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Publisher/Principal: Tom Chasteen tom@thehardwareconnection.com 305-852-6126
Editor/Principal: Chris Jensen chris@thehardwareconnection.com 317-514-8864
Marketing & Creative Director/Principal: Dan Akers dan@thehardwareconnection.com 317-797-6609
Senior Business Advisor: John Hammond jhammond@thehardwareconnection.com
Western Sales: Tom Ballard tballard@thehardwareconnection.com 317-938-9380
Contributing Writer: John Franklin john@thehardwareconnection.com
Contributing Writer: John Fix III
By Chris Jensen
Staying on Top of Consumer Trends
One of the world’s leading trend firms, trendwatching.com sends out its free, monthly Trend Briefings to more than 160,000 subscribers worldwide. What follows are some of the top trends they have identified for 2012.
1. Dealer Chic—Deal hunting has become an integral part of daily life for millions of consumers. Although there are many new and innovative ways in which brands are using promotions and offers, consumer attitudes to discounts and deals are what’s really changing. It’s now about more than just saving money; it’s the thrill of the pursuit and the perceived smartness, which becomes a source of status. From a retailer’s perspective, this all leads to more personalization, increased importance of loyalty programs and pressure to deliver deal-immune brilliance as an integral part of everything they sell.
2. Cash-Less—Google, MasterCard and PayPal have all rolled out cashless initiatives and the initial lure for consumers is convenience. Eventually, mobile payments will create an entirely new data-driven eco-system of rewards, purchase history and deals. Shoppers
will soon expect to pay for their purchases by tapping their mobile device on a special POS terminal.
3. Screen Culture—Whether it’s via cell phone, tablet or touch screen, screens will be even more mobile, cheap, always on, interactive and intuitive. Screens are the interface to everything and anything that lies beyond via the mobile web and eventually the cloud.
4. Point and Know—Google Goggles is a free image recognition app that enables users to search based on photographs taken with a handheld device. Amazon Flow is a similar app. By taking pictures of objects, places or product bar codes, users can find out further information. Instead of consumers wandering into your store holding up an object and saying, “I need another one of these thingamajigs,” they will be able to scan it into their mobile device and let the Internet tell them what they need and where they can buy it for the cheapest price.
These trends, which are just the tip of the iceberg, are both exciting and frightening at the same time. It’s up to you whether you embrace these changes or let them knock you off your game. n
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By Tom Chasteen
Are You Ready for the Rebound?
Ijust returned from the National Hardware Show in Las Vegas and the one thing that really struck me is that companies are launching new products again and people are excited about it. There was little talk of doom and gloom as everyone was either experiencing business growth or was expecting to see a gradual improvement in the near future.
Our hardware store is located in the Florida Keys, so we have limited real estate to build upon, tourism is our largest industry and we have the only living reef in the continental United States. Add to that our annual temperature is in the high 70’s and you get the idea it’s an ideal place to purchase a second home.
During the real estate boom our property values would go up as much as 20 percent a year. Ten to 15 percent was pretty much a given, much like the real estate markets in Arizona, Nevada and California. Hardware sales were very good as were margins and gross profits. However, then the boom turned to bust and our real estate values dropped as much as 60 percent in some areas. There
are few markets in the United States that didn’t have similar stories to tell. That’s the bad news.
Like most business people in a recession we were forced to shrink our business for the business we were doing. Our purchases dropped in proportion to our sales and we didn’t hire anyone to replace those that retired or moved away. We scrutinized every expense to make sure we couldn’t cut or reduce some of our fixed costs (overhead). Slowly we were able to get our costs in line with our sales.
It hasn’t been easy, but it sure beat the alternative. Probably our biggest advantage in shrinking our business was our lack of debt. I would like to think we have weathered the worst of the storm and I’m proud I wasn’t forced to lay off any of our associates.
Now for the great news, as our real estate markets slowly start to stabilize and homes are slowly working their way through the foreclosure process. I believe our industry is poised to experience one of the biggest booms in recent history.
When a home or commercial property changes ownership the owners
…how does 160 years sound? That’s not a typo. Every tool leaving Wooster, Ohio has been forged with “made in America standards” that our name has been known for since 1851. We have the reliable brands contractors want, and the performance value consumers are sure to appreciate. Wooster product assortments are neatly organized and finished with informative signage to increase your profits. Experience a more successful paint department with Wooster.
the way i see it
invariably do three things almost immediately. They clean up the property, paint something and fix something within the first two weeks of ownership.
In most real estate markets that have experienced significant drops in value or high vacancy rates the buildings have been poorly maintained due to financial pressures. In most cases, these buildings are not going to be torn down but will be snapped up and renovated by new buyers when the new market value has been established.
When this process takes place, and the timeline will be different for each area of the country, the demand for hardware products and service could quite possibly exceed our ability to meet the demand. In some cases, if we haven’t been prudent about our reserves or were forced to dip into our reserves we may find it difficult to meet the increased financial demand to buy larger amounts of merchandise. If the banks are still reluctant to open up lines of credit then this could have a dramatic impact on our ability to compete as independently owned hardware stores.
If the manufacturing sector lags behind with production of goods then this could further impact our ability to access merchandise for resale in our individual markets. The solution is access to money, but in practice it is much more difficult to implement.
Obviously, those with limited or no debt are going to have a huge advantage as they will have an easier time accessing lines of credit. Those that have depleted their reserves and have significant debt must develop strong lines of credit with their suppliers and reduce their past due balances to maximize their credit limits with primary suppliers.
The news is good in my opinion. Just as we’ve had to adjust our businesses for a soft economy we must also be ready to adjust them again when the economy starts to show consistent and steady growth, which is much easier to talk about than it is to implement. From one independent hardware retailer to another we need to be ready, because we could be in for an unprecedented growth spurt the likes of which very few of us have ever experienced. If we aren’t prepared to ramp up our businesses as the economy improves in our markets, it’s a certainty that someone else will.
Now if anyone can tell me when our small vacation community in the Keys is poised to get “white hot” I would be most grateful. n
Tom Chasteen, publisher of The Hardware Connection, is a third-generation owner of Tavernier Hardware in the Florida Keys and conducts The Hardware Conference annually in Marco Island with his wife, Dale.
HARDWARE HUMOR
HARDWARE STORIES Amazing but TRUE
We just had a guy come in with his snowblower. It worked when we had some snow in the fall, but now it wouldn’t start. We thought maybe the gas had gone bad. When we opened the tank, though, we found that he didn’t have any gas. Problem solved.
Allan Funk Eagan Hardware Hank Eagan, Minn.
A customer just bought a caulk gun and came in wanting to know why the caulk tube kept blowing out of the sides or back. We had to explain how to pierce the top of the caulk cartridge. He was stunned to hear the news.
Robert Dacy
The True Value Hardware Store Austin, Texas
Once, this lady returned a pack of batteries because they were dead and the packaging said “good until 2015.” She didn’t understand that the label was about shelf life. We just gave her new batteries. Another one: One month, our water bill was really high, so we believed we had a leak somewhere under our parking lot. A customer said he could find the leak by witching with a couple wires. While the customer was in the parking lot looking for the leak, another customer who is a retired hydrologist came in the store. We asked him if that witching works, and he said “Yep, because water is everywhere under the surface in this country.”
Ken Stewart Stewart’s Hardware Southport, N.C.
Here’s something that struck me as funny: A customer bought a garden hose from us six months ago, and he returned it with the receipt and the cardboard wrapper laminated. Yes, laminated like how some folks do recipe cards. The cardboard collar and receipt were hermetically sealed.
Gordon Keith Sunwest True Value Sun West City, Ariz.
Howʼs Business?
West
How have spring sales been? In the first quarter we’re up 20 percent. The mild weather and a significant change in our promotional strategy accounted for the increase. We’ve been very aggressively marketing weekend sales, offering discounts storewide or in specific departments. We’ve also been using our significant database of emails, utilizing Ace Rewards Dream and Send market promotions in addition to our traditional marketing, such as circulars, radio and a small amount of television.
Best niche categories? We run five full-service lumberyards and lumber and building materials have led the way because of the mild weather. People were able to get started earlier on outdoor projects. Paint has also been a good niche, up 40 percent over last year. The introduction of the Ace premier line Clark+Kensington has accounted for a lot of that increase.
Any recent initiatives? We’ve done a lot of work in aggressive
category management and remerchandising. The paint department has been completely redone in every location. We’ve also added hand tools and power tool accessory categories in the past half year, and we’ve seen significant growth with those. We have also offered a renewed emphasis in live goods such as houseplants.
Have you seen any turnaround in the economy? A lot of customers who have deferred maintenance are pursuing repairs and renovations now. And believe it or not, we are seeing some new construction on the residential side that’s been absent for the past four years. There is a flicker of demand out there.
How are you using social media? One of the things we do a lot of now is interact with customers on Facebook. One posted a complaint about how he didn’t receive a 20 percent discount off an already discounted sale price that was even more than 20 percent. It was fun to be able to respond in a calm and polite manner and convert the angry poster into a customer. That’s definitely something new to our business.
Mike Mayfield Mendo Mill & Lumber Ukiah, Calif.
The warm weather is here, and that means gardening, lawn care and maintenance projects for some... and increased sales for you as your customers prepare their homes for the season.
At Southwire, we understand the changing needs of the seasons and we’re here to help you put the right mix on your shelves, with consistent packaging and a variety of merchandising options. You can feel confident supplying Southwire wire and cable. So, the next time your customers inquire about wire, you can answer without hesitation.
