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Marketing to Home Improvement Retailers

Marketing to Home Improvement Retailers

Home improvement retailers are a specialized marketing channel for many

types of construction and remodeling products including building materials

and supplies, lawn and garden, lighting and plumbing, construction tools

and equipment, and more.

This whitepaper provides a snapshot or basic statistics on the retail home

improvement industry, along with the results of a 2011 survey on home

improvement retail marketing practices conducted by the Construction

Marketing Association. In addition, three important aspects of home

improvement marketing will be considered: merchandising, packaging and

retail line reviews.

Retail Snapshot

Retail home center and home improvement stores have a combined

revenue of $132.54 billion in 2011; with overall home improvement channel

sales totaling $205.9 billion in 2011. (Source: Home Channel News).

The retail home improvement category consists of several segments

including big box home centers like The Home Depot and Lowe’s,

hardware cooperatives including Ace Hardware and True Value, Lumber

and Building Material dealers (LBM’s), mass merchants like Walmart and

Sears Holdings, and specialty retailers that sell products such as paint,

flooring, and farm goods.

The following chart identifies the top ten largest home improvement

retailers in North America by number of stores and earnings in 2011

(Source: Home Channel News).

/// Construction Marketing Association | Marketing to Home Improvement RetailersPAGE 1

Retailer Sales ($M) 2011 # Stores 20111. Home Depot $70,395 22482. Lowe’s $50,200 17493. Walmart* $19,400 38684. Sears Holdings* $12,200 35105. Menards $8,800 2636. Shermin-Williams $4,780 34507. Tractor Supply $4,230 10858. ProBuild Holdings $3,300 4399. Harbor Freight Tools $1,650 38010. 84 Lumber $1,430 258

Home Improvement Retail Marketing Survey

The Construction Marketing Association recently conducted a survey on

retail marketing practices to shed insight into this important channel.

The following questions were asked:

• What retail channels do you sell to?• What approximate percentage of sales are retail (vs. non-reital)?• What types of retail initiatives do you undertake?• What types of products do you sell to retail?

Retail Channels Sold To

.

Percentage of Retail Sales

PAGE 2 /// Construction Marketing Association | Marketing to Home Improvement Retailers

HOME CENTERS/BIG BOX 70%

40%

40%

30%

20%

HARDWARE CO-OP

ECOMMERCE

LUMBERYARDS

OTHER

HIGH AVERAGE LOW

100%

53%

15%

Home centers/big box home centers were the top retail channel sold to with 70 percent, followed by hardware cooperatives and ecommerce with 40 percent each.

On average, 53 percent of respondent’s sales are retail. Responses went as high as 100 percent, and as low as 15 percent.

* Note: Mass Merchants like Walmart and Sears Holdings were not included in past rankings. However, they are included today because the influence of these stores on home improvement is so large. Mass merchants generated $33.12 billion in revenue, or about 16% of overall home improvement channel sales in 2011.

Types of Retail Initiatives

.

Types of Products Sold

Home Improvement Retail Merchandising

Merchandising is the visual presentation of products in the store including

all types of displays, signage, and in-store promotions.

Planograms are used to specify merchandise sets by department and stock

keeping unit (SKU), and corresponding point-of-purchase (POP) signage.

Typical merchandise sets include in-line (bays for home centers), end caps

and solution centers; promotional displays include in-aisle stack outs,

quarter pallets (QPs), bin merchandisers, clip-strips and various dispensers.

PAGE 3 /// Construction Marketing Association | Marketing to Home Improvement Retailers

MERCHANDISING DISPLAYS

PROPOSALS/RFPS/BIDS

PROMOTIONS

LINE REVIEWS

OTHER

PACKAGING

90%

80%

70%

60%

60%

40%

50%

30%

10%

10%

BULDING MATERIALS

TOOLS

EQUIPMENT

OTHER

Merchandising displays, promotions, and proposals/rfps/bids ranked as the top three types of retail marketing initiatives.

Typical POP includes channel headers and posters, laminated how-to

instructions, shelf-talkers, banners, ceiling danglers, and floor decals. Each

retailer has departments and guidelines. Sometimes a retailer will appoint

a category captain to oversee category management. Following is an

example of category management for The Home Depot “Tool Corral”.

