Special Report: Industry Update on COVID-19
By Chris Jensen
As more areas of the country reopen from COVID-19 lockdowns, the coronavirus threat continues to loom ominously.
In the past three weeks, COVID cases have spiked in 18 states such as Arkansas, Arizona, California, Kentucky, Mississippi, North Carolina, Oregon and Texas. Although the virus has shown decline in 21 states, no one believes that is because the deadly virus has been stopped there.
The Centers for Disease Control and Prevention (CDC) is still urging everyone to wash hands often, avoid close contact with people outside the home, wear a face covering when around others, cover coughs and sneezes, monitor health symptoms, and clean and disinfect frequently touched surfaces daily.
For independent hardware and LBM retailers, the pandemic has been a mixed bag of frenzied activity amid dire concern for the health of employees and customers. Many retailers continue to enjoy near-record sales while operating with short staff and increased duties to keep the store disinfected and shelves stocked with in-demand products.
Retailers Adopt New Practices
Starting in early April, before employees of Celina Lumber could step in the store for work, a digital thermometer would be used to read their temperature. If anyone had a fever, Owner Danny Nevans would send them home.
“We are lucky and no one’s got sick yet,” Nevans says. “We’re doing as much as we can to protect employees and customers.”
The store in Celina, Tenn., has installed protective screens around checkout counters, and Nevans asks that employees and customers stay six feet apart, and employees wear gloves and are constantly cleaning store surfaces—at least 12 times a day.
However, with cleaning supplies hard to find, Nevans and the staff of Celina Lumber had to get resourceful. They started making their own disinfectant. With a mixture of rubbing alcohol and aloe, the store wipes down countertops, keypads and door handles.
“It’s worked out pretty good,” Nevans reports. “One bottle of alcohol was wintergreen, though, so it felt like you were rubbing your hands in Listerine, but it still did the job.”
Along with intense cleaning, Celina Lumber has also implemented an increased curbside pickup program. Previously, the store would provide curbside pickup for customers who asked, but now the store promotes the service on its Facebook page. To make curbside pickup easier, the store handles all credit card transactions over the phone and has set up a table, where it places orders for customers to grab.
Sales and customer counts during the COVID-19 pandemic have been about the same as the previous year. In addition to an uptick in cleaning supplies, Nevans has noticed a dramatic increase in gardening supplies. The store has seen a roughly 30 percent increase in gardening-related product sales.
Baisden Brothers Hardware in Logan, W. Va., found a smart, simple solution to reducing contact to help prevent the spread of the COVID-19 virus: Leave the door open. The doors of the store are literally propped open so customers don’t have to touch the handles.
As the realities of the COVID-19 pandemic began to sink in, Owner Wyatt Scaggs has adeptly adjusted his assortment to meet the needs of his community.
While hard-to-find items such as masks and cleaning supplies fly off shelves, Scaggs also realized other, everyday items may not need as much depth. His plan: Stay well-stocked on fast movers and cut back on anything else. To keep cash flow moving, he keeps one and two products on many SKUs. And A, B and most C items are well stocked, but lower, off-brand products haven’t been reordered.
When the stay-at-home order was issued in West Virginia, customers began tackling more home and yard projects, and that has resulted in a huge increase in one specific category for Baisden Brothers Hardware.
“One of the biggest surprises with all this has been the lawn and garden sales,” Scaggs says. “Two other local stores that sold plants decided to close, so we’ve sold more plants, seeds and lawn and garden products this year than the previous two or three years combined.”
To keep customers and employees healthy, the store has added several safety measures. Baisden Hardware has installed a plexiglass screen in front of the counter; for a while no more than 10 customers were allowed in the store at one time; and counters, keypads, pens, calculators and door handles are wiped down with bleach disinfectant every 15 to 30 minutes. The 13 employees wear masks and gloves when on the sales floor. The store has also posted signs that encourage social distancing.
Employees must wash their hands after each transaction, and the store encourages customers to take advantage of its curbside pickup and free delivery. “Our customers have done a wonderful job and are the biggest reasons we haven’t had more cases,” Scaggs says. “They are really following the guidelines so everyone stays safe and healthy.”
