Paint & Decorating Retailer March 2023

The Next Steps

Best Practices for Working Through an Outside Sale

Page 24

Why Digital Acceleration Is Replacing Digital Transformation

Page 30

3 Tech Insights from NRF 2023

Page 34

What the Pros Know About Hand Tools, Knives and Blades

Page 36

DISCOVER...

• Innovative Leadership and Ideas

• How to Stand Out in a Digital World

• Real-World Cybersecurity Lessons

• How to Streamline Operations Using Technology

• Retail and Technology Solutions

• How to Amplify Your Brand With Digital Marketing

• And more!

Former Google Head of Business Innovation & Strategy

CHRIS HOOD

Former Amazon Executive JOHN ROSSMAN

The Next Steps

Best Practices for Working Through an Outside Sale

Page 24

Why Digital Acceleration Is Replacing Digital Transformation

Page 30

3 Tech Insights from NRF 2023

Page 34

What the Pros Know About Hand Tools, Knives and Blades

Page 36

The Next Steps

Best Practices for Working Through an Outside Sale

Page 24

Why Digital Acceleration Is Replacing Digital Transformation

Page 30

3 Tech Insights from NRF 2023

Page 34

What the Pros Know About Hand Tools, Knives and Blades

Page 36

COMING IN APRIL

OUR MISSION

1025 E. 54th St. Indianapolis, Indiana 317-275-9400 NHPA@YourNHPA.org YourNHPA.org

COMMUNICATIONS

Melanie Moul Communications & Content Manager mmoul@YourNHPA.org

Lindsey Thompson Senior Editor lthompson@YourNHPA.org

Carly Froderman Associate Editor cfroderman@YourNHPA.org

Jess Tillman Retail Training Editor jtillman@YourNHPA.org

Autumn Ricketts Graphic Designer

Olivia Adam Graphic Designer

Austin Vance Production Manager

Kallahan Beatty Communications & Production Coordinator

Freda Creech Sales & Production Assistant

Kevin Trehan Digital Media Specialist

Julie Leinwand Marketing Manager

ASSOCIATION PROGRAMS

800-772-4424 | nhpa@YourNHPA.org

Katie McHone-Jones kmchone-jones@YourNHPA.org

Director, Member Services & Events

Kim Peffley kpeffley@YourNHPA.org

Director, Organizational Development & Consulting

Jesse Carleton jcarleton@YourNHPA.org Training Manager & Editor

Renee Changnon rchangnon@YourNHPA.org Retail Engagement Specialist

SALES

LeAnn Day lday@YourNHPA.org

Publisher Scott Gilcrest

317-508-7680 | sgilcrest@YourNHPA.org

Director of Sales & Southern Sales Director

Jordan Rice

217-808-1641 | jrice@YourNHPA.org

Northern Sales Director

From Job to Career

Beyond advertising a positive and culturally minded job description, businesses should focus on promoting their operations as a career opportunity, not simply a job to be filled. Next month, hear from employees of independent operations who started in an entry level position and have grown in the business, turning their job into a career.

PAINT & DECORATING RETAILER

(ISSN 1096-6927): Published monthly except December by the North American Hardware and Paint Association, 1025 E. 54th St., Indianapolis, IN 46220. Phone: 800-737-0107. Subscription rates: January through November issues, $50 in U.S., payable in advance. Canada $75 per year. All other countries $100 per year. Single copy $7, except July issue, $25. Periodicals postage paid at Indianapolis, Indiana, and additional mailing offices. Postmaster: Send address changes to Paint & Decorating Retailer, P.O. Box 16709, St. Louis, MO 63105-1209. Returns (Canada): Return undeliverable magazines to P.O. Box 2600, Mississauga, Ontario L4T 0A8. PM# 41450540. Copyright © North American Hardware and Paint Association, 2023.

The North American Hardware and Paint Association (NHPA) helps independent home improvement and paint and decorating retailers, regardless of affiliations, become better and more profitable retailers.

NHPA EXECUTIVE STAFF

Bob Cutter President & CEO

Dan Tratensek

Chief Operating Officer

David Gowan

Chief Financial Officer & Executive Vice President, Business Services

Scott Wright

Executive Director, Advanced Retail Education Programs

Whitney Mancuso

Executive Director of Innovation & Engagement

NHPA BOARD OF DIRECTORS CHAIRMAN OF THE BOARD

Jared Smith, Jared’s Ace Hardware, Bishopville, South Carolina

EXECUTIVE VICE CHAIRMAN

Jackie Sacks, Round Top Mercantile Co., Round Top, Texas

DIRECTORS

Alesia Anderson, Handy Ace Hardware, Tucker, Georgia

Jay Donnelly, Flanagan Paint & Supply, Ellisville, Missouri

Ned Green, Weiders Paint & Hardware, Rochester, New York

Scott Jerousek, Farm and Home Hardware, Wellington, Ohio

Joanne Lawrie, Annapolis Home Hardware Building Centre, Annapolis Royal, Nova Scotia

Ryan Ringer, Gold Beach Lumber Yard Inc., Gold Beach, Oregon

SECRETARY-TREASURER

Bob Cutter, NHPA President & CEO

NHPA CANADA

NHPA CANADA

Michael McLarney, +1 416-489-3396, mike@hardlines.ca 330 Bay Street, Suite 1400 Toronto, ON, Canada M5H 2S8

CIRCULATION, SUBSCRIPTION & LIST RENTAL INQUIRIES

CIRCULATION DIRECTOR

Richard Jarrett, 314-432-7511, Fax: 314-432-7665

The Next Steps

Selling an independent family business can be an emotional process with plenty of challenges. Hear from the previous owner of a family-owned company and the outside operation that purchased them to discover insights on making the transition go smoothly from both sides of the transaction.

30

ASSOCIATION

Tech-Focused Career

Hear from one of the 2023 NHPA Independents Conference keynote speakers, Chris Hood, about his career in the movie, television, video game and retail industries.

34

INDUSTRY EVENTS

Tech Takeaways

Discover the highlights from NRF 2023: Retail’s Big Show, where retailers from across the industry gathered for educational sessions, product discovery and networking.

36

CATEGORY FOCUS Pro Preferences

DISCOVER...

• Innovative Leadership and Ideas

• How to Stand Out in a Digital World

• Real-World Cybersecurity Lessons

• How to Streamline Operations Using Technology

• Retail and Technology Solutions

• How to Amplify Your Brand With Digital Marketing

• And more!