Following is an example of category management for Lowe’s tool

department, or “Tool World”

/// Construction Marketing Association | Marketing to Home Improvement RetailersPAGE 4

/// Construction Marketing Association | Marketing to Home Improvement Retailers

Following is an example of a category management planogram for power tool accessories from Vermont American.

To the left is an example of a

merchandising planogram brochure

for hardware chain Do it Best from

National Div. Stanley, created by

Construction Marketing Advisors.

Following is an example of a category management planogram for RIDGID

jobsite and truck storage equipment by Construction Marketing Advisors.

PAGE 5

Following is an example of a Home Depot end cap with quarter palette

display, and “conversion cart” portable display.

Retail Packaging

Each retailer will have packaging requirements related to bi-lingual or

tri-lingual, bar codes, and for some products, security strips (Sensormatic).

Following are examples of home improvement packaging including blister

card packaging for Ideal Industries, Bosch and Vermont American.

/// Construction Marketing Association | Marketing to Home Improvement RetailersPAGE 6

Home Improvement Retail Line Reviews

Retailers continually evaluate their vendors and merchandising mix with

point-of-sale (POS) data, margin analysis, and supplier performance

(fill-rate 95%+, inventory turns, sales per square foot).

Depending on the product category and/or department, line reviews are

typically 1-year contracts, but could be up to 3-5 years. For certain product

categories or departments, the retailer will hold online price auctions.:

Depending on the product category, a retailer will often seek one or more

national or pro brands, and a price brand, which often is a

proprietary (house or private label) brand. Some line review

trends to consider:

• Retailers focused on SKU rationalization and vendor consolidation

• Retailers are requesting more frequent line reviews, and

demanding more support

• Note that home center retailers seek pro contractor business, and

likewise seek pro contractor brands

A challenger brand (not in the retailer) can win placements with

special promotions:

• Approach differs based on narrow or broad line supplier

• Identify the department or category merchant and pitch

• Provide market intelligence (share, equity, brand support)

• Hardware co-op is different; pitch individual stores, as well as

corporate buyers

Incumbent suppliers and challenger brands can defend or gain placement

with home center retailers through proactive merchandising and/or

promotional support. Below is a USG cirular ad for Lowe’s.

/// Construction Marketing Association | Marketing to Home Improvement RetailersPAGE 7

/// Construction Marketing Association | Marketing to Home Improvement RetailersPAGE 8

Following is an example of a bi-lingual free-standing insert (FSI)

announcing a promotion, (buy a truck box get a free vacuum cleaner),

in support of a merchandising display placement for Ridgid Truck storage.

Achieving Retail Marketing SuccessManufacturers and brands that market to home improvement, hardware and related retailers are challenged with competitive threats, eroding margins and demanding merchants. These challenges are more than offset by the sheer volume opportunity from these retailers.

How brands navigate retail line reviews is dependent on the specific product category, as well as the brand’s position as incumbent or challenger. Effective merchandising, packaging, promotion, and line review management can determine success or failure.

This whitepaper provides rare insight into this specialized industry with a snapshot of the top retailers, the results of a national survey, followed by examples of merchandsing and packaging, along with line review tips. Following are additional resources.

Additonal Resources:American Hardware Manufacturers Association (AHMA)Hardware Retailing (magazine)Home Improvement Research Institute (HIRI)North American Retail Hardware Association (NRHA)Technology Trends in Home Improvement Retail

The Construction Marketing Association

provides professional development and

marketing training, resources and information,

networking and recognition including the

Construction Marketing Blog, the annual CMA

STAR Awards, and the Certified Construction

Marketing Professional (CCMP) program. For

more information, visit the website.

Construction Marketing Advisors is an agency

specializing in construction product and retail

home improvement marketing. For more

information, visit the website.

