A wider aisle for HD Supply
HD Supply, the $7.4 billion wholesaler that sells everything from underground water pipes to window blinds, has had to roll with the recession’s punches like everyone else in the building industry. But the Atlanta-based company, which spun off from Home Depot in 2007, has found a business unit in its sprawling portfolio that, it believes, has a lot of potential. And by investing some money and personnel into that division, HD Supply has already taken some market share in the builders hardware category.
Until now, Crown Bolt had kept a pretty low profile with one major account—Home Depot—keeping its conveyer belts running. But over the past year, the Aliso Viejo, Calif.-based division has made a concentrated effort to promote its program of anchors, screws, nuts, fasteners, rope, chain and builders hardware to other retail outlets that may be interested in changing suppliers.
So far Crown Bolt has bagged two big accounts—Marvin’s Building Materials and Home Centers, a 26-unit home center chain in Alabama, and Orchard Supply Hardware, an 88-unit chain of California hardware stores. Overseeing Crown Bolt (in addition to all retail and installation service divisions) is recent hire Joe Izganics, a Home Depot veteran who was once in charge of the Contractor Service Desks, as well as the installed sales division for the Atlanta retailer.
“I still get multiple phone calls [from Home Depot>,” Izganics joked. “You’ll find me in the [store> aisles, straightening up a display.” The former senior VP and division president for Home Depot, who left in 2009, is now in charge of his former employer’s $725 million fasteners account, plus another $350 million in builder’s hardware. (Home Depot’s Canadian and overseas stores use different suppliers.)
To make the program attractive to other retailers, Crown Bolt offers several merchandising and inventory solutions, some of which it claims are unique to the industry. In builders hardware, “one of the biggest issues was inventory control,” Izganics said. So Crown Bolt repackaged many of its products in smaller quantities, freeing up a retailer’s cash. The company claims a 98%-plus fill rate from its four distribution centers in Stockton, Calif.; Atlanta; Memphis, Tenn.; and Carlisle, Pa.
Crown Bolt also has a color-coded packaging design for its door, closet, window and other builders hardware categories, making it easier to identify and stock. A co-branding deal with Rust-Oleum on all galvanized and stainless steel products is an opportunity to increase margins, the company said. High-fashion finishes—rubbed bronze, satin, nickel and antique brass—are also available for consumers who want to match their hardware to their fixtures.
Craig Cowart, president of Marvin’s, said the decision to switch his builders hardware program to Crown Bolt was “a big one for us,” given that Marvin’s had been with its old supplier for 20 years. But the Leeds, Ala.-based chain has remodeled many of its 26 home centers, and Crown Bolt allowed them to retool the department from the ground up.
“This ‘greenfield’ effort allowed customization on assortment, signage and product set flow that worked best with our store format,” said Cowart, who has also been pleased with the “solid field support staff.” At the one-year mark, Marvin’s is now adding ancillary items to expand its Crown Bolt offerings beyond builders’ hardware.
For other retailers, Crown Bolt is the supplier of choice for fasteners, a signature department that can become a nightmare at the cash register. To cut down on confusion and keying errors, Crown Bolt has developed an exclusive system of imprinting three-letter codes on the heads of all bolts and lag screws. Cashiers no longer have to look up an individual bolt or a screw in a binder at the checkout line. Instead, he or she keys in the letter code, which is recognized and tracked by the point-of-sale system. For retailers who sell bulk fasteners, this can decease checkout time and improve accuracy at the same time.
As with the builders hardware program, Crown Bolt’s fastener program has also reduced minimum SKU quantities to help with inventory control and turns. So poly bags of sheet metal screws can be purchased in buy packs of five instead of 10, and hex bolts are available in 25-piece boxes instead of 100. The color-coded packaging is also applied to separate the categories. Crown Bolt’s merchandiser for bulk fasteners uses 2-ft.-wide bin cabinets that accommodate single, double and full-length drawers.
Last month, Crown Bolt finished the conversion of the fasteners department at Orchard Supply & Hardware, a chain that stretches throughout California. “We converted the entire program, both bagged and bulk fasteners, in an 88-linear-ft. program,” Izganics said. The upshot for Orchard, according to Izganics, was a 10% increase in SKU count and a 29% reduction in floor space.
As evidenced by its booth at the National Hardware Show in May, Crown Bolt is trying to establish its own identity in the independent hardware channel, and in the process, go after some market share it sees as being up for grabs.
“Historically, the market has primarily been served by fill rate and product depth requirements,” Izganics said. “While these will always continue to be important to retailers, we think there is opportunity.”
