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CRESTCRESTHARDWARE

BROOKLYN NEW YORK

I N T I A T I V E S I N S U S T A I N A B I L I T YF A L L 2 0 1 2

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TABLE OF CONTENTS

1 CompanyProfile

2/3 SystemDiagram

4/5 BusinessModelCanvas

5/6 SWOTAnalysis

7 LeveragePoints

9 KeyLeveragePoints

10 Recommendations

11 Conclusions

M A I N S T R E E T

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CrestHardwarewasfoundedin1962intheWilliamsburgneighborhoodofBrooklynbyMannyFranquinha.Throughoutthe1960’sand70’s,Crestgarneredthesupportoftheorginallocalsoftheneighborhood,primarilyservingthelargeItalianpopulationofmidandlate20thcenturyWIlliamsburg.Asthecompanygrew,theneedforalargerspacebecamemoreandmoreprevalentandCrestmovedacrossthethestreetintoits’presentlocationat558MetropolitanAvenue.Manny’sson,JoeFranquinhatookoverthestoreintheearly2000’sbreathingnewlifeandenergyintoacompanythatalthoughstillfunctioningperfectlywasnotadpatingtotherapidlychangingneighborhoodaroundit.WIththeinflixofyoungartistictypesintoWlliamsburg,astorethathadalwaysbeenwelcomingandaccomdatingtotheneighborhoodoriginalcreativetypes,wasseeingaenormousshiftindemographic,whiletheItaliansthathadsustainedthebusinessforthepast40yearswerestillactivelyshoppingatCrest,thousandsofyoungpeopleweremigratingacrosstheEastRiverfromlowerManhattanintolargeloftspacesintheindustrialandbluecollarWIlliamsburgneighborhoodandCrestrespondedtoits’newneighborsinamyriadofpostiveandinnovativeways.WithinthisdocumentyouwillfindanexplorationintothesustainabilityintiativesthatarebeingconductedwithinCrest’scurrentbusinesspracticeasawellasadetailedformulationofrecommenda-tionstobeenactedatCrestdevelopedafteranextensivecasestudyofthecompanywasconducted.

1 CompanyProfile

2/3 SystemDiagram

4/5 BusinessModelCanvas

5/6 SWOTAnalysis

7 LeveragePoints

9 KeyLeveragePoints

10 Recommendations

11 Conclusions

B R O O K L Y N 2 0 1 2

L O O K I N G T O T H E F U T U R E

HARDWARERETAIL

BIGBOX

C O R P O R A T EPUBLICLYTRADED

MANUFACTURERS

SUPPLIERS

MASSNATIONALMARKETS

SYSTEMD I AG R A M

L O E W SHOMEDEPOT

SHIPPINGCOMPANIES/TRANSPORTATIONOFGOODS

WHOLESALERS

TRUE VALUEHARDWARECOOPERATIVES

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HARDWARECOOPERATIVES

LOCAL

SMALLLOCALIZEDMARKETLOCALSUPPLIERS(GARDENCENTER)

LOCAL PARTNERS

FRANQUINHAFAMILYMANNY(FOUNDER)JOE(SON/CURRENTOWNER)

CONSUMERS

1962CRESTHARDWARE: 1994CRESTARTS:

PRIVATEOWNERSHIP

LIZASHIELDS(CRESTARTSCOORDINATOR)YOUNGLOCALS -PROFESSIONALS -ARTISTS -FAMILIESOLDWILLAMSBURGFILMANDPRODUCTIONSTUDIOSCONTRACTORS

LOCALBUSINESSES

GENEPOOL(LOCALARTIST,FOUNDEDCRESTARTS)

EMPLOYEES

URBANGARDENCENTER HARDWARESTORE

KEY RESOURCES

KEY PARTNERS

CHANNELS

suppliersshipping companies

community museum/ reliquaryartists (example: Gene Pool)

neighborhood/local businessesconverse rubber tracks recording studios

selling productmaintaining store’s needs

maintaining garden centerplanning and executing social events

interacting and engaging with customers

saleshardware/toolscrest merchandisecrest eventsrelationships with local businesses

employeesgarden space

revenues from asset salesphysical brick and mortar store

BUSINESSM O D E LC A N V A S

VALUEPROPOSITIONS

KEYACTIVITIES

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saleshardware/toolscrest merchandisecrest eventsrelationships with local businesses

