Old is for museums, current is for retail
When I picked up my local newspaper the other day, a headline read “Collierville’s McGinnis Hardware to close its doors after 146 years.” Clearly this isn’t the first independent store to go out of business, but it brought on feelings of nostalgia. Started in 1866 and in the same location on the picturesque Town Square since 1879, McGinnis Hardware was a fixture in the community. It stood through the Spanish-American War, World Wars I and II, the Korean War, the Vietnam War, Desert Storm and the Iraq War. What could bring this institution to an end?
Consumer change undermined this retailer and many more that have preceded it into closure. In this case, competition moving in from both The Home Depot and Lowe’s was more than McGinnis could withstand. Nonetheless, many hardware stores remain vibrant players in the market. Why didn’t McGinnis make it while others have done well? A look at the Home Improvement Research Institute’s (HIRI) “2012 Retail Selector Study” gives us some important insights. This study was conducted among 1,603 consumers who had made a home improvement purchase in the past three months.
As one would expect, home centers dominated the share of the purchasers at 68%. Hardware stores got 7% of the activity; a very similar number to what had been shown in this same study going back to 2005.
A primary goal of the study is to understand the reasons why people select a particular retailer for a specific purchase occasion. Looking at the top-of-mind reasons for selection, there are primary areas: price, convenience and product selection. The mixture of these reasons is significantly different by type of retailer. Examining these differences is enlightening.
Consumers who purchased at home centers often mentioned all three major reasons for their choice of store. This is noticeably different than what we see for hardware, specialty and discount stores. Specialty stores are very strong for product selection. Given the depth of products in their chosen category, this makes a great deal of sense. Discount stores rely on low prices as their key attraction. With this store type’s focus on price, this is likewise understandable.
The reason for shopping in hardware stores is focused on convenience. Unlike specialty and discount stores, this isn’t an inherent characteristic of their basic business model but more a function of how they operate. Convenience comes from a variety of characteristics. Some variables that drive convenience are store location, ease of parking, ability to find the needed product easily, product in stock and ease of check out.
Being in the same location for 133 years may be a wonderful part of history, but is it convenient? A picturesque location on a town square is delightful, but does it have easy-to-find parking spaces, and is it still the center of commerce in town? Is the store configured to make it easy to find needed products? When you go to check out, is it quick and easy?
Unfortunately for McGinnis, it doesn’t appear that its longevity overcame the perceived advantages for consumers to shop elsewhere.
There are important lessons to be learned from this story:
• Today’s winning formula may not make it tomorrow;
• Even loyal customers can be persuaded to shift their business; and
• Understanding your advantage in the market is critical, and finding ways to enhance that edge should be a continuous activity.
Another HIRI study, “The Future of Home Improvement,” helps members understand emerging trends and prepare to be relevant as consumer desires shift. Embrace change. Those who aren’t going forward are going backward.
If you aren’t a museum, maybe moving once every 100 years isn’t a bad idea?
A 24-year industry veteran, Fred Miller is the managing director of the Home Improvement Research Institute (HIRI). He can be reached at [email protected].