Tools and Outdoor Industry: Navigating Skilled Labor Shortages
July 31, 2024
Note: We reveal investment insights through the quotes of top business leaders.
Key Takeaways
- Companies are enhancing supply chain efficiencies and managing costs to mitigate the impact of skilled labor shortages.
- Leveraging technology solutions like Computer Vision and modernizing omni-channel experiences are key strategies for improving operations and customer service.
- Significant investments in training and development initiatives are being made to foster career growth and address labor shortages.
- Strategic partnerships and collaborations are being utilized to navigate skilled labor shortages and gain market share.
Impact on Production and Supply Chains
Companies in the tools and outdoor industry are navigating skilled labor shortages by improving supply chain efficiencies and managing costs. Fastenal and Stanley Black & Decker are focusing on cost improvements and inventory management, while Home Depot and Lowe's are enhancing delivery mechanisms and on-shelf availability to mitigate supply chain disruptions.
"It also increases the expense of supply chain. To the extent it increases the cost of the customer supply chain, that will manifest itself in our revenue growing little bit faster because we're pricing that as it's coming through." --- (FAST, earning call, 2024/Q1)
"Looking forward in 2024, we expect mixed demand trends to persist across our businesses and we are driving supply chain cost improvements to expand margins, deliver earnings growth and generate strong cash flow." --- (SWK, earning call, 2024/Q1)
"And if I can just take a minute to rattle off a few of these telltales, when you think what Hector has done in the stores, in terms of shrink, in leveraging our wage investments to getting attrition way down, which is helping with safety instances, what we're doing with technology and process in the store that Ann mentioned in her remarks about not just the better in-stock, but the supply chain is delivering, but the actual on-shelf availability that all our tools are delivering, our supply chain and merchant teams." --- (HD, earning call, 2024/Q1)
"And then we think about some of the things we're doing with our supply chain and what we've done with market delivery, how we've now created a best in class delivery mechanism for appliances." --- (LOW, conference, 2024/06/26)
"The decrease in our inventory balance in the first quarter of 2024 primarily reflects progress made over the last twelve months to reduce inventory following the normalization of the supply chain after the disruptions experienced in 2022." --- (FAST, sec filing, 2024/Q1)
Leveraging Technology Solutions
Home Depot and Lowe's are leveraging technology solutions like Computer Vision and modernizing their omni-channel experiences to improve operations and customer service, effectively mitigating the impact of skilled labor shortages.
"What's really exciting is how we are also now leveraging Computer Vision for other applications across the store." --- (HD, earning call, 2024/Q1)
"And if you compare the customer service results of our delivery process executed by our store associates versus our 3rd party partners, our 3rd party partners actually receive significantly higher scores, which tell us that our customer appreciates what they're doing and they can see the value in leveraging them." --- (LOW, event transcript, 2024/05/31)
"In 2023, we continue to invest in our total home strategy initiatives, while we transform and modernize our technology as we strive to create a seamless omni channel experience for our customers. As a reminder, our total home strategy is built to enhance customer engagement and position Lowe's for market share gains through 5 key areas: increasing pro penetration, accelerating our online business, expanding our installation services, driving localization and elevating our product assortment." --- (LOW, event transcript, 2024/05/31)
Training and Development Initiatives
Lowe's and Stanley Black & Decker are heavily investing in training and development initiatives. Lowe's offers hands-on leadership training and career advancement opportunities, while Stanley Black & Decker focuses on specialized training centers for tradespeople. Fastenal emphasizes internal promotions, fostering career growth from within.
"And we have a best-in-class leadership development training program, including a store replicate at our Lowe's University training center, which gives store leaders hands on leadership practice and coaching." --- (LOW, earning call, 2025/Q1)
"1 Plumbers & Gas-Fitters Training Center. "Today, we celebrate our history by standing strong with the pros who have fueled DEWALT's purpose since day one and renew our commitment to continually stay at the forefront of jobsite innovation," said Chris Nelson, Chief Operating Officer at Stanley Black & Decker." --- (SWK, press release, 2024/05/14)
"And they also found within Fast Stone Organization that incredibly values promote from within, promote from within, promote from within." --- (FAST, event transcript, 2024/04/25)
"And at Lowe's, I'm really proud that we're committed to investing in these development processes for our associates and we're helping them not only to gain knowledge, but also skill that can allow them to take a job and turn it into a career." --- (LOW, event transcript, 2024/05/31)
"And last year, we awarded over $350,000,000 in discretionary and profit sharing bonuses for these hard working associates. And we're creating opportunities for advancement and investing in development for all of these associates to help them build their careers with Lowe's." --- (LOW, event transcript, 2024/05/31)
Industry Collaboration and Partnerships
Companies in the tools and outdoor industry are leveraging strategic partnerships and collaborations to address skilled labor shortages. Fastenal's high-touch partnership approach, TTI's collaborative income arrangements, Home Depot's strategic acquisitions, Lowe's tech team collaboration, and DEWALT's technology-driven innovations exemplify this trend.
"We believe this close-to-the-customer, 'high-touch, high-tech' partnership approach is differentiated in the marketplace and allows us to gain market share in what remains a fragmented industrial distribution market." --- (FAST, sec filing, 2024/Q1)
"Income from collaborative arrangement represents the portion of exploration and pre-development costs that are reimbursable by our strategic partner." --- (TTI, sec filing, 2024/Q1)
"The acquisition is expected to complement our existing capabilities and enable us to better serve complex project purchase occasions with the renovator/remodeler, while also establishing the Company as a leading specialty trade distributor across multiple verticals." --- (HD, sec filing, 2024/Q1)
"And when I think about the proprietary self-checkout systems we talked about in the past, the user-friendly for the home improvement customer along with the partnership we have with our tech team under Seemantini's leadership, the teams work hand-in-hand." --- (LOW, earning call, 2025/Q1)
"By applying its latest technology to the challenges of today's skilled trades, DEWALT is leading the charge for the jobsite of the future and is pioneering the next generation of tools, outdoor equipment and forward-looking technologies." --- (SWK, press release, 2024/07/24)