“We
Howʼs Business?
Mid-Atlantic
How have spring sales been? We’re a little flat the past few months. Because it got warm so early people were spending in February, so the past two months it’s been flat at best.
Best niche categories? Weber grills have been, by far, the best niche. We also have strong outdoor power equipment sales and knife sharpening and chainsaw repair services. Any customer stories to share? A guy wanted to buy the cheapest drill possible, so I sold him an electric 4-volt drill. He tried drilling into foundation concrete, and let’s just say that didn’t work out. Then, he got mad at me for selling him the drill.
Mark Ploskina
Bill’s True Value Arlington, Va.
Southeast
How have spring sales been? Our sales haven’t been too bad; we’re up about 10 percent over last year. It’s hard to pinpoint where the increase has come from, but we’ve been doing some remerchandising in the store and the housing market is starting to turn around.
What are your best niche categories? Definitely paint. We sell Benjamin Moore through the store and that’s always been a big seller. What’s your competitive advantage? We’ve been here a long time and have a unique location in an old corner building. We give customers an old-school hardware store feel.
Ed Huss
Beach Ace Hardware Lauderdale by the Sea, Fla.
The grill department at Bill’s True Value
Midwest
How have spring sales been?
We’re up about 20 percent over last year, and transactions are up about 11 percent. Our garden center has been behind most of that growth.
Best niche categories? We have a very good garden center, and as part of that our chemical sales have been very strong. We sell higher-quality plants and even have 40 to 50 different kinds of tomato plants. When people buy the nicer plants, they want to take care of them. So that’s why the chemical sales go hand in hand with our garden center. We’re growing our own hanging baskets,
higher-end versions of ones that Lowe’s and Home Depot sell. This spring we’ve sold 650 hanging baskets. Also, we offer home décor.
Any customer stories to share?
During the Christmas season we had some guy asking for double male plug lights. That was good for a few laughs around the store.
Cris Henkle Henkle’s Ace Webb City, Mo.
Northeast
How have spring sales been? Fantastic. We’re up about 15 percent over last year. During March a lot of customers were buying lawn care products such as grass seed and fertilizer.
Best niche categories? We’re about a half mile from the ocean, so our marine niche has been doing really well. My marine sales have doubled every year since we started that department in 2008. Bird feeders and seed have been very strong. We also sell a lot of Weber grills.
Any new initiatives? Our main focus is on the customer and providing excellent customer service. In our marine department, we can have 62,000 items delivered the next day from our wholesaler—and cheaper than a bigbox marine store. We will be opening a 4,500-squarefoot marine store in February 2013 in Westbrook, the next town east of Clinton.
Steward’s Ace
Howʼs Business?
How have spring sales been?
Pretty good, probably up about 10 percent. This year we ran more sales, and bigger sales, than in the past. We used more radio and more newspaper advertising along with the Ace circulars.
Best niche categories? We’re a little unusual for a hardware store, because we have a big, strong sporting goods section. Thirty-five years ago, when we bought the store, it had a sporting goods department and we’ve expanded it. It’s mostly hunting and fishing, because we’re near a lot
of lakes. We’ve found that a lot of folks will drive pretty far to see a rod, reel or gun. We also have a new line of power tools and have just become a Stihl dealer.
What’s unique about your store? Well, we do have our store animals, Lilly the Maltese and Puddin the cat. They always bring a smile to the customers’ faces. Customers even come in just to see them.
Ernie McLaughlin Audette’s Hardware Winthrop, Maine
From Tom’s Shop HARDWARE PRODUCTS
REVIEW
By Tom Chasteen
As you attend your wholesaler shows this fall you will be surprised to see the number of new products that manufacturers are introducing. Apex, formally Cooper Tools, has come out with a
complete new lineup of hand tools we will be reviewing in the coming months. Swanson Tool Company has launched the Savage line of tools that is equally as impressive and there are many more new products by other manufacturers in the pipeline that have
PRODUCT #1: DUAL™ PAINT + PRIMER | KRYLON
Krylon has developed a complete line of Dual™ paint and primer in one spray paint, which is great. The products we tested were the Hammered Finish and the Metallic Finish. Hammered and metallic finishes are not new, as several manufacturers have developed these types of products over the years.
What our testers found so appealing about Krylon’s Hammered and Metallic Finish spray paints is how easy they flowed and covered. None of our testers experienced the “orange peel” or flooding effect they had experienced with other similar finished products in the past. The other nice feature is there was no
need to prime the surface before applying the finish coat.
The Krylon Dual line is not just limited to Hammered and Metallic finishes, since they also have 32 other colors in Gloss, Satin and Flat finishes. Krylon is a brand that is trusted by retailers and end users. The new line of Krylon Dual spray paints seems to hold up to the Krylon quality standard we’ve all come to expect. To learn more about this product go to www.dualpaint.com.
just been released or will be by the fall show season.
In our store I try to create a “New Area” endcap in the front of the store to highlight some of the new products I’ve seen at the various shows. I don’t create these as a traditional endcap but rather as a “teaser” endcap with only one product of each item or a CD player demonstrating a new product with the
PRODUCT #2: TOOL MATE | SHOP-VAC
Shop Vac has developed a neat new product called the Tool Mate. This innovative product combines a toolbox with a Shop Vac 2.5 gal tank vacuum. This is a great product for the serious finish carpenter who is installing cabinets or doing finish remodeling in a home or office or for a plumber who may need to vacuum up some water that drained out of a water line he was repairing. It would also make a great Father’s Day gift for that serious do-ityourself homeowner.
What makes this such a handy product is the vacuum attaches to the toolbox and can easily be unattached if need be and reattached, so you can carry both your tools in the toolbox and the vacuum together using the heavy-duty handle.
price and location of where we stock it in the store. I do this for two reasons: one, I want the customer to explore our store, possibly seeing other items he or she didn’t know we stocked. And two, I don’t want the customer to think when the endcap changes we’ve stopped stocking the product. It’s just another way to filet a fish and it seems to have worked for us over the years. worked for us over the years.
All of the vacuum accessories including the 1.25" diameter vacuum hose fit neatly into the lid of the toolbox. The tray of the toolbox has removable dividers that enable the user to customize it for his needs. Each of our testers really appreciated the fact Shop Vac attached an 18' cord to the 2.5 peak hp vacuum as well.
As with all of the Shop Vac line you won’t be disappointed with the 2.5 peak hp vacuum. It can easily handle those repair or small install jobs when you don’t need the full-size Shop Vac. To learn more about Tool Mate from Shop Vac, go to www.shopvac.com and search 38802 for vacs.
From Tom’s Shop
Product #3:
Pivot Nozzle WaNds
Hyde tools
Have you ever seen a new product and thought to yourself “I wish I had thought of that?” Well, Hyde Tools has done just that with its patented Pivot Nozzle Wands for pressure washers. Hyde developed this product about a year and a half ago and has been improving and expanding the line to be compatible with just about any pressure washer—electric or gas—that is in production today.
becoming a contortionist and getting soaked trying to maneuver the typical pressure washer wand into those hard-to-reach areas, Hyde developed a pressure cleaner wand that allows the spray nozzle to actually pivot by turning the hand grip on the wand. If you sell or rent pressure washers in your store, this is a must-stock item and is a great add-on sale item.
All three of our testers thought this was a great idea and it worked flawlessly. To see a product demonstration click on the link www. hydetools.com/product-demos#pressurewashing.
This is a product that will be used by both the professional and the d-iyer with equally satisfying results. The Pivot
electric pressure washers, and 28" and 40"
versions for gas-powered pressure washers. If you haven’t seen this product yet, stop by the Hyde booth at your next wholesaler show. I think you will be impressed.
By Chris Jensen
Stand Out How to
with Store Services
Store services are a necessary evil. Customers expect that a hardware store will offer services such as key cutting, screen repair and pipe threading. But if every hardware retailer offers these common services, then how does a retailer stand out for his service?
It all ComeS down to detaIlS and execution. “You have to underpromise and overdeliver,” says matt noonan III, who operates two noonan true Value stores and a Grand Rental Station in Springfield, Ill. when it comes to repairing outdoor power equipment and screens everyone wants it done at the same time, noonan points out. “You’re better off telling them it will take three weeks and then getting
it done in 10 days. we strive to do just a little better than the customer expects,” he says.
If you want to avoid a lot of aggravation, then make customers prepay for screen and window repair. “even with prepaid window work, we still have 10 or 12 screens left behind from last year,” says alan talman of Karp’s Hardware in east northport, n.Y. “now when I look at the leftovers I’m not angry, just amused.”
Albrights Hardware & Garden Center in Allentown, Pa., runs a promotion in the winter months to try to get ahead of the spring rush. “We offer a discount on a full service and double it if the equipment is picked up within seven days of completion,” says Owner Ken Ringer. “The discount is given in the form of a gift card that is mailed at a later date. This gets the customer back in the store at a later date,“ he adds.
If your store is not busy with screen and window repair, then try moving the repair table from the backroom to the salesfloor. You would be surprised
Matt Noonan III offers rental at his two True Value Hardware stores and also operates a standalone Grand Rental Station in Springfield, Ill.
how many customers aren’t aware of the services you offer, so give yourself some free advertising.
UNIQUE SERVICES
how many customers aren’t aware of self problem,” says Noonan.
Another success strategy is to offer unique services that no other local retailers provide.
Noonan True Value is an authorized servicing dealer for Weber grills. “If the customer calls Weber they will send parts to us and give us a work order to go out and fix the problem,” says Noonan.
