Hardware Retailing The Industry's Source for Insights and Information
Literally anchoring store departments, endcaps should be a superstar seller in any store, but require more than just a set-it-and-forget-it mentality. In March, the North American Hardware and Paint Association (NHPA) released its third iteration of the Merchandising for Profit Study, providing detailed insights and data on the impacts of utilizing specific merchandising strategies on sales. Of the 13 merchandising techniques studied, five were endcap variations, including a feature endcap with a single item, a feature endcap with a percent off sale sign, a feature endcap with a sale sign, a multi-item endcap main item and a multi-item endcap second item.
As an extension of the study, Hardware Retailing took a closer look at endcap strategies, with NHPA staff visiting several independent home improvement retailers to see their endcaps in action and connecting with others to gain valuable insights on their endcap strategies.
Lean Into Promotions
Utilizing promotions from wholesalers and vendors is one key to success for endcaps. At Grayco Hardware, which has four hardware and home retail stores and four building centers in South Carolina, endcaps center around wholesaler and vendor promotions.
Jon Turner, merchandising manager, says the planning for endcaps starts by identifying items that are going on sale within the operation’s planned promotional window. Grayco utilizes its wholesaler’s promotional program, which makes up about 80% of the stores’ monthly promotions. Turner, along with Donna Ward at the Summerville location, Jack Kerby at the Hilton Head location and Brad Knox at the Lady’s Island store, compile the promotions into an Excel workbook and sort through to find items that meet Grayco’s criteria for a good promotion.
“The criteria can look different month to month or depending on our quarterly goals, but typically we look for products with a strong sales history or active customer sentiment, products that have seasonal demand or impulse potential and products we can receive at least a 10% discount on market price,” Turner says. “Our goal with the promotions is to figure out what the customer wants before they know they want it. If you can anticipate the customers’ needs, you can give them a better price, have all the stock they’ll need and provide a better overall customer experience.”
Each month, the team at Grayco changes out at least four of the 30 endcaps in the stores. Because price imaging is important to the operation’s value mission, items featured on endcaps typically are priced at $20 or lower, with some seasonal exceptions, such as heaters and pop-up tents. Grayco’s team then works hand-in-hand with its marketing company to be sure these deals are in the monthly flyer available in print and online.
Along with the promotional product, think through add-on products that complement it. Turner says you want to highlight the sale product, but you also want to increase basket sizes beyond just the sale items.
“Placement is crucial for a well-performing promotion; you need to think about how your customer will be shopping,” he says. “For example, if they’re already coming to your store for weed killer, you want them to see your 1-gallon pump sprayers as well, so put them right in the customers’ way so they have no choice but to see how amazing your deal is.”
And if an endcap isn’t working, don’t be afraid to pivot.
“We just had an endcap for 1-gallon pump sprayers in one of our stores that we placed next to the power tools away from the normal flow of traffic for this item,” Turner says. “We watched a handful of customers put back a non-promo pump sprayer and swap for the promotion, so we decided to move the endcap closer to the lawn and garden section after observing this.”
If done right, promotional and sale endcaps result in customers walking more of your store and bringing traffic to areas they may have otherwise avoided.
“Promotions play a key role in the success of our company,” Turner says. “When combined with a focus on providing the best customer service, offering these promotions and marketing them effectively gives us an edge in a competitive market against the big boxes.”
Focus on Locality and Seasonality
Knowing your market and what customers in your area want and need is another crucial component for endcaps. Berger Hardware in Hawthorne, New York, utilizes promotions from its co-op when putting together endcaps, using those promotions as a starting point for crafting endcaps, says Aimee Nichols, who owns Berger Hardware with her brother Chris Rubeo.
The store receives a monthly execution guide for promotions and the store manager is in charge of executing those promotions through endcaps. Nichols says they follow their wholesaler’s promotions but also build out the store’s endcaps to coincide with the local seasons and the items that are popular in that area during a given time.