Former Google Head of Business Innovation & Strategy CHRIS HOOD

Former Amazon Executive JOHN ROSSMAN

NEWS,

Get the Latest Updates

Scan this QR code or visit PDRmag.com/march to see these stories and more resources for your operation.

Carrying on the Business

Succession planning and business transitions can be tough, but learning how the process works and how to best handle the challenges and hurdles along the way will help everything go more smoothly for both sides.

8 Tips to Selling or Buying a Business

If you’re looking to sell your business, here are eight tips for walking through that process on both the buying and selling sides.

The Place to Buy and Sell

NHPA offers the Retail Marketplace where owners can list their operations for sale or advertise that they are looking to purchase a business.

See 3 Business Transition Strategies

Read how different retailers transitioned their businesses from one owner to another through three different strategies: family inheritance, selling to an outside source or forming an employee stock ownership plan (ESOP).

ASSOCIATION

A Warm Welcome

Meet the newest NHPA board member, Joanne Lawrie, and hear from other board members on what they love about serving the industry as a part of the NHPA board.

INDUSTRY EVENTS

Innovation Insights

Don’t miss insights from former Amazon exec John Rossman, who will share best practices on developing leaders through innovation as a keynote at the NHPA Independents Conference on August 2-3 in Dallas, TX.

PODCAST

Technology Takeaways

From NRF 2023

NHPA senior editor Lindsey Thompson attended the National Retail Federation’s NRF 2023: Retail’s Big Show in New York City. Listen to her takeaways from the show and how they can apply to your operation.

Scan the QR code or visit the website below to listen.

YourNHPA.org/podcast

How to Reach Dan

Dan Tratensek dant@YourNHPA.org

Learning to Evolve

Back in high school, I remember a particularly intense conversation with a good friend who was in grave distress over some issues with his then-girlfriend. Apparently, their relationship had become stale and said girlfriend was suggesting they worked better as friends.

In my attempts to settle his nerves, I explained that all high school relationships end in one of two ways—you break up and move on with your lives or you get married and live happily ever after. Since most high school relationships don’t end in marriage, I reasoned that he should come to terms with the fact that his relationship would likely end in breakup. Of course, this wasn’t much solace to his aggrieved teenage psyche.

Unfortunately, the same principle applies to businesses. Businesses typically end in one of two ways—they close down or the owners sell it or pass it along to the next owners. There isn’t much middle ground. Like high school relationships, the brutal truth is that most businesses don’t survive into multiple generations.

I would assume your goal as the current steward of your business is achieving the latter outcome.

In order to do this, you have to push your business forward. Much like my friend’s sophomore relationship, you can’t let things grow stale. Of course, this is often the case with too many businesses, and I am seeing it more and more in this industry. There is a steady stream of independent retailers saying their convenience and service are enough to beat their competition; the truth is these words often don’t reflect reality, especially when the competition is collecting customer data to create unique loyalty messaging, monitoring price changes across the industry in real time, offering a variety of online options for engaging with the business and more.

So, if you want to beat the odds and have something of value to either fund your retirement or pass on to the next generation, you have to be honest about the current state of your operation and examine what others are doing to evolve and keep their businesses fresh.

Luckily, the North American Hardware and Paint Association (NHPA) has a solution for you. In August, we will be hosting our first-ever Independents Conference. During this two-day conference, we will be focusing on the latest in retail technology, best-in-class operations practices and much more. Attendees will hear from industry leaders and pioneers from Amazon, Google and others who have evolved with the times. There’s no better way to keep your operation on the leading edge than learning from the best in the business and discovering how they developed relationships with their customers that were built to stand the test of time—unlike my friend’s high school romance. For more information go to YourNHPA.org/conference

Dan M. Tratensek Chief Operating Officer & Publisher

“You have to be honest about the current state of your operation and examine what others are doing to evolve and keep their businesses fresh.”

Test It Out

Gray’s Paint Provides Colorful Samples to Customers

At the Redwood City location of Gray’s Paint, which has four stores in the Bay Area of California, customers taking on painting projects can purchase 2-oz. paint sample jars to test colors before buying a larger quantity.

“We have the largest collection of sample paints in the area, and it’s only 85% or 90% of Benjamin Moore’s colors,” says Daniel Engels, manager of the Redwood City store. “We spend a couple of hours daily filling them. Mondays, Tuesdays and Wednesdays are always big fill-up days because we have to recover from the weekend.”

A third-party company previously made the samples over 20 years ago, but when they stopped, the store’s

employees started making the samples themselves because they were so popular with their customers.

“It allows our customers to get six 2-oz. paint samples for the price of two quart-sized samples,” Engels says. “We’re often shocked at how popular this size is, and our offering is unique because paint companies can’t make them in small enough increments accurately.”

The sample jars are neatly organized on several floor-to-ceiling shelves spanning one side of an aisle.

“We can match any color brought to us,” Engels says. “So if a competitor is out of sample sizes and a customer brings the color to us, we can provide that sample.”

Customers at Gray’s Paint can get a true-to-life look at what paint colors will look like in their spaces thanks to the sample jars the store sells.

From

Above and Beyond Service

Serving has always been a part of Kevin Schramm’s career. After retiring from the U.S. Navy, he wanted to continue making a difference in the lives of others and looked for a career where he could benefit his community. That career search led him to become a franchisee and owner of LIME Painting in Boise, Idaho, where he has created multiple job opportunities for the community and partnered with local organizations to give back.

Schramm and his local franchise partnered with Make-A-Wish Idaho, which grants life-changing wishes to children with critical illnesses. When customers join the LIME Loyalty Membership Program, 50% of the membership fees are donated to LIME Light Outreach Inc., the nonprofit arm of LIME Painting. LIME Light Outreach then gives the donated funds to support Make-A-Wish Idaho and grant life-changing wishes to local children.

“I’ve always had the desire to give back to the community in a big way, and now I have a vehicle that allows us to make a difference,” Schramm says. “When we have a cause that’s bigger than ourselves, we tend to do extraordinary things. That’s my goal with my team and company—to always think about how we can better ourselves and our community at the same time.”

For his work in the community and staying true to the brand’s values of love, integrity, mission and excellence, Schramm was awarded the LIME award for the second year in a row at the LIME Painting 2022 Conference.