Noonan also operates a contract postal station in his main store. “It’s in the back of the store, so if we’re doing our job with endcaps we expose postal customers to a lot of product,” he says, adding that two employees are dedicated to taking care of the postal station. About 70 percent of the postal customers are women, which is why Noonan’s housewares department is right next to it.
What follows are some examples of unique services offered by other retailers around the United States.
• Belzer’s Hardware & Housewares in Boca Raton, Fla.,
services and repairs most namebrand electric shavers.
• Paddletown Hardware in Oscoda, Mich., offers dry cleaning drop-off service, asphalt driveway repair and storage for cars, boats and snowmobiles.
• Fletcher Lawn, Garden and Hardware in Fletcher, N.C. offers electric fence repair, lime/fertilizer spreading and kerosene heater repair.
Noonan True Value’s main store is a contract station for the U.S. Post Office and also offers UPS shipping.
• Cole Hardware in San Francisco provides chauffeur service for senior citizens, bridal and gift registry, rewiring for lamps, helium balloon service, plant repotting and UPS shipping. Cole Hardware will even loan a digital camera to a customer so they can take a picture of their home problem to aid the store in devising a solution.
• Frattallone’s Ace Hardware, with 17 stores in the Minneapolis-St. Paul area, replaces watch batteries, sharpens hand saws and repairs flashlights, hose ends, ice augers and lamps.
• Cole’s Hardware, with 11 stores in Pennsylvania, offers custom rug cutting and cleaning and is an authorized repair center for EdenPURE heaters.
• 5th Street Ace Hardware in Washington, D.C., offers a personal shopping service. If customers email their order by 1 p.m. it will be bagged and ready for pickup at the register by 5 p.m.
• Sullivan’s Do it Best Hardware in Indianapolis is an authorized servicer of Power Wheels by Fisher Price rideon toys.
• Lynkris PRO Hometown Hardware in Egg Harbor City, N.J., repairs vacuum cleaners and bikes.
Store ServiceS
• Hartville Hardware in Hartville, Ohio, offers custom closet design and is an authorized repair center for all major tool brands. The store participates in John Deere’s Ready To Mow program. They will come to a customer’s house in a specially designed truck and perform a 14-point inspection that includes everything from changing engine oil and filter to sharpening mower blades and making any necessary mower or blade adjustments.
• Henkle’s Ace Hardware in Webb City, Mo., offers free pool water testing.
RETAIL TRENDS
• District Hardware in Washington, D.C., features The Bike Shop, and they build, repair, restore and rent bikes.
• Penndel Hardware in Penndel, Pa., started doing fingerprinting a year ago for people who needed it done for background checks. The True Value store completed more than 1,000 fingerprints in the first four months.
THE KEY TO SATISFACTION
Cutting keys can sometimes try a retailer’s patience, depending on how unreasonable the customer gets. For example, the customer who comes in and gets a duplicate key made for a key that doesn’t work, and then blames the retailer when the duplicate doesn’t work either.
What should you do if a customer brings in their own auto chip key? “We won’t cut or program them and cite liability concerns,” says Brett Seright of Seright’s Ace Hardware in Idaho.
Matt Mazzone of Mazzone True Value in Brooklyn will cut auto chip keys with the understanding they are not responsible if the key does not work. “We do not program chip keys so no issue there for us. Never had a problem with our policy,” he says. “I don’t see any reason to turn the customer away. It happens so infrequently and if/when the key works, you are going to look like a hero,” Mazzone adds.
Upper: Matt Noonan ensures that all rental equipment is inspected and cleaned before being rented again.
Lower: Make sure employees know how to handle the unusual circumstances that crop up when cutting keys.
“We tell them we will do our best but don’t guarantee the cut. We charge the same as if they bought the chip key from us,” explains Jim Ertzman of South Hills True Value Home Center in Pittsburgh. “If they complain we tell them they are paying for the service.” When Ertzman doesn’t want to guarantee a key he sells a SKU called KNG (Key Not Guaranteed) that prints the following message on the receipt after verbally informing the customer: ABOVE KEY NOT GUARANTEED BECAUSE ORIGINAL IS WORN, DAMAGED, BROKEN OR CANNOT BE POSITIVELY IDENTIFIED. WE ALSO DO NOT GUARANTEE OR
Jeff Punzel, Owner Punzel Ace Hardware
REPLACE CUSTOMER-SUPPLIED KEY BLANKS. ABSOLUTELY NO REFUNDS OR EXCHANGES.
Three years ago, Bill’s True Value in Arlington, Va., began offering high-tech auto keying service. “We invested about $2,000 and it took about a year to pay for itself. It’s a high profit center,” says Manager Mark Ploskina. “Per key, the costs are about $25 to $30 and they retail for about $70. It’s easy to train employees to operate the keying machine.”
When cutting keys Talman at Karp’s Hardware doesn’t collect in advance because that “ends” or closes the transaction and then he will lose the impulse shopping that should be going on while he is cutting the key. “I am guilty of cutting keys SLOWLY when I spy the roving eye of an impulse shopper,” he says. Rex Stevens of Back Bay Hardware in Boston insists on a couple of things that most of his employees think are rude and insane, but which 99 percent of his customers think are thoughtful and helpful: all sets of keys are put on gimme rings in the same order as the
masters. Same blanks keys are automatically cut on different colors if possible.
“If you hand me two silver SC1s, we hand you back a brass and a silver. Also, if you hand us a Baldwin blank, we tell you that it is available—for much cheaper—on a different blank. Most of my customers choose the Baldwin key,” Stevens says. “For that one in a thousand customer who wants all their keys the same color, we re-cut and I eat the 20 cents. We cut about 50,000 keys a year, so this really speeds things up.”
rental iS not retail
Noonan has been in the rental business since 1994 and rents everything from contractor and landscaping equipment to dunk tanks and dance floors for weddings. “Rental is not retail. You have to operate with a different mindset,” he says. “The details are pretty important. We try to find out what the customer’s project is so we can recommend the right piece of equipment.”
Every time a rental product gets returned it gets inspected and cleaned before it goes back out. “We have weekends where we could turn lawn equipment three times, but it’s more important to make sure it looks and runs as good as new. We will clean and spray paint bits for jackhammers so they look new,” Noonan says.
Another key to rental success is relying on staff whose primary purpose is to take care of rental. “We quickly learned that you need people who can
Store ServiceS
specialize in rental and not have just anyone help a rental customer,” points out Noonan.
When the Noonan family got serious about party they opened the standalone Grand Rental Station in 2008. “That’s when we hired a young lady who was experienced in wedding and event planning—the guy who rents bobcats is probably not the person you want talking to a bride about her wedding,” Noonan says.
Noonan annually reviews prices of all store services and does an assessment of rental rates in January or February. “The cost of capital goes up when buying equipment and labor rates keep going up, so you have to make the necessary adjustments to maintain profits,” he says.
Phillip Babich at Frank’s Grand Rental Station in Chesterfield, Mich., shares how they keep track of rental equipment. “We use the shower curtain rings with round paper key tags. We write the numbers on the tags a hundred or so at a time and keep them in a bin ready to clip onto equipment as it comes in,” he says. Their software has a field for “tag number,” which is entered from the tag along with customer name, address, brand, model, etc. The number stays on the equipment as it goes through the system until the customer picks it up. The tag goes back into the bin for reassignment once customer picks it up. n
By John Franklin
BOTTOM LINE
Is Your Scanning Up to Code?
John Franklin has 40 years of experience in hardware retailing, most recently as merchandise manager at Williams Lumber & Home Centers in upstate New York. Contact him at john@thehardwareconnection.com.
Most hardware stores now have computer systems that record every transaction and keep track of sales and inventory data and lots of other information for the owner. We have just about come to the point that we don’t know how to do the job without computers.
The question I ask all store owners and managers is this: Are you truly being served by your store system? Does it do what it is supposed to do every time without fail? Do you have
total blind trust in your store system? My experience says I hope not.
The following is true, and may make you less convinced. The reason for this column is simple. In the last year I have noticed many instances of improper scanning at point of sale. I have personally had at least five instances where I have found the cashier scanned my purchases and failed to accurately record the transaction. Because I spent so many years working on inventory accuracy, I tend to pay very close attention to store transactions. This cannot just be happening to me.
In my local food store, they have a policy that if an item doesn’t scan, you get it free. One time last year I walked out with about $10 of groceries for free. This did not cost the store a lot, and they recorded the problem and
presumably fixed it quickly. The point is that they had a problem, they knew about the problem and they had a program to fix it. Not every store does.
Last year I did a tile job in my bathroom. Since none of the local hardware store/lumberyards stock tile, I had a choice of two big-box stores. My wife and I went to the orange big box and purchased a cart full of assorted tile for about $400. A few days later I bought another $200 worth of tile. Both times, they scanned the boxes of tile at the checkout and sent me on my way.
Over the next few weeks I went back for some minor adjustments, to exchange a few borders for a different type of border. In the return process, the cashier noticed that some of the material I was attempting to return was not on the original receipt and I had not brought the second
Make sure your scanning system is working properly, or you could be watching money walk out the door.
week’s receipt with me. They made the exchange for me anyway.
When I got home I looked at the second receipt and noticed that the item I returned was not on either receipt. It was clear they had sent me out the door with an entire box of 36 border tiles that failed to scan at point of sale. I presume that the case quantity UPC code was not properly loaded, because when I returned the three loose pieces it did pick up the individual UPC code on the item.