In his more than 24 years of operating Woodside Ace Hardware in Winthrop, Mass., Paul Leavy hadn’t seen anything like this. On a sunny Friday afternoon, a constant line of people standing six feet, according to a recent report in the local newspaper.
“I’ve seen it like this a day here or a day there, but I’ve never seen anything like it day after day after day for two months,” Leavy said. “Every day is like a Saturday in springtime.”
To read more of Leavy’s experience operating during the pandemic, click here.
Supply Channel Issues
Most retailers are still experiencing issues staying in stock with cleaning supplies, masks and hand sanitizer, as well as certain items in lawn and garden like soils, manure and wheelbarrows. The industry supply channel is still a month or two away from being able to handle the uptick in demand while manufacturers experience production limitations. A recent discussion on Hardlines Digest highlighted the supply chain issues.
“We sell adult trikes and repair bicycles. I can’t build the trikes fast enough. People have been buying tires, tubes, baskets and bells. I went to place an order with a large bike parts supplier and out of 32 line items, they were out of 22 of them,” said Rick Heuser of Handyman Hardware in St. Cloud, Fla.
“We have experienced shortages in lawn and garden, with many bulkier items not being shipped. Ace has done a pretty good job overall. Our challenge is staff, staff, staff,” commented Bob Brame of Cadiz Ace Hardware in Kentucky.
“Leaving off the COVID-related backorders like masks or anything that says ‘kills viruses’ on it, we’re doing OK with Do it Best. The gardening category is off-the-charts busy. Certain wheelbarrows are sold out, but plenty of substitute SKUs are in stock. I’m actually stunned by how many choices of wheelbarrows are in the warehouse, so I’m getting supplied. We are getting two deliveries per week, and I can see that they have a lot of split runs. The split runs mean that their warehouse orders are way larger than forecast. Our fill rate is still pretty good—as long as I don’t count on gloves and masks on every truck—so I think they’re getting the job done,” posted Alan Talman of Karp’s Hardware in East Northport, N.Y.
“Around 15-20 percent of my orders are back-ordered. I try to piece together orders through other suppliers, which are also having trouble. It’s the absolute perfect storm for me—I’m up 400 customers on the month, I’m short-staffed and having supply issues,” said Chris Finethy of Gilford True Value in New Hampshire.
“We are seeing a lot of items out at the True Value RDC, and I’ve heard the same from an Ace dealer so it seems to be an industry-wide problem. In the northeast, sales are up 50 percent in many stores and that means up 50 percent at the wholesale level too. Compound that with staffing shortages, trucking issues and it’s not surprising they can’t keep up. I know in our store we’re struggling daily to get product to the sales floor and keep up with the customer traffic flow (even with limiting our parking lot size). Most customers are understanding, but as things start to return to ‘normal’ they may be less inclined to be happy. On the positive side, based on customer stories the big-box stores in our area are even worse,” posted John Fix III of Cornell’s True Value in Eastchester, N.Y.
Added John Blair of Occidental Hardware in California, “Our orders are about double in size and our back-order list is long and growing. One reason for this is that Do it Best has added so many new SKUs of things like toilet paper, paper towels, disposable gloves, masks, goggles and so on. Where we might usually have a SKU or two of each on back order, now, because of lots of new choices, we have 10 SKUs of each category. We have a constantly changing selection of brands and styles, but customers are rarely concerned. We are also seeing shortages in random home repair items as everyone in the country has decided to repair the same things and the entire supply chain is drained. We are beefing up categories and broadening them as well. We have added seven new suppliers to keep masks, gloves and hand sanitizer in stock.”
