Paint as a profit center
When Teton Ace Hardware expanded its store in 2006 to 19,000 square feet, it tripled the size of its paint department to 1,000 square feet. The move made perfect economic sense: the Teton Valley, Idaho-based hardware store, with a well-earned reputation as a destination paint store, recognized that no matter the strength or weakness of the housing market, paint and paint supplies still sell.
Today, amid a deepening recession, punctuated by a protracted housing slump, paint sales are still doing rather well and generally outpacing other home improvement segments. “Paint has held up pretty good for us,” said Dennis Sessions, owner of Teton Ace Hardware, who said that the category flourished after his expansion. “Our overall sales are good. We’re in an area that is somewhat immune to the economic downturn; we’re doing well here.”
According to research by Global Insight for the Home Improvement Research Institute, the $11 billion paint and preservatives category fell 2.9 percent in 2008. But the latest forecast is expected to increase 2.9 percent in 2009, and another 10.9 percent in 2010 to $12.5 billion.
In Springfield, Mass., an area that has not been immune to the economic woes of the nation, Rocky’s Ace Hardware reports strong sales for paint and sundries. “To this point, paint has held up very well which is even surprising as we get close to the holidays,” said Clare Falcone, vp of Rocky’s Ace Hardware, which has 34 stores ranging in size from 7,000 square feet to 20,000, across four New England states and Florida. “Sometimes people want to spruce up their house quickly. It’s a quick fix.”
Retailers who give serious attention to the paint category say several key ingredients go into a successful paint center. Among them are devoting the proper amount of space and having the quality and quantity of product available. “We have seen a dramatic improvement in the renewal rate among retailers because the independent retailer has stepped up to really differentiate their offerings,” said Ed Klein, vp-retail, Benjamin Moore, which serves more than 4,000 retailers comprising more than 1,200 Signature Stores and 3,000 paint and decorating stores, hardware stores and lumberyards.
For years the biggest paint brands were built around quality and performance. While that positioning resonated with the do-it-yourself customer, predominately males, an increasingly female purchaser was looking for quality -- and fashion.
That trend led to co-branding, with names such as Ralph Lauren, Disney, Martha Stewart and Nickelodeon turning up on paint cans. For many dealers, adding household brand names energized the traditional paint category. Lowe’s entered into a partnership with the Martha Stewart brand to be the exclusive carrier of the “Martha Stewart Colors” line of paints.
While its relationship with Martha Stewart helped Lowe’s with the female consumer, Home Depot forged an alliance with Disney to broaden its appeal to kids. Ace's path included hooking up with 3M Scotchgard to develop a stain-resistant, washable and scrubbable paint for the Ace Sensations brand.
The biggest trend in paint has been the use of vibrant colors. While real estate agents often preach off-white and neutral colors for home paint projects -- especially when residents are looking to sell -- retailers say bolder colors are in. “People are really into a lot of new colors and a variety of colors throughout their homes,” Sessions said. “Ten years ago everything was pretty much an off-white. Today people are putting brilliant colors on the wall. That’s been the big trend the last five or six years.”