On a recent trip to my local hardware store, I purchased a $30 faucet and an additional bunch of small stuff. I watched the cashier scan the items and every time the system read a UPC code it beeped. At the end of the transaction I was confident that everything was properly billed so I scanned the receipt. I noticed the total was about $35. I was puzzled, since the
BOTTOM LINE
faucet alone would have been $30. I examined the receipt and noticed the $30 faucet did not appear. I asked the cashier if everything was OK and she said “Yes, have a nice day.”
I then pulled the faucet out of the bag and asked her if she wanted to ring that up as well? She looked at the receipt and then the faucet and gasped. She rang it up and thanked me for pointing it out. When she rang it up separately the UPC code worked, but something went wrong with the first scan.
This was not a case of a UPC code not being loaded, something was wrong with the scanner. Most customers would have left the building. I talked to the acting store manager and mentioned that the system had failed to pick up an item, and he said he would notify management in the morning. How many of your customers would return to your store to ask to be charged for an item that they received without cost? I bet not very many.
On another recent trip to my local hardware store, I purchased two each of five grits of sandpaper three-packs. I placed them in sorted order, UPC code face up, so the cashier could scan the product quickly and accurately. When the cashier scanned the five pairs of items I looked at the computer screen and it had failed to tally two each of the five different products. It had actually recorded 10 each of just the first stock number!
In this case there was no actual financial loss for the company, but the inventory was now incorrect for five stock numbers. We wonder how inventories get out of whack. The cashier did not notice the error. I pointed it out, and she corrected the invoice to record what was actually leaving the building. I think this happens much more often than retailers realize.
A bad UPC code is always a problem. At best, it just slows down your customer service level and irritates the cashier and the customer. At worst, it allows product to go out of your store unrecorded, and no store can afford such a pure loss of profit. When a customer walks out of the store with an item without paying for it we call them a shoplifter, except when he has your store computer working as a partner in crime.
HOW DO YOU ADDRESS BAD UPC CODES?
I would strongly suggest giving your store cashier a bounty for locating and identifying UPC code errors. No one knows UPC code problems better than they do, and, there is nothing better than this to fix the problem. How did we do this?
Years ago, we tried a $1.00 bounty on every bad code. If the cashier located a UPC code error, they notified management and filled out a “bad UPC” log sheet. Our goal was to fix them at once. I can remember walking up to the cashier and scanning correct UPC codes
into the data file within minutes of the bad transaction. If you wait a week to get this job done, you allow more problems to generate. At the end of the week, we paid the cashier off the log sheet. This program worked because the cashiers had a reason to pay very close attention to every transaction. After a few months, things quieted down and we got almost no UPC errors for a while and we eventually dropped the $1.00 bounty program. In hindsight, I think we should have maintained it forever. UPC codes still plague stores from time to time and $1 is a cheap fix. Remember, if there aren’t any errors, it costs you nothing.
HOW DO UPC CODE ERRORS OCCUR?
Some errors are caused by bad equipment, some are caused by careless cashiers and some are simply bad data. Some UPC code scanners are too old or inaccurate and they just don’t read properly. Bad equipment is easier to find because the cashiers will complain a lot when they don’t work quickly and properly.
Bad data is the most common cause and unfortunately the hardest to find. Some errors occur when adding new items to the store. Make it an absolute rule that until a UPC code is entered, it doesn’t get received. Better yet, scan at receiving. If it doesn’t scan in receiving, it won’t scan at the cashier either. Fix it before it involves a customer.
Another possible place for UPC errors occurs when a manufacturer or your warehouse makes a substitution for the ordered product and sends you an item that is generically the same, but not identified with the same UPC code. Make sure you load all the possible codes for each item number, and then when you get a substitution it still records correctly.
There are issues with individual item codes and also issues with case quantity UPC codes. I have noticed that stores often load the single-item UPC code but not always the case or pack-quantity UPC code.
Look for things sold by the foot like Velcro. Velcro is an unmarked product inside the box. There is a UPC code on the outside of the box. If a customer bought 10 feet, we cut it and sent them to the cashier with a tear slip. If they bought the whole box, the cashier scanned it as 1 foot. We had to make sure the box UPC code covers the whole contents in the box.
The bottom line is this: don’t give the system blind faith, prove it works. Start doing some testing on your system. Some systems use an audible beep on failed UPC codes that is noticeable to the cashier. Some systems just use the same beep for everything, and the cashier must watch the screen after every scan to see if it recorded the correct item. Review your systems to make sure you are getting everything you should. ■
HOT from the Show
Here are 10 unique and innovative new products we discovered at the National Hardware Show®, held May 1-3 in Las Vegas.
CODE RED™ RENOVATION AND DEMOLITION TOOLS
Crescent® has introduced a new line of 10 new renovation and demolition tools in a wide variety of sizes, including indexing flat pry bars, adjustable utility bars, flat bars and molding bars.
utility and
• The company spent many hours in the field with professional and DIY users to develop renovation products that feature greater strength, leverage and precision than the demolition tools on the market today.
Crescent® Code Red™ Indexing Flat Pry Bar head adjusts to give the most leverage to any prying or pulling application.
Crescent® Code Red™ Flat Bars have precision-ground tips for wedging into the tightest gaps and opposing nail slots for improved access and functionality.
• Premium, multi-purpose sealant that goes on pink and dries white when it’s ready to be painted and is environmentally friendly. The patent-pending technology is free of solvents, plasticizers and toxic chemicals, yet has the added benefit of a dry-time indicator.
• It is low in VOCs and odor and cleans up easily with water.
• ColorCure sealant has a typical drying time of one to two hours, depending on climate conditions. It is perfect for indoor and outdoor use, meets spec for ASTM C 834-05 and has patented HomeShield™ antimicrobial protection.
• The Racor® Ladder Lift uses a ropeand-pulley system along with a fixed hook that is mounted on the ceiling. Now homeowners can easily lift and lower a 150-pound ladder up to 12 feet by simply lifting the ladder onto the fixed hook, attaching the strap to the bottom of the ladder and pulling on the rope.
• With a tight, weather-proof seal, ColorCure sealant may be used on windows, door frames, baseboards, trim, countertops and vents. It has excellent adhesion to painted and unpainted wood, glass, aluminum, masonry, tile, brick, metal and concrete.
• The rope-and-pulley system and fixed hook do most of the work, making the typical 80 pound ladder feel like it weighs just 10 pounds—an 8:1 mechanical advantage.
• A unique locking mechanism holds the rope securely in place to prevent accidental release.
• The Ladder Lift comes with installation brackets and hardware and installs in a few easy steps.
• With a full offering of four taping knife lines, Hyde Tools now provides a large selection of options to match the job at hand and the users’ individual preferences. The offering includes three new, patented taping knife lines—Pro Stainless™, Pro Hardwood™ and Pro Project™ tools—plus existing line of Value Series taping knives.
• The high end of this newly re-engineered series is a Pro Stainless™ line of taping knives featuring eight new tools with a flexible, tapered stainless steel blade and premium soft-grip handle.
• Rivet-free construction means the blade will never loosen with use. It also makes cleanup easier, since compound will not build up around rivets. The taping knife backings are non-rust aluminum, with options for a flexible and lightweight folded-aluminum style or a stiff extruded backing. Also included: a Hammer Head® end for resetting popped nails and screws—a popular feature with professionals.
• The Mail Manager™ was designed to offer consumers a superior alternative to the locking mailboxes offered in big-box retailers, but at a price on parity with lower security mailboxes.
• Mail Manager features heavygauge galvanized steel construction for superior protection against vandalism. Moreover, it includes the patented anti-pry latch locking mechanism and 12-wafer disc
lock featured on all Mail Boss™ mailboxes, for ultimate protection against mail theft.
• The Mail Manager has a smaller profile than the Mail Boss, but still accepts small parcels such as checks and prescriptions.
• The bin-door was designed with security in mind to prevent easy fishing by hand.
• Toro’s innovative wireless soilsensing technology communicates moisture levels and transmits that data to the sprinkler timer. If a yard is low on water, the sensor tells the system to apply water. Conversely, if water levels are too high, the sensor prevents the sprinkler system from running.
• This new technology makes monitoring your soil moisture levels effortless. By automatically calculating your field capacity—or the amount of moisture your soil can hold—homeowners can deliver water to their lawns only when the
soil moisture level dips below a desired level.
• The XTRA SMART Soil Sensor features a two-part system: a battery-powered wireless moisture sensor that installs right in your turf, and a receiver that connects to your sprinkler timer, up to 500 feet away.
Small Wall® is a patented paint sample board that takes the guesswork out of paint color selection.
• It has a unique adhesive backing that allows it to be repositioned up to a dozen times, depending on the quality of the substrate to which it is applied.
• When installed properly, the XTRA SMART Soil Sensor can save homeowners up to 35% on their annual irrigation water use.
• The standard Small Wall package comes with two 12-inch-by12-inch boards. Other packaging options include a Color Sampler to Go Kit, which contains two 12-inchby-12-inch boards, a mini roller and tray; and a pack of five 16-inch-by24-inch boards, perfect for faux finishing.
• The line recently expanded to include exterior products. Exterior boards are available in a 6-inch-by24-inch size and are packaged in sets of three.
SMALL
HARDWARE SHOW REPORT
ONE TOUCH SHOWER & STREAM™
• The new One Touch Shower & Stream™ eliminates the strain of squeezing in order to turn the watering on and off, making it especially great for arthritic hands.
plants,
• The new watering nozzle has two water pattern options: Shower, for a cascading flow of fine water droplets that will not harm your plants, and Stream, for a concentrated jet, powerful enough to wash even the muddiest sidewalks.
