Behind the scenes at Germantown Hardware

Q: What are some cool technologies you're using in the store these days? And do you have any new tech or tactics coming soon? 

Jim Rivas: Because we look at our CNRG as a retail laboratory, we are always trying new things and testing concepts that could provide solutions to our retail customers. 

At Germantown Hardware, we are experimenting with various types of technologies, including our integrated eCommerce solution and the Industry PIM (Product Information Management system) that helps us deliver enriched data and images to the website, showing our complete product selection beyond just showing Orgill products. We have also integrated our customizable loyalty platform, FanBuilder (branded "Germantown Rewards"). 

One of the coolest things we have been testing is a robot from Badger Industries. The robot travels up and down each aisle, helps us maintain our in-stock position, and ensures we are in compliance with pricing. And coming soon, we’re launching an automated digital display board highlighting items available for customer pickup, featuring pictures, UPCs for cashiers to scan, and near-real-time pricing and inventory levels. This technology is part of the electronic shelf label platform we have installed at Germantown, which is provided by VusionGroup. It’ll make the whole checkout process faster and more convenient for our customers. 

Whether they are based on new technology or just processes and procedures, we are always seeking innovative solutions that benefit our teams, customers and ultimately our dealers, once we have validated them through our vetting process. These are just a few of the technologies we are currently exploring, but there are too many others to mention.

Q: How long do you test new ideas, tech or tactics at CNRG stores before sharing ideas with customers? 

Jim Rivas: There’s no one-size-fits-all answer. 

It really depends on the complexity of what we’re testing. The duration of any test to provide proof of concept (POC) depends on the complexity of the technology and the time required to implement it. We prioritize sharing our experiences with our dealers, providing an honest account of everything we do. This includes discussing our successes, failures and the lessons we learned along the way. 

After completing a POC, we move on to a pilot project that scales the effort across many, if not all, CNRG brands (the laboratories). Once we validate a concept, we publish a case study that details our findings, including metrics and an anticipated return on investment. 

The key here is we are honest about what works and what doesn’t. We share those lessons with our dealers through case studies, highlighting wins, misses and everything in between. 

Q: Is Germantown the only CNRG store that's used as a testing ground for new ideas?

Jim Rivas: No. To the contrary. Our entire network of CNRG stores serves as living retail laboratories. 

Each of the brands is different, and this provides us with the opportunity to experiment across various geographic areas and store types. The CNRG network of brands closely resembles the operations of our dealers, which include hardware stores, lumberyards, home centers, and farm stores. 

The Germantown Hardware store plays a big role, but the entire CNRG network acts as our innovation lab. With 18 brands across 16 states, we’ve got a pretty diverse testing ground. A good example of how we use different lab stores is that we could try the Vusion automated board for soil pick-up at hardware stores and home centers, but we could use the same technology for lumber pick-up at a pro store. This diversity of store types gives us great insights into how tech and new ideas perform in a real-world setting that reflects our dealer network. We utilize the entire CNRG network to test new technologies and other programs that Orgill offers. 

Q: How do you come up with new ideas to implement, and how do you go about the actual implementation/training with staff? 

Jim Rivas: Most of our inspirations for testing new concepts come from our dealers and the challenges they encounter, as well as the issues we face at CNRG. We typically start with a “problem” or “challenge” that our dealers are having. Also, sometimes it begins with a product or technology the dealer has heard about but doesn't have the time, knowledge, or resources to try. Electronic Shelf Labels (ESLs) are a good example of this. In this case, we are helping by doing this discovery for them in the lab. 

As far as the implementation and data collection, writing effective policies and procedures is essential for successful execution, as technology is merely a tool to address a particular challenge. It's crucial to accurately capture the business's intentions to prevent regression or failure. We also know that even the best ideas won’t stick without proper training. If the solution is complicated, we build training into the rollout. However, some tools are intuitive, and they catch on pretty quickly without much instruction. 

Q: What are some metrics you use to measure whether a new initiative is successful or not?

Jim Rivas: Typically, the offset should be three times the initial investment, although this isn't always the case. 

We assess the impact on sales, profit margins and other indicators of enhanced efficiency, such as time saved by automating or streamlining processes. 

Some metrics are softer and more challenging to quantify, like improvements in customer service or the overall customer experience. Measuring factors that contribute to making someone's job easier can be difficult, even though they may lead to increased morale and productivity. Therefore, it’s important to be creative in finding ways to evaluate these outcomes.

Q: What have been some of the most promising features, initiatives or new tech you've rolled out?

Jim Rivas: Our Fanbuilder loyalty platform shows great promise as we continue to evolve the program based on feedback from our dealers. 

We developed this platform in-house and continuously add features that our dealers request. Some of these enhanced features allow you to design and brand the platform to make it uniquely yours. The platform is fully customizable, enabling you to reward customers in a way that suits your business best. It’s not just another loyalty program, it provides a way for stores to connect with their customers in a personalized, branded way. Our dealers are impressed with its flexibility, and customers love earning rewards that actually matter to them. 

Q: What guidance would you give small hardware store owners who are skeptical about trying new ideas or new technologies?

Craig Cowart: It’s completely understandable to be skeptical, and to a certain extent, you should be. I recommend conducting thorough research by examining data such as the case studies we do, asking for demonstrations and requesting specific statistics from the vendor. 

Don’t write off new tech without doing some research. Whenever possible, look at studies or insights that feature actual use cases, and try to speak with someone who has been through the process. Sometimes seeing it in action makes all the difference.

Q. What’s one example of an idea or technology that did not work as expected? What did you learn from that experience?

Jason Butchko: It's important to understand that "failure" in technology is often a matter of unmet expectations or unforeseen challenges, rather than complete abandonment. In the realm of SaaS (Software as a Service), and particularly with tools like Inventory Planning software, there are instances where expectations don't align with our current business model. During a recent Proof of Concept, we deemed the PoC as a “fail fast” test, meaning we rapidly identified the issues and terminated the project. 

Many inventory planning SaaS solutions promote highly accurate demand forecasting, leveraging complex algorithms. However, real-world inventory management is often disrupted by unpredictable factors like sudden market shifts, supply chain disruptions or unexpected promotional impacts. In our test, we found that the software's forecasts, while sophisticated, couldn't fully account for these variables, leading to either overstocking or stockouts. 

This highlights the challenge of relying solely on algorithms without incorporating human judgment and flexibility into inventory strategies. So this technology is very useful, but it must be tailored to the needs of the business. Even in these situations, we learn a lot by going through the process and this education helps us make more informed decisions as we move forward.

Q. How do customers typically respond to new tech or innovations in the store?

Jason Butchko: Customers' responses to new in-store technology and innovations vary, often depending on how well the technology enhances their shopping experience. 

Generally, our customers appreciate technologies that offer convenience, personalization, and efficiency. For example in our Germantown Hardware location, VusionGroup’s electronic shelf labels (ESLs) are often welcomed as they provide near real-time accurate pricing and additional product details. ESLs are contributing to a more efficient, informative and customer-friendly shopping environment. 

Additionally, our customers’ feedback regarding digital signage is helping our stores to understand the importance of clear, concise information, and easy-to-use interfaces. Ultimately, successful tech implementations are those that prioritize user-friendliness and address customer pain points, resulting in a smoother, more enjoyable shopping journey.