain profit as a business, but to provide products and service to their community in genuine manner.
THE CREST FORMULA 1.) There is no formula! There are a few guidelines or beliefs to follow but beyond that change is constant and inevitable and it is key to adapt and go with these changes. (According to owner) 2.) Fuse the Old and the New. Stay tuned to what is happening, such as possible changes in demographics, example: Increase amount of women consumers by adding gardening utensils to your products. But, tradition is important as well, keeping the employees who grew up in the community, know everyones first names is advantageous as it keeps your loyal customer base. Continuing with the craft that has been around for some 30 + years can give you competitive advantage as your offers become rarer and sought over commodities. Additionally the cost of training new employees is to be considered as well when thinking of new vs old. 3.) Profit in the short run is not everything. If your supplier has made batteries double the price because of increase in demand, it does not mean you should double price as well. Making a profit right now would mean greater losses in the future as relationship and trust of your customers is violated. 4.) It is not always cheaper to stay local. In fact you may have re-think some things when you are faced with hard numbers. It may turn out that receiving your goods from outside New York can be cheaper, even though this is less sustainable environmentally it makes business more sustainable as you can offer your goods to your customers at lower price points. 5.) Think outside the box. A parrot or a pig can go a long way in terms of marketing and may create so much buzz that it can land you all sorts of advertisements even in NY times. 6.) Give Back. Crest fest and the Crest art show are only two examples that are used to raise money in order to give back to the community. The money raised is used and invested right back into this community to help clean up a park or support the museum down the block. This has created incredible bond between other local businesses who love to contribute as well, customers that participate and anyone who benefits. And after all this consumers enjoy coming back and business benefits as well. 7.) Communicate. The owner of the store knows the community, knows everyone by first name and the other local businesses, this is helpful when asking for support for their fundraising events. Also because they know their suppliers closely as well, it is easy to ask about gardening advice for customers and creates a tight knit community and great communication.
THE CREST FORMULA
8.) Sustainability and Art. Art abounds at Crest whether it is the artwork that permanently hangs in the store, or a piece included in the annual art show, the work of the hobbyist down the street or finely crafted life size sculpture by world renowned fine artists. Crest Hardware is about creativity and innovativeness while also making sure the audience knows that art is meant for everyone. Those old tires can be transformed into a wall tapestry, those nuts and bolts; a working clock. Crest Arts works not only to promote the store but as well as to promote awareness and appreciation of art now matter what your walk of life is. 8.) Craft is Important. At Crest, craft is held in high esteem. â€œHardware can be applied to all facets of life,â€? said Liza Shields. Having the ability to implement hardware in an effective way is a craft in itself, one must spend years learning about how to properly use the tools and materials and Crest is here to help. The customers at Crest are assured that those working there are masters or are in the process of mastering their craft. A prime example of craft as Crest is when Joe explained the signage seen on the facade and within the store. All of the signage, whether its the main sign in seen on the front of the store or down to the numbers marking the aisle orders, all are high quality hand painted signage, a skill that is becoming increasingly harder to locate in an artist, but recently has seen a resurgence, particularly in Brooklyn businesses looking to the neighborhoodâ€™s history for inspiration not only in aesthetics but in business practices as well.
PERSONAS After conducting a number of customer interviews, we developed a set of four distinct personaes around the feedback and findings that were generated from the respondents answers. It was here that we really keyed on current Crest customers needs and wants.
1: Helen Shields AGE: 82 LOCATION: GREENPOINT, BROOKLYN DIY’ER AND BUSY BODY “I love doing little home improvement projects around my apartment but if I can’t get family to drive me to Crest, I cannot justify a subway or bus ride to the store to pick up the supplies I need!
2: Andrea Fiorello Martinez AGE: 21 LOCATION: WILLIAMSBURG, BROOKLYN BROKE COLLEGE STUDENT AND LOYAL CREST CUSTOMER “I’m always at Crest, whether going to one of their awesome events, chatting with the employees, or picking up supplies. Sometimes I cannot afford to buy the one tool that I need while at the same time knowing that I only need to use it once!”
3: Doug Shapiro AGE: 52 LOCATION: WILLIAMSBURG, BROOKLYN HOMETOWN HANDYMAN AND WILLIAMSBURG NATIVE “I know pride myself on my ability to fix just about anything, but sometimes even I get stumped! I always go to Crest for advice on upcoming projects and am always looking to learn more!”
4: Dan Letson AGE: 25 LOCATION: WILLIAMSBURG, BROOKLYN ARTIST AND TECH ENTHUSIAST “This is the third year I’ve been in involved with the Crest Art Show, it’s an awesome experience but when I tell friends about it, it is hard to find any information online about it. Crest really needs a dedicated up to date website and increased online presence! They’re too cool to not know about!”
EDUCATIONAL EXPERIENCE: Crest already does a great job in being a source of advice for existing customers who have questions about their upcoming hardware projects but to take the existing employees advice to the next level, Crest could offer workshops to the public and any interested on learning new things about gardening or tool usage if they havenâ€™t yet before. Because Crest is utilizing pre existing employees and their skills, no extra costs for instructors is needed and a very small monetary is needed to conduct the workshops. In Crest touching on a bit of vertical integration, something any successful company must enact to varying extents. Engaging with local schools to participate in these how to workshops can not only offer the kids and interesting and engaging educational experience, but in turn can develop long lasting customer/Crest relationships.
WEBSITE/ONLINE DELIVERY/ONLINE STRATEGY: Currently Crest has a Tumblr account which works well to inform visitors about their businesses but there is an huge opportunity to develop an extensive online website platform from which to inform and engage the public and in turn garnering new customers and possibly more mass media attention.
DEVELOPING SMALL MARKETING FIRM: Crest Events have garnered a huge following in the past decade. Each year, Liza, Director of Crest Arts, throws an amazing art show and opening event that in 2012 was attended by over 6,000 people. One of our recommendations is for Liza and Joe to develop a small boutique marketing, consulting and event production company. Utilizing pre existing skills and talent, Liza and Joe could charge to assist in the execution of similiar events at other local businesses. By doing this Crest would develop multiple revenue streams and by doing so would not only have to rely on the store asset sales. By having the event be a fully Crest Brnad event, they can not only use their existing human capital, employees, for the set up and building of the event space, but can use only Crest materials directly tying back into the success of the Crest at itsâ€™ core function
Crest Hardware has sustained itself for over fifty years and while there are many reasons as to why, many which we explored throughout this document, what we as a group kept seeing throughout our project was simply the idea of â€œgive and you will receive.â€? Crest has always supported not only the local economy, but the local community as well. Crest is where long lasting ties with its customers are formed, whether you have lived in the community your whole life, or are a recent transplant into New York. Crest is there to provide you with all your hardware and gardening needs along with good conversation and advice, two annual events, an art show and lastly but just as importantly an opportunity to hang out with Franklin the pet pig and store mascot.
THANK YOU, LAUREN SANCHEZ, PATRICIA SHOENBACH, OLIVIA LERNER AND DYLAN DEMANSKI