BUSINESS INSIGHTS: Steak or Hamburger: What’ll You Have for Dinner?

By / 2 years ago

Fasteners and other hardlines are a profit lever.


If you ask a hundred pro dealers what are the highest gross margin products in their lineup, what do you think their response would be? For sure, fasteners would be near the top of the list of most responses. As more than one dealer has said, “Lumber may set the table, but profits from specialties, like hardlines, can be the difference between eating steak or hamburger.”

Often overlooked due to small volumes and generally not very well merchandised in the store, fasteners can be real profit generators, along with other hardlines such as hardware, power tools, caulks and sealants, and lawn and garden tools/equipment. Based on research conducted by Principia, these products typically generate close to or in excess of 40% gross margin compared to lumber and even specialty building materials like decking, roofing, and windows and doors, which range from 15% to 30%.

So why don’t lumberyards sell more fasteners if there’s more profit to capture?

It’s probably because fasteners aren’t perceived as the key to driving up the sales ticket. From a volume perspective, that’d be the right view as fasteners are typically no more than 1-2% of total dealer revenues but do represent 3-4% of gross profits, according to our recent research. Money is being left on the proverbial sales desk, but that doesn’t have to be the case with smart selling.

Every time the sales desk takes an order for lumber, a decking package or roofing squares, it’s critical that salespeople recommend fasteners and related hard-ware needed to get the product properly installed. Let your customer know about the latest products designed to deliver improved performance, provide greater safety or increased productivity. Don’t let the sale go to a traditional hardware store, or worse yet to a box retailer where price is the only deciding factor

The sales desk may be the front line and certainly the final stop for the order, but there’s also a great opportunity to merchandise fasteners, especially if your store format is already set up properly for walk-through traffic from the trades and DIYers.

Dealers who want to grow their sales and margins should conduct a product line review to identify tie-ins with existing product lines and brand offerings. They should also work with manufacturer/ vendor partners to coordinate product assortments and training for specialty fasteners and other new, high-margin products.

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Lou Rossi

Lou Rossi is managing partner at Principia, a marketing strategy consulting firm that serves the broad building products and construction markets, as well as other materials-related industries. Lou brings over 25 years of consulting experience to Principia where he leads the strategic direction and growth of the company.