By Craig Webb
President, Webb Analytics
Their languages may differ, but construction supply dealers the world over share the same mission: Serve the customer, engage employees, and turn a profit. Thus it made sense for me to travel to Berlin on June 14-16 to learn the best management ideas from outside U.S. borders. Here are eight, drawn from the 9th Global DIY-Summit, attended by more than 1,000 home center executives and product suppliers from 55 countries.
1. Celebrate Talented Workers
Erwin Van Osta is co-founder and CEO of Hubo, a chain of 160 stores in Belgium with annual revenue of nearly $1.1 billion, as well as President of BricoAlliance, a collection of nine different DIY chains with stores in a dozen countries. He’s blunt and driven: “Just fucking do it!” is his catchphrase when dealing with staff. And staffers respond: Employees spontaneously organize charity events and are featured with their kids in lots of Hubo’s ads.
The company also organizes events in which the employees are the CEO—in this case, the Chief Entertainment Officer. The company puts on a slickly produced show called “Hubo’s Got Talent,” in which employees sing, dance, and show other skills. Among the prizes is one year of professional coaching.
2. Run Lean Stores
The Sweden-based Byggmax Group operates 218 stores in four Nordic countries, generating roughly $680 million in sales last year. It has a 7.0% EBITDA margin thanks to its low-price focus: The stores typically have only two to three employees, customers load all the products, payment is made at self-service kiosks (after an employee at a gate checks what’s been loaded), and all administrative duties are handled by the central office. Each store carries about 3,000 to 6,000 SKUs designed to handle roughly 300 home improvement tasks. Large-volume product requests are drop-shipped directly from the manufacturer.
Now it is growing in two ways. Byggmax Studio, launched last December with two stores, is a showroom only facility focusing on 300 SKUs of flooring and tile. Products sold are shipped directly to the buyer’s home. Also recently, Byggmax unveiled software customers can use to combined preplanned home modules that can be built in just two days.
3. Start with the Free Stuff
When Takashi Yanase joined his family’s GooDay home improvement chain in 2008, the Kyushu, Japan-based chain basically had no company e-mail, no website, and a computer system that consisted of just one terminal in each store. Before its monthly managers’ meetings, the company had print roughly 10,000 pages—100 for each recipient. Clearly, the company had to make big changes, but how could GooDay afford the technology needed?
Yanase turned to Google’s free software. In 2015, Gmail replaced interoffice mail, and Google Meet supplanted most out-of-office gatherings. GooDay also began using Google’s free document, spreadsheet, and presentation software.
Eventually, the company’s data moved into the Cloud, where GooDay uses Google’s BigQuery software to process the data and Tableau software to create meaningful charts and maps.“We’ve gone from data that didn’t make sense to meaningful data that can be used to predict the future,” Yanase said. The change has been so successful that the company has grown to 63 stores with $280 million in sales, and Yanase has created a side business, Kaho Enterprise, to help build systems for other companies. And there’s also GooDay Data Academy, which trains employees on data management. Coming soon: An in-store device that uses voice recognition system to locate products on the shelves.
4. Add a Robot to the Team
Cooperativa Sodimac, which runs 240 stores from Mexico down through all South America, has helped the Chilean-born (and now U.S. owned) company Zippedi develop a robot helper that’s now being used by The Home Depot and other DIY stores around the world.
More than 200 of the Zippedi robots are helping stores spot out-of-stock items, check for compliance with the planogram and current price, and identify inventory placed high on the top racks. The robot also can help a 3-D virtual version of the store, so managers can imagine how a reset would look before physically making the changes.
5. Get an App
The latest Construction Supply 150 report on America’s biggest LBM dealers found that only about 31% those responding said they have a smartphone app for their customers, but 32% planned to get one. Companies like Obi can attest to its effectiveness. It’s heyOBI app (shown at left) has 5 million users, many of whom contribute to the 25 million visitors to Obi’s online store and are among Ob’s 1.5 million German social media fans.
“We strive to create a triple win, where retailers, brands, and consumers benefit,” said Patricia Grundmann, Obi’s VP of Retail Media and Director of the Obi First media group.
6. Improve Your Inventory Accuracy
A Euromonitor International study found the United Kingdom leads most industrialized nations in the percentage of people using online tools to find and then travel to DIY stores. Nick Brackenbury, CEO of the London-based software company NearSt, believes the next key advantage in web use will be whether you can tell a customer that a product they want is in stock. This is because search engines will boost placement of companies that can report a product’s availability, he said. NearSt works with dealers to make their stock visible to search engines.
For many U.S. dealers, this could be a challenge. The vast majority of smaller LBM operations use their ERP systems to keep track of what they have in stock. Spot checks and annual inventory counts will fall short of what’s needed in a world where knowing for sure about availability will be vital to keeping customers happy.
7. Look Abroad for Sustainability Ideas
DIY-Summit speakers used the word “sustainability” more often than you would hear in 10 LBM conferences in the U.S., and many of the exhibitors touted their green credentials.
Several speakers said their companies had embraced a three-part plan to cut greenhouse gas emissions—first with equipment they use (switching to electric vehicles, for instance), then via sources of energy they purchase (e.g., moving away from coal-burning power plants), and finally via emissions generated by product suppliers as they are made, distributed, and trashed. For instance, Byggmax aims to reduce emissions from its own operations by 90% between 2020 and 2027, and it is investing in companies that make recyclable products.
One of the summit’s big announcements was the creation of a task force of manufacturers and retailers, including The Home Depot, to study how much greenhouse gases get emitted across the supply chain and then share ideas on how to reduce them. At the very least, manufacturers can expect to start getting questions from vendors about their greenhouse gas emissions.
A sustainability strategy is important, but you also need to communicate it, said Marija Milasevic, a senior consultant at Euromonitor International. In a recent survey, only 19% of businesses regard their sustainability communication strategy is extremely effective, she said.
8. Teach Your Children
“I learned from my father how to hammer a nail. I didn’t pass this skill onto my children,” Hubo’s Van Osta said. “We must motivate and stimulate children to get into a DIY mode.” To that end, Hubo sponsors events that help get people interested in DIY. It and Obi have live chat lines to help people through projects, while Peru’s 35-store Promart Home Center chain employs lots of in-store experts, as much of Peru’s homes are built by hand by the occupants.