VALUEPROPOSITIONS

CUSTOMERRELATIONSHIPS

CUSTOMERSEGMENTS

COST STRUCTURE

REVENUESTREAMS

KEYACTIVITIES

broad spectrum of clientalecaters to two distinct customer segments -young, hip williamsburg -older williamsburg natives

asset sales

unique shopping experienceattentive staffurban garden centerlocal small businesstwo large scale annual community eventsphilanthropic business practicecurated selections in both hardware and plantsurban Americana/ nostaliga

huge community customer baseclose relationship with cutomersmany on a first name basishigh customer retentionimplementation of multiple categorical customer relationships

emphasis on value, not only in goods but also in customer service and satisfaction

STRENGTHS

WEAKNESSESS

-localcommunity/sponsors(“converserubbertracks”)-localsupplychain

-relationshipwithcommunitymuseum/reliquary-truevalue

-urbangardencenter-crestfest/artshow-familybusiness

-lowemployeeturnover-wideloyalcustomersegments

-wordofmouthmarketing-presscoverage

-socialmediapresence(wordpress,facebook,flickr)-cheapalternativeartspace

-Dependentonprovidersoutsidelocalcommunitybecauseoflowercosts-Doesnothavealltheservicesthatbigboxhomeimprovementstoresoffer-Onlyonerevenuestream(assetsales)

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STRENGTHS THREATS

OPPORTUNITIES-encouragecreativityamongyoungerpeople

-expandsocialevents-createaservice/workshops

-foundandoperatesmallboutiquemarketingfirm

-localcompetition(benjaminmoore)-gentrification-environmentaldamages-changesinmarketprices-doesnothaveabigmonetarybufferifcrisisweretohit

LEVERAGEP O I N T S

12.Constants,parameters,numbers(subsidies,taxes,standards) CrestHardwareisaTrueValuebusinessandmustconductitselfwithinthosesetconstraintsofthatbusi-ness.Despitethegoalsofwantingtoestablishitselfasabeaconinthecommunity,Crestmustallstillturnaprofit.

11.Thesizesofbuffersandotherstabilizingstocks,relativetotheirflows. Crestiscarefultoobservetheneedsofthecommunitywhenorderinginventory.They’verecentlynoticedaninterestinmixedpaintfromcustomerslookingforalternativewaysofshoppingfromtheSherwinWilliamsstoreacrossthestreet.Keepingaconstanteyeonthepulseoftheircustomersallowsthemtojumpathiddenopportuni-tiesbykeepingasteadflowofinventorytheircustomersmakeknownisnecessary.

(inorderofeffectiveness)

6.Thestructureofinformationflows. Fewbusinessesknowcustomersbytheirfirstname,letalonetheirpetdogtheybringwiththeminside.Maintainingthesecloserelationshipswithcustomersbreedsloyaltyandtrust.TheserelationshipsalsogiveCrestagoodname.Word-of-mouthworksinfavorforthisbusinessaswellasthepressfromtheirpigmascot,Franklin,andpopularityfromCrestFestandCrestArtShow.

5.Therulesofthesystem. CrestmustbeabletonotonlyplaywithintheboundariesofTrueValue,asImentionedpreviouslyinnumber12,butalsotheregulationsofthecitywhenitcomestostayinggreen.JoehadexpressedtousthepowerlimitationsofNYCandtheproblemstheyfacedofkeepingtheirstorelightsbright.Byswitchingtoamoregreenbulb,theywereabletodefeattheproblemaswellaskeepwithinthegreenguidelinesofthecity.

