Home Depot and Lowe’s seem to have some form of control over the direction of the tool industry. How? Why? Aren’t there other large tool retailers?
What most people don’t consider is that Home Depot and Lowe’s are customers in the brand-retailer relationship. The details are complex, but they both are essentially customers, and tool brands the suppliers.
Let’s say you are a baker that supplies restaurants with cupcakes. You came up with a new style of cupcake that requires new equipment that can only be justified if you sell large quantities. Your biggest customer says “nah, we’ll pass on this one.” Can you still justify putting the time, effort, and expense into the new cupcake?
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We have seen examples of this from tool companies such as Stanley Black & Decker (Dewalt, Craftsman, Irwin).
To major tool brands, we’re the end users and Home Depot and Lowe’s are customers – or potential customers.
End users and retailers sometimes share the same demands.
Lowe’s came out with Kobalt mini tool boxes 2 years ago, and they sold really well. Every retailer has their own mini tool chests and boxes this holiday season. Did end users express interest in more brand name options? No – retailers sought to try to copy Lowe’s success.
What about Menards. I’ve heard Menards is great, but they’re a regional chain with fewer stores and I’m sure also few online sales. There are others, such as Tractor Supply, but I’m under the impression Home Depot and Lowe’s are much bigger with respect to tool sales.
Visibility at Home Depot or Lowe’s isn’t the only thing that matters, but it can be impactful.
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Consider the Dewalt organizers that were discounted at Home Depot stores for Black Friday.
My store seemed to have 120 organizers. Let’s say Home Depot had 100 organizers at each of 2,000 stores in the US. That would be an order of 200,000 organizers for Black Friday.
Dewalt didn’t just pull this out of a warehouse, they built a roughly estimated 200,000 organizers, with 2,000,000 removable bins (10 each) for Black Friday.
How much do you think Home Depot paid for these organizers? What terms did Dewalt have to agree to for this floor space?
Even if nobody made a ton of money on these organizers, there are other benefits such as brand familiarity.
Branding is important. Speaking of which, Lowe’s is selling this Dewalt automotive jack. Is is typical to have a brand name in 3 different places on the same product?
When is the last time anyone has talked about Southwire hand tools?
Southwire was the main electrical hand tool brand at Lowe’s for a while before being replaced by Ideal. Ideal tools have since been replaced by Klein Tools.
Retail visibility is important with respect to customer awareness, familiarity and sales, but also keep in mind that contracts can be very lucrative.
Similar to what might be arranged for Black Friday promotions, a lot of money changes hands when retailers place purchase orders to fill their shelves at hundreds and even thousands of stores.
Winning a contract at a major retail store can mean big money, and sometimes it means the opposite.
Around 10 years ago, the Dewalt ToughSystem Music player launched at Home Depot first, and could be found in the holiday season gift center.
The ToughSystem Music 2.0 product launched around 6 years ago, also at Home Depot. It received a lot of negative reviews fairly quickly. Dewalt suspended production to understand the issues, and that was it.
There was no updated model. The original was back around Father’s Day a year ago before disappearing again.
Why? What if Home Depot said this was something they really wanted in their holiday season deals and gift center this year?
That wouldn’t happen, of course – Milwaukee’s Packout doorbuster didn’t sell very quickly last year. Milwaukee’s $149 jobsite radio with battery and charger doorbuster bundle looked to sell better and faster this year.
Lowe’s has a Dewalt speaker bundle with battery and charger for $129, and it’s not selling very quickly at my local store.
If you’re Home Depot, would you place a large volume order for Dewalt ToughSystem radios?
If you’re Dewalt, would you bother to set up a production line if you weren’t guaranteed a minimum order quantity?
The retail industry isn’t as clear as I assumed.
Consider a convenient store on a college campus. With limited space in the beverage refrigerator, do you think they’re going to carry prune juice, or maybe another flavor of some energy drink, soda, juice, or seltzer product that’s trending on TikTok?
The tool industry starts to make a lot more sense when you realize we’re end users and not customers. Why doesn’t tool brand sell [some kind of tool you want]? Ah, because their customers didn’t want to buy it.
Craftsman seems to have given up on their plans to manufacturer hand tools in the USA. Why? Maybe they couldn’t sell their customers on the idea.
Klein Tools is making more imported tools. Why? Maybe that’s what the customer wanted.
There was a Home Depot-exclusive Milwaukee hole saw set in stores’ holiday gift centers a few years ago, and there were some atypical bundle decisions. I asked them why. “It’s what the customer wanted.”
I greatly disliked a new tool that launched for the holiday season a number of years ago. I shared my honest feedback with the manufacturer and asked them why the tool was designed the way it was. “It’s what the client asked for.”
Lowe’s seems to be shoving Flex and Skil brands out the door, and a lot of people rightfully commented that you can still buy them at other retailers. Sure, but the absence of volume sales and widespread visibility will hamper growth and expansion.
How much effort has Dewalt put into their Xtreme 12V Max cordless power tool system in recent years? That was Lowe’s exclusive Dewalt line to Home Depot’s exclusive Dewalt Atomic line for a while. Lowe’s now has a couple of Dewalt 20V Max non-XR brushless tools.
