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To get their take on how the market has been in the past year, what their clients are currently demanding in the hardware channel and what the future may hold, I spoke to a range of sales agents, from larger players with years in the hardware channel under their belts, to new players coming from areas such as grocery and the electronics and whiteware channels.
Creative Activation is one of several companies I spoke to with experience in channels other than hardware. Taking stock, Managing Director Neville Pulman has found the last 12 months to be a very healthy and exciting period for business in the hardware channel.
Expressions of interest from many players have shown it’s a competitive but healthy market, from Pulman’s perspective, with many potential clients wanting to stay on top of their game with the help of a smart sales agency.
“2014 was a strong year for us,” he confirms. “We’ve had a lot of new clients calling us and asking how their model can evolve.” In fact, he adds: “I’ve never had so many calls from people keen to be more efficient, meet their retailers’ demands, and not lose their brand integrity from their traditional model so it’s always a tricky balancing act.”
So what do these businesses want from sales agents and how is Creative Activation responding? “There is increased demand to both meet the cost and maintain the quality of brand representation. And another thing pushing back the other way is speed of info and support to market. It’s no longer good enough to consider a fortnightly cycle or even weekly as enough,” Pulman explains. “So for us it’s about creating the type of business with the flexibility to go in and drive orders earlier in the week and then potentially go back in and make sure everything stays up to date pre-weekend peak demand. So the speed of information becomes critical.”
GETTING YOUR FACTS RIGHT
Fast turnaround of real time information is a common concern among the players I spoke to for this feature with many seeing new technology as a major contributor to remaining competitive in this category.
For Neville Pulman, creating not only accurate and timely data but also easy and intuitive to use interfaces has been a crucial element in making real time results happen. After all, there’s no point having an advanced system if your best agents can’t use it.
“One thing we are trying to promote is very easy to use real time data. We have spent a lot of time simplifying what we capture – focusing in on actionable information. And there are some things we have put in place which really turnaround a result, not after the visit but while the person is in the store so that it can be most effective. There’s no good going back and doing a repeat visit and potentially losing a week’s sales opportunity. Instead they can activate a visit alert or call that can be dealt with straight away. So we have really simplified use for both agents and clients by putting some smart apps over the top of a robust reporting engine – making it blindingly simple to improve results.”
These changes have effectively removed paper from Creative Activations’ data processes and consolidated all brand and SKU info into one easy to access place.
“That means our people and the people we work with have that information at their fingertips which is an easy thing to say but hard to do,” Pulman explains. “It’s taken a few years to get it right and it was a matter of stepping back and looking at it from the perspective of our agents on the job.”
For Pulman, running as tight and responsive an operation as possible is the only way to keep up with increased pressure from clients and their customers.
“The biggest pressure I’ve seen is that stores don’t want to carry as much stock depth. And their customers are also getting more demanding in terms of wanting to see categories linked together which I see the retailers responding to. Customers are smarter now and expect smarter product representation. With the boom of online information, their expectation has totally changed.”
THE LEARNING CURVE
Despite this increased pressure, many sales agents find the hardware channel a very nice place to be.
At the start of 2014, Neville Vujcic of Strikeforce New Zealand was a relative newcomer to the channel, although the company had years of experience in grocery before taking steps into the hardware channel around four years ago. By the end of the year, however, Vujcic and Strikeforce were real converts to the hardware channel with the company truly finding its stride in this area throughout 2014.
The last year was “absolutely massive for us,” Vujcic reports. “Hardware is our biggest growth channel. Our client base has grown 700% and we are really enjoying being involved in it.”
Vujcic has nothing but praise for the people he has worked with at Bunnings Warehouse: “There was a lot of consultation with them and Bunnings gave us some fantastic people to work with and our dealings with the category managers have been second to none.”
When asked about the process of moving into the hardware market, Neville Vujcic stresses that Strikeforce took its time to do the groundwork in the channel before making proposals to some of the larger players and that this cautious approach has paid off well for the company.