Brandon Buckalew of East Grand Forks Hardware Hank in Minnesota, posted, “I haven’t crunched the numbers, but it seems like it’s about 80 percent fill rate for both stores. One of the stores I preorder pretty heavy ahead of the season, so that store is doing a bit better simply because the orders aren’t as big. A lot of the lawn and garden stuff is out. That being said, sales are way up. I’m super lucky that there is a company in town that makes a really good Peat product and they’ve come out with an organic product to compete with Miracle Gro. They sell in bulk to farmers but bag the stuff up for me to sell at a retail level. I’ll place an order and am able to pick it up the next day. Also, there is a grass seed company in town that delivers to me within two hours of placing an order.”
To learn how Do it Best Corp. is leaning on freight technology to streamline the overstressed supply chain, click here.
Loan Program Changes
While a number of hardware and home improvement retailers were able to secure loans through the Paycheck Protection Program (PPP), not everyone was thrilled with the narrow guidelines to earn loan forgiveness. Congress recently passed legislation that gives small businesses much more time to spend the funds and qualify for forgiveness.
Following is a summary of the legislation’s key points as compiled by the American Institute of CPAs:
- PPP borrowers can choose to extend the eight-week period to 24 weeks, or they can keep the original eight-week period. This flexibility is designed to make it easier for more borrowers to reach full, or almost full, forgiveness.
- The payroll expenditure requirement drops to 60% from 75%, but is now a cliff, meaning that borrowers must spend at least 60% on payroll or none of the loan will be forgiven. Currently, a borrower is required to reduce the amount eligible for forgiveness if less than 75% of eligible funds are used for payroll costs, but forgiveness isn’t eliminated if the 75% threshold isn’t met.
- Borrowers can use the 24-week period to restore their workforce levels and wages to the pre-pandemic levels required for full forgiveness. This must be done by December 31, a change from the previous deadline of June 30.
- The legislation includes two new exceptions allowing borrowers to achieve full PPP loan forgiveness even if they don’t fully restore their workforce. Previous guidance already allowed borrowers to exclude from those calculations employees who turned down good faith offers to be rehired at the same hours and wages as before the pandemic. The new bill allows borrowers to adjust because they could not find qualified employees or were unable to restore business operations to February 15, 2020, levels due to COVID-19 related operating restrictions.
- Borrowers now have five years to repay the loan instead of two. The interest rate remains at 1%.
- The bill allows businesses that took a PPP loan to also delay payment of their payroll taxes, which was prohibited under the CARES Act.
For more information on SBA PPP loan program, click here.
Tracking Consumer and Contractor Behavior
Since mid-March, The Farnsworth Group and Home Improvement Research Institute have been tracking how consumer and contractor behavior has been impacted by the COVID-19 pandemic. What follows are some highlights of their survey results.
- DIY activity increased greatly, as DIYers stated having time at home as the major reason for starting projects that they otherwise had not planned prior to COVID. This resulted in not only a strong DIY retail market, but a strengthening DIY market as the weeks continued. Researchers saw an increase of 60% doing a project, up to 74% doing a project.
- Project intent was equally as strong, which caused the growth in completed projects. Two-thirds of DIYers were planning to do a DIY project in the coming weeks in mid-March, compared to 75% today stating they plan to do a project.
- Online activity and purchasing both increased. Researchers saw in-store purchase go from a high of 88% of DIYers stating they went in a physical store to make their recent home improvement product buy, down to 75%, while online purchases (delivered or picked up) went from 49% at its lowest to 72% at its highest.
- Paint, lawn & garden and general home maintenance were by far the most common projects undertaken by DIYers in recent months, but there was also a noticeable rise in DIY projects such as plumbing, HVAC and electrical work.
- Younger generations are driving activity, tackling more DIY projects and spending more on DIY products than older generations.
- Most contractors have experienced delayed or canceled projects due to COVID-19. The leading cause is health concerns, either concern over worker health or homeowners feeling uncomfortable having contractors come to their house. However, homeowner financial concerns over budget/finances have risen from 44% to 55%.
- In mid-March, pros were getting 79% of purchases in-store, which later dropped as low as 53%. In-store purchasing activity has picked up again, but online purchase activity remains strong. About 40% of contractors are purchasing online and having materials delivered, while 30% are purchasing online and picking up at the store.