“I strive to be part of the big picture and buy into everyone’s success,” Schramm says. “I’m always available to help anyone that asks and participating in conversations on how we can become better business owners and serve our clients and community better.”

Technology Corner

Nicole Durant strives to offer something different when customers visit her two Exeter Paint Transform and Design stores in Exeter and Epping, New Hampshire. She implemented several different technologies to improve the customer experience, including the Popl digital business card platform, a simple but effective solution that has boosted business and customer awareness.

Popl is a circular device that sticks to the checkout counter. When a customer wants the information of the store or any employees working with them on a project, the customer simply taps their phone to the Popl device and it brings up the contact information, email address and even social media account information. This information is added to the contact list on their phone.

“All the customer has to do is hit ‘Save’ and the information is stored right in their phone; they don’t have to type it in,” Durant says.

The system also includes wristbands employees wear around the store that offer the same technology. A customer simply scans the QR code on the bracelet and can instantly save the store or employee’s contact information to their phone.

his time in the military to retail and beyond, Kevin Schramm has made serving others a priority.

“I’m always available to help anyone that asks and participating in conversations on how we can become better business owners and serve our clients and community better.”

—Kevin Schramm, LIME Painting

Early Bird Discount Ends Soon

Register for the 2023 NHPA Independents Conference by April 1 to save $400 with early bird pricing. Visit YourNHPA.org/conference

EVENTS

What’s Their Secret?

Pulling Back the Curtain on Tech Giants Like Amazon and Google

Join attendees from across North America for two energetic days of keynote speakers, presentations and panels, industry awards, exhibits and networking at the 2023 NHPA Independents Conference Aug. 2-3 in Dallas.

You will gain insights from tech giants—including former Amazon and Google executives, celebrate two prestigious industry awards—The Young Retailer of the Year and Top Guns Awards—and discover retail solutions from leading technology and retail service providers.

The early bird registration deadline for the NHPA Independents Conference is fast approaching. Register to attend by April 1 to save $400.

Retailer Panel Discussions

Avoiding the Hack: Lessons Learned From Cybersecurity Incidents

Learn from retailers who have managed cybersecurity incidents and hear about the types of attacks you need to prepare for. This panel discussion will offer guidance on mitigating risk and how to communicate and implement companywide best practices.

Streamlining Operations Using Technology

When you need an effective solution, sometimes the answer is to build it yourself. Hear from retailers who have developed their own internal technology tools to improve operations from inventory management to employee productivity.

Inventory Management and Purchasing Solutions

In this panel discussion, learn how The Aubuchon Company has improved inventory management, purchasing strategies and loss mitigation across more than 100 store locations with the help of a unique technology solution.

Amplify Your Brand with Digital Marketing Connect with your customers beyond the four walls of your store. In this panel discussion, hear from retailers who are experts in using technology solutions to extend the customer experience beyond brick-and-mortar.

Visit YourNHPA.org/conference to get your ticket to the 2023 NHPA Independents Conference.

Scan the QR code to see the conference speaker lineup.

The best paint jobs all start the same way, with Scotch® Painter’s Tapes. Scotch® Brand has a full line of painter’s tapes to help you conquer whatever surface you’re painting.

Enroll Today

Download the learning guide at YourNHPA.org/foundations to learn more about NHPA’s online development programs for managers and key employees.

NHPA Adds to Its Marketplace Services

For more information about Live Oak Bank loans and to connect with buyers, sellers and potential employees through the NHPA Retail Marketplace, visit YourNHPA.org/marketplace

Are you looking to buy an independent home improvement store? NHPA members can now take advantage of small business loans through the association’s partnership with Live Oak Bank. Whether you’re looking to build, buy or expand your business, Live Oak Bank offers small business loans to independent retailers.

This new offering complements the different services, including valuation, available through the NHPA Retail Marketplace—the industry’s marketplace for buying and selling independent home

improvement stores and posting jobs. Marketplace listings appear in print in Paint & Decorating Retailer and online on the NHPA website and NHPA Retail Marketplace webpage. Both public and private Marketplace listing options are available to retailers. Public listings allow retailers to advertise their business for up to one year with information, photos and the retailer contact information listed. Private listings do not share photos or critical information, and NHPA helps facilitate any inquiries.

We also offer valuation services!

If you’re ready to sell, but aren’t sure how to assess the value of your business, NHPA has partnered with Gary Pittsford, partner and chief valuation officer of Castle Valuation, a Division of Creative Planning, to help guide you through the valuation process.

EDUCATION

Enroll in Foundations of Merchandising Management

Visit YourNHPA.org/foundations to enroll in the Foundations of Merchandising Management online course by March 10

Do you need to level up your merchandising management and assortment planning strategies?

NHPA’s Foundations of Merchandising Management is a new, 12-week online program created for both new and experienced staff responsible for managing merchandising at their operations.

The course focuses on timeless merchandising best practices, strategies and tactics that teach students how to optimize merchandising functions in a retail home improvement environment, enhancing store appearance and customer experience.

Students will also complete a real-world capstone assignment for their business where they will apply all of the knowledge and skills they have learned throughout the course. The project will focus on solving a problem or capitalizing on a missed opportunity in the business.

Topics will include:

Philosophy of merchandising

• Visual merchandising standards and techniques

• Promotional space management

• Resets and remodels

• Merchandising maintenance

Assortment planning and category management

• Vendor relations

• Merchandising and marketing

• Pricing strategies and management

• In-store design elements

The industry’s marketplace for buying and selling independent home improvement businesses and posting jobs.

BUSINESS FOR SALE

Northwest Farm & Home Supply Co.

Location: Lemmon, SD

Gross Revenue: $3.21 million

The main building is a total 27,213 sq. ft. of retail and warehouse space on 4 acres. The main bldg. was constructed in 1994 with additions constructed in 2002 & 2004. Single story with 22’ clear height in 11,459 sq. ft. of lumber warehouse, three grade level doors and two dock height doors.

BUSINESS FOR SALE

Central Vermont Paint, Flooring, and Decorating

Business

Location: Vermont

Gross Revenue: $2.82 million

Price: $1.1 million

Full-service decorating store providing flooring, paint, window treatments, kitchen/bathroom remodeling, cabinetry product offerings, design assistance, specialized service, and professional installation.

SEEKING BUSINESSES The Aubuchon Company

BUSINESS FOR SALE

Home Improvement Supply Store

Location: Missouri

Gross Revenue: $1.04 million

This historic home improvement and hardware store is a staple of its community and operates from its headquarters in Missouri. The Company is a long-standing retailer and installer of consumer and commercial improvement products.

