HD Supply Unveils New Private Labels
To ensure the integrity of proprietary branded products, HD Supply has implemented rigorous screening processes to ensure both the supplier and product meet specific requirements. Independent third-party audits of suppliers are conducted to confirm business practices are socially and environmentally responsible and that production capacity, process capabilities and quality assurance systems dependably deliver a consistent product. Thorough product testing, conducted by expert third parties, assesses safety, performance and adherence to exact specifications. HD Supply also carries extensive liability and warranty coverage on all its proprietary branded products. Supply House Times interviewed Arleen Quiñones, senior vice president of Marketing & Communications for HD Supply, for additional information on its proprietary brands.
ARLEEN QUIÑONES: There are two lines. The Brigade brand is used on heavy-duty products that the trades use on the job site, such as tools and hardware, water heater connectors, no-hub couplings, residential valves, and flexible supply lines. Recently our HD Supply White Cap business launched Brigade brand extension cords, diamond blades and sealants in Southern California.
The Seasons brand includes products sold through the trades ultimately to consumers and homeowners, such as residential china and fixtures. In our Facilities Maintenance business, we currently offer Seasons sinks, toilets and ceiling fans for the multi-family housing and hospitality industries. We will continue to add product lines as customer needs arise.
Neither brand is carried on opening price point products. They are tied to products in the better or premium price category.
Q: How many plumbing lines are you offering all together?
ARLEEN QUIÑONES: HD Supply Plumbing has launched five different product categories in total. We offer Brigade branded water heater connectors, no-hub couplings, supply lines and residential valves. Plumbing has also launched a line of Seasons branded residential china. In addition, we have some opening price point products under the ProValue brand, which we have offered for several years. With Brigade and Seasons, we are making our first foray into the more upscale market throughout several of our businesses.
Q: Are they being made in China or elsewhere?
ARLEEN QUIÑONES: Some products are sourced from China, but we consider other low-cost countries, as well as partnerships with domestic suppliers. The recent Brigade product launch at HD Supply White Cap features products from domestic suppliers.
Q: Regarding independent third-party audits of your suppliers - can you elaborate on this?
ARLEEN QUIÑONES: We screen our manufacturers very carefully. Teaming with outside agencies, we thoroughly inspect supplier production capacity and social and environmental practices, as well as perform rigorous testing to ensure products meet exact specifications and quality standards. Quality assurance is a key point for us. We will not sacrifice quality. We want to make sure our customers get the highest quality product possible.
Q: What kind of promotions will you do to build brand recognition?
ARLEEN QUIÑONES: In our branch-based businesses, we will use traditional tools to promote product awareness such as point-of-purchase signage, customer events, promotional giveaways, line cards, and other marketing materials. We will also promote the brands on our company Web site, www.hdsupply.com. In addition to these tools, HD Supply White Cap will use direct mail to build brand and product awareness. HD Supply Facilities Maintenance, a catalog-based business, will promote the new brands through its catalog, as well as direct mail and its transactional Web site, www.hdsupplysolutions.com.
Q: About what percentage of HD Supply market share do you anticipate these private labels will account for vs. regular vendors’ products?
ARLEEN QUIÑONES: It depends on the business. Our Facilities Maintenance business has offered proprietary branded products for a much longer period of time than, let’s say, HD Supply White Cap, where we just launched the Brigade brand last month. Each business will expand its offerings based on its customers’ needs. We don’t have specific market share targets that we are disclosing.
Q: Have you dropped any plumbing product vendors or have they stopped selling to you as a result of your taking on these private labels?
ARLEEN QUIÑONES: Across the HD Supply enterprise, we have consolidated our purchases toward more strategic suppliers, which makes good business sense overall. We are not planning to stop doing business with any valued suppliers for the sake of our proprietary brands. Some of our current suppliers have asked if we would be interested in sourcing our exclusive branded products from them. Many are key suppliers who see our proprietary brand expansion not as a threat, but as an opportunity to capture market share, while retaining profitable business with an existing customer.
Q: What about pricing?
ARLEEN QUIÑONES: Price is based on features and functionality. Sometimes there are product and value gaps in which a supplier can’t provide what our customers need. Proprietary branded products can fill those gaps whether sourced domestically or globally.
Q: How do you learn about the gaps in product offerings?
ARLEEN QUIÑONES: We learn what the gaps are by talking to our customers and salespeople. We may also do focus groups with our customers, who are primarily professional contractors and other tradespeople.
Q: Will you sell your private label products directly to homebuilders, retailers or other large institutional buyers?
ARLEEN QUIÑONES: HD Supply is exclusively focused on the professional customer. Retailers are not a target market for us. We have no intention of changing our current mode of distribution, but will continue to sell these products to the same type of customer we serve today. We do not intend to bypass any customer.
Our Creative Touch Interiors (CTI) business partners with homebuilders to provide design center services. Our Facilities Maintenance business serves customers in the multi-family housing, government, hospitality, industrial and healthcare sectors.
Q: Who do you regard as your competitors on these lines?
ARLEEN QUIÑONES: We don’t regard our suppliers as competitors. This is about doing what is most advantageous and creates the most value for our customers and our business. Some of the products are being sourced directly from existing suppliers.
Q: What do you consider to be your competitive edge?
ARLEEN QUIÑONES: We view our ability to offer proprietary brands to our customers as a key market differentiator for HD Supply and as a way to enhance our market-leading position. As one of the largest players in wholesale distribution, we are one of a limited number of companies with the size, scale and sourcing capability to offer proprietary branded products. We can provide customers with a product assortment that many other distributors can’t. Proprietary brands allow us to build brand loyalty and a stronger connection with customers that goes far beyond a transaction.
Q: What are some of the challenges you encounter with importing products from overseas?
ARLEEN QUIÑONES: The biggest challenge is managing lead times. With globally sourced products, it is a much longer cycle between the time a purchase order is placed and the product is launched in the market, so you have to anticipate with a greater amount of precision when you will need the products. We are always improving our forecasting and logistics capabilities to ensure we can get the products to our customers when and where they need them.
Additionally, importing products from overseas adds another level of complexity in managing volatile global factors such as currency fluctuations, rapidly changing commodity prices and export tax changes.
Q: Will these products be sold through all HD Supply plumbing branches or will local management have input on what they stock and market?
ARLEEN QUIÑONES: For the HD Supply businesses, it’s all about the customer, so the local branches, those closest to the customers, will determine which products best serve the needs of the market.
Q: How will HD Supply handle warranties on the private label products?
ARLEEN QUIÑONES: The private label products will be warranteed by HD Supply. Even though we are not the manufacturer, our brands are on the products and we stand behind them for our customers. Through our HD Supply warranties, our message to our customers is that these are quality, dependable products that can be trusted.
Q: Will HD Supply compensate the contractor for his time and labor if he has to replace a defective private label product?
ARLEEN QUIÑONES: That will be determined on a case-by-case basis. Our goal is to provide our customers with the absolute best products and service possible.