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Discount Store News, August 7, 1989

Discounters Bring Clout to Show

Cordless Tools, Security Lighting Top Hardware Buyers' Show Agenda

CHICAGO -- Discount department store retailers will be a quiet minority at the annual National Hardware Show, slated for Aug. 13 to 16 at the McCormick Place complex here in the Windy City.

But, though they may speak softly, discounters carry a big pencil. That's because these mass merchandisers, who only represented about 12 percent of total attendees at last year's event, will write a disproportionately large share of hardware business with vendors compared to other types of retailers.

Discount department stores will generate $7 billion worth of hardware, tools and paint sales this year, according to DSN's latest departmental projections. That figure compares favorably to the $8.4 billion attributed to home centers and the $7.7 billion at hardware stores, according to the show sponsor.

More importantly to exhibitors at this year's show, the top discount and mass merchandise chains--most of whom are expected to be in Chicago--generate more home improvement sales than the top home center chains. According to a report by DSN's sister publication, National Home Center News, the 10 leading mass merchant and discount chains posted approximately $14.4 billion in sales of home improvement-related merchandise last year, compared to $13.9 billion generated by the 10 largest home center chains. Home improvement sales include plumbing, electrical, lumber and building supply, hardware, hand and power tool and paint sales. According to NHCN, the top nonhome center DIY retailers are: Sears, $4.5 billion (excludes installed sales); K mart, $4.1 billion (excludes Builders Square); Wal-Mart, $3.1 billion; Target, $630 million; Ames, $510 million; Price Club, $480 million; Fred Meyer, $357 million; Bradlees, $285 million; Montgomery Ward, $235 million; and Costco, $200 million.

And, if the theory of one discount merchandising executive proves true, discounters and mass merchant retailers may begin to reap even higher sales from their hardware department.

"For the past few years, consumers have been on a do-it-yourself craze," he said. "Now, they are more knowledgeable about the products they need to get a home repair or improvement job done. Thus, they are more confident of using a discount store to make their purchase than in the past."

Another merchandising vp for a mid-Atlantic discounter, who asked to remain anonymous, agreed with that assessment, adding that his power tool business has been very strong, up 25 percent to 30 percent.

George Glidden, divisional merchandise manager, hardware, lawn and garden and home improvement for Troy, Mich.-based K mart, noted that many home improvement products are now pre-sold by the manufacturer. "A guy's read a couple of how-to magazines about building a deck and he's seen the ads so he knows what he wants before he goes to the store," noted Glidden, suggesting that mass merchants like K mart offer a better price/value on the product than home centers or hardware stores.

Glidden and other execs identified a number of products that comprise a "hit list" of items they will look for at this year's show: * Cordless power tools. "There are a lot of new introductions that we think can be very successful for us," said the executive from the mid-Atlantic chain. * Security products. "We expect to expand the mix of low voltage security lighting," said Ross Fruen, dmm, hardware, for Rocky Hill, Conn.-based Ames. "Locksets and total house security will continue to get a lot of our attention," said Glidden of K mart. * Air compressors are selling especially well at membership warehouse clubs, said Jeffrey Zisk, president of Dallas-based American Wholesale Club. * Unfinished ready-to-assemble furniture. These products, said Les Dietzmann, executive vp, merchandise, at Ames, have the added appeal of encouraging sales of stains and paint sundries. * Electrical category, extension cords, outlets, plugs, etc.

Like many chains, Ames uses the hardware show to find "new, novelty types of items," said Dietzman. Added Fruen, the show "provides us with an opportunity to ferret out some of the smaller vendors we don't have the opportunity to see every day."

Fruen also noted that Ames will spend time with the top execs of many of its vendors to thank them for their help in the smooth integration of the acquired Zayre stores into the Ames distribution network. Ames has always been strong in the hardware and tool business, said Fruen. But because Zayre de-emphasized hardware so much over the last few years, "it's going to be a learning curve to let Zayre customers know that we're back in the hardware business."

PHOTO : Increased consumer proficiency is bringing many DIYers back to discounters' and mass

PHOTO : merchants' hardware departments.