BUSINESS FOR SALE

Hoosick True Value

Location: Hoosick Falls, New York

Gross Revenue: $1.26 million

Price: $1.875 million

This opportunity offers a turnkey sale of a general hardware operation located in northeastern Rensselaer Co., New York. The business serves five towns, southwestern Bennington Co., Vermont, and 25 miles east of Troy, New York.

BUSINESS FOR SALE

Private Business

Location: Alabama

Gross Revenue: $2.21 million

Price: $649,000

For our next acquisition, we are looking for:

Single-store and multi-store hardware operations

• Located in northeast and southeast United States

• Store size of 5,000-30,000 ft2

• At least $3 million in average store sales

SEEKING BUSINESSES

Bolster Hardware

We are looking for:

• Geography agnostic With or without real estate

• Store revenues of $1.5M+

• We prefer to honor the family name and heritage in the local community by not changing the name

• We prefer to keep all employees as part of the acquisition

OUTREACH

Retailer Recommendations

Send an email to editorial@YourNHPA.org telling us about the products your customers love and why they are such a hit in your business.

DISINFECTANT SPRAYER

WAGNER SPRAYTECH

wagnerspraytech.com or 800-328-8251

The Wagner D300 is ideal for sanitizing smallto-medium size spaces. It is compatible with water-based disinfectants, includes exchangeable cups (800mL and 1400 mL) and sanitizes up to 10 times faster than a spray bottle with complete and even coverage of surfaces. The disinfectant nozzle is designed to spray optimal micron-size droplets (45 microns).

FLOOR ROLLER

ROBERTS CONSOLIDATED INDUSTRIES

robertsconsolidated.com or 888-875-5087

The Roberts Extendable Floor Roller extends up to 27 inches and includes two handles for maximum leverage. The nonmarking, segmented rollers exert even pressure to smooth out uneven vinyl floor coverings, carpet or wallcoverings.

CRYSTAL DOOR KNOB

BALDWIN® HARDWARE

baldwinhardware.com or 800-566-1986

The Reserve Contemporary Crystal Knob is a modern, timeless design that serves as an updated take on the traditional crystal knob. The Contemporary Crystal Knob is part of Baldwin’s Reserve™ Portfolio and can be paired with any of Baldwin’s contemporary finishes or beautiful rose designs. Each Contemporary Crystal Knob is available in full dummy, half dummy, passage and privacy functions as well as six finishes: PVD Lifetime Satin Brass, Polished Chrome, PVD Lifetime Polished Nickel, Satin Nickel, Satin Black and Venetian Bronze.

Six new wallpaper mural designs from Wallsauce are inspired by the hit show three wallpaper styles including classic peel-and-stick material. Each mural is supplied pre-cut in even-width panels,

“Bridgerton.” They are available in and premium paste-the-wall and making installation simple.

SEAM BUSTER ADVANCE EQUIPMENT MANUFACTURING CO.

advance-equipment.com

This double-cutting wallpaper knife is ideal for use on vinyl and fabric wallcoverings. It does not cut into drywall and uses a double-edged blade for clean seams.

INTERIOR PAINT

RUST-OLEUM | rustoleum.com or 303-514-2641

Sure Color® is a new ready-to-use interior paint and primer line developed by Rust-Oleum®. The pre-mixed paint is extremely washable and scrubbable while featuring great color retention. The colors are available in an eggshell sheen, and the white and blacks are available in flat, eggshell and semi-gloss sheens.

ADHESIVE APPLICATOR

WOOSTER BRUSH CO.

woosterbrush.com or 800-392-7246

The Wooster Brush Co. Adhesive Applicator comes with extra-short white fabric that provides smooth application of all adhesives and water-based or solvent-based epoxies. It’s ideal for use on wallcoverings, fiberglass, paneling and floor tile. The applicator’s polypropylene core resists water, solvents and cracking.

PAINT AND VARNISH STRIPPING GEL

CITISTRIP | Citristrip.com

CITRISTRIP® Paint & Varnish Stripping

Gel removes multiple layers of dried latex and oil-based paint, varnish, lacquer, polyurethane and shellac from wood, metal and masonry surfaces. It removes five layers of dried latex paint in under one hour. OAD-WXX-1L

OAD-WXX-1L

A NEW CREATION

Spectrum Paint president Travis Detter started the business in 1986 out of a mini-storage building.

OPERATIONS

The Next Chapters

Explore three business transition strategies for your operation at PDRmag.org/business-transition-strategies

Mov ON

ing

SELLING YOUR BUSINESS TO AN OUTSIDE BUYER

BY CARLY FRODERMAN

Selling an independent family business can be an emotional process, and it can become even more emotional when selling to an outside buyer. Learning where to find an outside buyer, how the acquisition process works and how to best handle all the challenges and hurdles will help the process go more smoothly and can temper some of the emotions of the transaction.

Paint & Decorating Retailer spoke with the previous owner of Cumberland Paint and Wallpaper, a family-owned company, and the president of Spectrum Paint, the outside operation that purchased them, to offer an up-close look at the process of selling and provide best practices for navigating an outside sale.

Travis Detter started Spectrum in 1986 after a single-store paint company he had been working for went out of business. Detter started selling industrial coatings out of a mini-storage building and the operation has steadily grown over the last four decades through acquisitions and new store openings, reaching 100 stores in 12 states.

In 1968 Claiborne Thomas, a paint salesman for a paint and chemical company, bought Cumberland Paint and Wallpaper in Fayetteville, North Carolina, from one of his clients. In 1971 Claiborne experienced a health scare that brought his son, Norman Thomas, back to the business. Thomas took over the business after his father’s passing in 2000 and sold the operation to Spectrum in December 2018.

All in the Family

Listen to Lanier Do it Best’s family business transition story on Episode 80 of NHPA’s “Taking Care of Business” podcast at YourNHPA.org/podcast

The Lead Up

Like many other independent family-owned businesses, Thomas says he had no plans to sell the operation, especially to an outside buyer.

“I thought I would work at the store until I passed away,” Thomas says. “When you’re having fun and you’re making money, you don’t think about it.”

Thomas’ son was involved in the business for several years and assisted with most of the outside sales. In 2015, Thomas’ son ran into health problems and it became clear he would not be able to take over the business, which led Thomas to begin thinking more intentionally about the future of the operation, he says. Over the years, a few builders approached Thomas and expressed interest in purchasing the business, but Thomas was not ready.