• The new One Touch Shower & Stream™ is made with heavy-duty metal and is available in six colors: red, orange, yellow, green, blue and berry.
FLO-N-STOP™ WIRELESS WATER SHUT OFF SYSTEM
• FLO-n-STOP™ prevents damage from household water lines. Water is turned On or Off with a touch of a button.
• It features wireless operation and is easy to install.
• The base system includes: floor sensor, remote module, wireless transceiver, wireless on/off button pad and a NSF 61-8 certified lead free brass solenoid valve with a manual override.
• It features a 5'6" x 28" tabletop for preparing or serving food with an attached 28" x 15" heavy-duty grill rack with utensil holder.
• The metal rack conveniently folds inside table and entire table then folds in half to 33" x 28" for easy transport with built-in carry handle.
• Tabletop is UV-protected and stain resistant, easy to clean, and will not crack, chip, or peel.
By John Fix III hardlines digest
Before You open that New Store...
Spring has arrived for most of us, and with it the busy season has started. However, that hasn’t kept dealers away from Hardlines. Here are two interesting discussions from the Hardlines Digest from the past few weeks.
Bank Charges
A lively dialogue got started when Yvonne Gurney from Lake Norman Hardware in Denver, N.C., posted this question. “Is anyone being charged for ‘rolled change’ from the bank? Noticed a fee on the bank statement and was told it is for rolled changed, 10 cents per roll! Curious if it is only our bank that charges this and appreciate any feedback.”
Dusty Lee from Stormer’s True Value in Knoxville, Tenn., feels pretty strongly about bank fees. “If my bank pulled something like that, I would tell them to go lock themselves up in the vault without an air tank. I have never heard such a thing. I have never taken the chance
to rant and rave on Hardlines, but the banking industry is enough to make anyone’s blood pressure be 1000/800. If only we could all find some way to nickel and dime our customers the way they do, we would all be millionaires 10 times over.”
Steve Sayers from Sayers Ace Hardware in Independence, Kan., has not experienced similar bank fees in his business. “I’ve never heard of this. I would look into changing banks unless they are paying you big interest on your account.”
I weighed in on this topic with our experience in the New York metropolitan area. “We get charged for change but credited for our balance. We are also charged for cash deposits—makes no sense. However, our account balance credits usually make the monthly fees from the bank minimal. We’ve shopped around and nearly all the
Fed up with rising bank fees, some retailers are switching to credit unions.
HARDLINES DIGEST
banks in our market have these fees. The smaller, local banks are not close enough to us for handling cash and change, or they share a large parking lot where security might be an issue. So we stick with the bank two blocks away, since they provide fast service and have a very secure parking lot.”
Matt Mazzone of Mazzone Hardware in Brooklyn has had more success with bank fees. “It’s actually pretty common up here in N.Y. We ‘negotiated’ with our bank to not pay those fees. The negotiation basically went like this: “If you charge us for change we will close our accounts.”
Dan Schiffman of Pasadena True Value Hardware & Paint pointed out that it may not be as much of an issue for some stores. “We’ve been charged for coin for decades—to me it’s just a cost of doing business. Thankfully, we are doing more credit card business, which means less rolled coin usage and fees. Reasonable credit card fees are OK with me as I now do a lot less collection work on slow accounts.”
Rick Heuser of Handyman Hardware in St. Cloud, Fla., had a suggestion and some thoughts on why fees are increasing. “Before changing accounts, ask your bank to look at the accounts they offer and see if there is a better fit for your company. Since the law on overdrafts changed, banks have lost a lot of income. They are looking for ways to recoup that money, thus a lot of the
‘free’ services that we’re used to are going to go away.”
Heuser added, “My bank has several different accounts for businesses. There are limits on some as to how much cash I can deposit per month as well as how much change can be purchased per month. If you go over those limits they start charging a fee. Other accounts, they charge you a larger monthly service charge, but no fees for excessive cash or change. Some fees will also depend on what your average monthly balance is. I think the whole ‘free checking’ idea is going to change if it hasn’t already.”
Steve Beeson of Beemun’s Variety & True Value in Alaska noted that his regional bank has these fees as well. “I keep our balances at a level that offsets the fees. I also buy change from our church, which is how we get most of the pennies and nickels that last us for the year. I refuse to pay .10 for a .50 roll of pennies and would much rather have $80 or $100 in pennies.
Prospective new store owners should do their homework before taking the plunge.
The only other way around this is to move to a credit union. I have considered this, but changing all those auto payments—ugh!
Don Keller of K&K True Value in Bettendorf, Iowa, decided to go the credit union route. “Here in the Midwest the banks are charging for everything. We are in the process of changing to a credit union that has no fees. There is a small fee for each account to become a member. Members are the ones who owns the operation, so they don’t have to satisfy stockholders and they are also a non-profit business and don’t pay certain taxes.”
OPENING A NEW STORE
A potential store owner posted the following question about opening a new store. “Please excuse some basic stupid questions but I’m retiring and looking at a possible Ace Hardware in the Atlanta area. My wife and I want something we can work together on as our children are all leaving for college in the next two years.”
Terrill Bartlett from Bartlett’s Lumber & Hardware in Texas offered some advice. “Ace and True Value, among others, are dealer-owned buying co-ops. Orgill is a privately owned
distributor. Basically, they perform the same function but operate differently.”
Bartlett added, “It would scare me that you have never been in a retail environment before. Simply saying retail is different is a big understatement. It is WAY different. There are so many different facets to this business from managing inventory, cash flow, payroll, employees, profit margins, competitors, your pricing policies, return on investment. I could go on and on and I haven’t even mentioned the hardest of all—people.”
“Most of all, do not take the advice of a banker because most do not have your best interest at heart. If I had to do it over again would I be in this business? Well, yes, but then I grew up in this business. I’m third generation and we’ll have #4 running the business before long. I could drive a forklift long before I could drive a car and I’m still learning. While your idea is admirable, I would do everything I could to learn all you can about retail before investing a dime,” he concluded.
Jeff Prupis of Pomona Hardware in New York suggested purchasing an existing store rather than opening from the ground up. “There is a huge difference between opening a ground-up store and taking over an established store. The co-ops will try to convince you to start up since the money is in new stores, not churn. Since you have no hardware/retail experience, opening
since you have no hardware/ retail experience, opening on day one with no customers requires a great deal of start-up capital in order to build a customer base.
on day one with no customers requires a great deal of start-up capital in order to build a customer base. The right established store starts out with cash coming in on day one. Having done both (bought with no experience and start-up 10 years later) they both offer a lot. But for the novice, I’d urge you to look for a store for sale in your market—they are there—preferably one where the owner would stay on/train for a period of time. Just remember, owning your own business is great, you only have to work half a day and you can do what you want with the other 12 hours.”
Ralph Witkin warned against the idea. “I think you’re nuts. I was born in this business and started working 50 years ago. Very different now, government regulations, concern of unions, big-box competition, internet, etc. We sold our store years ago and I worked for a couple of others since and am semi-retired now. I almost bought a small store in upstate New York about six years ago but came to my senses. It might have been a so-so idea for somebody in their early 30’s but I was nearly 60 then.”
Finally, Alan Talman of Karp’s Hardware in East Northport, N.Y., posted this response. “After giving much thought to your question about opening a new store, I thought I’d point out something to you that you might not have considered. When you open a food franchise, you have a menu of 150 items, you go to classes to learn how the business operates and in six months you are an expert in your field. Everywhere in the country, that food franchise operates exactly the same way. You are not in competition with other franchise owners because you all charge the same price. Your core items, maybe 20 or 30 menu items, make up the bulk of your sales.
When you open a hardware store, you have 25,000 items or more, you have 20, 30, 40 suppliers or more, your store stocks stuff that is unique to your store, you will never be an expert even in your own store, every single week you order new merchandise you’ve never stocked before and someone else in town will sell some of the same items for less money.
The point is that a successful hardware store is not an off-the-shelf franchise that you can run by buying some inventory and your job is done. Each day your store inventory and practices change with your customers’ needs, and your job is never done.
If a franchise or co-op salesman tells you that you can buy some inventory
and hang some signs and you’ll do $800,000 in annual sales because you are on the right corner and send out some flyers, then they are oversimplifying a very complicated business and you will fail if you follow their advice.
In my very small store, I do about 80 percent of my hardware buying from my co-op, or drop-ship through the coop, yet I still have scores of other suppliers that provide me with my most profitable items. They are the most profitable items precisely because the co-ops don’t have the items and stocking these special items is why my store is successful at attracting customers.
Your new store will need to stock unique items, tailored to your own customers, not mine, and that’s why a ground-up store doesn’t make money for a couple of years while you figure out what those items are. The co-ops can’t help you with this most integral part of the business because it’s unique to your own city, town or village, and is not part of the big picture of hardware sales nationally. Good luck, take your time choosing and welcome to the industry!” Talman concluded. n
John Fix started the Hardlines Digest in January 1996 and continues to run the servers out of his hardware store in Eastchester, N.Y. There are currently over 2,500 subscribers to Hardlines Digest. To read more or subscribe go to www.hardlinesdigest.com.
Dealers
hardware conference
Talking to
dealers
The industry’s best kept secret is not such a secret anymore—more and more industry people are discovering how beneficial it is to attend The Hardware Conference in Marco Island, Fla. the 2012 edition of the Hardware Conference, set for September 7-9, offers an unmatched opportunity to find ways to improve your business while having lots of fun.
