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Next generation batteries: finding the force in an increasingly electronic world.

A SHORT TIME AGO IN A GALAXY NOT SO FAR AWAY, HOME improvement retailers found themselves joining other retailers in an economic war characterized by declining retail sales and cautious consumer spending. But while overall retail sales have typically been anything but electrifying over the past two years, the electronic sector has emerged as the category prodigy. Enthusiasm from consumers to spend money on electronics and ancillary products appears not only to have remained steady over the past several years, but has actually been increasing as consumers look to charge up in today's technological world.

NOW, WE'RE NOT SAYING IT'S time for home improvement retailers to drop everything and carve out valuable real estate for an extensive display of cell phones or PS3s, but odds are you're already stocking one product that could help you take advantage of the electronics trend: batteries.

According to Ohio research company the Freedonia Group. "U.S. demand for batteries is forecast to increase 4.3 percent annually through 2011 to $14.9 billion. Growth will be driven by such factors as strong demand for battery-powered products like cellular phones and digital cameras."

What's particularly great about the increasing electronic trend is its high-drain characteristic, which will demand a higher level of battery consumption, enabling you to drive more customer traffic and create loyal customers.

"I can't imagine home improvement retailers wouldn't have batteries," says Brad Buss, owner of Ace Hardware Bad Axe in Bad Axe, Mich., who stocks a 4-foot-by-4-foot kiosk of standard batteries with an additional 20 feet of specialty batteries. "It just goes with the territory."

Dave Bailey, owner of Dave's Hardware & U-Haul in Phoenix, agrees, emphasizing the profit potential of the convenience product. "I sell the batteries at about a 45-percent margin," he says. "Price isn't the issue; it's selection and helpful service that retailers need to focus on."

Power up Your Niche

Because independent home improvement stores are typically less crowded than mass merchants, offer customers convenient store hours, a good selection of battery sizes and types along with individual service they are well positioned to make batteries a powerful niche. And though it's true many retailers currently offer some basic batteries, they could be missing valuable market share by not taking the niche to the next level with hard-to-find or technologically advanced batteries.

"Expanded battery offerings tie in nicely with the other odd products we are able to offer," explains Buss. "Because we're the helpful place, we need to have those things."

Our editors touched base with several battery manufacturers, asking how retailers could position themselves ahead of the curve in their battery departments, and while vendors explained how emerging technology is making rechargeable batteries--specifically lithium-ion--popular in the category, the main objective retailers should keep in mind is how the battery is going to be used. For example, lithium-ion batteries aren't currently the most economical choice for certain products such as a TV remote. One vendor explained that nearly 80 percent of devices are going to perform as well with alkaline, or the traditional battery, as they would with lithiumion batteries in today's products.

So why should retailers even focus on newer batteries? As prices decrease for these new types of batteries and consumers begin using more and more high-drain electronics, rechargeable, or secondary batteries, are anticipated to gain more market share. Odds are that you already are stocking several rechargeable or secondary batteries such as lead-acid, nickel cadmium (NiCad) or nickel metal hydride (NiMH), but now is the time to start experimenting and marketing your availability of lithiumion (Li-Ion) batteries. Turn to page 32 to hear how many retailers are finding success with lithium-ion in their power tool departments.

Battery 101

To clarify the differences in rechargeable batteries, our editors attended Battery University, an online module covering battery trends and types, developed by Isidor Buchmarm, founder and CEO of Cadex Electronics Inc., in Vancouver, British Columbia.

Lead-acid batteries, commonly used in applications like automobiles, currently account for nearly half the demand of rechargeable batteries and, according to the module, should represent a steady increase through the year 2012. However, lithium-based batteries are anticipated to take over more of the market share as production costs drop and performance technology increases.

And prices are already dropping. The price of Li-Ion batteries has dropped by 20 to 50 percent over the past several years while NiCad and NiMH batteries have dropped by 10 to 20 percent in the same time period.

Bailey warns retailers to do their research before branching out. While he says his battery department is profitable, he only stocks the popular options of Li-Ion and rechargeable batteries because they tend to be slow movers in his market.

"Batteries are a good category and make money," Bailey says, "but you have to be smart and focus your purchasing on what is producing sales in your market. It's really easy to blow money on products that will just sit and collect dust in the battery category."

Thinking Toward the Future

[ILLUSTRATION OMITTED]

To translate these types of batteries into actual dollars, vendors and retailers agree that retailers should focus on the popular electronic devices. Buss has found particular success in selling old model cell phone batteries. Because phone companies often switch requirements, these difficult-to-find batteries have helped him develop loyal customers and a special order battery offering. For Buss, batteries are an obvious extension to his hardware store.

"Customers come to us because they want advice on which batteries they need, and how to install them. We can give them those answers," says Buss. "I would really recommend retailers look into opportunities with batteries."

So whether a retailer's next step is to expand his or her assortment of basic alkaline or look to the future with lithium-ion and other rechargeable offerings, our editors put together a list of several products that home improvement retailers are finding success in selling batteries for:

* Cell phones: particularly outdated. hard-to-find models.

* Hearing aids.

* Power tools.

* ATVs, wheelchairs. motorcycles,

* Automotive.

* Lawn mowers.

* Exit signs.

* Camcorders.

* Digital cameras.

* Gaming systems.

* Watches.

* Key fobs.

* Smoke detectors.

* Laptops.

* Ancillary accessories such as portable car and chargers.

Battery 101: Rechargeables

For a tutorial on the most popular rechargeable batteries, please see the excerpt adapted from Battery University below:

[ILLUSTRATION OMITTED]

Lead-acid batteries

Lead-acid is the oldest rechargeable battery. It has maintained a high market share where newer batteries would either be too expensive or impractical. Typical charge time for this battery is eight to 16 hours. Lead-acid batteries are inexpensive, simple to manufacture, popular and fairly durable.

Lithium-Ion (Li-Ion)

Among portable secondary batteries, lithium-ion shows the most promise for the future, according to Buchmann. D-Ion batteries produce the same energy as NiMH batteries but weigh approximately 35 percent less, desireable for lighter electronics like computers. Moreover, D-Ion batteries are environmentally friendly because they don't contain toxic materials such as cadmium or mercury.

[ILLUSTRATION OMITTED]

Nickel-cadmium (NiCad)

The market for nickel-cadmium is shrinking. This chemistry will be replaced with nickel-metalhydride; however, NiCad batteries still hold a major share for power tools, two-way radios and medical devices. This battery is preferred over nickel-metal-hydride for its high durability and reliable service. NiCad batteries tend to require less maintenance and care, but are not environmentally friendly.

[ILLUSTRATION OMITTED]

Nickel-metal-hydride (NiMH)

NiMH batteries deliver approximately twice the capacity of their NiCad counterpart, which adds to increased run-time and less bulk. NiMH batteries are also more environmentally friendly than NiCad batteries since they do not contain heavy metals.

Web Exclusive

Visit www.nrha.org/batterytips for 10 of the top selling practices that ensure success in a battery niche.

By Jaime Koch, jkoch@nrha.org, @NRHHA_Jaime
COPYRIGHT 2010 National Retail Hardware Association
No portion of this article can be reproduced without the express written permission from the copyright holder.
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Title Annotation:CATEGORY SPOTLIGHT
Comment:Next generation batteries: finding the force in an increasingly electronic world.(CATEGORY SPOTLIGHT)
Author:Koch, Jaime
Publication:Hardware Retailing
Geographic Code:1USA
Date:Nov 1, 2010
Words:1272
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