Summary
• CSD has noticed more merchants expanding shop areas into the warehouse.
• Shop products can achieve a far higher margin than carcassing.
• Rembrand Timber has expanded its shops to offer a uniform product range.
• Champion Timber customers have asked for a coffee machine.

Walking into a shop can be a rewarding experience, especially if you find just what you need.

Equally, the opposite can be true, and if the staff are particularly unhelpful, then there is no better way to ensure you never return.

The merchant’s shop, the area generally selling all the ancillary items like screws, stains and tools, can represent a substantial minority of business if it’s managed correctly.

One merchant told TTJ that his shop business represented about 30% of overall turnover, while another said the margin on shop products was 12% higher than for timber.

Ashley Evans, managing director of storage and display specialist CSD Associates, said the recession had led many merchants to batten down the hatches and put shop investment on the back burner.

“But there are interesting exceptions, with some professional independents deciding to go ahead with projects,” he said. “We have a number of projects with independents that have money in the bank and are doing business. It’s a case of ‘I may as well make the changes now while it’s quiet and be ready for the upturn’.

“Traditionally, there is a small shop area at the front of the premises with a suspended ceiling, with a pretty counter and some nice shelving. The tendency seems to be moving away from that to taking the wall down between the shop and the warehouse.

“People are accepting the idea of the warehouse becoming a sales area and positioning a greater proportion of the product range in sight of the customer.”

Mr Evans said token shops with “pretty” items on display conveyed the impression to tradespeople that the merchant “has gone DIY”, which does not help the merchant’s relationship with the client. There is an impression of limited products and small stock.

“The tradesman wants to feel confident that the people they are buying it from have plenty in stock,” said Mr Evans.

Display expertise

Ornate displays similar to those in high street chains should be eschewed in favour of macho product presentation with good quantities within deep self-selection areas. “More and more merchants are accepting that this is the way of doing things,” he said.

Mr Evans said a current project involving a Leicester merchant was initially a brief to tidy up the shop and move the existing trade counter, but the client was persuaded to expand under a mezzanine area.

But there are some options which do not need to break the bank.

“In the last 12-14 months people have become more aware of housekeeping, maintaining the quality of displays in the shop area,” said Mr Evans. “The impact can be significant for customers entering the shop if it’s untidy, shelves are empty and the staff are a bit despondent. They think it’s going out of business and the whole perception is negative. “If a shop is not looked after it can look like a dog’s breakfast.”

Mr Evans said another cardinal sin is 10-litre tubs of paint or timber preservative stacked on the floor, rather than on a plinth. “Untidy and unprofessional,” he added.

Free display stands from product manufacturers are another bugbear. “They are all different shapes and sizes and the shop area can become a bit like the Manhattan skyline. There’s no product grouping and it looks temporary,” Mr Evans said.

He argued that the answer is a more capital intensive one, with the best results achieved by merchants who fit their shops out with their own shelving. “If you can’t find £20,000 to refit the area, you might be able to afford £7-8,000 to refit the perimeter with your own shelving. When customers walk in, they tend to walk around the perimeter.”

Corporate signage and a menu of products can inform the customer and reinforce the merchant’s brand identity. “The cost is only one-third of refitting the shop but the impact is much more than that third you’ve spent,” said Mr Evans.

Rembrand expansion

Rembrand Timber, Scotland’s largest independent timber merchant, has been busy expanding the shops in all its branches to accommodate a uniform stock range. This has involved taking down walls, expanding into previous office space and investing in the right sort of shelving – generally Slatwall.

Recently, the Oban branch shop area was expanded into the warehouse and under a mezzanine area – a move which trebled the size of the shop area.

“The expansion was due to demand in the area,” said Rembrand’s Jeff Low. “In Oban there’s not a lot of hardware available, and there’s no B&Q. So, we tried to become a one-stop shop with a showroom featuring windows, doors and flooring.” Previously joinery items were scattered about.

“It’s based on the same theory as a petrol station. You go in for petrol but come out with other things.”

Popular items

Mr Low said Rembrand’s most popular shop items were products tradesmen needed to do a job – decking screws and stains are a top item during spring and summer, while saws and hammers are always good sellers. It has recently added a German supplier of door handles, Cuprinol stains and expanded protective clothing and footwear.

“All of our stock is very much in the open area and accessible,” said Mr Low.

Another independent, Champion Timber, is catering mainly for the “man with a van” customer. “In the good days they would have work ahead for eight months but in the bad days like now it is more like eight weeks,” said Champion marketing director Mike Bird.

“The discretionary purchases like power tools and ladders, these are the things they have stopped buying. They still have to buy the bits and bobs they need to finish a job. Doors and flooring have taken a bit of a hit and other bigger ticket items.”

Shelving systems

Champion has revamped all its shops and used its timber expertise to make its own shelving systems. “It looks good and uses wood,” said Mr Bird.

More of the branches now have more space to sell shop products. “We moved some items out of the shop into the warehouse to create related sales. In Wimbledon, joist hangers are now located beside timber, creating more space in the shop for other items.”

Champion has also increased its stockholding. It was finding that sometimes products would sell out before new stock arrived, which meant empty shelves.

When the company runs promotions on timber products, it tries to position related items – such as saws and adhesives – behind or on the counter so the tradesman is actually looking at the product. Small items like drill bits are typical counter items.

“We have looked into doing non-core products like ice scrapers and anti-freeze but every man and his dog is doing that,” said Mr Bird.

“We do customer surveys on a regular basis. Some of our branch customers have said they want a coffee machine because they’re waiting for their timber or sheet materials to be cut. We have taken it seriously. But we’re trying to work out if it is one of those things we could spend a shed load of money on but not see much benefit.”

Power tools

Champion elects to source all its hand and power tools (DeWalt, Hitachi and Ryobi) from Toolbank. Although a more expensive service, Champion says it is more efficient compared with dealing with a myriad of different suppliers.

Confirming the general reduction in power tool purchases, a Makita spokesperson told TTJ that its sales in the first half of 2009 were down about 20-25% on a year ago. And it increased its prices in April, reflecting the cost pressures in the manufacturing sector.

“While the performance took a hit to start with, particularly with the exchange rate situation, our market share is growing,” he said.

He said many national merchants had stopped buying new stock and were running down inventories, which had influenced the market as a whole. “But we have not reduced our field staff at all.”

New Makita products launched recently include a new sander range and more pneumatic nailing guns.