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Conference Reveals Insights Into Industry Challenges, Opportunities
As a group, independent home improvement retailers are optimistic about the near future, with 78 percent saying they expect to see sales increase over the next three years. This information came from a recent survey of more than 1,000 retailers conducted by the North American Retail Hardware Association (NRHA).
Ten percent of these retailers expected sales to “increase significantly” during this period. However, NRHA’s research also revealed some of the challenges these retailers felt could impede this growth and once again, the ability to find quality employees topped this list (for more information, click here).
“Five years ago, if you would have asked me the same question, I would have told you that having quality employees was one of the greatest assets independent retailers had,” says Jared Smith of Jared’s Ace Hardware in South Carolina. “Overall, we are lucky to have a great team at our operation. But in general, the younger crowd coming in today, even if they have a lot of enthusiasm and the right attitude, they just seem to lack some of the basic skills and knowledge they need to have about the trade. These are things we really need to teach them about and help them with so they can help our customers properly.”
This research and Smith’s sentiments were among many of the topics discussed during NRHA’s 2016 State of Independents Conference, which was held Dec. 8 at the Hyatt O’Hare in Chicago and exclusively sponsored by the National Hardware Show®.
This was the second annual State of Independents Conference, and attendance at the event was up by nearly 20 percent from the 2015 event, according to Dan Tratensek, NRHA vice president and publisher of Hardware Retailing magazine.
“We were very excited to see that more and more members of the home improvement channel are interested in learning about the challenges and opportunities faced by independent retailers today,” Tratensek says. “We hope to see even more people come to the event next year so we can make sure we keep the needs of independent retailers front and center for the channel.”
A Focus on Independents
With representatives from across the manufacturing, distribution and retail segments of the channel in attendance, the NRHA 2016 State of Independents Conference represents the only industry event that is completely focused on providing attendees with a better understanding of the more than 35,000 independent home improvement retailers operating in the U.S. and Canada.
The one-day event featured a variety of research from NRHA and other leading industry organizations, focusing on topics ranging from what motivates individuals to open a home improvement operation to how consumers view the shopping experience at independent brick-and-mortar stores versus their big-box and online competitors.
“Independent retailers are such a vital part of the home improvement industry, but because they are all independently operated businesses, they can be the most difficult to truly understand,” says Rich Russo, vice president of the National Hardware Show, which has served as the event’s exclusive sponsor for the past two years. “We want to lend our support to this important event, because anything we can do to help the industry better understand what these retailers need to succeed will only help the industry thrive.”
In addition to revealing results of research on a range of topics impacting independent retailers in the home improvement channel, the State of Independents Conference also featured panel discussions with retailers from across North America.
“For me, the panels are one of the most valuable parts of the event,” says TJ Comstock of Northwest Hardware, based in Billings, Montana. “The research is great, but I like hearing from other retailers about the challenges they are facing and what they are doing to address them.”
Insights Into Independents
Along with the challenge of finding the right people to run and grow their businesses, retailers, through the research results and at the Conference, expressed concerns over issues such as the increasing amount of online competition as well as the growing burden of taxes and regulations on small businesses.
In fact, the number of retailers mentioning concerns over increasing taxes and regulations as a challenge to growth increased by 5 percent over last year’s study.
“In our area of the country and our county, we are under a new minimum wage law, and we have new regulations specifying that we have to provide one hour of paid vacation for every 40 hours an employee works,” says Dan Harris, State of Independents panelist and owner of Palos Heights Ace Hardware in Illinois. “As small businesses, I just don’t know how much more we can absorb with these kinds of regulations,” he says.
On the other end of the spectrum, retailers in NRHA’s research and at the Conference also shared insights into the biggest opportunities they felt they had to grow their businesses.
When it came to expanding their operations, retailers seem to be focusing on internal opportunities—at least in the short term.
NRHA’s research showed that 23 percent of independent retailers felt adding new products and niches to their existing assortments represented their biggest opportunity for growth.
Over the short term (one to three years), retailers identified adding new products and niches, refining operational efficiencies and developing stronger teams as the top three pathways to increased success.
For retailers like Smith, this means tweaking the business to attract a younger customer base. “We really want to focus on making changes to the operation that will help us attract more millennials into our store,” Smith told Conference attendees. “This means looking at what retailers outside of our industry are doing and utilizing those ideas in our own stores. We can’t have tunnel vision.”
In addition to a discussion about the challenges and opportunities retailers face, the State of Independents Conference and NRHA research also looked at independent retailers’ relationships with other channel members—namely manufacturers and distributors.
In this area, NRHA’s research revealed that independent retailers are generally pleased with the support they get from their channel partners, but they still feel there is room for improvement in areas such as communications.
To single out industry partners that independent retailers feel are going above and beyond to meet their needs, NRHA also recognized four manufacturers with Channel Partnership Awards during the State of Independents Conference.
These award winners were selected based on feedback from NRHA research. As part of one of the surveys, independent retailers were simply asked to identify which manufacturers they felt were “best in class when it comes to supporting their success.”
This year’s winners were Stihl Inc., Weber Grills, Benjamin Moore & Co. and Valspar.
For more information about NRHA’s research or the State of Independents Conference, please contact Dan Tratensek directly at DanT@nrha.org. For more information about the National Hardware Show, go to nationalhardwareshow.com.