Hardware goes global in Cologne

COLOGNE, GERMANY —Manfred Maus, the retired co-founder of leading German retailer OBI, was milling about Hall 7 of the International Hardware Fair/Practical World here when a reporter asked him to describe the retail landscape in Germany.

He talked about Germans’ desire for discount, the increasing influence of female shoppers and the need for quality and service. Then he shared something freshly baked:

“The next step I think will be that we try to find a new business model bringing furniture and DIY closer together,” he said. “It’s a new idea, I give to you.”

There is no way to measure how many intellectual gifts like Maus’s were exchanged throughout the nine active exhibit halls of the massive Koelnmesse complex during the fair, held March 9 to 12. But to give some idea: the event attracted some 70,000 people from 62 countries. All told, 3,375 companies presented products, down slightly from 2006. About 90 exhibitors were companies from the United States that enjoyed a gift in the form of a favorable exchange rate.

Obviously, each company had its own exhibits and talking points, but improvements in ease-of-use and flexibility emerged as a common thread across several of the halls. And the fair also showed innovation in the field of trade show management. For example, the event invited consumers to explore two of the halls, and promoted the “No Copy” program to deter knockoffs.

Tool time

Many attendees came to see new ideas in tools, a strong suit for the fair. The tools segment of the show accounted for more than 75 percent of the exhibitors. Show organizers pointed to efficiency, safety, versatility and ease of use as the basic criteria of tool innovation. (See sidebar on page 19.)

The show itself was taking place against a back ground of relative optimism for retailing in Germany, and Europe in general.

One optimist is John W. Herbert, managing director of the Federal Association of the German DIY, Building and Garden Specialist Stores (BHB), which forecast a 2 percent gain in 2008, coming off a 6 percent decline in 2007. Much of that decline in 2007 was chalked up to the impact of new rules governing the value-added tax.

“We really think it’s going to be a much better year,” said Herbert, the former executive with the Home Depot Expo Design Center. Eastern countries and Russia are booming, he said.

Made-in-the-USA products, he said, have yet to show major gains in those markets. “There is still a lot of opportunity for someone with an innovative product, not a me-too product,” he added.

U.S. manufacturers are aware of that opportunity in Europe and abroad—particularly as the weak U.S. dollar makes U.S. products more attractive to foreign markets.

David Silverman, of General Pipe Cleaners, was one of about 50 U.S. companies participating in the AHMA/USA Pavilion. The exchange rate—which at press time stands at $1.59 for a single Euro—has opened doors internationally, he said. “I like to think it’s because of the quality products and services we offer, but I’m sure that those people who may have been on the fence see the exchange to the point where it is now, it moves people to start buying,” he said.

The exchange rate isn’t the only adjustment for U.S. companies. Silverman and other USA Pavilion participants pointed to motor voltages, approvals, multi-language operating instructions and local European building trends as business considerations.

“You either decide do we want to get into this market or not,” Silverman said. “If you do, you have to do the things necessary to be successful.”

Just a couple of booths down the aisle, executives at Zircon pointed to other market differences, as the Campbell, Calif.-based company sought to bring its stud sensors and wall scanners to new markets. “The European customer has a little different mentality, said Christina Acquistapace, marketing director for Zircon. “We focus on finding things in the U.S., such as finding a stud to hang something. Here the tone seems to be avoiding things—avoiding metal, avoiding electricity.”

European regulations that call for home sellers to ensure wires and pipes are where they are supposed to be presents an opportunity for Zircon, she said.

The USA Pavilion is a recurring project or ganized by the AHMA. “There is no doubt that international customers are still seeking out American-made products, and the AHMA/USA Pavilion provided a one-stop shopping experience for those customers,” said Timothy Farrell, AHMA’s president and CEO.

Growth begins with being engaged in the trends and networking, he said. “Our message is increasingly, you have to participate in events like this to participate in the global marketplace.” The local marketplace was another story angle in Cologne. In hall 7, where some of the major German retailers promoted their brands to the flow of consumers, major themes were simplified shopping and solution-oriented retailing.

