Brand switching adds gloss to flat paint sales - at discount stores

Discount Store News, August 6, 1990 by Richard C. Halverson

Brand Switching Adds Gloss to Flat Paint Sales

Brand switching was the main merchandising strategy used by discount chains last year in an attempt to squeeze more dollars out of a flat DIY paint market.

Among the major developments in the $2.2 billion product category are:

* Hills' test of Dutch Boy in 20 of its 210 stores to see if a better promoted national brand can pump up sales; * Wal-Mart's switch from Lucite last year to Dutch Boy Kem-Tone in about 400 stores, along with its private label offerings from United Coatings. The discounter also put Glidden and private label in about 900 stores and, as a test, now offers only private label paint in 100 other stores; * ShopKo's switch to Lucite from Dutch Boy KemTone for its 101 stores; * Chaffin, operator of Gibson Discount Centers, has upgraded its DeSoto private label paint, to carry 12- and 15-year warranties instead of an eight-year warranty; * Target dropped its private label paint line, giving Glidden an exclusive on its business, and is using new, color-coordinated POP materials Glidden developed for it; * K mart offers both leading national brands, Dutch Boy and Glidden, as well as Fresh & Easy, a budget brand from United Coatings; * Sears picked Dutch Boy for its Craftsmen Home & Yard Center, the chain's new hardware power format, and will have the national brand in all stores by the end of 1990, along with its Weatherbeater and Easy Living private labels from DeSoto.

The rivalry between Glidden and Dutch Boy for dominance in discount channels--and the planned rejuvenation of Lucite--takes a new turn now that DeSoto has agreed to sell its private label business, including the key Sears account, to Sherwin-Williams for $80 million.

Once the deal is closed, S-W will command more than one-third of the DIY market. That includes: the Sears Weatherbeater and Easy Living brands that DeSoto makes; paint sold under its S-W, Martin-Senour and Dutch Boy brands; and its existing private label paint made for the hardware store trade.

In market share, Glidden, with a 14.9 percent share of all national sales, eased Sears out of first place in 1989, concluded the 1989 survey of the Paint Consumer Research Panel, an arm of the National Paint and Coatings Association.

Sears paint, which has developed into a national brand that once claimed 30 percent of the DIY market, slipped to 14.8 percent of the 270-million- gallon DIY market.

For all channels of distribution, the 1989 PCRP survey gives S-W a 10.4 percent market share, while Dutch Boy and Lucite took 6.3 percent and 2.3 percent, respectively.

Discount stores which also included warehouse clubs, accounted for 22 percent of the DIY paint sold nationally.

For discount stores alone, the PCRP survey gives Glidden a 25.1 percent market share, while Dutch Boy accounted for 18.5 percent and Lucite 7 percent.

Greg Nejmeh, vice president of equity research, for Shearson-Lehman, had been predicting for four months that S-W will buy DeSoto. Under attack from a corporate raider, DeSoto Inc., Des Plaines, Ill., essentially is liquidating itself by selling off its divisions, including consumer paint, and distributing the proceeds to shareholders.

Because the acquisition gives S-W such a large chunk of the DIY market, the acquisition may become subject to antitrust review, Nejmeh said. Such a review might delay but won't block the acquisition, the analyst predicted.

Along with DeSoto, Lucite also reflects the consolidation trend in the industry. PPG, formerly Pittsburgh Paint & Glass, acquired the Lucite and Olympic stain brands from Clorox last September. Lucite languished under Clorox, which bought the brand from DuPont five years ago.

In attempts to rejuvenate the brand, PPG is moving Lucite headquarters to Pittsburgh from Bellevue, Wash., and named a new brand manager, Thomas Gabey.

At the Hardware Show, Lucite plans to disclose details of its new marketing thrust for discount stores, Gabey said. In general, Lucite plans to offer more aggressive pricing on mass purchases that will deliver better margins.

In addition, discounters will be able to take delivery on special buys as product sells, Gabey said, rather than having to load up on inventory.

PPG's new marketing thrust will be "more retailer-friendly," he promised.

To capitalize on a 92 percent brand awareness for Lucite, PPG plans to double spending on TV advertising for the 1991 selling season, Gabey said.

In another acquisition, Sherwin-Williams completed its purchase of the Krylon aerosol paint business from Borden in June.

At Hills, Canton, Mass., the 20-store Dutch Boy test won't end until September, said Michael Morales, merchandise manager for hardware, automotives and seasonal. Hills' other stores still sell Lucite.

So far, Hills hasn't seen any dramatic effect from the test, Morales said. "The paint business hasn't been that great overall," Morales said.

With relatively flat industry sales, Hills undertook the test to see if it could get any significant results from remerchandising 20 percent of its 210 stores around a more vigorously promoted name brand.