By Ben Smith

I wanted to provide an update to Vince Young’s prior coverage of Stainmaster carpet’s move to Lowe’s and share an article by Chris Burritt that just appeared in Business Week detailing how the dust has settled.

“Martha Stewart can thank a move by Invista’s Stainmaster unit for her good fortune. Stainmaster had been a major Home Depot carpet brand since 1996. Invista recently dumped the leading home improvement retailer to boost its sales through No. 2-ranked Lowe’s and a string of smaller distributors. Home Depot managers figure Stainmaster was under pressure by its independent carpet dealers, who had trouble competing with the big box retailer’s low prices. “We were selling a lot of carpet at very good prices,” says Gordon Erickson, Home Depot’s senior vice-president for decor. “We were a bit surprised.”

The net is that Martha Stewart now has the featured brand of carpet at the #1 carpet retailer in the US, Home Depot.

Retail Leverage Notes:

In today’s environment it is rare that a brand drops a major retailer. Once the shock wears off, you can see how major moves by competitors, particularly exclusive deals, can create retail leverage opportunities.

The void left by Stainmaster at Home Depot created the opportunity that Martha Stewart (via Shaw Industries) capitalized on. As the old quote goes, “Luck is what happens when preparation meets opportunity.” I’m guessing that both Home Depot, Shaw, and maybe even MSO had thought about this possibility before, although Home Depot was obviously shocked by Stainmaster’s move.

One has to wonder how much better business terms Stainmaster got from Lowes to move there. In addition, Stainmaster must expect to gain a greater share of Lowes carpet business than they had at Home Depot, the #1 carpet retailer.

I expect the case was they offered tangible growth to Lowes, who was eager to steal Stainmaster away from their rival in their own bid for leverage. In turn Lowes is probably doing everything short of guaranteeing a certain percentage of their business. This can be done via shelf space and ad features. That combined with more favorable terms and you can see why Stainmaster would take the leap.

What will be interesting is if the Martha Stewart brand does extend well to carpet at Home Depot. While Stainmaster must be considered more of a “sure thing” in carpet, one could argue there may be upside for Home Depot and Martha Stewart. For now, it is just one more extension of the Martha Stewart brand at Home Depot.

Related Reading:

• http://www.businessweek.com/magazine/content/10_29/b4187020881895.htm
• http://www.bloomberg.com/news/2010-07-01/home-depot-adds-martha-stewart-carpeting-as-stainmaster-pulls-out-of-chain.html
• http://retailleverage.com/2010/03/01/lowes-stainmaster/

By Ben Smith

WATCH & LEARN – HOME DEPOT DECLARES BLACK FRIDAY IN APRIL:

The fight for Retail Leverage doesn’t end with brands duking it out in the aisles.   Retailers take it outside, fighting their own battles.  If you think unemployment, the real estate market, and tight credit has hurt sales for your brand, imagine how that rolls up to create a desperate environment for the retailer.  While the home improvement sector in retail is still fragmented, the two resounding leaders are Home Depot and Lowes.

Home Depot, in a bid for some Retail Leverage of its own, and in an effort to drive year over year sales growth, has declared “Black Friday Is Back”, creating their own retail big event.  Craig Menear, executive vice president of merchandising for Home Depot, was quoted in BusinessWeek saying that Home Depot will increase its marketing through newspaper circulars, online promotions and other advertising to draw consumers during its busiest season.

HOME DEPOT MANUFACTURES ITS OWN SUCCESS AND GAINS RETAIL LEVERAGE:

Home Depot is following the retail leverage playbook, creating their own “Can’t Ignore” / “Too Big To Ignore” event.  I love what Home Depot is doing, and it would still be a great idea even if it wasn’t during their peak season.  To start a fire you need oxygen and sometimes when everybody else is screaming “fire” it sucks all they oxygen out of the room.  What might get lost in November may have a better chance of standing out during other times of the year.  While timing isn’t the motivating factor, it does work out well if there is stronger seasonality at play, and that is definitely the case here.

HOW CAN YOU “DO IT YOURSELF?” (apologies for the Home Improvement channel puns)

Don’t get hung up on the fact that it was a retailer doing this, and not just a brand.  As I mentioned before, everybody looks for opportunities to gain leverage against their competition – retailers are the same.  And the same goes for scale –  it’s all relative to the pond you are swimming in, and there are levers that any brand marketer can pull to make your own “Too Big To Ignore” event.  I’ll provide a list of basic “tools” we recommend (I’m on a roll with the puns today)

List of Tools To Build Your Own “Too Big To Ignore” Event:

1. Promotion: it all starts with a strong promotion that will maximize participation among your retail partners (something they don’t want to be left out from)
2. Circular Ads: align circular ads across all your retailer partners for one week / period (again, they don’t want to be left out of this one)
3. FSI / gift guide: these dedicated pieces allow you to fully tell your story, and create a multiplier effect in conjunction with your circular presence.
4. Traditional Broadcast Media (tv/radio – if it makes sense given your $ scale)
5. Demo/sampling events (if it makes sense given your product)

The list is by no means exhaustive – depending on your capabilities and resources there are other arrows you can pull from your quiver.  Some brands have a strong social media presence & connection with their customers.  By all means – give your connections marching orders to visit participating retailers during your event.  If PR is a major component of your strategy, please do engage with those wizards who have mastered making something “look bigger than it really is”.  The net is – align as many resources as you can to amplify your message, create your own big bang and stand out from the crowd (wow 3 buzz phrases in a row).  If you succeed your only problem will be figuring out how you “Do It Yourself – Again!”

RETAIL LEVERAGE CONCEPT(S) COVERED:

• Have Something So Big “They” Can’t Ignore
• Retailers don’t care about your brand’s battles – they only care about their own

RELATED RESOURCES / ADDITIONAL READING:

• Retailwire discussion about FSI’s growing popularity (with comments from Retail Leverage on how you can leverage them)
• BusinessWeek article covering Home Depot’s “Black Friday Is Back” promotion, including executive quotes