DIY Retailer Sells Flooring and Food
Home Depot has experimented with grocery item sales with its test of convenience stores in its parking lots. Now, Menards is taking the grocery angle one step further with in-store food sections at many of the DIY chain’s locations.
Customers walking into a Menards will find hand and power tools in their normal place in the store, but those who haven’t shopped in a while will find a new area of the store devoted to shelf-stable, refrigerated and frozen items.
“It’s not companywide, but quite a few of us are doing it,” John Keller, general manager of Menards in Muncie, Indiana, told The (Muncie) Star Press. “The idea is convenience groceries. If someone is here and shopping, they can get a gallon of milk.”
Mr. Keller said the company is staying true to its roots with most of the grocery selection being what he called “man food.”
At least one Menards’ customer said he liked the concept. “I would use it sometimes,” said Mark McCoy. “If I go to Menards first and then Meijer, if Menards has milk and bread, I would grab that and skip going to Meijer.”
Bill Greer, director of communications for the Food Marketing Institute, said the grocery business was dramatically different than retail outlets such as Menards and Home Depot. The difference can be jarring for those thinking they are on to some easy revenues.
“The supermarket business is a very challenging business to be in,” he said. “You have a net profit, after taxes, that average a penny on every dollar of sales. You’re dealing with perishables which require refrigeration to keep products safe.”
But, said Mr. Keller, so far, so good.
“We’re really happy with the way sales are going… We had some contractors surprised we were taking away shelf space for traditional hardware product, but in changing our racking and the store layout, we didn’t lose anything,” he said.
Discussion Question: Have DIY chains such as Menards and Home Depot bitten off more than they can chew by going outside their core competency to sell grocery items?
I am not sure that the convergence of “food and nails” will work in the long run. I am a bit leery about the food safety training needed for these associates to handle fresh, refrigerated and frozen food products properly. That would be an additional commitment in training for these perishable products for any DIY retailer.
I would think that “food to go” with choices like sandwiches, wraps, chili, soups and desserts might go over better with the customer base and also be seen as more of a convenience by these customers.
I wonder if the profits from the sales of the grocery items by these DIY stores are worth the efforts. Only time will tell, I suppose.
It seems like any type of store can sell food today. Loyalty is gone anyway, and most retailers are trying to be “Wal-Mart like” with their versions of some type of all encompassing supercenter store.
Traditional supermarkets, especially independents, better rethink how they do business, because most of your basic food items are now sold everywhere. In order to survive, a tremendous perishable perimeter is essential. Quality and good prices will still bring in people, but the days of Tide, bath tissue and other staples being sold like they used to are gone. Pretty soon you’ll probably have a wiener wagon outside a funeral home to catch the hungry people after services. Who knows?
This is a great example of retailers realizing that their core competencies are retailing, not specific products. Home Depot is the second largest retailer in the nation, and their ability to manage the processing and transportation of products, throughout their logistics system, enables them to maximize their core competencies (that of a highly efficient retailer) to any product they touch. This applies to Menards and any other retailer who is efficient and has a formidable market share in their area. Except for the issues of resource management (which is not a concern for HD), moving any product through their system is a great opportunity to create incremental sales.
For years Menards has been moving down the road to having more food items in their stores. First it was candy and gum, so it’s not surprising for them to be expanding into more food categories. The problem is, it only confuses the customer even more as to what it is they stand for. Menards is already known as the low price retailer which many times will also be of lower quality than offered by The Home Depot or Lowe’s. If they want to be known for being low-price and low quality, then moving into more food categories is only natural. In the long-run it will be very difficult for them to sustain themselves since low-price is always a difficult role to maintain.
I agree with Sue that I am not sure I picture a consumer picking up a loaf of bread with their paint…. But I also thought the same issue was going to be a problem with supercenters selling clothes with a half gallon of orange juice and some ground beef.
The consumer spends less time worrying about where they buy items than in the convenience of fulfilling the task. The DIY centers already sell household items like furniture polish and laundry detergent, is it really that much of a leap to sell some other categories like charcoal, condiments and frozen burgers near the grills or milk at the checkouts? What will be interesting after that will be if supermarkets will continue to sell Home Depot gift cards at their locations for purchases of some of their core items elsewhere.