“For example, for this part of New York, fall seasonal endcaps generally include weather stripping, faucet covers, draft dodgers and other winter-related products, so when that first shot of cold comes in, people are ready,” Nichols says.
The team at Berger Hardware will also tweak endcap product selection to maximize sales.
“For example, if our wholesaler has a promotion on a certain brand of weed killer, we’ll put that on the endcap and add other options,” Nichols says. “Rather than only focusing on the sale item, we’ll add a different option we know will get full margin.”
Additionally, they will include add-on products to the endcap’s mix. When promoting an item like weed killer, Nichols says they will add a clip strip or wing panel of garden gloves or include a pump sprayer.
“The $4 extra they spend on gardening gloves might not seem like much, but increasing transaction size anytime we can little by little is beneficial to overall sales,” Nichols says.
Products at Berger Hardware that do well on endcaps near the checkout include sports and Pokemon trading cards, candy and drinks and children’s toys—especially seasonal options like bubbles, swimming toys and water bottles.
The team at Grayco also collectively identifies items that make sense for the stores’ demographics and ideal customer profiles. If your store doesn’t already have a customer profile, Turner says get one.
“You need to know who’s shopping at your store to understand what their needs are,” he says.
With over 45 years in home improvement retailing, including 15 years as the vice president of merchandising at Friedman’s Home Improvement, Tony Corsberg founded Merchant5 Advisors. Merchant5 is a strategic merchandising service provider that provides merchandising assessments and training in merchandising management.
Corsberg says a retailer should change out their endcaps every 30 days, but another option is to establish four to seven seasons, which can include the traditional weather seasons—spring, summer, fall and winter—but can also include additional seasons like holidays, anniversary sales and others.
“Regardless of the promotional space seasons you establish, the promotional spaces should be merchandised up to 30 days before that selling season begins,” Corsberg says.
Optimize Endcap Signage
Once your endcaps are well-stocked with the right products that promote current sales or appeal to the local market, the right signage can mean the difference between a customer purchasing or walking right by.
At Berger Hardware, promotional endcaps always include the regular price along with the promotional price so customers can see exactly what their savings will be, Nichols says. The endcap signage will also include any instant savings through the store’s loyalty program.
Along with including effectual signage, the endcaps at Berger Hardware are thoughtfully placed throughout the store. In 2017, the store underwent a renovation, and Nichols and Rubeo considered how endcaps would play into the store’s updated design.
“When we renovated, we adjusted the aisles to create a clear path taking you down the center aisle where most of our endcaps are located to then draw customers further into those aisles and the store,” Nichols says. “Because our store isn’t a traditional square or rectangle, the endcaps help direct customers through the store.”
Price should be the first priority for endcap signage, Corsberg says. In the signage hierarchy, price should be No. 1, product description No. 2 and third should be showing how much the customer is saving.
“And the price should be big. A $2.99 price that is 18 inches tall is a better value than a $2.99 price that’s only 4 inches tall,” Corsberg says “The objective is to shout out value pricing or low price because price today is transparent, and independent retailers can have the reputation for being higher priced than other shopping alternatives.”
Track the Analytics
Without collecting data and then analyzing that data, it’s hard to know if your current endcap strategies
are effective.
At Grayco Hardware, Turner tracks the performance of the promo items, using Microsoft Excel and consolidated sales analysis reports. When he first joined the team in 2023 to focus on merchandising, during the first quarter, the operation brought in an additional $50,212 with an average profit margin gain of 7.83%.
The team accomplished these sales numbers by purchasing three to four months of projected sales at a 10% or better discount and then turned around and gave those savings to the customer during a one-month sale period. They then sold the other two to three months of inventory with the discounted cost for a slight margin gain.
“Any increase to our sales I took as a win considering that before this, we were not taking full advantage of our discounts,” Turner says. “Tracking the data proved to us that sales can be replicated, repeated and will drive traffic if we plan accordingly and offer the right products at the right time.”