Start making plan S to attend an uplifting event that can have a positive impact on your business. it’s the perfect opportunity to bring your whole family to a five-star resort right on the gulf of mexico with three miles of pristine white beaches.
tom and dale Chasteen, who operate a hardware store in the Florida keys, have been putting on the Hardware Conference since 1988. it is the industry’s largest gathering of independent retailers, who, regardless of wholesale affiliation, can get together and discuss ways to improve their business and grow sales/profits in the face of competition. not only are lasting memories and friendships made, but attendees return to their stores with lots of new ideas to implement.
leading vendors participate in the Conference with tabletop booths showcasing their product lines, and dealers get a chance to have informal
Vendors interact with dealers in a relaxed environment with no pressure to buy.
dialogue with manufacturer executives without feeling pressured to buy. The open dialogue sessions are another highlight, with dealers joining vendors and wholesaler representatives in a frank discussion of topics of concern to all.
“You have the opportunity to see new products, talk to other dealers and learn from both dealers and vendors in a very relaxed setting,” says Rick Heuser of Handyman Hardware in St. Cloud, Fla.
Ace, True Value, Do it Best and Orgill all participate in the event in support of their retailers. The Conference is designed for the whole
The open dialogue sessions address topics of concern to independent retailers.
family, with plenty of free time for fun activities such as tennis, golf, sailing, shelling and walking on the beautiful sandy beach.
The Hardware Conference takes place at the beautiful Marco Island Marriott right on the beach.
hardware conference AGENDA
Wednesday, September 5
Epicor/Activant Training Seminar
. 8:00 A .M . - 5:00 P.M .
Vendor Only Meeting 10:00 A M – 3:00 PM
Epicor/Activant Cocktail Reception .
Thursday, September 6
Epicor/Activant Training Seminar
. 7:00 P.M . - 8:30 P.M .
7:00 A M - 4:45 PM
Vendor and Dealer Registration 9:00 A M - 12:00 PM
Vendor Set Up 9:00 A M - 4:00 PM
Vendor and Dealer Registration 1:30 PM - 4:00 PM
Hardlines Meeting .
4:30 P.M . - 6:00 P.M .
All-Industry Cocktail Reception 6:30 PM - 8:30 PM
Friday, September 7
Vendor Set Up
8:00 A M - 12:00 PM
Vendor and Dealer Registration 8:00 A M - 6:00 PM
Ace Hardware Dealer Meeting/Luncheon 8:30 A M - 1:00 PM
True Value Dealer Meeting/Luncheon 8:30 A M - 1:00 PM
Do it Best Dealer Meeting/Luncheon 10:00 A M - 1:00 PM
Wooster Brush - Day at the Beach 12:30 PM - 4:30 PM
Hospitality Suite Open 1:00 PM - 5:30 PM
3M Tennis Outing 2:00 PM - 4:00 PM
Minwax Shelling Trip 2:30 PM - 4:30 PM
Kids’ (ages 4-12) Night Out 6:15 PM - 10:30 PM
Cocktail Party 6:15 PM - 7:15 PM
Dinner Party and Auction .
. 7:15 P.M . - 10:30 P.M .
Hospitality Suite Open 10:30 PM - 11:45 PM
Sunday, September 9
Breakfast 7:00 A M - 8:00 A M
Exhibit Areas Open 8:15 A M - 10:00 A M
Open Dialogue 10:15 A M – 11:30 A M
Closing Remarks 11:30 A M - 12:00 PM
The Hardware Conference is truly a venue where lasting relationships are formed.
For one low fee, dealers will be able to attend the Epicor/Activant training seminar Wednesday and Thursday and then stick around through the weekend to participate in all the events and activities of The Hardware Conference. In addition to a cocktail reception on Wednesday evening, those participating in the Epicor event will be offered breakfast and lunch on Thursday.
Those in the industry who participate in the Hardlines Digest message board will again be gathering on Thursday to share ways to improve that important industry resource. Hardlines founder John Fix III, who attended his first Hardware Conference last year, will be attending the event again this year.
For more information on attending the Conference, call Tom or Dale at (305) 853-0049 or go to www.thehardwareconference.com. n
a growing community of thousands of independent
tips from fellow retailers delivered fresh daily to your email inbox
“I created Hardlines Digest in 1996 as a way for my fellow retailers to swap tips about the nitty-gritty of running an independent hardware store. Today, it’s grown to a community of thousands of independent hardware store owners just like you. I hope you’ll join today and start sharing your own expertise.”
John Fix Owner, Cornell’s
Hardware Eastchester, NY
By Peter Stoops
Refining Your Inventory Management System
The recent inventory control articles appearing The Hardware Connection have been right on the money in terms of what a POS system can do for users as they dig deeper into that sort of functionality.
Today’s POS system has gone far beyond its original design of helping to process sales transactions and maintain customer accounts. Witness Document Management, GPS integration for delivery and the creation of management apps that work on i-devices and smartphones—the modern POS installation is helping keep the tech-savvy hardware store in sync with so many new opportunities to improve business.
Yet “good old” inventory control has also improved with advancing technology, and shouldn’t be overlooked for its importance. As John Franklin suggests in his article “Saving Labor Costs with Sharp Inventory Control,” the big-box retailers are managing their inventory turns very carefully—and very smartly. They understand the importance of balancing lost sales (too little stock), with expensive excess carrying costs (too much stock), and so should any smaller retailer competing with them.
Taking the previous articles one step further would be these two critical processes: 1. actively fl exing the
inventory up and down to meet historical demands; and 2. eliminating excess inventory as quickly and effectively as possible.
Inventory “Flex”
A min/max system is found on most POS systems, and taking advantage of it does have positive consequences on labor costs. But where the inventory itself can be most leveraged for savings, is by using POS functionality that allows the min/max levels to automatically “flex” on a regular basis. This is accomplished by combining the known periodic sales history with an accurate trending algorithm. Again, this is found in most POS systems, yet it is generally under-utilized.
Finding the time to learn this functionality—usually one department at a time—provides tremendous power, in that these changing min/max levels will go up and down weekly to meet expected demand, something no retailer can do in his head or take the time to do accurately on an individual item-by-item basis.
So, instead of using “fixed” min/ maxes—which don’t compensate for historical buying patterns—“flexing” min/maxes beef up the inventory when a buying demand is increasing, and taper off when it is not.
Eliminating Overstock
Mr. Franklin’s last article was right on the money: a retailer using a min/ max system can run a report showing the number of pieces any SKU might be over-inventoried on (i.e. the number above the “max” level). However, combine this with a flexing min/max, and the result is that you eliminate that inventory even sooner than if you waited for them to be cleared by purchase “attrition.”
Many POS systems take this process one step further: after identifying the overstocks, they allow the extra pieces to be tagged and sold with a special markdown price. Savvy retailers (and some POS systems) can even look back at their sales history by customers, find out who has
Modular means flexibility...
purchased that product in the past and email them the advertised special pricing. Result: instant inventory clearance! Take advantage of these improved inventory control techniques and you will be competing on the same level as the big-box guys—and your inventory investment will be optimized on every shelf and peg hook in the store. That in turn frees up valuable capital, which you can reinvest in the store, making it even more competitive in other areas. ■
Peter Stoops is president of Pacsoft USA, which markets inventory management software and point-of-sale systems. Please send comments to pstoops@pacsoftusa.com.
ELECTRICAL & LIGHTING TRENDS
Light Bulb Sales
(Independent Hardware Channel)
12 Months % Change vs. Year Ago Light Bulbs: Units
Light Bulbs: Dollars.
Source: Vista Information Services, div. of Epicor Software Corp.
Unit Sales Breakdown in Light Bulbs
Total of 5,075 Items with Sales
ELECTRICAL & LIGHTING BUYING UPDATE
Build an endcap display that shows consumers the differences between the new light bulb options.
brightness as stated in lumens; estimated yearly energy cost; life hours (based upon 3 hours use per day); light appearance (warm or cool); and energy used (listed in the form of wattage).
■ The 2007 Energy Independence and Security Act mandated the gradual phaseout of traditional incandescent bulbs as well as halogen PARs and select linear fluorescents, which waste much of their energy through heat loss.
■ As of Jan. 1, 2012, manufacturers can no longer make 100-watt incandescent bulbs. Halogen PARs and select linear fluorescent bulbs can no longer be made as of July 14, 2012, followed by Jan. 1, 2013 for 75W and Jan. 1, 2014 for 60W and 40W.
■ The dates only refer to when manufacturers have to stop making these bulbs. Retailers can sell the old bulbs as long as they have stock.
■ Packaging requirements are also changing. The Lighting Facts label on the back of the package must list the following information:
■ According to Terry McGowan of the American Lighting Association (ALA), dealers and consumers will need to become more familiar with lumens, which is how light output is measured worldwide. For example, a 100-watt incandescent is rated for 1600-1700 lumens of light output depending upon the manufacturer and the rated life of the bulb. To get the same light output in one of the new CFLs or LEDs, find one with the same 1600 rated lumens. The lumen ratings are always printed on the bulb package.
■ Energy-saving halogen technology helps save energy compared to standard halogen bulb by adding XENON gas and enhancing the pressure of the capsule. Energysaving halogens have the same light output and characteristics that you expect from standard incandescents but provide up to 40 percent energy savings. They are available in several styles, are dimmable to 0 percent, last up to 2,500 hours and are instant-on to full brightness. ■
By Matt Mullen
Payment Acquisition Strategy Establishing a Sound
In my last article in the March/April issue (“Payment Processing: What You Don’t Know Could Hurt You”), I explained the inner workings of bankcard processing networks. I also discussed some of the new laws that have radically changed this industry and described how hardware stores are being affected by these changes.