8.Thestrengthofnegativefeedbackloops,relativetotheimpactstheyaretryingtocorrectagainst. PullingfromlocalbusinessesisanimportantpartofCrest.Therehavebeentimeshoweverwhenstayinglocalisn’texactlythesmartestwaytoconductbusinesswhenitcomestonumbers.Sometimessuppliersnearbychargemuchmorethansuppliersinotherstates.Thecustomer’sneedsarestillmetbutCrestcan’tnecessarilystaylocalwhenitcomestotheirinventory.

2.Themindsetorparadigmoutofwhichthesystemarises. ThemindsetofCrestisinlinewithit’sgoalsbutalsotomaintainthatpurenostalgiathatseemstobelackinginmanyaspectsofbusinesstoday.Thingslikeknowingcustomersbytheirfirstnameandrememberingthelastprojecttheyworkedonresultsfromtheirmindsetofbeingauthentictothecommunityandcustomers.

1.Thepowertotranscendparadigms. OneofCrest’sstrengthsisit’slongevity.Beingopenfornearlyfortyyearsprovesitsresiliencetohardtimesandchangingpublicopinion.TherehavebeentimeswhenCresthasbeentemptedtoturnquickprofitbuttheideaoflong-termcommitmenttocustomersoutweighedanyshort-termprizes.Forinstance,whenhurricaneSandyhitbatterypricesskyrocketed.Insteadofgainingfromthatquickmoment,Joedecidedtotakeamonetaryhitknowingthatcustomerswouldremainloyalinthelong-run.

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K E Y LEVERAGEP O I N T S

4. The power to add, change, evolve, or self organize system structure. Crest is a small, family owned business which works tremendously in their favor. There is less turnover for employees which means they save money and time that would otherwise be spent on searching for and training new employees. Joe told us that one of their own, Tony was his name, had been working there for 40 years. This goes to show that despite the change in economy and time, the timeless goals of the business have remained the same and continue to work in today’s world.

3. The goals of the system. As I mentioned briefly in the last leverage point, Crest’s goals are timeless. They revolve around it’s customers and the community they all live in. Being authentic in every gesture creates loyal relationships with their customers. Their goals aren’t purely to gain profit as a business, but to provide products and service to their community in genuine manner.

7. The gain around driving positive feedback loops. The community is of the utmost importance for Crest. Two festivals, Crest Fest and Crest Arts Show, work to inspire members of the community to re-purpose seemingly useless items. Crest Fest also gives proceeds to the local NYC museum which works to exhibit the lost histories of the city that are often overlooked. By showing so much concern for the neighborhood, Crest manages to stay authentic to their customers.

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1.)Thereisnoformula!Thereareafewguidelinesorbeliefstofollowbutbeyondthatchangeisconstantandinevitableanditiskeytoadaptandgowiththesechanges.(Accordingtoowner)

2.)FusetheOldandtheNew.Staytunedtowhatishappening,suchaspossiblechangesindemographics,example:Increaseamountofwomenconsumersbyaddinggardeningutensilstoyourproducts.But,traditionisimportantaswell,keepingtheemployeeswhogrewupinthecommunity,knoweveryonesfirstnamesisadvanta-geousasitkeepsyourloyalcustomerbase.Continuingwiththecraftthathasbeenaroundforsome30+yearscangiveyoucompetitiveadvantageasyouroffersbecomerarerandsoughtovercommodities.Additionallythecostoftrainingnewemployeesistobeconsideredaswellwhenthinkingofnewvsold.

3.)Profitintheshortrunisnoteverything.Ifyoursupplierhasmadebatteriesdoublethepricebecauseofin-creaseindemand,itdoesnotmeanyoushoulddoublepriceaswell.Makingaprofitrightnowwouldmeangreat-erlossesinthefutureasrelationshipandtrustofyourcustomersisviolated.

4.)Itisnotalwayscheapertostaylocal.Infactyoumayhavere-thinksomethingswhenyouarefacedwithhardnumbers.ItmayturnoutthatreceivingyourgoodsfromoutsideNewYorkcanbecheaper,eventhoughthisislesssustainableenvironmentallyitmakesbusinessmoresustainableasyoucanofferyourgoodstoyourcustomersatlowerpricepoints.