“I also didn’t want to sell to a builder because I knew they wouldn’t take care of our customers as well and were mostly interested in buying a paint store to eliminate a step in the building process,” Thomas says. “I think as an independent retailer, you have to be selective in who you sell to. I didn't want to sell to just anybody, and it was important to me that whoever I sold to would continue our traditions, provide high-quality service to our customers and have respect for the community.”

Thomas says he also had great relationships with his suppliers and had no interest in selling to somebody who would not treat the store’s suppliers well.

With this in mind, Thomas identified two customers he thought would be interested in buying the store. One wasn’t a viable lead but the other was interested, Thomas says.

“We went through the process, agreed on a price and had all of the details worked out,” Thomas says. “But the potential buyer had purchased a large welding and steel business in 2016 with his son, and when he approached the bank about financing, they did not want him to overextend himself. So they advised him not to buy the business and the deal fell through the cracks.”

Luckily, Thomas had close relationships with some of his salesmen, who discreetly spread the word that Thomas might be interested in selling the business to the right person for the right deal; that person was Detter.

“Travis’ parents were friends with my parents; they went on paint trips together and visited each other sometimes. Travis and I knew each other casually through our buying cooperative,” Thomas says. “I knew his family’s reputation and the type of business he did.”

When it comes to acquisitions, the first step for Detter and Spectrum Paint is making sure the location makes geographical sense and can be serviced by a distribution center, Detter says.

“I think as an independent retailer, you have to be selective in who you sell to. I didn’t want to sell to just anybody, and it was important to me that whoever I sold to would continue our traditions, provide high-quality service to our customers and have respect for the community.”

—Norman Thomas, Cumberland Paint and Wallpaper

Norman Thomas, previous owner of Cumberland Paint and Wallpaper, sold the operation to Spectrum Paint in 2018.

“We also make sure the key employees from the operation are committed to working with us,” Detter says. “We believe people are the most important part of succeeding in a market.”

With plans in place for a warehouse in Knightdale, North Carolina, which is close to Cumberland Paint and Wallpaper, and awareness of Thomas’ interest in selling, Detter made the call.

“In late October 2018 I received a call from Travis saying he was going to be in the area,” Thomas says. “He asked if he could come by and see the store, and I said yes.”

Detter says many businesses looking to sell contact him or someone from his operation directly, but they also contact retailers in the right area to let them know they are interested. He says Spectrum Paint does not intentionally go into markets where there are other strong independent dealers.

“During Travis’ visit we talked about the business for a little while and once I assured him I was interested in selling my store he asked me three questions, assuring the answers would be kept confidential,” Thomas says. “He asked how many employees I had, what my gross sales were and what my gross margin was. Afterward, he got up and said he would email me a proposal to buy the store.”

The Offer

When interested in an acquisition, Detter and his team take the company’s annual sales and build a financial statement, he says. Knowing sales, rent, payroll expenses and other fixed costs, the Spectrum Paint team builds a financial projection to make sure the acquisition makes fiscal sense for the company, Detter says.

When reviewing the proposal he received from Detter, Thomas relied on knowledge from seminars put on by his buying cooperative, consultations with his financial advisor and accountant and a valuation of his business conducted by an outside company in 2000 for tax purposes.

Cumberland Paint had an extremely strong reputation in its area and they felt confident they could go in and become profitable right away, Detter says.

“We make our offers based on a multiple of EBITDA, or net income with interest, taxes, depreciation and amortization added back, or the value of the assets of the company, whichever is greater,” he says.

For Thomas, the operations’ worth can be broken down into four categories: inventory, account receivable, fixtures and goodwill. While inventory is a fixed figure, accounts receivable left room for negotiation, since some accounts paid on time and others did not, Thomas says. Fixtures depreciate over time, he says, which also led to some negotiating. Lastly, there is goodwill or blue skies, which are the intangible aspects of the operations’ worth and the most negotiable aspect of a deal, Thomas says.

“While we had some negotiation, the initial offer was within a couple of percentage points of what I expected to get out of selling the business and the terms were beneficial to me,” Thomas says. “We financed part of the sale for two years after the purchase, which helped with taxes, and I rent the building to them.”

RESOURCES

Draft the Right Docs

Learn the right documents you need for a smooth business transition experience at PDRmag.com/succession-documents

Counteracting Challenges

Like any part of a business, the acquisition process has challenges. Selling or buying a business requires extra work for everyone involved in the process, and it’s important to expect bumps along the way and for the strong possibility that everything won’t go perfectly.

“A mistake a lot of retailers make is overestimating the worth of the business and not being realistic. We sometimes overvalue what we have because of the blood and sweat we put into it,” Thomas says. “Retailers have to be realistic about what someone’s willing to invest and what the payoff will be.”

While there were no surprises with the Cumberland Paint and Wallpaper acquisition and their reputation was exceptional, there have been surprises in past years with unknown reputation problems with previous owners, says Detter. If there is one thing he wishes he knew going into every acquisition, it is the reputation of the people in that location.

"Reputation, along with updated inventory and a clean store, is everything," Detter says. “Retailers have to earn customers and employees; large customers and key employees cannot be taken for granted.”

After the Sale

Once the acquisition is complete, the work isn’t done yet.

“One of the things we do with every acquisition is ask the previous owner to write a letter to their customers,” Detter says. “We want to make sure customers know that taking care of them is our No. 1 priority.”

Detter also employed Thomas as a consultant for three years following the acquisition.

“Travis wanted the transition to be smooth and for me to visit the store and talk to the customers for a period of time after the purchase. I did that and attended the pro shows, grand opening and other events,” Thomas says. “My compensation was a percentage of the growth of the business, which I knew was going to be good because I knew what I had and what the possibilities were with the hiring of a full-time outside salesperson.”

The addition of an outside salesperson is one of Detter’s first steps after an acquisition if the operation didn’t have that position before.

“I knew Travis’s philosophy with outside selling and I told him during one of our conversations that there was no doubt in my mind store sales would increase sales by over $100,000 with an outside salesperson other than me,” Thomas says. “I think they interviewed somebody for that position before we even closed the deal.”

While Detter filled the sales person position externally, he took care of all of Thomas’ existing employees as well.

