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.”

Paint is also deemed more of a necessity item than other products, according to Kay Martin, who for 20 years has served as the paint manager at Teton Ace Hardware. “It’s not like a tanning salon where you can decide to go or not go,” she said. “People always need repairs and paint supplies.”

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 category 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 Claire Falcone, vp of Rocky’s Ace Hardware, which has 34 stores ranging in size from 7,000 square feet to 20,000 square feet, across four New England states and Florida. “Sometimes people want to spruce up their house quickly. It’s a quick fix.”

The housing market works in paint’s favor whether housing prices—or sales—are falling or rising, Falcone said. “People are not buying homes in this economy and not putting in major improvements in their dwellings either. If they’re selling their homes, they certainly want to enhance their homes with a paint job, and even in lieu of selling their homes, they’re looking to at least freshen it up. Painting is the lesser of other bigger investments in your home.”

Alistair Linton, director of retail development, Benjamin Moore, agreed: “For those people who are not selling their homes, paint may have become an even more desirable way to freshen up their room than in the past. It’s a low-cost option for home decor.”

Retailers who put 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.

After Teton Ace’s expansion, the paint department occupied a prominent space on the retail floor featuring 16 feet of color chip racks where customers can select colors. “Paint is a space-consuming category,” Martin said. “There are the brands of paint you carry, the different types of paint (latex, flat, etc.), the machines that custom mix the paint and the many accessories that add value including brushes, brush cleaners, rolls, poles, drop cloths, sandpaper, masking tape. Our people are trained in salesmanship to service customers by suggesting all these products. People appreciate that because they don’t stop to think about [those accessories] until they get home and realize they need it.”

Customers at Teton are accustomed to spending time in the store and speaking with the paint experts. One reason is that Teton is the only hardware store in its rural area. The other driver is service. “We don’t just take the fabric the customer brings in, match it with the right paint and send them on their way, ”Martin said. “We get very personally involved in their paint project. We want to know about the project, and we also want to know later on how it turned out.”