At a recent wholesale buying market, Ace Hardware President and CEO Dave Hodnik told Ace retailers, “If we could increase warehouse purchases from an average of 70 percent to 80 percent, it would mean an additional $429 million in wholesale sales each year.”
It goes without saying that as a home improvement retailer, you can’t always get what you need from your primary wholesaler. In a Do-It-Yourself Retailing study conducted several years ago, retailers reported purchasing an average of 77 percent through their primary wholesaler’s warehouse. So where are retailers sourcing the remaining products they stock?
These figures signal that distribution within the hardlines industry is more fragmented than ever. Home improvement retailers are sourcing more products from more different suppliers than ever before.
While the traditional two-step distribution model of independent retailers concentrating purchases through a primary wholesaler is still the most viable and used method of sourcing product in the industry, the fragmentation of the various distribution sources being used by retailers has largely been the result of increased demand from consumers who want more retail choices than ever before.
As consumers become more time-pressed, they want a one-stop shopping environment where they can get everything they need in a single shopping trip. This is why retailers like All American Home Center in Downey, Calif., stock nearly 90,000 SKUs and why McGuckin’s Hardware in Boulder, Colo., stocks more than 200,000 products, including many unique and specialty assortments. Both retailers have positioned their businesses as one-stop shopping sources to customers, and both have SKU counts that far exceed the average offering from primary wholesalers in the industry, which on average offer between 60,000 and 70,000 SKUs.