Power tool retailing is not for the faint of heart, and there is no shortage of well-funded competition. But given consumer expectations, it's an arena in which hardware stores must play to claim relevance.
Plus, think of all the accessories like tool bits and saw blades that represent margin-rich products in the hardware retailer’s sweet spot.
This is part of the thinking behind the major overhaul of True Value Company’s revamped power tool business — a “core business” for the Chicago-based co-op, according to VP and Chief Merchandising Officer Heath Ashenfelter.
“The overall margin on power tools isn’t tremendous,” he said, alluding to competition from big-box and online retailers. “But we know that as we sell more power tools, then it will lead to more sales of higher margin products in categories that we feel we compete very well in, including hand tools and power tool accessories. That’s the path to success.”
"Price optimization is a key component.”The new-look tool assortment for the co-op is based on several ideas at the intersection of price, value, national brands and private label assortment.
The True Value approach begins with national brands, or as Ashenfelter describes it, “giving an appropriate share of the shelf to brands that the consumer cares about.” He points to Milwaukee and DeWalt among power tool brands that generate loyalty. (And Estwing in the hammer category, for instance.)
The national brands and creative merchandising — and an approach that comes very close to a store-within-a-store type setting — combine to validate that the category is a core business for a True Value store, he said.
Of course, pricing plays a major role in the new approach. “Price optimization is a key component,” Ashenfelter said. While power tool prices are generally going to have to be “right on top” of national competition, “the opportunity is for us to make more margin in the supporting businesses.”
And then there’s the matter of private label. For True Value, Master Mechanic has carried the load in both power tools and hand tools. For 2017, the True Value strategy is to upgrade the product, while reducing its presence in the aisle as national brands expand.
“Historically, we just quite frankly had way too much private label,” he said. “The price strategy was to drive a lot of margin. The problem was it was at the expense of relevancy.” Today’s mix is more relevant, he said, with prices that are more competitive on the SKUs that are most price-sensitive.
The upgrade in the Master Mechanic brand includes a new line hand of power tools, with a new logo, and new brand image across the board.
“Our goal for the private label brand is to provide a relevant mix of really good, high quality products that are priced at a value to the national brands, but right-sized.”
On top of everything, True Value is emphasizing creative merchandising and support for the core category. The result: “We’re growing rapidly and inspiring more confidence in our retailers that we can sell these categories,” he said.