Any high traffic retailer could sell some food, not just DIY stores like Menards and Home Depot. Victoria’s Secret, Old Navy, Aeropostale, and TJ Maxx could all sell groceries. Guranteed: put a Coke machine in any of these stores and they’ll sell Coke. But well-managed retailers use their space to improve their core assortment. The only reasonable exception: when the food presence keeps shoppers in the store, like a snack bar in Target or a Starbucks in Barnes & Noble. If Menards didn’t need to shorten their assortment to make space for the groceries, then they should use the extra space to reinforce their core assortment or make their stores smaller by renting the wasted space to someone else.
Nails in aisle 7, Potting soil in aisle 3 and while you are here, get your Fresh Milk in Aisle 1. Is this a likely scenario? Probably not. Most would agree that the vast majority of consumers making a dedicated trip to the DIY store are not also looking for their dinner. They are in the DIY store because they are in the hunt to “build or repair” something. That something is likely not their appetite for edibles.
In the not too distant past, generations of Americans only went to the neighborhood hardware or garden store to solve their “fix it” needs. Obviously over time the prevalence of those neighborhood stores has diminished in favor of the super stores like Home Depot and Lowe’s. Additionally, it wasn’t that long ago that Drug Stores and other non-traditional formats began selling edibles is large measure. In both cases, a shift in consumer thinking was needed. Some brave retailer stepped into new waters to get the consumer to think differently. The point is the needs of consumers change and so do the stores serving them.
All retailers have financial obligations that must be met. To do so requires incubating new ideas to discover what might be the next great consumer shift. That is indeed what is happening in this case. These retailers are testing the waters by incubating or developing slowly ideas that may add top and bottom line revenue to their business. This isn’t new and this is not the last time we will see products sold in formats that might at the moment seem “non-traditional.” I say keep on incubating.
My first reaction was “no way, this won’t work,” but then again, I’m probably not the target consumer for a DIY chain. If the DYI retailer just “throws” some grocery items into their stores and hope that someone buys them, they probably won’t. But if they market the right consumer (men, in a hurry, that are supposed to pick up bread & milk?) to know that the products are there, and why they are there, and they are priced within a reasonable gap of the local grocery store, there is a slight chance that this will work…??? (or maybe not?)….
I personally can’t picture many consumers picking up a bag of dirt, some nails, a power tool, a can of paint, and a loaf of bread in the same shopping trip. Hopefully Home Depot knows their consumers better than I do….
As was noted, the addition of these food categories was done without the need to reduce the core assortment. Aside from the obvious question about unproductive store layout and planogram design…what does this imply?
A reasonable operator would look at a variety of choices when given the opportunity to merchandise additional product. Can existing categories be expanded profitably? Are any existing assortments artificially constrained by incorrect assumptions about available space? Are there strategic categories to expand into, previously unavailable due to space limitations…market basket drivers, project completers, etc.? What about related by new categories, ones that might provide a competitive advantage or point of difference?
Giving Menards the benefit of the doubt, what if the answer to all of these questions came up “food is a better choice”? Wow. A very low margin business, requiring completely different skill sets, product knowledge and inventory management metrics…I’d short my stock. Oops, I can’t. It’s privately held.
In my younger years, I worked at Menards as a cashier. I absolutely believe they’re right on the money with Man Food, because a lot of contractors will stop in at the stroke of 8 when the store opens to get supplies for the day. You better believe they’re going to grab a milk chug and a box of donuts (or other convenient food) while they’re there. It means one less stop on the way to and from the job site. The same will be true at the lunch hour.
I don’t believe, though, that this will be a stop on the way home to pick up dinner items for the family. If they’re putting a mini c-store in, they’ll do just fine.
Retailers are clearly in a battle over the quick trip for convenience items. Drug stores and Dollar stores are now competing with grocery and c-stores for the quick trip sales.
Home depot is more of a destination shopping trip. It is unlikely that people will “run out to Home Depot for milk.”
However, they can certainly build incremental sales with impulse items such as candy, gum, magazines and beverages. They should focus on their core consumer and offer a limited selection of the incremental items they are seeking.
I experienced the food section in my local Menards and was confused by the intent. While the ‘man of the house’ may think it is OK to buy grocery items while shopping for tools and building supplies, will the woman allow perishable items in the family refrigerator that have been sitting in the car while the man finished his shopping errands?
