Retailers nail added sales with tool gift sets

Discount Store News,  Jan 6, 1997  

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With tool sales to DIY customers growing at barely the 2% to 3% rate of inflation, tool manufacturers are hitting on a marketing strategy of bundling individual tools into sets or kits that lead to incremental and impulse gift sales at Christmas and Father's Day.

In the bargain, consumers enjoy at least a discount over the price of the same tools purchased individually. And vendors are positioning their costs to provide retailers five to 10 more margin points on these sets and kits compared to individual tools.

In hand tools, vendors are heavily importing from the Orient to keep costs down, while assembling the sets here in the United States.

Cordless power tool manufacturers also have gotten into the kit game, including Black & Decker, which offers eight different kits combing various Versa-Pak 7.2-volt sets for the light DIY customer beginning at the $89 level and its DeWalt division, which offers 14.4-volt twin sets for the professional user, with a retail of $350.

The Dewalt combination of a cordless drill and a power saw have resulted in a "terrific boost in sales" after just a year on the market, product manager Rich Mathews said.

Most users come in to buy just a cordless drill, but the often buy the kit because the like the 15% savings from buying a drill and a saw separately. Each tool uses the same interchangeable battery pack, whether for volt 12-volt or 14.4-volt models.

As a consequence, the kit packaging has resulted in large incremental sales of cordless saws, Mathews said.

Dewalt normally is a home center product, but in an exception, The Andersons, Maumee, Ohio, a discount chain that specializes in hard lines, also carries the Dewalt kit, with good results.

"They aren't flying off the shelves, but they are doing well enough considering the price point," hardware buyer Gary Gross said. The 14.4-volt Dewalt kit is $329, including two batteries, charger and molded carrying case.

At the low end, a Versa-Pak set consisting of a cordless screwdriver, a Snake Light, one battery and charger is doing extremely well at $49.88, Gross said. On the other hand, a Versa-Pak consisting of a multi-purpose reciprocating saw, drill, Snake Light, two batteries and charger is doing well," at $99.88, but "not as well as expected," Gross said.

In hand tool sets, The Andersons stores do better with inexpensive sets from Alltrade and Great Neck that retail for less than $20, including both the traditional mechanics tool sets and household tool sets, he said.

"We've tried higher priced sets [from Stanley]," Gross said, but they don't do as well.

For Christmas and Father's Day gift giving, The Andersons stock about a dozen extra tool sets, he said. Examples are a three-piece pipe wrench set from Alltrade at $9.99, a 10-piece screwdriver set at $14.88 and a 55-piece socket and ratchet wrench set at $28.88.

Some vendors bump up the piece count in their sets by including fasteners. Gross cautioned. "They're not all tools."

Kmart heavily promotes tool kits at Christmas and Father's Day.

At Christmas, for example, its key tool set promotion featured a BenchTop private label 100-piece socket and wrench mechanics tool set at $42.99, $15 off the everyday retail of $57.99. It also was promoting at $59.99 an Alltrade. 401-piece tool house that opens into a 5-sq.-ft. storage area. Including fasteners. the tool house also contained a variety of auto and carpenter tools, including tools for electrical repairs. Another pre-Christmas promotion at $79.99 was an Alltrade 201-piece set of tools, including a reversible screw bit driver, a number of screw bits and drivers.

In cordless tool sets, Kmart carried an Versa-Pak gift set consisting of a drill, Snake light, multi-purpose saw, two batteries, a charger and carrying case. Normally, Versa-Pak batteries and chargers are sold separately from tools since they are interchangeable. If purchased separately, the items would cost $103, for a $13, or 12.6% discount on the kit.

Another Kmart kit is a Coleman Power Matel 4-hp air compressor, packaged with $112 worth of power tools and accessories, such as a 50-ft. air hose, paint sprayer, impact hammer for changing tires and tire inflator. The Kmart price is $300 for the whole package, and Coleman claims the tools represent a free bonus.

Wal-Mart at Christmas also was featuring a wide range of tool sets, including the same Versa-Pak kit at $79.96 on endcap.

On a power aisle gondola, Wal-Mart was merchandising such tool programs as its own Homeowners tool kit at $20, consisting of a small hammer, pliers, adjustable wrench, glue gun, measuring tape, scissors, screw bit driver and assorted bits.

Under its Popular Mechanics private label, Wal-Mart offered for $19.97 a carpenters tool set: 22-oz. framing hammer, 13-in. pry bar, 25-ft. measuring tape, two nail sets and a small bubble level.

Another unusual set was from Arrow, a staple gun and glue gun at $19.96.

A 41-piece socket and wrench set from Popular Mechanics also was $19.96. For $5, Wal-Mart was offering a four-piece set of Chinese-made files.