“I told my employees when my son left the business that I was not actively trying to sell but if somebody came along, I would make sure they were protected and whoever I sold to would be good to them,” Thomas says. “I had a conversation with Travis about taking care of my employees, and he lived up to that as I knew he would.”

All About Acquisitions

3 ACQUISITION BEST PRACTICES FROM SPECTRUM

Let retailers in your area know that you’re interested in expanding and maintain good relationships with them.

Make sure you look at the value of an operation closely and consider if it makes financial sense for your operation.

• Outside sales help maintain existing business and bring in new customers. Consider adding this revenue if the acquired operation is lacking it.

NEXT STEPS

Spectrum Paint's team works hard to make acquisitions and transitions as smooth as possible.

Visit the NHPA Retail Marketplace

NHPA frequently receives inquiries from retailers who are looking to sell their stores, those who are looking to acquire additional stores and those who are looking for key talent in a challenging employment landscape. NHPA created the Retail Marketplace to give operators a cost-effective way to advertise their businesses for sale, their interest in buying or open job positions. There is a high likelihood that a strong investment opportunity, potential buyer or the future leader of your business is already out there.

One of the hardest parts of a business transition can be the culture change and going from a small operation to a large one.

“When I knew I was going to sell to Travis, I got my employees together and told them what was happening and explained how there would be more benefits, like a 401k, and they accepted it,” Thomas says.

While the employees were agreeable, it takes time to adjust.

“We don’t change policies overnight,” Detter says. “We try to slowly transition things like dress codes and hours of operation, and we physically bring in operation leaders to newly acquired stores for a few weeks to teach our computer system and procedures. And when we bring on a new outside sales rep, our regional sales managers spend time in the market with them.”

Training is a large part of the culture change that occurs when Spectrum Paint acquires an operation. Detter says Spectrum Paint has a training manager for its Midwest division and in the eastern division, and in-person counter sales training and manager training courses.

“We also utilize a learning management system within our human resources portal to load additional training videos and documents, like the ones the North American Hardware and Paint Association has available to us,” Detter says.

Communication also plays an important role in Spectrum Paint’s culture. The company has a yearly national manager meeting where all store managers and account managers are brought together, Detter says, and there is also a mid-year in-person meeting with the regional management team.

“Video conferencing has been instrumental in communication,” Detter says. “Our executive team does a monthly Zoom call, and many of our regional teams also take part in monthly team video calls.”

The last piece of the puzzle is leadership.

“Our leadership and people spread the culture. It's something we talk about intentionally and frequently—their role is extremely important,” Detter says. “Social media is also a way we show and spread our culture, and it makes an impact.”

With these pieces in place, Detter and his team at Spectrum Paint strive to continuously improve the company and its culture simultaneously.

“I feel extremely blessed and lucky to have sold to who I did,” Thomas says. “My experience with Travis and Spectrum Paint has been fantastic. He went above and beyond in making the transition easy.”

And when it comes to the business transition journey, Thomas has one piece of advice.

“You cannot coast. You have to increase business every year or you cease to become profitable. When you get older, you slow down and struggle to stay aggressive enough to stay ahead of the competition,” Thomas says. “I think a person who has a profitable business should be thinking about what's going to happen five years, 10 years down the road and on. So the biggest advice I could give to anybody else who’s looking at transition is to start planning as early as possible, unlike the course I took.”

Q+A

Innovation Abounds

Meet Chris Hood, 2023 NHPA Independents Conference Keynote Speaker

Mark your calendars for August 2-3 when the North American Hardware and Paint Association (NHPA) hosts the 2023 NHPA Independents Conference in Dallas. No other time this year will you hear from former Amazon and Google execs, cybersecurity and technology experts, take part in the Top Guns and Young Retailer of the Year award programs and dive into topics covering numerous aspects of retail technologies. During the two-day conference, attendees will discover the latest in retail technology and the solutions independent home improvement retailers are using to improve their efficiency, customer service and competitive advantage in the channel.

Paint & Decorating Retailer sat down with one of the event’s keynote speakers, digital strategist Chris Hood. Hood is an internationally recognized voice, thought leader and digital strategist with over 35 years of experience in online entertainment and marketing for television, film, music and video games. Through The Chris Hood Digital Show, Hood currently works with companies worldwide to develop digital strategies. Previously, Chris worked as the head of business innovation and strategy for Google, where he engaged with Fortune 500 companies to create digital transformation programs and build cultures of innovation. Hood also worked as a director for Fox Broadcasting, where he developed storytelling technologies and innovated new mechanisms for viewers to engage with television content.

INDUSTRY EVENTS Learn More About the Conference

Scan the code to learn more about the 2023 NHPA Independents Conference or visit YourNHPA.org/conference. Early bird discount ends April 1!

Find Out Who Is Speaking at the Conference

Putting Technology to Work for You

Aug. 2-3, 2023 | Dallas

Join us at the 2023 NHPA Independents Conference to discover real-world answers to your technology questions.

Find more information and register at YourNHPA.org/conference

Paint & Decorating Retailer (PDR): You’ve worked in some interesting and exciting industries and have been involved in some cutting-edge technologies. Tell us about your first career in the film industry.

Chris Hood (CH): I actually had two jobs at that time, working at a movie theater and also selling computer software at a retail shop. It was great because the two jobs combined two of my passions: technology and movies. As I travel through my career, I’ve been able to keep both of those in sync with each other and really leverage what I learned from that retail experience and at the movie theater in my other roles in technology, media and entertainment.

PDR: After some time in the movie industry, you brought your eye for innovation to the music industry. Tell us about what your startup company created.

CH: In 2003, I joined a startup company called Ruckus Network, which was created by two

students out of MIT who wanted to create a way to share music on college campuses in a legal and free manner. It was a direct battle against Napster and the free sharing that was going on at that time. The technology from Ruckus was designed to distribute music freely on campus by working directly with the record labels to get license agreements. It was a lot like a student discount; Ruckus paid for the license agreements, and then through registrations and advertising we would then sell that back to the record label so the students could get it for free. While our business model, which was basically giving something away for free in exchange for advertising revenue, was simple and also almost unheard of at that time, it is now the basis of many streaming-type services many consumers use today.

PDR: What are some other highlights of your career in terms of innovation and technology?