Was it a steep learning curve moving into hardware from a grocery background? “Yes,” he responds, adding that the firm’s “soft launch” into hardware meant spending two years “just listening and learning” with a couple of smaller clients. “Once we felt we had learned what we needed to that’s when we pitched to the big boys and said ‘we can do this for you’, confident that we could deliver on that.”
Vujcic also has some wise words for others considering entering this channel from other areas: “We have tried to put some grocery theories into hardware and that doesn’t work. It’s not all translatable and for some things we have had to learn a new way.”
For example, Vujcic points to the task-based motivation behind many of the hardware channel’s consumers when shopping in-store, as opposed to the buy-as-you-browse, single purchase mentality that exemplifies grocery.
“For example with paint, the size of the job may require six pails and if you don’t have that on the shelf, chances are they will go somewhere they can get six. So it’s about understanding the reasons people go to these stores and what they are doing to make sure you have the stock management right.”
A pleasant surprise for Vujcic has been what he sees as a friendly, cooperative business culture both at Bunnings and around the hardware channel in general.
“Hardware, culturally, is very personable. What I find in Bunnings for example is you have people with a lot of passion and expertise directly from that industry so they really know what they are talking about. The people are well informed and they want to be trained as well.”
CROSSING THE DITCH AND LIKING IT
Australian-based agency G-Force Category Solutions is another company with a strong and successful relationship with Bunnings that has recently made the move to New Zealand. Director George Alexandridis gave some insights into how the transition has been.
“Given our achievements and the results delivered in Australia, the transition to New Zealand has been very smooth, working in partnership with our supplier clients to enter the market in a considered manner and leverage our established relationships with Bunnings’ senior team.
“We have always been pleased with the strength of the word of mouth recommendations delivering new business to G-Force and the New Zealand market is responding in the same manner. We certainly have had great feedback including that we are a breath of fresh air in the market and that our Bunnings operations expertise is incredibly valuable.”
Many of the sales agents spoken to for this feature talk about the hardware channel having a unique business culture but are there differences between the Australian and New Zealand hardware markets that present challenges to someone from across the Tasman?
“I think New Zealand retailers are more receptive to new innovations and trying different products or ideas, they are always thinking, always looking to continuously improve which matches our approach. New Zealanders are also really keen to receive information and support,” says George Alexandridis.
“In terms of challenges, one of the biggest entering this market was to be patient with supplier growth, and only move as quickly as the market would allow us. Also, the VIS program isn’t as widely used as it is in Australia, so educating suppliers about the advantages of moving to the VIS program, given our expertise, and the attractive return on investment has been another goal.”
WHERE DID YOU GO WRONG?
For a different perspective on working in the New Zealand hardware market, I spoke to Derek van der Vossen, CEO and owner of Vendor Refill Management. With 35 years of experience in hardware, he’s well placed to offer some thoughts on common mistakes made by agents in the hardware channel.
“It’s really easy to do the pitch and sell your services but it comes down to delivering on what the customer has asked for. So, if a customer has specified a certain number of visits, we are fanatical about keeping our word. If we say we can do something, we do it and we won’t promise anything we can’t do either.”
In fact, van der Vossen has seen first-hand the results of agencies promising the earth but not being able to deliver: “A trap that agents fall into is where they spread themselves too thin and aren’t able to deliver on what they have actually committed to. So some have been in the business of making promises and then figuring out how to deliver and that is not our business,” he says.
Before making an offer to clients, it’s important for an agency to have a clear idea on their role and what they can offer to their clients in hardware. I asked van der Vossen what he felt was the greatest value that an agency can offer clients.
“We have some suppliers with sales reps around the country but they can’t get into stores with the frequency that the stores need. So, in that case, we become a complementary service and then it’s about protecting that business in that store and staying close to the reps,” van der Vossen explains.