I would prefer that home improvement stores concentrate on doing an even better job at keeping stock levels up, and providing knowledgeable home improvement advice, rather than keeping the food aisle looking nice.
DIY retailers need to think through the role of food and household products in their stores. Will Home Depot shoppers purchase impulse items (beverages, snacks, confections) at the front end on their way through the registers? Absolutely–they will do that in almost any store. Will Menards shoppers think, while I’m here thinking about my home improvement project let me take a quick look down the food aisles to see what they have and maybe save myself a trip–that’s a bit of a stretch. And if these sections are not shopped, and as a result merchandised regularly the product on the shelves will become very unappetizing, very quickly. They also have to deal with food safety operational challenges that make Home Depot’s parking lot solution highly appealing–and more compliant with both OSHA and FDA regulations.
Re: food in Menard and DIY chains, conventional wisdom tells us that it just won’t work. Fresh produce and plasterboard are hardly a saintly pair designed in Heaven. But, somebody–probably lots of somebodies–said it couldn’t be done, and some DIY guy said, “maybe it can’t and maybe it can, but how will I know ’til I try.”
Unlike stocking masking tape and faucets, sale of food items beyond gum and candy requires a lot more managing than just restocking shelves with more stuff when they’re empty. There are freshness dates to consider, recall compliance, and constant monitoring that boxes and bags containing foodstuffs have not become open thereby attracting vermin (and small children). Food stores and convenience stores and their employees have developed this knowledge through experience and training. Does Menards comprehend this necessary aspect of adding food to their merchandise mix?
I’m not sure they’ve bitten off more than they can chew, since it seems from the article they have focused on primarily DSD items. A few folks have mentioned a supply chain competency rationale as behind this move, but it is highly unlikely Menards is moving any of this product. Few grocers even do. I am also not sure how the margins can stack up with those offered by their traditional categories. A few contributors have made the point that this space might be better utilized by leaving neutral of examining assortment options. Likely true, unless there is a high degree of intangible or in-store goodwill to be earned by offering the items. Similar to the donuts Home Depot placed by the Contractor door.
I had this same thought twenty years ago when I encountered Twizzlers at Office Depot (maybe it’s a “Depot” thang). I’m also reminded of the (possibly urban mythic) study which revealed that the two items most often accompanying each other in grocery baskets are beer and diapers. Perhaps Toys R Us should sell beer. If you can sell it, stock it.
I love/hate Home Depot. They’re a dysfunctional family, but they’re my (shopping) family. I’d welcome the opportunity to chew on a wad of beef jerky for strength while navigating the aisles. Or some Twizzlers. How about a Starbucks? (You heard it here first.) And cupholders for my mochachino on those big, orange, drag-along dollies. Very manly.
They have remodeled our neighborhood Menards store as you have described and I’m not sure what to think yet. In some ways it reminds me of the way that Kmart and Target started selling groceries. The food is in the back of the store and you won’t find it unless you are shopping the whole store or just happen to stumble across it. I’m trying to decide which shopper would be most likely to buy food there. It’s not cheaper or more convenient, they don’t have a larger variety so where will their sales come from? It will be interesting to see what happens but I can’t get too excited about it so far.
The c-store business makes some sense for Home Depot, in part because the convenience business targets predominantly male consumers, relatively similar to the hardware and home center store. However, the market will determine in the long term if there is room for Home Depot, or other new players, in this category. If they succeed, then it will come mostly at the expense of a different entity or channel.
There happens to be a Home Depot around the corner from my office, and there isn’t a convenience store nearby. So if they built a C-store in their parking lot, would I stop there sometimes? Probably. Would I go into the store for milk? Probably not.
That said, I think the suggestions of a ready-made food section, or some donuts and coffee, or some impulse candy/gum selections are all good ideas. Contractors on the way to a job site would appreciate it, and so would “regular guys” whose first stop of the day is their DIY store.
Years ago in the Richmond and Washington DC markets, the Halfs ran a chain called Dart Drug/Dart Home. There you could buy lumber and milk and aspirin and all kinds of stuff, under one roof.
What a mess those stores became. I saw tools misplaced and dumped in the first aid aisle and cologne in the lumber area.
I don’t think it can work. It didn’t work then, and it won’t work now.