With that foundation set, we can now discuss specific strategies for lowering payment processing costs. Retailers sometimes have to get creative in order to minimize these fees.
PayPal’s motivation is clear—The company has established a trusted and effective mechanism for paying online, and wants to extend their reach into the brick and mortar world.
Home Depot’s motivation is equally clear—They are looking to cut processing costs. PayPal’s basic advantage over traditional credit cards is that their customers can fund their PayPal wallets using multiple sources. They can fund it with a credit card, debit card, a checking account or by using Bill Me Later.
Last year, Home Depot partnered with PayPal to become the first brick-andmortar retailer to accept PayPal payment in their stores. The trial has passed the first phase and PayPal is currently rolling out its mobile commerce and payments platform to nearly 2,000 Home Depot locations across the U.S. This will allow Home Depot customers to pay with their PayPal digital wallets—by just entering their phone number and the corresponding PIN number.
Some PayPal customers choose to fund their accounts with their credit cards or debit cards, and PayPal will incur the typical card processing fees for those transactions. However, customers that fund their accounts with their checking accounts are making direct ACH payments, and ACH fees are significantly lower than credit card processing fees. Because over half of PayPal’s customers use this direct funding model, the company is able to offer Home Depot a much lower blended effective rate on their transactions than the traditional credit card companies.
PayPal is taking a calculated risk with the Home Depot experiment. If 90 percent of PayPal’s customers decide to stop funding their accounts directly and switch to credit cards, then the company is going to lose money and this experiment will fail. However, this is their first step into the brick-and-mortar
retail world and they are going to refine the model based on what they learn.
If this experiment succeeds, PayPal will look to extend it to other retailers. Unfortunately, this offer will change significantly by the time the company begins targeting independent hardware stores.
“The PayPal relationship may offer Home Depot other benefits beyond reduced processing expense,” said Wayne Johnson, managing director of Technology Equity Research-Transaction Processing for Raymond James. “PayPal may also improve Home Depot’s customer interaction at the point of sale by allowing customers to pre-order and pre-pay for items on the Internet, bypass the checkout line and pick up items at the loading dock.
UNDERSTAND HOW YOU ARE BEING PRICED
them into different categories, and you get priced according to how many transactions you have in each of these categories.
This pricing system is a thinly veiled bait-and-switch approach. Under this model, the lowest tier is usually an extremely low and very competitive interchange rate. Unfortunately, very few transactions will fall into this category. The majority of your transactions are going to fall under the midqualified or the non-qualified discount rates, and those rates are much higher. Hardware store owners need to understand the pricing model they have agreed to and how they are being charged.
Your company may not be big enough to establish an industry partnership on the scale of Home Depot/PayPal, but that does not mean that you should sit on the sidelines.
Many bankcard processors try to get their vendors to sign onto their Tiered Pricing model, which means that your processor takes all your transactions and splits
I believe that the Interchange Plus model is better for most retailers. Under this pricing model, the payment processor takes the actual interchange of each transaction— whatever the amount the network says it is—and simply adds an agreed upon markup to that cost to process each transaction. This system is much more transparent, and allows the retailers to understand and control their costs. Under a Tiered Pricing model, the processing company will typically go to great lengths to hide how transactions are being divided up.
Going to a pricing model that is transparent helps your
business grow, because you will be able to analyze the charges and make the adjustments necessary to avoid unnecessary fees.
If your store does not offer PIN Debit processing, you need to make this change immediately. While the Durbin Amendment removes some of the distinctions between signature debit and PIN debit transactions, there are still many banks that do not fall under the Durbin proviso, and may not offer reduced rates for signature debit transactions. Having a PIN pad will dramatically reduce transaction fees for these banks.
Know Your Processor
Retailers come in all shapes and sizes. Bankcard processors understand this and offer different rates to different industries based on their level of risk. You need to know your processor well and understand how they view hardware retailers so that you can get the best deals on processing.
Hardware cooperatives are an excellent source of information and a great place to start looking for payment processing programs. The co-ops have already negotiated on your behalf and have done most of the heavy lifting for you. If you participate in a co-op and are not participating in their payments program, then take another look. Those programs are very valuable to their members and often represent the best deals.
staY Informed
The payment processing landscape is constantly changing. There have been many big changes in the market in the last two years, and more changes are expected. It is important to have a partner that will help you understand the regulatory environment. If you are informed, then you can have an intelligent conversation with your processors about your rates, what you are paying and the options available to you. This partner can be your co-op or wholesaler, or an independent third party like Epicor.
At the end of the day, all that matters is what you are paying in fees each month. This is a pretty simple calculation: take your total sales, take the fee you are paying your processor and divide it. That percentage is your effective rate. You are trying to find an effective rate that is competitive for your industry and your size. If you are a single-store operation, it is in your best interest to find a program that is collectively negotiating on your behalf because your volume is not enough to change standard pricing from processors.
Armed with this new information (and the right partners), you should now be in a better position to analyze and lower your payment processing costs. n
Matt Mullen is director of market development for Epicor Software Corp.
IN THE NEWS
NEW STORES:
■ Darlene and Ed Jenkins are the new owners of Forge Hardware in Spring Grove, Pa.
■ Locust Lumber held a grand opening for its new store in Vass, N.C. on March 30.
■ Hockey legend Bobby Hull was on hand for Geneva Ace Hardware’s grand opening in Geneva, Ill.
■ Greg and Shannon Hufford opened Hufford’s Lumber and Hardware in Leachville, Ark.
Hufford’s Lumber and Hardware
■ Bob Mitchell plans on opening a third Ace Hardware store in Bend, Wash.
■ McCabe Do it Center has reopened a store in Madeira, Ohio, where George
Meyer Hardware had operated for 100 years.
■ Mike and Brenda Dempsey purchased Wilson Lumber in St. James, Mo., and renamed it Perkins Lumber.
■ Paul Leahey has opened an Ace Hardware store in Buffalo, N.Y., adjacent to his Schuele Paint Co. store.
■ Hartville Hardware opened its new 245,586-square-foot store featuring an Idea House in Hartville, Ohio.
Hartville Hardware
■ Allen and Leigh Duncan have reopened their business, renamed Smithville Hardware and General Merchandise in Smithville, Miss., after it was destroyed by a tornado a year ago.
■ Matt and Laura Kollar opened Matty K’s Hardware in Chicago.
■ The Duncan family has opened Duncan’s Hardware and Building Supply in Hohenwald, Tenn.
■ McLendon Hardware plans to open a new store in Tacoma, Wash., this summer.
■ Pellicci Ace Hardware held three days of activities to celebrate the grand opening of its new location in Farmington, Minn.
■ H. Brickman & Sons opened its third Ace store in New York City in April.
■ Andy Grant opened his fourth Ace Hardware store in Rocky Hill, Conn.
Matty K’s Hardware
■ Dick Blandford opened Ace Hardware Newport in Newport, Ky.
■ AG Supply Company has opened its fifth Ace Hardware store in Sultan, Wash.
■ Deering Lumber has purchased stores in Springvale and Sanford, Maine, from New England Building Materials.
■ Sterling Lumber & Investment has opened its 11th store in South Fork, Colo., named South Fork Lumber.
■ Pacific Coast Supply has purchased six stores from Pioneers Builders Supply in Tacoma, Wash.
■ Mike Nelson opened Chinle Ace Hardware in Chinle, Ariz., which represents his third store on the Navajo Reservation.
■ John Redmond has opened Tiger
Ace Hardware in Stewartville, Minn.
■ Matt Shapiro and Jim Marsh opened Beyond Hardware True Value in Canandaigua, N.Y.
■ Gary Walker opened Gary’s Ace Hardware in Culpeper, Va.
■ Kenny Queen and sons Kent and Mark are the new owners of a 100-year-old business renamed Kenny Queen Ace Hardware in Kenova, W. Va.
KUDOS TO:
■ Hauser Home Hardware, owned by Rob Hauser, was honored with the Walter J. Hachborn Store of the Year Award by Home Hardware.
■ Ellis Ace Hardware in Seneca, Ill., is celebrating its 140th anniversary.
■ Pete’s Hardware in Castro Valley, Calif., received the Hayward Area Historical Society’s historic business award.
■ Bob’s True Value, owned by Bruce Meles in Otsego, Mich., is celebrating its 60th anniversary.
■ LeBlanc’s True Value in Manchester, N.H., is celebrating 93-year-old patriarch Sylvio LeBlanc’s 75 years in the hardware business.
■ Christine Hand, who operates Handyman Home Hardware in Conception Bay South, Newfoundland, has been elected chair of Home Hardware Stores’ board of directors.
■ Kabelin Hardware in LaPorte, Ind., is marking 100 years of family ownership in the business.
■ Holdridge Home & Garden Showplace in Ledyard, Conn., has finished a major renovation as it celebrates 100 years in business.
IN THE NEWS
■ Bob Taylor was inducted into the Home Center Hall of Fame.
PEOPLE ON THE MOVE:
Scott Sproul
■ Do it Best Corp. has created a new position— national retail performance manager— and promoted Scott Sproul to the job.
WHOLESALERS IN THE NEWS:
■ Ace Hardware ranked highest in customer satisfaction in the J.D. Power and Associates 2012 U.S. Home Improvement Retailer Satisfaction Study. Ace reported total revenues of $908.2 million for the first quarter of 2012, up 6.3% from 2011. Net income rose 49.3% to $10.2 million.
