Purchasing At Big Box Stores: Open For BSC Business
When it comes to purchasing cleaning supplies, building service contractors have often debated whether it’s more sensible to buy directly from the manufacturer or through a jan/san distributor. But now another option is increasing its presence in the fight for BSCs’ product dollars — national retailers such as The Home Depot, Sam’s Club, Lowe’s, Wal-Mart and Costco.
These “big-box” stores stock a variety of cleaning products and often claim to sell them at lower prices than jan/san distributors. But is the lure of saving money on products enough to sway BSCs from purchasing products through a distributor?
“If customers don’t care about the unique value-added services a jan/san distributor can offer, then the distributor can do nothing to stem the tide of lost business,” says Mark Dancer, vice president and principal for Pembroke Consulting, Northbrook, Ill. “[Also], contractors shift their purchases to big-box stores when jan/san distributors fail to offer new, innovative value-added services.”
Both big-box stores and distributors provide attractive services for BSCs. Ultimately, whichever services contractors feel are more vital to business growth and success will influence the decision.
Buying from big boxes
Big-box stores view BSCs and other cleaning and maintenance professionals as attractive customers. Ads appear in trade publications and companies buy booth space at trade shows. In an attempt to reach more commercial customers, this past March, The Home Depot completed its acquisition of Hughes Supply Inc., a large distributor of maintenance-related products.
Commercial customers represent a quarter of Lowe’s customers and the company continues to strengthen the relationship as their store base expands. According to their 2004 Annual report, “Commercial Business Customers generated comparable store sales over twice the company average, and we had double-digit comp sales in 15 of 18 merchandising categories.”
Sam’s Club focuses on smaller contractors, especially ones cleaning government facilities, says Doug Walt, vice president.
National retailers aim to be a one-stop shop for contractors. The Home Depot Supply, the business-to-business division of the Home Depot, is introducing more than a thousand new commercial-grade products, says Ken Graat, merchandising manager. BSCs should be able to find most products needed to clean a typical account at these stores, including floor finishes and strippers, vacuums, mops and buckets, microfiber, paper products and dispensers, disinfectants, glass cleaners and multi-purpose cleaners. In addition, for BSCs who diversify into maintenance services, these stores also carry lighting, electrical and plumbing products, says Graat.
National retailers remain competitive with jan/san distributors by selling products at competitive prices.
“It is always our goal to be the lowest price on commercial cleaning supplies,” says Walt.
Because these stores are so large, they have the buying power to purchase products at cheaper prices and sell them at discounted rates. Customers have the opportunity to save additional money through volume discounts by buying larger quantities of products in one order.
Along with competitive prices, national retailers try to make purchasing convenient. The Home Depot Supply publishes a catalog featuring more than 16,000 products and ordering is available by phone, fax or Internet. Sam’s Club allows customers to place orders in advance and have products ready for pick-up at the store. In addition, they offer exclusive hours for business owners before the store opens.
“This allows contract cleaners to shop for essential merchandise before beginning their hectic days,” says Walt.
Many national retailers also offer next-day, free delivery as a value-added service.
Despite the low prices and convenience of national retailers, jan/san distributors aren’t overly worried about losing BSCs as customers.
“On a scale of one to five, with one being of low concern, I’m a one,” says John Treat, president of Treat’s Solutions Inc., Ada, Okla.
Many distributors feel that BSCs are not a market fit for big-box stores. Smaller contractors who are most likely to shop at national retailers still need a lot of support and education in order to be successful and they won’t get that from big-box stores, says Bill Nourse, president, Brookmeade Hardware and Supply Co., Nashville, Tenn.
Big-box stores are limited to the level of knowledge their salespeople have, adds Dancer.
While national retailers may be able to sometimes offer lower prices on selected products, distributors believe that BSCs need more than a cheap price tag — most of all, they need service.
“We have contractors that will call us on a Friday afternoon at 2 p.m. and tell us that they need paper or liners at a location,” says Brad Gruber, president, Uneeda Enterprises, Long Island, N.Y. “We will get to them no matter what. We keep two emergency delivery vehicles on site for that reason alone. There is not one big-box store that can do that.”
Unlike big-box stores, distributors aren’t just interested in selling commodities; they are looking to form a partnership with BSCs. They want to help their customers succeed because when business grows for them, distributors grow, too. As a result, distributors are aware of what problems BSCs are typically facing and are ready with solutions. For example, BSCs’ businesses suffer from high turnover rates, so distributors provide training classes to teach new staff how to properly clean. Or, when contractors land a new account, distributors can assemble a start-up package.
“We can know what equipment will be needed, make sure it works, have it delivered on time and make sure those workers are trained,” says Treat.
Distributors are also able to make new product recommendations that can help BSCs increase productivity. Big-box stores are limited in what products they stock and oftentimes the products they do carry are not the best of the line or most innovative, says Nourse.
“Big-box stores usually only carry the name-brand products,” adds Gruber. “They become like everyone else. They do not carry anything that is unique, whereas a good distributor makes themselves unique by finding products that will help the BSC.”
Unlike distributors, most national retailers are not up to date with new programs like Leadership in Energy and Environmental Design (LEED) and won’t stock the products required for the certification standard, says Nourse. Big-box stores will only carry products once they become a commodity for the majority of consumers, he adds. Cutting-edge contractors will need to buy these types of products from distributors or directly from the manufacturers.
Competition between big-box stores and distributors will not subside any time soon. Both sides have future plans in their fight for BSC business.
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