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PurcHAse: RIDGID® Model 4100/4105 Truck Saddle Box.*receive: RIDGID® 12-Gallon High Performance Wet/Dry Vacuum Model WD1250 or similar. send: This completed form and original (Home Depot) receipt showing the RIDGID® Model 4100/4105 Truck Saddle Box and date of purchase to:  CustomerResponseCenter•RIDGIDRedemptionProgram•2917N.LatoriaLane,FranklinPark,IL60131Promotion vAlid: On purchases dated 12/01/10 to 12/31/10. Entry must be postmarked by 1/15/2011. Name:  ____________________________________ Email Address: ________________________________ Street Address:  ____________________________________ 

City/State/ZIP:  ______________________________ Purchased From:  ______________________________ Questions? Call 866-481-0212 (8 am - 4:30 pm CT) for more info. *Promotion form must be postmarked on or before January 15, 2011 and received by January 25, 2011. One submission per handwritten addressed envelope and must be sent by individual consumer purchasing product. Limit ONE request per name and address. No group submissions. No copies of receipts. The promotion form must be filled out completely and legibly. Visibly altered documentation will not be honored. Requests from PO Boxes will not be  honored. Use of fictitious names, addresses or organizations to obtain additional vouchers or premiums is fraud and is in violation of Federal Law and may result in prosecution and a term of imprisonment, fine or both. Offer void  where prohibited, taxed or otherwise restricted by law. This offer cannot be used with any other RIDGID® Brand Promotion. Please retain a copy for your records. RIDGID® and its employees and affiliates are not responsible for  lost, late, damaged, illegible or misdirected mail or forms. AFFIDAVIT OF ELIGIBILITY & LIABILITY/PUBLICITY RELEASE. **Limited to in-store inventory.

A HolidAy Present for yourself!Buy a ridgid® truck saddle Box – Get a ridgid® wet/dry vacuum free!

tHe neW ridgid® truck sAddle BoXAvAilABle At select locAl tHe Home dePot stores**

It would be a shame to throw all those nice tools and supplies in the back of your truck exposed to weather and thieves. Especially when you can pick up the pro-grade RIDGID® 4100/4105 Truck Saddle Box at such an affordable price.

• Locking systems that are    virtually tamper-proof 

• Full weather seal protects    against the elements

• Easy Find organization for    storage of small parts and tools

• Heavy-duty reinforced    aluminum diamond plate    construction with powder    coat finish

• Full 10-year warranty!

NeW from

free ridgid® model Wd1250 Wet/dry vacuum

$79.97 retail value

PurcHAse: RIDGID® Model 4100/4105 Truck Saddle Box.*receive: RIDGID® 12-Gallon High Performance Wet/Dry Vacuum Model WD1250 or similar. send: This completed form and original (Home Depot) receipt showing the RIDGID® Model 4100/4105 Truck Saddle Box and date of purchase to:  CustomerResponseCenter•RIDGIDRedemptionProgram•2917N.LatoriaLane,FranklinPark,IL60131Promotion vAlid: On purchases dated 12/01/10 to 12/31/10. Entry must be postmarked by 1/15/2011. Name:  ____________________________________ Email Address: ________________________________ Street Address:  ____________________________________ 

City/State/ZIP:  ______________________________ Purchased From:  ______________________________ Questions? Call 866-481-0212 (8 am - 4:30 pm CT) for more info. *Promotion form must be postmarked on or before January 15, 2011 and received by January 25, 2011. One submission per handwritten addressed envelope and must be sent by individual consumer purchasing product. Limit ONE request per name and address. No group submissions. No copies of receipts. The promotion form must be filled out completely and legibly. Visibly altered documentation will not be honored. Requests from PO Boxes will not be  honored. Use of fictitious names, addresses or organizations to obtain additional vouchers or premiums is fraud and is in violation of Federal Law and may result in prosecution and a term of imprisonment, fine or both. Offer void  where prohibited, taxed or otherwise restricted by law. This offer cannot be used with any other RIDGID® Brand Promotion. Please retain a copy for your records. RIDGID® and its employees and affiliates are not responsible for  lost, late, damaged, illegible or misdirected mail or forms. AFFIDAVIT OF ELIGIBILITY & LIABILITY/PUBLICITY RELEASE. **Limited to in-store inventory.

NOVEDAD DE