Tool brands can thrive outside of major retailers, it just takes more time and effort. I would say it also takes more money, but from what I’ve seen it can take an awful amount of money to buy prominent placement at Home Depot or Lowe’s stores.
While I’m sure retailers have different preferences, they also have a lot of objective data about consumer purchasing behaviors.
They know what their customers are buying, and what they’re not.
Years ago, Sears had USA-made Craftsman Pro and imported Gearwrench ratcheting wrenches. The less expensive and regularly-discounted Gearwrench sets sold often, and the Craftsman Pro sets collected dust. My local Sears store had the space to carry both options. Let’s say they only had one spot – they would have they made stocking decisions based on sales performance.
Although this post focuses on Home Depot and Lowe’s, do you think it’s different with other retailers?
I used to think that brands would come out with new products, and that those new products would simply show up at stores. It’s just not that simple.
Well, maybe it’s that simple online, where online marketplaces will list and sell anything these days.
Amazon has a Flex 24V cordless drill kit at $99 right now, and according to Amazon’s sales data they sold 100+ in the past month. They don’t even have sales data for the Skil multi-head drill kit. The Flex kit is #83 in the drill drivers category with respect to best sellers rank, and the Skil kit #151, and so Amazon presumably sold even fewer of the Skil kit in the past month.
Amazon sold over 10K of a Dewalt brushless drill kit in the past month. That particular model drill launched 9 years ago.
Amazon sold a lot of brushed motor Craftsman cordless drill kits in the past month, and just 50+ of the brushless model.
Lowe’s also has a Craftsman brushless drill kit at $79, and they sold just “100+” in the past week. Lowe’s sold 1K+ of their $79 Kobalt brushless drill kit deal in the past week.
Do you think that Craftsman is going to put a lot of effort into launching more brushless tools when the sales data seems to favor their cheaper brushed motor tools?
Bostitch, another Stanley Black & Decker brand, was once big at Lowe’s. When’s the last time you saw Bostitch hand tools anywhere?
Bostitch later had cordless power tools that were exclusive to Walmart. When’s the last time you saw Bostitch cordless power tools? Walmart now has Hart, which is related to Ryobi at Home Depot.
Home Depot got rid of Estwing hammers (see Home Depot Stopped Selling Estwing Hammers) which were eventually replaced with Crescent (see Here’s What Replaced Estwing Tools at Home Depot).
The writing was on the wall months earlier (see Estwing Ultra Hammers are on Clearance at Home Depot).
Such shifts happen somewhat regularly.
By the time we see movement on store shelves, decisions have already been made, and those decisions are often informed by customer actions, not their words.
Saying “I wish [retailer] gave more floor space to [your favorite tool brand]” isn’t meaningless, but it’s a whisper compared to what your wallet screams out when you make a purchase.
“I really want to buy [tool brand] but bought [other more popular brand] instead” is what retailers listen to.
I hear this one a lot: “[Retailer] is in bed with [popular tool brand] while [other tool brand] gets no attention.” Why do you think that is?
Because some brands bring more customers to stores and drive more sales than others. Of course they’re going to get more floor space and attention.
It can also be argued that the floor space and attention result in more foot traffic and sales for some brands than others, and I suppose that’s why retailers will often run experiments.
Home Depot and Klein announced an exclusive arrangement in 2009, which ended in 2023 when Lowe’s and Klein announced a new partnership.
Milwaukee took over most of the electrical hand tool aisle at Home Depot. Ideal exited Lowe’s. Who’s to say what will happen over time – maybe Ideal will join Milwaukee at Home Depot. Maybe Stanley Black & Decker will acquire Ideal and then sign a contract with Lowe’s that minimizes Klein exposure there.
None of this has anything to do with what end users want, but it can all be influenced by how end users respond. And by respond, I mean purchasing behaviors, because actions are everything.
Yes, brands and retailers can sometimes make decisions for specific reasons – see Milwaukee Doesn’t Sell Tools on Amazon Anymore – Why? – but much of the time consumer purchasing behaviors are the driving force behind many other decisions.
Sometimes tools will sell themselves. Other times, in-store placement and both in-store and online visibility aren’t enough.
Where would Milwaukee Packout be today if Home Depot never carried the product line in stores?
In-store placement didn’t make or break the system, but has nudged it along over the years.
But what did in-store visibility do for Dewalt ToughSystem DXL? My store has a couple of boxes of DXL items in the pro deals area right now, and they look so faded and beat up I wonder if they were leftovers from last year’s displays.
Some tool brands are less dependent on retailers than others, but there’s no doubt how much influence and impact retailers have in their role as major customers.
JJ47649
Retail 101:
Sell more of what you sell more of.
TomD
This all applies to “retail” tools and sundry, but manufacturers make some non-retail tools, too.
Milwaukee especially seems willing to bring out things like MX Fuel with tools that might be sold by HD online but have never been seen in stores.
Those types of tools are substantially more expensive; and it’s not just because they’re specialized.