- Product availability is a critical factor for pros. Research revealed 38% of contractors cited lack of product in stock as the reason they purchased online.
For more information on The Farnsworth Group and Home Improvement Research Institute COVID-19 research, click here.
Meeting the Community Needs
With large numbers of Americans unemployed and furloughed, the need for assistance is alarmingly high. Hardware and home improvement retailers all over America are stepping up to help out their communities.
Aubuchon Hardware, a Century Club retailer that dates back to 1908, operates more than 100 stores in New England and upstate New York. The retailer recently announced that the Aubuchon Foundation is donating more than $100,000 to COVID-19 Relief Funds throughout the various communities they serve within the Northeast.
The donations are being distributed to the following COVID-19 relief funds: The Massachusetts COVID-19 Relief Fund, The Maine Community Foundation COVID-19 Emergency Response Fund, The New Hampshire Charitable Foundation Community Crisis Action Fund, The Adirondack Foundation Special Urgent Needs Fund and The Vermont Community Foundation COVID-19 Response Fund.
“It’s a privilege to provide much needed assistance to those individuals most affected by the COVID-19 pandemic,” said Will Aubuchon, president and CEO of W.E. Aubuchon Co. “I’m especially thankful for our fantastic vendor partners, who graciously donated their sponsorship commitments to our annual Aubuchon Foundation golf tournament, even though we were forced to cancel the event this year. With their added support we were able to make more meaningful donations to all of these relief funds.”
Throughout the month of April, customers of North Platte Ace Hardware in North Platte, Neb., were encouraged to round up their purchases to the nearest dollar. In late May, the store presented a check for $1,584 to the local Salvation Army to support its food bank.
Down in North Carolina, Randy and Jill Saunders and Kathy Thompson, the owners of Southern Pines Ace Hardware, got busy acquiring urgently needed PPE. They donated 15,000 N95 masks, 10,000 surgical masks, 900 face shields and 80 gallons of hand sanitizer to local first responders, nursing homes, healthcare providers and public safety agencies in their county.
When they heard about dire conditions in New York City, the North Carolina retailers stepped in again to help. They shipped 1,000 N95 masks and 100 face shields to a pediatric nursing home in New York City, where the granddaughter of a customer works.
Protests Lead to Store Looting
With the country dealing with a widespread and deadly pandemic, cities all across America have now been dealing with the aftermath of peaceful protests and sporadic looting that have broken out in response to the deaths of George Floyd in Minneapolis and Rayshard Brooks in Atlanta.
In the early morning hours of May 30, Fixit Ace Hardware in Atlanta had the glass of its front entrance door smashed as looting erupted in numerous neighborhoods of the city. Owner Michael Harwell swept up the glass and opened for business to continue serving the community.
On the south side of Chicago, Hyman’s Hardware Store & Auto Body was not so fortunate. The 93-year-old business and Ace member was among the stores badly damaged by looting. Police were able to come and stave off some of the damage, but the folks looting the store were prepared.
“Ten seconds before the police got here, they (the looters) took off. So obviously, they had a scanner, knew they were coming and took off,” Owner Dennis Hyman said in an interview with WTTW. For more on that story, click here.
In Minneapolis, the looting and damage have been more extensive, which led several residents to start a hardware store in a parking lot to help businesses rebuild. To read more on that story, click here.
A Lowe’s store in Philadelphia was damaged during the looting, and Lowe’s CEO Marvin Ellison posted a passionate plea on his Twitter page to all Lowe’s employees:
“Tensions have been rising in our country for some time now. As the pandemic and economic crisis have upended lives, so too has the racism that, for far too long, has torn families and communities apart. I grew up in the segregated south and remember stories my parents shared about living in the Jim Crow South. During this time of Jim Crow, people of color were viewed and considered second class citizens.
So I have a personal understanding of the fear and frustration that many of you are feeling. To overcome the challenges that we all face, we must use our voices and demand that ignorance and racism must come to an end. This is a time to come together, to support one another and, through partnership, begin to heal,” Ellison posted.
To read Ellison’s full message, click here.