“The other role is that some suppliers have no reps on the road so we are their eyes and ears feeding back, gathering info, doing the job, trying to increase sales as much as possible but continuing to feed information back to the customer. And when things aren’t going well or you see opportunities, it’s about picking up the phone immediately and following through with that.”
THE HUMAN TOUCH STILL WORKS
While he agrees with many players in the market that hardware might be becoming a more price-focused environment, Vendor Refill Management’s Derek van der Vossen feels that the best way to build strong business relationships that last is face to face interaction.
“I still firmly believe there’s room for the human element. Some people may see it as a little old fashioned but purely from the basis that they are seeing people having a handshake and calling a spade a spade,” he says.
As van der Vossen sees it, good relationships are built on trust and this means that small mistakes can be moved on from as long as there’s accountability: “In hardware when someone makes a mistake, as long as you get up, fix it and don’t do it again you are forgiven, and that just doesn’t happen in some industries.”
Stephen Edlin of Central Region Sales is another agent with years of experience in the hardware game who places value on face to face interactions with experienced agents who know the ins and outs of the hardware channel.
“A sales agent can be the face of a company and one with technical knowhow and experience can definitely diffuse customer complaints or challenges at the workface. It’s that personal input and your reputation that goes a long way when there’s a mutual trust. And, when you have a strong technical background, you can offer suggestions and alternatives, rather than just numbers,” Edlin says.
So is it fair to say that people skills are a top priority for a sales agent? Diane Malcolm, sales agent/owner of Hardware Sales Agencies, believes it is.
“That’s the top thing. You have to have good people skills. If you aren’t liked, you won’t sell your product no matter what. So people skills are a huge part of it. I have really worked on that behind-the-scenes stuff to get to where I am.”
Malcolm backs up these skills with an 18-year history in the hardware channel that has given her valuable experience for her current role: “The biggest thing I offer my clients is knowledge of the industry and a lot of contacts that I can really open doors with. I also have a very good rapport in-store.”
And have these skills paid off in the last year? “The market has grown for me because Auckland is growing fast and products are going out faster too. So volumes have been good for the products I carry,” she says.
Diane Malcolm is another to offer solutions for suppliers looking to scale back their reps. “I have had enquiries from people that have had reps but find that the costs are too much and they are looking at something like me which is more, for less money.
“With one customer I have had that experience where I could do the job faster as the rep had to cover the whole North Island, whereas I just cover Taupo and North. So I am consistently doing more calls and she’s very happy with that.”
PROVINCES STILL TOUGHING IT OUT
The landscape looks a little less buoyant for some south of Auckland however. Stephen Edlin from Central Region Sales covers from New Plymouth to Gisborne and down to Wellington, where things have been quiet for the hardware channel.
“I’ve seen very little of the ‘rock & roll economy’ in the central region. The Wellington region has suffered from Government restructuring and a lack of consumer confidence is the main problem,” Edlin says. “It’s more of a replacement type market, though there has been some upturn in the last two months.”
Looking north and in the provinces, Edlin has seen the smaller areas hit hardest but also Hawera – once one of the most prosperous towns in the Empire – lost first its Mitre 10 and then its New World supermarket. Edlin has also found the Hawkes Bay suspiciously quiet in recent months but feels that Palmerston North and New Plymouth have both had an air of optimism that may be pulling them out of a slump.
Admittedly an optimist, Edlin is positive about the future of his region: “The feeling in my region is that things are on the up and up from people I am talking to and I’m hoping that buoyancy in Auckland will soon trickle into Wellington and surrounds,” he says.
Diane Malcolm also predicts further growth for the channel based on her interactions with both suppliers and retailers north of Taupo and up to Auckland: “The industry is just humming right now and I think further growth will come,” she says.
So – while the game for sales agents in the hardware channel may be picking up some new players, it sounds like there is still room to move and grow in the future.
INSTANT EXPERT – SALES AGENTS