5.)Thinkoutsidethebox.AparrotorapigcangoalongwayintermsofmarketingandmaycreatesomuchbuzzthatitcanlandyouallsortsofadvertisementseveninNYtimes.

6.)GiveBack.CrestfestandtheCrestartshowareonlytwoexamplesthatareusedtoraisemoneyinordertogivebacktothecommunity.Themoneyraisedisusedandinvestedrightbackintothiscommunitytohelpcleanupaparkorsupportthemuseumdowntheblock.Thishascreatedincrediblebondbetweenotherlocalbusiness-eswholovetocontributeaswell,customersthatparticipateandanyonewhobenefits.Andafterallthisconsum-ersenjoycomingbackandbusinessbenefitsaswell.

7.)Communicate.Theownerofthestoreknowsthecommunity,knowseveryonebyfirstnameandtheotherlocalbusinesses,thisishelpfulwhenaskingforsupportfortheirfundraisingevents.Alsobecausetheyknowtheirsupplierscloselyaswell,itiseasytoaskaboutgardeningadviceforcustomersandcreatesatightknitcommu-nityandgreatcommunication.

8.)SustainabilityandArt.ArtaboundsatCrestwhetheritistheartworkthatpermanentlyhangsinthestore,orapieceincludedintheannualartshow,theworkofthehobbyistdownthestreetorfinelycraftedlifesizesculpturebyworldrenownedfineartists.CrestHardwareisaboutcreativityandinnovativenesswhilealsomakingsuretheaudienceknowsthatartismeantforeveryone.Thoseoldtirescanbetransformedintoawalltapestry,thosenutsandbolts;aworkingclock.CrestArtsworksnotonlytopromotethestorebutaswellastopromoteawarenessandappreciationofartnowmatterwhatyourwalkoflifeis.

8.)CraftisImportant.AtCrest,craftisheldinhighesteem.“Hardwarecanbeappliedtoallfacetsoflife,”saidLizaShields.Havingtheabilitytoimplementhardwareinaneffectivewayisacraftinitself,onemustspendyearslearningabouthowtoproperlyusethetoolsandmaterialsandCrestisheretohelp.ThecustomersatCrestareassuredthatthoseworkingtherearemastersorareintheprocessofmasteringtheircraft.AprimeexampleofcraftasCrestiswhenJoeexplainedthesignageseenonthefacadeandwithinthestore.Allofthesignage,whetheritsthemainsigninseenonthefrontofthestoreordowntothenumbersmarkingtheaisleorders,allarehighqualityhandpaintedsignage,askillthatisbecomingincreasinglyhardertolocateinanartist,butre-centlyhasseenaresurgence,particularlyinBrooklynbusinesseslookingtotheneighborhood’shistoryforinspira-tionnotonlyinaestheticsbutinbusinesspracticesaswell.

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1:HelenShields AGE:82 LOCATION:GREENPOINT,BROOKLYN DIY’ERANDBUSYBODY

“IlovedoinglittlehomeimprovementprojectsaroundmyapartmentbutifIcan’tgetfamilytodrivemetoCrest,IcannotjustifyasubwayorbusridetothestoretopickupthesuppliesIneed!

2:AndreaFiorelloMartinez AGE:21 LOCATION:WILLIAMSBURG,BROOKLYN BROKECOLLEGESTUDENTANDLOYALCRESTCUSTOMER

“I’malwaysatCrest,whethergoingtooneoftheirawesomeevents,chattingwiththeemployees,orpickingupsupplies.SometimesIcannotaffordtobuytheonetoolthatIneedwhileatthesametimeknowingthatIonlyneedtouseitonce!”

3:DougShapiro AGE:52 LOCATION:WILLIAMSBURG,BROOKLYN HOMETOWNHANDYMANANDWILLIAMSBURGNATIVE

“Iknowpridemyselfonmyabilitytofixjustaboutanything,butsometimesevenIgetstumped!IalwaysgotoCrestforadviceonupcomingprojectsandamalwayslookingtolearnmore!”

