Large chain stores: Large chains, which include Home Center and Ace, operate large stores- 750-2,000 square meters- in strategic locations.
Small private stores/ medium sized stores- Average size of a medium store is 600-1,000 square meters, and it is usually located in a relatively narrow geographical space. These stores usually have relatively high quality inventory. They are characterized by high quality service and are associated with various types of contractors.
Hardware lots: Lots specialize mainly in supply of heavy-duty hardware such as: construction iron, sand, cement, bricks, etc. Lots usually allow rental of equipment and are usually located in industrial areas and city entrances.
Specialty stores There are many specialty stores in the hardware industry, which supply materials for contractors, wholesalers, and individuals. Various types of specialized stores are: metalsmithing, raw wood, plasterboards, ladders and lifting props, metal profiles, aluminum and aluminum products, etc.
“Tambur” stores: Small hardware stores, with an area of 50-100 square meters, usually located in neighborhood shopping centers. Have a limited inventory. Supply the daily needs of residents in the area.
Customers: Defining the Target Market and its Size, Market segmenting
This industry’s target market includes the entire population.
Private customer sales are usually of individual products. Occasionally schools or other organizations conduct large purchases.
There are three types of competitors in this industry- mega-chains, retailers, and wholesalers.
These differ in merchandise variety, service level, and price. Purchases at chains are usually planned. Wholesalers carry a large inventory, some is specialized, and prices are mid-level. Retailers carry a limited, planned inventory, according to the population in the vicinity.
Active vendors in the industry are importers and local manufacturers. Most products are imported.
Local manufacturers are active in a few specific professional fields (for example, paint), and compete with importers.
Some vendors refuse to work with chains because of their payment terms. These vendors clearly prefer working with retailers and wholesalers.
“Tambur” stores have only recently begun utilizing available marketing resources. Advertising in the industry is conducted mainly by large chains and other large stores. Large chains append promotional pamphlets to the weekend issue of "Ma'ariv" and "Yediot Ahronot"
Factors Affecting Success:
- Business’ location and competition in the area.
- Professionalism of the owners and salespersons, service level, and product selection.
- Business type and sales method (self-service or staff service)
- Various specializations (such as plumbing, welding, tools, etc.)
- Business operating hours.
- Business size and internal design.
This industry requires a high investment mainly in appropriating the structure, furniture, shelving, initial inventory, and service.
Average inventory at a small to medium sized hardware store (not including chains) ranges between 80,000-400,000 NIS. Wholesaler inventory is usually 2 million NIS.
A direct ratio of business size to employees. In this industry, staff must be professional and understand the variety of products and its uses. Service quality, speed, and problem solving are highly important the business. Inventory and order placement must be conducted very professionally. If there are more than 3 workers, one should be specially trained for the subject.
Industry Revenue and Profitability
This analysis is conducted according to types of business
Type 1: A business located in a shopping center or central city street. Area of these stores usually ranges between 40-60 square meters, and sometimes more. They offer a wide range of products. Electronic tools, plastic products, faucets, etc. Some also sell garden tools and fertilizers. Stores are usually operated by the business owner with the aid of one or more employees.
Type 2: A business located in a neighborhood. Area ranges between 30-50 square meters. Selection is relatively limited and includes mainly tools, metal parts, and paint. This type of store rarely carries electric tools or faucets. Stores are usually operated by the business owner, sometimes with the aid other family members
Type 3: Neighborhood businesses operated from 8:00-14:00, usually by an elder business owner. The area of these businesses is usually 20-30 square meters. Their revenue is approximately 60% of the revenue listed below.
Revenue per worker (NIS)
REVENUE AT STORES OF TYPE 1
Revenue at stores of type 2
675,230 – 825,360
449,230 – 540,680
716,420 – 875,710
476,630 – 573,660
Typical Terms of Payment
Vendors- EOM+60 to EOM+90
Private customers: usually pay in cash or credit cards. Regular customers may also pay by check.
Business Customers: EOM+60
Licensing and certification.
Only local authority licensing is required.
Content and inventory insurance.
Third party insurance.
Goods in transit insurance,
Loss of income insurance.
In addition to the above, an insurance agent should be consulted in regards to the need for additional insurance.
Due to the high investment, the following should be looked into prior to establishing a store:
- Competitors in the area,
- Commercial vehicle accessibility and customer parking,
- Traffic direction (one-way street, rotary, intersection, etc.)
- Relative advantages (exclusive representation, unique products, etc.)
- A realistic business plan must be prepared.
It is recommended to consult with your local Business Development Center regarding business establishment and operations.
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