In this issue of DIY & Industrial Trade News, Aquidneck shifts the focus to power tool accessories with a special emphasis on drill bits. This product segment is a classic example how blind lines provide the potential for positive price adjustments when analysing a whole product range or product family.
Aquidneck’s findings will be featured in a series of articles by DIY & Industrial Trade News, offering monthly updates across various hardware categories.
Power tool accessories are a major turnover contributor to DIY sales in general. However, they require a fair share of shelf space due to their massive range and specialised product spectrum. On the other hand, power tool accessories, on item level, tend to have low price points and shoppers do not have an accurate price perception (this does not necessarily apply to sets which have higher price points). Unlike with KVI’s, shoppers are unlikely to compare prices, thus allowing for positive adjustments on SKU level. The best example for this concept is the drill bit product group which generates around 39% of the value and 35% of the volume of power tool accessories.
Within the drill bit segment, there is a high degree of specialisation accounting for the very deep range. The most common sub-group are masonry drill bits which represented 35% of the value and 39% of the units of drill bits in August. Followed by metal drill bits at 30% and 36% respectively (bit more if one adds dedicated steel drill bits). Standard wood drill bits are also very popular at 8% and 9%. However, the wood segment is significantly larger if combined with specialised wood drill bits (hole saw, spade, etc). Price wise, 59% of the sales of drill bits (excluding sets) are generated by items retailing below R50 per transaction. The price band between R50 and R100 contributes another 26% and the price band between R100 and R200 adds a further 11%. All sales above R200 represent a meagre 4% in units but an impressive 14% in value, indicating the need for a comprehensive range that includes dedicated high-end bits.
Generally, without considering the type of drill bit, the average price roughly increases with size. In the attached graph, the blue bars represent the average price per size in milimetres (mm) (intermediate sizes rounded down to the next integer) for the year-to-date. The red line represents the sales volume share for each of these sizes for the same time frame. Most sales occurred between 2mm and 16mm with notable exceptions up to 38mm. Above this threshold, the volume share declines rapidly, but the value contribution remains critical, while a specialised range continues to attract foot traffic.
Masonry drill bits (standard and SDS combined) generated 41% of the value in the year-to-date well ahead of the other types. The most popular sizes are 6mm at 24% in value, 8mm at 17%, 10mm at 11% and 12mm at 15%. Together, these four sizes contribute 2/3 of the value generation of masonry drill bits in August. Larger sizes (14mm and 16mm together at 14%) are also relevant. One surprising characteristic of masonry drill bits is that uneven sizes apart from 5mm (8%) are generally irrelevant from a sales perspective when purchased individually.
The volume and price overview for masonry drill bits displays the sales share in per cent (red line) vis-à-vis the average price by sizes in mm (blue bars). The intermediate sizes are rounded down to the next integer, drill sets are excluded. The range of masonry drill bits is limited to
sizes between 3mm and 16mm, the sales share of the other sizes being negligible. Except for the 3mm and 5mm segments the size intervals tend to follow even numbers while the uneven sizes (7mm, 9mm, 11mm, 13mm and 15mm) contribute very little to the overall sales. Furthermore, the average prices for the uneven sizes are always lower than their respective even counterparts. For example, the average price for a 6mm drill bit is R66, the larger 7mm retails for R52. The same effect is visible for the larger sizes as well. Considering that the sales contribution of the uneven sizes from 7mm up is very small it makes little sense to price them below their even counterparts.
Metal drill bits generate 23% of the total turnover in the year-to-date, drill sets are relevant generating 16% of the volume; however, it must be noted that sizes below 4mm are generally sold as two-piece combos and allocated to the drill bit set segment. Unlike their masonry counterparts the size range is significantly larger and intermediate sizes are common compounding the range depth of metal drill bits. From a sales perspective sizes up to and including 8mm are the most relevant ones although the value contribution of larger sizes (10mm or 12mm) is critical.
The volume and price overview for metal drill bits (red line shows sales units in percentage and the blue bars display average price by size) reiterates the focus of the smaller sizes as well as the relevance of intermediate sizes. From a sales perspective up to 8mm plus the 10mm and 12mm brackets generate most of the sales. Price points from smallest to largest tend to increase with size in a linear fashion. Very large metal drill bits tend to be price constants with 15mm to 18mm retailing around R400 and sizes of 19mm and above selling around R600.
Wood drill bits paint a completely different picture in the volume and price overview, again red line shows sales units % while the blue bars display the average price by size. Average prices tend to increase with size, but the overview shows major discrepancies with very large bits retailing well below medium sized ones. Also, the sales relevance of the different sizes is very erratic, the red line shows several peaks across the range.
Drill bit sets are an important component of value generation, 11% of the turnover of drill bits is generated by sets in the year-to-date. The number of items per set is vast with no real common denominator. Twenty-six per cent of the value comes from sets with five pieces, 25% originates with two-piece combos (mostly small metal drill bits under 4mm) and so on. The sales relevance of sets changes between the drill bit types: for metal and hole saw drill bits the turnover share of drill bit sets is double digits; for masonry and wood drill bits it is rather small at 5% and 3%, respectively.
