Housewares growing as competitive tool - many hardware stores now selling housewares

Home Channel News, Sept 17, 2001 by R. Michelle Breyer

Home improvement dealers are seeking a bigger share of this discounter-dominated category

NATIONAL REPORT - When Ada Valencia started working at Kroeger True Value 17 years ago, the housewares department took up less than 1,000 square feet. There was a small selection of giftware, some dishes, a few gadgets, some cookware and an aisle of cleaning supplies.

"I wanted it to be the biggest house-wares department in the Four Corners area, which it now is, " said Valencia, housewares manager for the 20,000-square-foot store in downtown Durango, Cob. "I just kept buying."

She added a variety of products, including upscale appliances and silverware, throw rugs and bath accessories, baskets and clocks. Sales in the department - now 3,000 square feet - average $300 per square foot

The store's clientele ranges from ranchers to wealthy vacationers. The housewares department draws people from as far away as Moab, Utah, and Farmington, N.M., providing stiff competition for such housewares giants as Dillard Department Stores and American Furniture.

Housewares has helped Kroeger True Value ward off such powerhouses as Super Wal-Mart that opened three years ago in town and Home Depot, that opened 50 miles away in Farmington on July 1.

"They haven't hurt us at all," Valencia said.

The industrywide sales per square foot average for housewares are $134 to $150, according to the National Retail Hardware Association. The average for TruServ's members is $140. But many dealers still shy away from the category. "We scare a lot of people off by calling it housewares," said Brian Newton, product manager in housewares at Do it Best Corp., which has about 1,000 dealer-members with a significant presence in housewares. "It can be a little intimidating."

But a growing number of independent hardware stores like Kroeger True Value have discovered that housewares can be one of the most powerful tools when it comes to competing against the big boxes.

With solid margins - as high as 40 percent to 50 percent - and a lure for female shoppers, housewares can be a profitable niche.

"We paid attention to [housewares] on purpose because it brings ladies into the store," said Mitch Newenhouse, co-owner of Gemmens Hardware in Hudsonville, Mich., a Do it Best member. "If we can get her to shop here, the guys are easier. It's worked."

That's why buying groups are putting a greater emphasis on the housewares category. Do It Best provides housewares planograms on compact disk. At its spring market next year, housewares will receive a special exhibit area for the first time.

"More and more members are realizing it's a niche they can compete in' Newton said.

At its recent spring show, Ace Hardware offered a housewares mix that was developed under the guidelines of its Discovery program, with planograms for different store sizes. Stores were provided a monetary incentive to update their housewares departments, and more than 600 stores signed up, said Sheila Peters, housewares buyer or Ace Hardware.

"It's interesting, it's exciting and it differentiates a store from any other store if it's done right," said Simon Shapiro, president of Tags Ace Hardware in Cambridge, Mass. "Traditional hardware stores often write [the category] off as a lady's game. It's an erroneous statement."

Shapiro is a part of an expanding group of Ace dealers with an interest in housewares that meets at every market to brainstorm and swap ideas. Six years ago, the group had eight members, Shapiro said. At the last Ace market, the 7 a.m. meeting of the housewares group drew more than 100 people.

Ace considers Tags to be its third largest housewares dealer. Shapiro said that the department has seen growth rates of 12 percent to 18 percent a year. The bottom floor of Tags is a traditional hardware store. The 7,000-square-foot second floor includes the housewares department that employs a buyer, rebuyer, inventory analyst and department specialist.

"We treat housewares as a whole separate business," Shapiro said.

Tags specializes in upscale housewares items, with cookware, appliances, giftware, cookbooks, gadgets, textiles, bed and bath, storage, electronics and gourmet foods. Shapiro considers his main competition to be specialty home furnishings outlets like Linens 'N Things and Bed, Bath & Beyond, not Home Depot.

Changing boundaries

Until recently, independent hardware stores have had little competition in the housewares category from big boxes. But that is changing, as the line blurs between home improvement and housewares retailers. Home Depot's Villager's Hardware format has a significant housewares presence. Menard's has allocated significant floor space to electric and non-electric floor cleaning devices. And home centers have become aggressive players in major appliances.

"It's clearly an indication that home goods can occupy a position in the traditional marketing of hardware products," said Perry Reynolds, vp-marketing and trade development for the International Housewares Association, based in Rosemont, Ill. "I wouldn't be a bit surprised if some of the lessons learned at Villager's Hardware don't make their way to other Home Depot stores."