■ Do it Best Corp. announced plans to invest $30 million in a
new Retail Service Center in Sikestown, Mo., which would replace a nearby RSC in Cape Girardeau, Mo.
■ Doug Miller retired as president of Jensen Distribution Services after 40 years of service.
■ Hardware Distribution Warehouses Inc. is hosting a five-day “Boot Camp” training program to attract the next generation of workers to the industry. Click Here to read more.
OTHER NEWS:
■ The National Hardware Show, held May 1-3 in Las Vegas, attracted 2,500 exhibitors and more than 27,00 industry attendees, a 5% increase over 2011. “We couldn’t be more pleased with how the show went,” said Rich Russo, event director.
■ Mar Jam Supply purchased Lainhart & Potter in West Palm Beach, Fla.
■ Big C Lumber acquired Lutterbein Lumber in Edgerton, Ohio.
■ The Friday Night Sneak Peek event at Do it Best’s May Market generated a record $7.9 million in purchases in just 90 minutes. Do it Best also debuted an online training program called DiBU. Do it Best Sneak Peek
■ ACO Hardware has revamped seven stores since starting an extensive remodeling initiative last year, including a recent expansion of its Plymouth location that nearly doubled the size of the store while adding garden decor and patio furniture.
■ Sears Holdings Corp. has taken steps to spin off its 1,100 hometown/
hardware and 122 outlet stores in a public offering for a new company called Sears Hometown and Outlet Stores Inc.
■ Roswell Lumber Co. has renamed its stores in Artesia and Roswell, N.M., Builders Do it Centers.
IN MEMORY:
■ Paul Bernhardt, who had a knack for store promotions and displays as owner of Bernhardt Hardware in Salisbury, N.C., passed away at the age of 87. He was a North Carolina delegate to the White House Council on Small Business and won numerous national contests for his displays. Click Here to read more.
■ James Wassenaar, former owner of Oak Lawn True Value and Anchor True Value, passed away
April 20 at age of 77. He is survived by wife Pearl and three kids.
■ Joseph Fedor Jr., who owned and operated Walden Central Hardware in Lancaster, N.Y., passed away April 21 at the age of 81.
■ Carl Piekarski, president of Stanford Home Centers Do it Best in Plum Boro and Leechburg, Pa., passed away May 18 at the age of 73.
GET THE FULL STORY:
■ Cash mobs descend on Oak Ridge Hardware, Vose Hardware, Newtown Hardware House and St. Peters Hardware. Click on above hardware stores to read more.
■ Ziegler Ace Hardware operates a JCP Express outlet of JC Penney in one of its Elgin stores. Click Here to read more.
Ziegler’s Ace Hardware
■ Hardware retailer shares his experiences as a D-Day glider pilot. Click Here to read more.
■ Ace Hardware in Elgin sells fresh seafood out of its parking lot. Click Here to read more.
■ Vickery Do it Best Hardware in Smyrna, Ga., offers a Little Free Library for the community. Click Here to read more.
■ Study shows impact on Iowa communities 15 years before and after Walmart. Click Here to read more.
■ Hardware Plus finds niche with motorized furniture. Click Here to read more.
■ New York City shuts down hardware store that sold spray paint to minors. Click Here to read more.
■ Shell Lumber stops using pennies. Click Here to read more.
JUNE
n House-Hasson Summer Dealer Market
June 28-30, Duke Energy Center, Cincinnati
n National Lawn & Garden Show
June 11-13, Embassy Suites Convention Center, Dallas-Frisco, Texas
n PRO Group Inc. Group Merchandising Conference
June 18-20, Embassy Suites Downtown, Centennial Olympic Park, Atlanta
n United Hardware Fall & Christmas Buying Market
June 15-17, Minneapolis Convention Center, Minneapolis
JULY
n Southern Building Material Association Summer Conference
July 26-29, Wyndham Resort, Virginia Beach, Va.
AUGUST
n Ace Hardware Corp. Fall Convention
August 16-18, McCormick Place, Chicago
n Bostwick-Braun and Southern Hardware Fall Market
August 10-11, Columbus Convention Center, Columbus, Ohio
n Handy Hardware Dealer Market
August 10-12, Henry B. Gonzalez Convention Center, San Antonio
n Independent Garden Center Show
August 21-23, Navy Pier, Chicago
n Orgill Inc. Fall Dealer Market
August 16-18, Las Vegas Convention Center, Las Vegas, Nev.
SEPTEMBER
n Blish-Mize Fall Dealer Market
September 21-22, Overland Park Convention Center, Overland Park, Kan.
n HDW Fall Market
September 8-9, Shreveport Convention Center, Shreveport, La.
n Home Hardware Fall Dealer Market
September 17-20, National Trade Centre, St. Jacobs, Ontario
n Horizon Distribution Annual Market
September 8-9, Yakima Convention Center, Yakima, Wash.
n Jensen Distribution Marketplace 2012
September 12-14, Spokane Convention Center, Spokane, Wash.
n The Hardware Conference
September 7-9, Marco Island Marriott, Marco Island, Fla.
n True Value Fall Market
September 21-23, Salt Palace Convention Center, Salt Lake City, Utah
retail ideas
Creative Way to reWard employees
Steward’s Ace Hardware in Clinton, Conn., knows how to keep its employees charged up and ready to contribute with creative team-building.
“In the past year, our staff has really stepped up to the plate. In the fall, we had to deal with Hurricane Irene. We were without power for six days, and staff had to work 12-hour shifts,” explains Todd Steward. “We did this while working on generator power and with daily tractor-trailer deliveries. It was just non-stop for weeks. Then, we had a hell of a winter with big snowstorms. We couldn’t keep anything in stock and the staff worked extra hours and stayed late.”
As a thank-you, Steward closed the store one Sunday and took 19 staff members ziplining. “Afterward, we had a nice dinner together. While it was team-building, it was a reward for all their hard work. Even the older staff in their 50s and 60s had a blast,” he says.
Catering to the theater CroWd
The staff at Steward’s Ace went ziplining as a reward for their hard work.
project-planning services for home, business and theatrical projects.
This Lincoln Square neighborhood hardware store carries all the traditional categories of hardware but also dedicates two full aisles to materials for theatrical scenic and lighting designers including Jaxsan foam coat, specialty rigging supplies, powder-coated black aircraft cable, cheeseboroughs, specialty tape and more.
Matty K’s Hardware stocks materials for theatrical productions.
Founded by Matt Kollar in 2011, Matty K’s Hardware in Chicago is a onestop shop that features personalized
HOW TO PROFIT FROM SELLING THE UNEXPECTED
You can only sell so many hammers and toilet flappers, which means retailers need to experiment with unusual products…such as pickles.
One Ace store has sold $6,000 worth of two pickle SKUs from Tru Pickles in five months at over 40 percent margin. Nutter’s Hardware and Zettler’s Hardware in Columbus, Ohio, have both found success selling Rickle’s Pickles.
One of Michael Frattallone’s stores in Minnesota has sold over 5,000 bottles of Real Soda (soda that uses sugar instead of high fructose corn syrup) in five months. “Customers love it and they keep coming back for more. We have to sell stuff that adds the cherry on top to sales,” Frattallone says.
Howe’s True Value Lawn & Garden Center in Warren, Vt., sells jewelry that is handmade by the store’s cashier and merchandised in a section called Kitty’s Pretty’s.
“We have six or seven lines of purses and also a lot of costume jewelry,” says Steve Sayers of Sayers Ace Hardware in Independence, Kan. “We have a fairly large gift department and as ladies stores have gone out in our town, we have taken up the slack in some categories. Very good margin,” he adds.
Sayers notes that you have to go to the Gift Markets in Dallas, Atlanta or Chicago to source these items, and that it requires the right person buying it.
Above: Howe’s True Value sells jewelry that is handmade by a cashier.
Left: Pickles are a surprisingly strong impulse item.
J. Johnson of Johnson’s Home & Garden in Maple Valley, Wash., has had good results selling the Baggallini line of handbags, totes and computer bags.
“We picked up the Baggallini line at True Value’s fall market and are doing very well with them,” adds Nick Kaplanis of Frager’s in Washington, D.C. “Average ticket between $50 and $120 with a healthy margin. We have ladies spending 15 to 20 minutes trying to figure out which one they want—kind of amazing to me.”
Dan Johnson of Oak Hill Ace Hardware in Scarborough, Maine, has found success with Jellybean rugs, noting they are $25 retail and great margin “You need to have a good assortment. Steven Lewers cards of birds, fish, moose, etc. sell to everyone. Always looking for something new even though we are a hardware store.” ■
800
Number of lumens required to equal the light output of a 60-watt incandescent bulb.
$3.7 billion
2011 revenue reported by Ace Hardware Corp., up from $3.53 billion in 2010. Comp-store sales rose 2.9%.
sales levels to year-ago levels, 74% of manufacturer respondents said sales were higher, 4% reported sales were even and 22% said sales were below yearago levels.
62%
Total growth in U.S. e-commerce by 2016, reaching $327 billion in sales, according to Forrester.
Advantage.
9.3%
Growth rate for $7.2 billion U.S. lighting industry per annum through 2015, according to Freedonia Group.
308.3
The AHMA Home Improvement Industry Confidence Index’s Current Situation Index in April, down from an all-time high of 350.0 in March (April 2008 = 100). In comparing April
$448.2 million
First quarter 2012 revenue reported by True Value Company, a 0.1% increase from the same period a year ago. Net margin was flat at $8.1 million.
