Hardware Stores: Market Trends, Customer Targeting, and Advertising Strategies

2. Hardware Stores Hold Their Own • In the $338.6-billion home improvement industry (2015), as reported by Hardware Retailing, hardware stores were able to maintain their market share, at 13.0% (12.7% for 2014), with the 2016 share at 12.9% and 13.3% each year, 2017–2019. • Of the three sub-sectors in Hardware Retailing’s 2015 Market Measure Industry Report, hardware stores are forecast to have the largest compound annual growth rate (CAGR) for the period 2014–2019, at 5.0%. • In terms of the number of locations, the report forecasts a 0.1% decrease in the total number of hardware stores, home centers and lumber/building materials outlets during the same 6-year period, with hardware stores decreasing the most, at 0.3%.

3. Ace Is the Place • The Home Depot and Lowe’s may be the heavyweights of the retail home improvement market, but Ace Hardware tops the J. D. Power 2015 Home Improvement Retailer Satisfaction Study for the 9th consecutive year. True Value was 5th. • Ace Hardware was also first in Market Force Information’s 2015 Favorite Home Improvement Retailer, with a composite score of 61. Menards was second at 50, followed by Lowe’s, The Home Depot and Walmart. • Not surprising, Ace’s consumer satisfaction is reflected in its Q3 2015 revenues ($1.3 billion), which were the most for any third quarter in the company’s 91-year-old history. During the first 9 months of 2015, retail sales increased 5.1%.

4. Dissecting DIYers • According to research from The Farnsworth Group, retail hardware stores must be conscious of generational differences in DIY shoppers. Price is a primary driver with Millennials, but less so with Baby Boomers while Gen-Xers want competitive pricing. • Each generation also checks for prices differently: 46% of Millennials check online and 50% shelf prices. Gen-Xers also check online (46%), but 36% refer to advertising. With Boomers, it’s previous shopping, 38%; advertising, 36%; and online, 35%. • Another Farnsworth Group study found that 44% of homeowners, 45–54, shopped for flooring at specialty retailers instead of mass merchandisers. Younger homeowners, 18–34, are more than twice as likely as their parents to shop at a paint store.

5. The Other Target Audience • Although homeowners are and will likely remain the largest group of customers for hardware stores, it’s important to keep in mind that the 2015 homeownership rate of approximately 63.6% was the lowest since 1993. • Hardware stores can’t overlook rental households: singles, families, Millennials, retirees and all income levels. Since 2007, 42% of the growth in renters are households with the head 55 years of age and older, and since 2011, 33% are in the top 25% of wealth. • The US Census Bureau reports that the US rental vacancy rate averaged approximately 7.05% during 2015, the lowest in 30 years. According to Rent.com’s 2015 Rental Market Report, 45% of property managers said Millennial renters have been increasing.

6. Smart Home Technology Tales • Hardware stores that market smart home technologies are likely to attract the 27% of consumers who said they would acquire one or more components during 2016, according to the Coldwell Banker Real Estate Smart Home Marketplace Survey. • Of all survey participants, 43% of Millennials said they already owned smart home products, 33%, 35–54; and 24%, 55+. In addition, 25% of households with $50K–$75K in income and 26% with $75–$100K incomes are adding smart home technologies. • IControl Networks’ 2015 State of the Smart Home Report stated that consumers’ most-desired smart home devices were self-adjusting thermostat, 72%; remote-locking doors, 71%; master remote control, 68%; and home monitoring cameras, 65%.

7. Advertising Strategies • Now is the time to help hardware stores plan advertising campaigns for the spring home sales season and Father’s Day that use television to brand stores as the local experts and promote special offers or bundles of project tools, materials, etc. • Use television to promote a smart home technology seminar and the expertise of the hardware store that features a comprehensive inventory of these technologies. • A hardware store can use television to target specifically rental households, promoting products for their types of DIY projects, specially priced bundles or kits for those projects and any women on the staff that will appeal to young, single adults and single mothers.

8. Social Media Strategies • Whether promoting a smart home technology seminar or any type of workshop, hardware stores can use social media to ask people what topics would attract them to the seminar. Then, make video recordings of all seminars to post as replays on social media. • Target young adults who are less likely to have bought any kind of tool with videos demonstrating the use of basic tools, a recommended basic tool kit and a special price for such a kit when people share the videos with their social media connections. • Hardware stores should consider the use of Pinterest to attract single, young women and single mothers, creating pins as examples of how easily they can enhance their apartments with simple DIY projects and offering a digital coupon.