Impulsive sales

By Bill Addison

Average hardware store sales shrank 6.3% in 2008, according to the Home Improvement Research Institute (HIRI), and the macroeconomic slog continues in 2009.

Hardware retailers are looking to make every sale count. One category that seems to show that possibility is the broad category of impulse items.

During a recent visit to a New York City Home Depot, a reporter found shoppers enticed at the checkout with a menagerie of items ranging from home improvement basics such as wall hangers, compact fluorescent light bulbs and batteries to everyday convenience items such as antibacterial soap, combination locks and bottled water.

Down the street, at a True Value hardware store, economy tools and a selection of adhesives lined the front counter. Both stores helped drive home the point that impulse items can be almost anything, and they’re big business.

Do it Best VP merchandising Steve Markley believes in the power of impulse items to boost sales and margins for the co-op’s members, particularly in today’s hyper-competitive times. He pointed to the co-op’s “dollar program” as an example of an organized approach to tapping impulse sales.

“Members have responded to that in a big way,” he said. “It offers hundreds of SKUs, and involved dump bins or items at the checkout. It allows our members to sell a little bit more.”

At a recent Do it Best market, the company promoted impulse items and counter displays with signage directed at members: “Margins up to 66.4%.”

One top performing hardware impulse item is the Monkey Hook, a heavy-duty wall hanger that is simple in design and requires no tools to install.

According to David Kurrasch, an owner of Monkey Hook, impulse items play an important role in driving hardware store sales in a down market. He pointed to data showing hardware stores average about $20 per transaction, and 48% of those are single-item transactions. By putting high volume items at point of sale, retailers are creating new buying opportunities. “If they buy a pack of hangers for $3, I’ve just helped them increase sales by 15%,” he said.

The Monkey Hook’s design and packaging have helped make it the top selling wall hanging product in Ace Hardware and Lowe’s, according to Kurrasch. Placement within the store is a big factor in sales, he has observed. “We’ve seen that it’s an impulse item,” he said. “And we see that when retailers locate the hook in the picture-hanging aisle, it will do well. When they put it by the register, it nearly doubles in sales”.

Kurrasch said the product’s success is based on the tried-and-true formula of practicality and affordability. “Retailers want a product they can count on to generate a high margin of movement at an impulse,” he said. It was his retailer partners who helped him to discover the product’s potential as an impulse item. He noticed that of all the Ace dealers who were selling the Monkey Hook, two of them were moving 1,300 units per year. When he visited the stores to see why they were moving so much volume, he saw they were displaying it at impulse points.

“They had a display at the end of their fastener aisle and at their number one register. It all clicked that this was an impulse item,” he said.

Judging from checkouts and endcaps at hardware stores and home centers, many are finding snack foods and drinks are a growing opportunity. “The snack food industry is growing into a $5 billion industry, which is a 20% increase over last year and 40% over three years,” said Dennis Hale, sales manager for Chef Enden roasted nuts.

According to Hale, growth like that isn’t going unnoticed in hardware stores.

“Every Home Depot register has candy and snacks and water,” he said. “We see hardlines sales, tool sales, pretty much everything related to tools declining. All these stores are trying to make up margin losses by incorporating snack items.”

“We’re experiencing a snack food sell-through rate of 40% every 10 to 15 days, versus 3% or less in hardlines,” he said. “In this market, that’s a significant growth trend.”

Hale said the Chef Enden’s line of cinnamon roasted nuts has been growing steadily since the brand’s strong debut at the 2008 United Hardware show. A year later, the brand is available at more than 2,200 farm supply, hardware and home center locations.

Times are changing. So have hardware store impulse items.