CH: I’ve had some exciting careers and professions and opportunities in the movie, television and video game industries. In each of them it comes down to how to bridge the gap between business problems or challenges that organizations are facing and the technology available to fix them. We have business problems and we have to leverage technology to combat those problems because consumers are engaging with businesses through technology. That’s what has been fascinating in my career; being able to leverage these ideas of innovation and digital strategy and build opportunities at organizations to use that technology. I’ve been able to help organizations build cultures that support innovation and digital strategies and help them reach the goals they want to achieve. Regardless of the industry piece of it, whether it’s TV or video games or retail or health care or even financial services, the problems are the same across the board, and I’ve loved having these types of conversations with executives to help them shift their mindsets so they can also be successful.

Scan the code to see a full list of speakers from the 2023 NHPA Independents Conference or visit YourNHPA.org/conference. You don't want to miss this two-day event!

PDR: Part of your keynote presentation at the NHPA Independents Conference will include talking about digital transformation. Can you share more on this idea?

CH: Just this year, I’ve started to play with this notion that digital transformation is dead. The phrase digital transformation has been overused and many have modified the definition to meet their specific advertising or marketing needs or internal culture. So I want to look at it from a different lens, which is digital acceleration. Digital transformation was

about converting your organization to digital so that you can keep up with the demands of consumers, but the fact is we are already in a digital world. It’s no longer about trying to adapt and transform, it’s about accelerating your digital outcomes so you can keep up with consumer demands because, at the end of the day, every single consumer who you have is trying to meet with you in some way. So why not make that easier and more understood, or a better experience through technology that we’re already engaged with?

“It’s no longer about trying to adapt and transform, it’s about accelerating your digital outcomes so you can keep up with your consumer demands because, at the end of the day, every single consumer who you have is trying to meet with you in some way.”

—Chris Hood, Digital Strategist

INNOVATION Ideas +

TECH TAKEAWAYS FROM NRF 2023: RETAIL’S BIG SHOW

BY LINDSEY THOMPSON

Bringing together players from across the industry, NRF 2023: Retail’s Big Show focused on innovation, new ideas and product discovery. The annual event is hosted by the National Retail Federation (NRF), the world’s largest retail trade association that advocates for the people, policies and ideas that help retail thrive.

During the event, over 30,000 attendees listened to keynote speakers, took part in educational sessions and panel discussions, discovered new products, services and vendors and networked with industry colleagues. Keynote speakers came from inside and outside the industry and included

decorated Olympian and gymnast Simone Biles, Walmart U.S. president and CEO John Furner, Macy’s chairman and CEO Jeff Gennette, Lowe’s chairman and CEO Marvin Ellison, Nordstrom president and chief brand officer Pete Nordstrom, Kroger CEO Rodney McMullen and actor, producer and writer Kal Penn.

Lindsey Thompson, senior editor with the North American Hardware and Paint Association (NHPA), attended this year’s show. She shares her takeaways, key themes and insights from the event that are applicable to the independent home improvement industry.

Tech Giants

Hear from former execs of technology powerhouses Amazon and Google at the 2023 NHPA Independents Conference. Learn more at YourNHPA.org/conference

Key Takeaways

Embracing Shoppertainment

Combining shopping with entertainment, the concept of shoppertainment was a key topic in numerous event sessions and panels. In stores like CAMP, which has locations in California, New York, New Jersey, Massachusetts and Texas, shoppertainment comes in the form of immersive kids’ activities revolving around themes like movies, sports and crafts.

For Anna Harman, co-founder and CEO of Studs, it’s her staff members who help create a positive store experience.

“It’s our team that brings our customer experience alive while the physical store sets the backdrop for an amazing experience,” she says.

Matt Alexander, co-founder and CEO of Neighborhood Goods, says that the level of shoppertainment should match the operation’s culture and mission.

“At Neighborhood Goods, we try to foster and maintain magnetism and give reasons for people to visit,” Alexander says. “We avoid the gimmicky; it has to be relevant for our customers. Fundamentally, retail is a traditional experience, and while tech is great, you need to stay grounded in what works for you and your customers.”

Creating Convenience

Serving customers is the No. 1 goal for most retailers, and fortunately, technology is making it easier to provide a higher level of customer service.

“In retail, you’re in the convenience business,” says Cassidy Beadle, retail client innovation director for Accenture. “Focus on designing innovative solutions to remove friction and hurdles, creating point-of-sale experiences that encourage purchases and solving moments of waste or frustration through technologies like cashierless checkouts, delivery, product access and seamless payments.”

Choosing the Right Technology

Don’t feel the need to implement the latest and greatest technology just for the sake of adding it. Yevgeni Tsirulnik, senior vice president, innovation and incubation for Toshiba Global Commerce Solutions, says technology and innovation should be about what’s best for your customers.

“When implementing any new technology, it’s okay to fail, just fail fast and know when to shut it down,” he says.

Tech to the

Next Level

Sharing the latest trends and topics in technology, the Innovation Lab at NRF 2023: Retail’s Big Show showcased companies on the forefront of innovation. The companies shared their innovations in artificial intelligence, robotics, Web3, metaverse, virtual reality, autonomous delivery and the Internet of Things. Below, learn about some of the high-tech and forward-thinking companies featured in the Innovation Lab.

Pull Logic

uses QR codes and other tech that enable retailers to automate the sales process and have the right products in the right locations to maximize product availability.

Marpipe

provides multivariate testing to measure the performance of every possible combination of creative variables in an ad, including images, headlines, colors, calls to action and more.

Shiftsmart

helps workers build income, skills and experience to become true micro-entrepreneurs and connect those workers with companies looking for labor solutions.

VisionR

mines data directly from shoppers as they navigate stores, empowering retailers with real-time insights to maximize their operations.

CATEGORY FOCUS

The Cutting Edge

PRO PREFERENCES WITH HAND TOOL, KNIFE AND BLADE PRODUCTS

BY CARLY FRODERMAN

All painting contractors need the right tools to get the job done. As retailers, discovering how pros think and applying that knowledge to your operation will grow pro loyalty and lead to increased sales.

Larry and Michelle Marler started The Works, a remodeling company with a focus on painting and finishing, in 2011. Larry has over 30 years of experience in the industry, and in 2022, Michelle decided to begin learning the trade in addition to running the backend and accounting sides of the business. To help retailers better understand the pro customer base, Paint & Decorating Retailer spoke with Larry and Michelle about hand tool, knife and blade product preferences and best practices.

Making the Cut

Gain insights into ways retailers can choose what hand tools to carry and offer to their customers at PDRmag.com/hand-tools.