Tim Inteeworn, product manager of category management at toom BauMarkt, said the relatively fragmented German DIY retailing market leads to intense competition. The 10 largest DIY retailers maintain only 40 percent of the market share. At Toom, the latest store design is centered around a major thoroughfare running down the middle of the store and various room concepts on display throughout the store.

“We have everything that a typical DIY store has, but we also build themes around our assortment,” said Inteeworn, “We give them the idea, and they go find it in the store.”

In addition to competition, there’s the German tradition of cost consciousness—few are in a better position to make that judgment than Maus, who co-founded OBI in 1970. Today, OBI is the leading German DIY retailer, with more than 330 stores. “Germany is price-oriented, retail world,” he said. “We are the world champions in discount.”

Still, Maus said OBI has learned in the last few years that price is not everything—especially as the female consumer increasingly asserts her decision-making authority over purchase decisions. “Women are important, and they need service,” said Maus, who retired in 2004, but remains in an ambassadorial role for the retailer.

One example of that is the color-coded signage in new OBI stores. “People can follow the numbers and find what they need,” Johanna Meessen, director of corporate communications, said.

German companies accounted for 611 booths at the International Hardware Fair/Practical World, second only to the 918 Chinese companies. More than 85 U.S. companies took part.

In the official end-of-show press release, Jürgen Schwerter, owner of the Hermann Schwerter company called his participation a success, and the quality of the visitors was impressive, he said. But, “the number of visitors in attendance was not as high as we had hoped for,” he added. Most of the testimonials on the official press release were glowing, however.

PRODUCT REPORT

In the Prebena booth, spokeswoman Katharina Strauch pointed to a portable all-around solution for pneumatic devices involving compressed air, called the PKT-Box 3500. The device, in a metal box or on a leather belt, brings power to the pro, without need of electricity. “You don’t have to have a compressor, and you can take it a suitcase with you, on a belt with you, and you can work any where.”

In the Master Lock booth. The new Axis-style padlock is promoted as an easier-to-use version of the traditional combination lock. Instead of numbers, the padlock relies on a directional slider that moves up, down, left and right.

“You could dial it behind your back, or blindfolded if you want,” said Steve Hedlund, vp-growth and innovation. The product is two years in the making and came to the company through an Israeli mathematician and musician.

And at the Kapro booth, about a dozen new takes on measuring tools, marketing tools and levels were on display. “Systematic Innovative thinking helps us bring new products to the market,” said Gyora Israelit, vp-sales and marketing for Kadarim, Israel-based Kapro. In Cologne, some of the new products on display range from easy snap-on levels for pipes, to a ceramic hole marker that helps builders locate the exact spot in which to drill a hole where the pipe goes.

A third area of innovation involved the art and science of trade show management. For the first time, Practical World was open to consumers in two halls that focused on DIY products and services. Organizers say the open door policy brought in about 7,000 end users, who were entertained by contests, games, live home improvement demonstrations and even a Miss DIY contest. (The contest of home improvement skills was organized by the DIY Academy, a German association of retailers committed to promoting DIY projects among consumers.)

Attendance was boosted by opening the doors to consumers in two of the halls. While the concept brought the big German retailers to exhibit at the show, it received mixed reviews.

“The reorientation of Practical World was an experiment,” said Herbert, BHB managing director. “All the parties involved—the trade, industry and Koelnmesse—should get together again after the trade fair to discuss the concept.”

One show initiative that may catch on elsewhere is the “No Copy-Pro Original” program, an effort on the part of Koelnmesse to reduce illegal copying. Beginning in 2007 with an Intellectual Property memorandum signed in Beijing with Chinese business partners, the program followed up this year with an “action and advice center” in Hall 10, where exhibitors concerned with property right infringement could receive advice and support.

Organizers arranged around the clock live seminars and exhibits: Tools Live, Security Live and Do It Yourself Live. At one such session, the mental aspect of home improvement retailing was on full display. Ralf Oltrogge, a Belgium-based consultant who spoke about training during a “Tools Live” seminar, told HCN that quality trumps price in the retail game.

“The sweetness of low price will be forgotten, but the pain of poor quality remains long,” he said. “Don’t talk about the price, talk about quality. You will be more successful, and that’s the same in America.”