Rob K
I work for a construction company and we have a ton of MX tools. I’m often amazed at some of the stuff Milwaukee makes.
Jim Felt
I’m guessing some of the remaining old line heavy duty brands not found in big boxes aren’t.
But good on Milwaukee for mostly advancing the tool making art in so many directions.
Dave
With the higher-margin, lower-volume stuff you don’t necessarily have to have a store presence – someone who wants an MX Fuel tool knows why they want it and that they’re going to pay for it. No one is buying on impulse at that price point.
Of course the margins are also a lot higher based not only on higher price but lower expected volume – you can make a million dollars selling 1000 concrete vibrators at $1000 markup, but you’ve got to sell a million screwdrivers if you’re only getting $1 more than they cost to produce and deliver…and everyone has probably picked up an extra screwdriver at some point just because it looked appealing and happened to be in front of you. The concrete tool was bought because you needed it, the screwdriver because one brand was willing to pay more for product placement or operate on a slimmer margin than another brand.
S
Same as the movie industry. Sequels sell consistently, where every new series represents significant financial risk.
So we end up in the spiraling toilet water of repeats, copies, and spinoffs.
Jim Felt
Filmic creativity is as rare as the word “creativity” is in any other part of society. No?
Hon Cho
Manufacturers woo retailers with a variety of benefits in order to get them to stock their products. Common ones include generous margins, not requiring payment for goods until they are actually sold, cooperative advertising money where they pay for part of the retailers advertising efforts when the manufacturer’s products are featured, direct payment for floor/shelf space (very common in the grocery business), in store product specialists (I’ve seen Milwaukee and Ryobi reps in Home Depot) and more. Probably not as common or acceptable with big corporate retailers like Home Depot and Lowes, but lots of wining, dining, complementary tickets to events for retailer decision makers. (Not tool specific, but to counter wining and dining, I know that WalMart has very strict rules that employees can accept nothing, not even a ball point pen from suppliers,) In the end, retailers want to make money and grow the amount of money they make over time so what we’re sold is part of an intricate dance where the end user is something of a bit player in the game.
Shane F
So just a little clarification on how Amazon calculates sales rank, and also what “Sales Trend” (the internal name of “100+ bought in the past month” feature) actually works.
So sales rank is calculated by counting every single unit ever sold with recent sales weighted more heavily in rank. Historical sales diminish over time but always count. Importantly, returned orders are counted too. Even canceled orders are counted. This heavily abused by sellers and Amazon staff are constantly manually fixing abused rankings.
The badges “Frequently Returned” and “Customers usually keep this” are meant to combat that. So is “Amazon’s Choice” which really means in stock consistently and seldom returned and matching your search words”
The Sales Trend (100 bought) works completely different. First it requires 30 days of rolling data and sales to even show up. But the most important thing is that it doesn’t measure orders or units sold at all. It only counts how many unique customers have purchased and received the item. Customers who cancel or return are removed from the data.
In essence it’s the opposite of “rank”.
I have no idea how lowes calculates or even what they mean by units sold.
PAUL CHRISTIANSEN
Many decisions will come down to how the stock analysts choose to measure what success looks like. Often it is some form of sales per square foot or per labor hour. Making the analyst drive up your share price is most important thing to the real decision makers as it is how they get paid. Home Depot and Lowes have very little competition and that is why their poor service and sometimes bizarre actions should be understood.
Tool Junkie
Kind of interesting. Makita has a whole bay devoted to their heavy duty 40/80volt construction tools, like a massive concrete saw, grinders, receipts, etc. but the only purchases I’ve seen are masked 20 something’s with stolen credit cards.
I also don’t get Rigid power tools. Like they sell when they’re put on clearance, but I can count on one hand how many I’ve had to get out for a customer in one years time. We have a Milwaukee/Ryobi/Rigid rep in the store 5 days a week.
As far as buying trends, contractors come in daily to buy tools. A couple times a week someone comes in to buy a lot of tools, as their tools all got stolen. Lots of people come in because they’re in town and all their tools are at their other house in another state. The Snap On guy comes in to load up when there are sales going on with Milwaukee. He’ll walk out with a half dozen M12 wrenches or whatever (shopping cart full). I asked him about it. He said that a day doesn’t go buy that someone doesn’t ask him for a Milwaukee tool or two. He said that it’s a necessity to keep them stocked on his truck.
ElectroAtletico
Thank God for the Supply House. Build a nice relationship with the staff and you will get hooked up.
David
I had an Orchard supply store in the neighborhood for nearly 20 years and they were awesome. They have now been gone I believe 5-6 years. Great alternative to Lowe’s and Home Depot and they carried just about anything to fix anything. Great holiday items also during Christmas. I miss them greatly!
Saulac
How important is Tractor Supply regarding tools? I am surprised to learn the number of their stores.
Stuart
Tractor Supply and Porter Cable announced a new partnership 4 years ago. https://toolguyd.com/porter-cable-tractor-supply-exclusive-cordless-power-tools/
What new tools or innovations have we seen from this Stanley Black & Decker brand since then?