Mind Your Business: Competing with the ‘big boxes' requires a change in attitude
December 21, 2006
Home Depot recently launched what it calls its “Worksite CD.” They offer it free to trade customers at the Pro desk in Home Depot stores.
The CD offers online ordering of nearly every SKU carried by “Big Orange,” plus the entire maintenance warehouse catalog. Customers can search for products by category, description and SKU, and order via phone, fax, online or by printing out the order form and bringing it to the Pro desk at any store. The CD also enables contractors to get updated pricing from any Home Depot store to plug into job quotes, and estimates can be downloaded to QuickBooks Pro accounting software to create bids and invoices.
This convenient tool is one more element of a strategic push that’s been taking place at Home Depot and the other big-box stores for the last several years to boost business from trade customers. The Pro desk was another part of the program.
Desperation helps drive these initiatives. Aging baby boomers are less inclined to tackle home-improvement projects than they were in their youth. Only by boosting trade business can the big boxes keep pace with the growth they enjoyed throughout the 1980s and ’90s.
So far, results have been disappointing. Big-box parking lots are filled with plumbing trucks, but contractors - at least the pipe trades version - tend to go there for fill-in items rather than bulk purchases. The warehouse home centers are no match for traditional plumbing, heating, cooling and piping wholesalers in breadth and depth of inventory, delivery, troubleshooting and various other services contractors need.
The real competitionNor do the big boxes compete well on pricing overall. Contractors go ballistic when they see super-low prices in the newspaper ads. But these are loss-leader merchandising tricks. On a representative range of everyday goods, plumbing and HVAC wholesalers almost always offer better pricing across the board. And if he needs something out of the ordinary, a contractor has a much better chance of finding it right away at a supply house than at Home Depot or Lowe’s.
Despite their natural disadvantages, one competitive edge for the big boxes may be that they aren’t as complacent about their market position as most industry supply houses tend to be.
The big boxes haven’t given up their quest for professional business. They keep coming out with new ways to make it as inviting as possible for trade customers to do business with them, like the CD.
It gets the mind to wondering what it would take to come out with something resembling the Home Depot’s CD but hinged to this industry’s wholesaler inventory. It could be done by some of the bigger individual companies, or perhaps a trade group might undertake the project on behalf of all members showing product available at every supply house, updated frequently.
Maybe it’s even possible to produce an online version with real time inventory updates, or close to it. Wouldn’t that be convenient for customers?
A waste?But it seems a waste to talk about things that might benefit customers when manufacturers and wholesalers don’t seem very anxious in things that benefit themselves. Too much trouble. Not cost justifiable. Why fix what’s not broken?
The excuses roll all too easily from the tongues of would-be participants, and who am I to say they’re wrong. They have a much better handle on their own businesses than I or any other outsider does.
But it’s not too cheeky to invite wholesalers to ask themselves a couple of simple questions that have less to do with internal operations than fundamental business principles. What have you done lately to make it easier for your trade customers to do business with you? When’s the last time you came up with such an initiative?
Many wholesalers continue to operate not much differently than they did 10 years ago, or even 20 years ago. They keep the same hours, have the same return goods policies, order the same goods and provide price quotes the same way. They simply “know” that contractors are notorious whiners, so whatever complaints these customers may have about supply house shortcomings, wholesalers just “know” they’ll keep coming back.
Meantime, the big boxes plug away, trying everything they can to lure away your bread-and-butter trade customers. Don’t worry, though. Everyone “knows” wholesalers enjoy too many natural advantages for them ever to succeed. It’s not worth missing a nap over.