4:DanLetson AGE:25 LOCATION:WILLIAMSBURG,BROOKLYN ARTISTANDTECHENTHUSIAST

“ThisisthethirdyearI’vebeenininvolvedwiththeCrestArtShow,it’sanawesomeexperiencebutwhenItellfriendsaboutit,itishardtofindanyinformationonlineaboutit.Crestreallyneedsadedicateduptodatewebsiteandincreasedonlinepresence!They’retoocooltonotknowabout!”

Afterconductinganumberofcustomerinterviews,wedevelopedasetoffourdistinctpersonaesaroundthefeedbackandfindingsthatweregeneratedfromtherespondentsanswers.ItwasherethatwereallykeyedoncurrentCrestcustomersneedsandwants.

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WEBSITE/ONLINEDELIVERY/ONLINESTRATEGY:CurrentlyCresthasaTumblraccountwhichworks

welltoinformvisitorsabouttheirbusinessesbutthereisanhugeopportunitytodevelopanex-

tensiveonlinewebsiteplatformfromwhichtoinformandengagethepublicandinturngarnering

newcustomersandpossiblymoremassmediaattention.

EDUCATIONALEXPERIENCE:Crestalreadydoesagreatjobinbeingasourceofadviceforexisting

customerswhohavequestionsabouttheirupcominghardwareprojectsbuttotaketheexisting

employeesadvicetothenextlevel,Crestcouldofferworkshopstothepublicandanyinterested

onlearningnewthingsaboutgardeningortoolusageiftheyhaven’tyetbefore.BecauseCrestis

utilizingpreexistingemployeesandtheirskills,noextracostsforinstructorsisneededandavery

smallmonetaryisneededtoconducttheworkshops.InCresttouchingonabitofverticalinte-

gration,somethinganysuccessfulcompanymustenacttovaryingextents.Engagingwithlocal

schoolstoparticipateinthesehowtoworkshopscannotonlyofferthekidsandinterestingand

engagingeducationalexperience,butinturncandeveloplonglastingcustomer/Crestrelation-

ships.

DEVELOPINGSMALLMARKETINGFIRM:CrestEventshavegarneredahugefollowinginthepast

decade.Eachyear,Liza,DirectorofCrestArts,throwsanamazingartshowandopeningevent

thatin2012wasattendedbyover6,000people.OneofourrecommendationsisforLizaandJoe

todevelopasmallboutiquemarketing,consultingandeventproductioncompany.Utilizingpre

existingskillsandtalent,LizaandJoecouldchargetoassistintheexecutionofsimiliareventsat

otherlocalbusinesses.BydoingthisCrestwoulddevelopmultiplerevenuestreamsandbydoing

sowouldnotonlyhavetorelyonthestoreassetsales.ByhavingtheeventbeafullyCrestBrnad

event,theycannotonlyusetheirexistinghumancapital,employees,forthesetupandbuilding

oftheeventspace,butcanuseonlyCrestmaterialsdirectlytyingbackintothesuccessofthe

Crestatits’corefunction

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CONCLUSION

CrestHardwarehassustaineditselfforoverfiftyyearsandwhiletherearemanyreasonsastowhy,manywhich

weexploredthroughoutthisdocument,whatweasagroupkeptseeingthroughoutourprojectwassimplythe

ideaof“giveandyouwillreceive.”Cresthasalwayssupportednotonlythelocaleconomy,butthelocalcommu-

nityaswell.Crestiswherelonglastingtieswithitscustomersareformed,whetheryouhavelivedinthecommu-

nityyourwholelife,orarearecenttransplantintoNewYork.Crestistheretoprovideyouwithallyourhardware

andgardeningneedsalongwithgoodconversationandadvice,twoannualevents,anartshowandlastlybutjust

asimportantlyanopportunitytohangoutwithFranklinthepetpigandstoremascot.

THANKYOU,LAURENSANCHEZ,PATRICIASHOENBACH,OLIVIALERNERANDDYLANDEMANSKI