The big box retailers understand they have a service gap to fill as our aging population becomes ever less inclined to tackle do-it-yourself projects. That's why most of the players have started "installed sales" programs. For a single quoted price, customers can buy their water heaters, faucets, disposals, etc., and have someone install the products. The work is usually subbed out to a local network of independent contractors.
Retailers are not exactly jumping for joy over this setup. Most credible contractors don't find the installation fees high enough to make it worthwhile for them to participate. It's the kind of deal that tends to attract the garage-shop operators, who often are not very reliable or customer friendly. Home Depot and the other big boxes take a PR beating every time they dispatch Billy Joe Buttcrack to do their work, and it costs them money when they have to make good on failed commitments.
The retailers would love to partner with a first-rate company, but don't want to pay the labor rates charged by the best contractors. It would be out of sync with their discount merchandising mentality. Moreover, since the vast majority of installation jobs are pretty straightforward, it's not hard to find mechanics able to perform the work in acceptable fashion for chintzy pay. If only they could find people who wouldn't embarrass them.
In that vein comes news that Ace Hardware has entered into a program with New York-based Installinc for product installation. About 100 Ace stores in 11 markets have signed up for the program at this writing, with as many as 500 Ace affiliates expected to sign up by the end of 2001. According to the National Home Center News, plumbing and electrical installations will be the focal point of Ace's installed sales programs, because Ace feels those are projects customers are least likely to tackle themselves.
Who Is Installinc?Installinc is a labor broker with access to some 17,000 trade workers nationwide. They get them through an alliance with Trade Source, one of the nation's largest construction temporary employment agencies. Temp agencies offer pay that is typically in line with or slightly below the going rate for a given area, but with no benefits and, by definition, no job security.
Installinc claims to do a rigorous screening that includes DMV checks, tools inventory, vehicle inspection, drug testing, personality profiles and background checks. Installers are insured and, where applicable, licensed. Their work is backed by a one-year warranty.
A variety of other chain retailers besides Ace Hardware have cut deals with Installinc, including some Home Depot stores. Installinc workers wear uniforms and picture IDs, and are trained in customer service skills.
Upgrading MediocrityThere is nothing revolutionary about the business of Installinc. Let's take it from the top.
1. The company is in the business of selling labor, just as all PHC contractors are. Also just like you, Installinc charges its clients a labor fee (most jobs are flat-rated, though some get billed by the hour). Installers get paid a large portion of that fee, while the remainder covers Installinc's overhead and profit.
2. There is nothing to indicate Installinc has better access to skilled personnel than any of you do. There's every reason to believe its labor force is inferior across the board. The best and the brightest trade workers are in high demand. Why would they choose to work for middling wages without benefits and job security? Some might be in the middle of various life transitions that make it desirable to forego a permanent job temporarily, but I find it hard to believe every one of Trade Source's workers fall into that category.
3. The nature of its business is such that Installinc doesn't necessarily have to attract the best of the breed. PHC service companies need to hire full-fledged service technicians able to diagnose and troubleshoot a wide range of complicated jobs, even though they may spend the majority of their time on routine tasks. Installinc only needs to focus on residential installations. I shudder at the thought of incompetents fooling around with fuel lines and pressurized vessels otherwise known as water heaters, but with somewhere around 8 million of the devices sold every year, I suppose this has become a rather routine task.
So what does Installinc have to offer that makes it a more attractive partner than the independent contractors who currently perform this work? I think Installinc's value-added service is to package mediocrity in such a way as to make it attractive - like making a gourmet meal out of hamburger helper. The company recruits mostly mediocre mechanics, dresses them in clean uniforms and teaches them to be nice to customers. Then it's just a matter of marketing that professional image.
This business model goes to show yet again that image and people skills are even more important than mechanical ability in the residential service business.
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