The Choice Is Yours

When choosing products like hand tools, knives and blades, quality and the ability to do what is needed is most important, says Michelle. If a tool can serve more than a single purpose, it is even better. Multitool products bring an added sense of convenience that is extremely appealing, she says.

“Longevity is also important, which is an aspect of quality,” Larry says. “Sometimes a tool works really well, but only for six months, which is not attractive. So that quality, along with ergonomics, is a big pull when choosing hand tools, knives and blades.”

While ergonomic options are important and popular with workers, collapsible and compact tools are also becoming more trendy, Michelle says.

“Tools that contractors can easily put in their pocket and always have on them are handy, especially if it is a tool that a pro uses often,” Michelle says.

Even with increased accessibility, quality should still be a deciding factor. Some pros purchase their tools based on the brand, but the quality is what should be most important, Larry says.

“Skimping on a good knife or blade can also lead to the product slipping or collapsing, which can be dangerous,” Michelle says.

When choosing what hand tools, knives and blades he will use, Larry says he conducts research before purchasing.

“If I see somebody post a tool on a message board we are a part of, read a good review, gain a recommendation from someone else in the industry or watch someone use a tool to complete a job and make it look easy, I’ll research it and then try it out,” Larry says. “If it goes well, I slowly begin to integrate it into the business.”

Larry says that over time, the manufacturing quality of some of his favorite tools has gone down, which led him on a quest to find a new replacement for the tool he used to love.

When it comes to where they purchase a product, the answer varies.

“It honestly just depends on who has what we’re looking for and who has that better price point,” Larry says. “If it’s a small difference, we’ll go to the local stores. We like to support them when we can.”

RECOMMENDED PRODUCTS

MULTITOOL

PURDY | purdy.com

“I always have this tool on me,” Larry says. “It is the most versatile tool I own, and I use it constantly. It has a pocket clip, making it easy to carry. As a 10-in-1 multitool, its uses are almost endless.”

UTILITY KNIFE

MILWAUKEE | milwaukeetool.com

“I love how compact this product is; it fits in my pocket perfectly,” Michelle says. “I love that it has a blade, a screwdriver and many other features I use it every day.”

RESOURCES

Soaring Sales

Discover best practices for selling hand tools and other sundries at PDRmag.com/selling-hand-tools.

HOLD UP

Larry and Michelle have spent a fair share of time around DIYers and have hosted training classes over the years. One mistake they have frequently noticed is how some DIYers hold their hand tools. When selling hand tools, knives and blades, teach customers the correct way to hold their new tool to increase customer satisfaction and loyalty.

CORRECT

INCORRECT

Merchandising Matters

Learn four best practices for merchandising paint tools and accessories at PDRmag.com/merchandising-sundries.

A+ Advice

When it comes to hand tools, knives and blades, safety is important.

“The best advice I have, and what I repeat constantly is: Never cut toward your guts,” Larry says. “Anytime I have hurt myself or seen another person get injured, it is because the blade is being brought back toward the body.”

Another way the user can stay safe is by making sure knives and blades are always sharp.

“A lot of people are looking for ways to save money, which leads to blades never getting changed,” Larry says. “But tools aren’t magic and blades don’t resharpen themselves. A dull tool can be dangerous.”

In the interest of saving money, cheaper products often get purchased, which usually ends up requiring more effort from the user and a lower quality final result.

“If a blade is not sharp, you’re not going to be able to do what you need to do efficiently, and your chances of slipping and getting hurt increase,” Michelle says. “I usually test my blades on thicker paper or cardboard. If I can’t cut those materials like butter, then chances are my knife is not as sharp as it needs to be to cut drywall or other materials on the job.”

Larry says when there are signs of a dull or damaged blade, it is not worth attempting to repair it.

“When in doubt, throw it out,” Larry says. “If a knife is gouging a wall and I am not getting a smooth flow or there is a dent in a blade from hitting something, I’ve learned it is not worth trying to fix the blade—it never works and slows you down. It is worth the extra money to just get a new blade.”

Tools for the Job

Share this list of go-to products with customers and encourage them to carry them on their person so they are ready to start any project that comes their way.

5-IN-1 MULTITOOL

RAZOR KNIFE

SPEED SQUARE PENCIL

“If I have these tools with me, I’m ready for almost any job.”

—Larry Marler, The Works

OPERATIONS

How the Index Works for You

Sign up to receive updates on when surveys go live and download the reports at YourNHPA.org/retailer-index

ARE IN THE RESULTS

CATCH UP ON THE INDEPENDENT RETAILER INDEX QUARTERLY REPORT

THE INDEPENDENT RETAILER INDEX, developed by the North American Hardware and Paint Association (NHPA) in partnership with The Farnsworth Group, serves as a regular measure of the independent channel’s performance. In the second survey of 32 independent retailers, respondents were asked to share how several operating metrics have changed from Q3 2021 to Q3 2022, including total sales, transaction count, inventory investment, cost of goods and more. Retailers were also asked about investment plans for Q1 2023.

Standout Stats

25% of respondents who saw gross margin increase attributed increases to inflation.

69% of retailers increased their inventory investments by an average of 19%.

About 75% of respondents reported increased transaction sizes.

Over

Source: 2022 NHPA Independent Retailer Index Q3 Survey

Get More Out of Your Training

Upgrade your NHPA membership to access all training modules currently available and new ones when they launch at YourNHPA.org/membership

NHPA Academy Catalog INTRODUCING THE

If you are looking to develop a strategic plan for your business that includes robust training for your staff, scan the QR code to view the new North American Hardware and Paint Association (NHPA) Academy Catalog or visit YourNHPA.org/academy to download your own copy today. This catalog lists everything available through the NHPA Academy for Retail Development.

PROGRAMS INCLUDE:

Basic Training and Customer Service Skills

Teach employees the basics of the hardware industry, from hardlines and products to positive customer service and store safety skills.

Foundations of Leadership, Mentorship and Merchandising

Educate employees on how to be better leaders, effectively merchandise a store to maximize space and profit and how to mentor other employees.

Retail Management Certification Program (RMCP)

Students work with mentors on ways to more effectively run their operation and complete a final project designed for the student’s business

One-on-One Consultation

Meet with Kim Peffley, NHPA’s director of organizational development and consulting to discuss your operation and how to take it to the next level.

BEAUTIFUL AND PROFESSIONAL RESULTS