Revenge of the Independent Hardware Stores
WHY YOU SHOULD CARE
Because when it comes to hardware stores, selection and service still mean something.
We all know the requiem for retail in the 21st century. The big-box megastores killed off the mom-and-pops. Amazon and e-commerce crushed brick-and-mortar. By the time the Great Recession hit, traditional retail was already toast — and the drop in consumer spending that came with the crisis burned it to a crisp.
Amid the general doom and gloom, though, there’s a particular industry segment that stands apart. Independent home-improvement retailers — a broad class that includes more than 35,000 hardware stores, lumberyards, garden supply centers and paint shops that make up 50 percent of the market — didn’t just survive the category-killing, market-disrupting, store-shuttering trio of challenges. By customizing product offerings to local needs and personalizing customer service, these plucky retailers are solidifying their status as a crucial component of a healthy Main Street economy.
That’s the joy of it for me — being able to help my customer’s day be better.
—Gentry Hipp, owner, Hipp Modern Builders Supply, Mountain View, Arkansas
Every year, Deloitte releases what it calls the Retail Volatility Index, which measures how much market share businesses gain and lose in key retail segments, including hardware. In its 2016 report, Deloitte noted the emergence of a conventional-wisdom-busting trend. After a century of consolidation and concentration in retail, “smaller, more nimble players are stealing share from larger, more traditional, at-scale retailers.”
As a strategy principal at Deloitte, Jacob Bruun-Jensen was one of the authors of the company’s 2016 index. He says the hardware retail market is emblematic of the new retail volatility. “These smaller players have found a niche and have been very successful in competing against the big national chains. It’s tied to this phenomenon of consumers seeking out local products or services and being willing to pay for that advice and that experience.”
Dan Tratensek, publisher of the trade magazine Hardware Retailing, has been an industry observer for more than two decades. He notes that hardware stores, regardless of size, trade in what he calls the “need to have” business — as in, my toilet is overflowing and I need to have that plunger immediately. This, along with the typical homeowner’s desire to see things like fixtures and paint colors in person and ask lots of questions before putting them in his or her home, helps inoculate home-improvement retailers from death by internet. (That’s a big reason the publicly traded big-box chains are flying high on the stock market, in spite of the broader retail woes.)
When it comes to convenience and customer service, it’s not hard to see why consumers continue to patronize smaller independent retailers. While megastores certainly have pushed many weaker stores out of business, they also have forced the remaining operators to improve. “They had to rethink their presentation and do a better job drawing the distinction between them and the big boxes,” Tratensek tells OZY. “Because [the market is] so fragmented, they’re all finding their own way to survive.”
One way is unique inventory. Stihl, for example, sells its power tools only through independent dealers, many of which happen to be locally owned hardware stores. Jordan Hosking, who owns the Madison Greenhouse Store in Madison, Wisconsin, has tailored his shop’s plant and seed selection to match his ultra-progressive neighborhood. “The people who supply us aren’t supplying the big-box stores,” Hosking says. “The seeds we sell are a high-end product, and you’re not going to find them at Home Depot.”
The same goes for the plants Hosking stocks. “The big stores will beat us pretty good on the price of a plant,” he says, “but we give you more expert knowledge versus somebody who just moved from the paint section to the grill section and is now in charge of the plants.”
That’s another key distinguisher for the independent home-improvement retailers: knowledgeable staff who provide a customer-service experience the megastores can’t match. “It’s like you’re a therapist for those customers for those 10 minutes,” says Gentry Hipp, the owner of Hipp Modern Builders Supply in Mountain View, Arkansas. “You’re back there helping them fix a water leak. So you’ve got their plumbing parts on the floor, strewn across the aisle so no one else can even get through, and you’re hearing about how bad their day was … and that’s the joy of it for me — being able to help my customer’s day be better.”
Hipp also vigilantly tracks trends and looks for opportunities. When a nearby grocer shuttered, he bought his entire lawn and garden inventory and hired his L&G manager to help him add a new section to his business. Before that, he turned an unused section of his store into Mountain View’s premier tool and equipment rental center. Simply put, Hipp says he’s always asking, “What’s the next thing that we can include or add to make our business survive and flourish?”
If there’s one thing that might slow the mom-and-pop momentum, it’s succession. According to Tratensek, the average store owner in the industry is approaching 60. The business isn’t easy, though, and it’s hardly glamorous. That makes it difficult for older store owners to find someone to replace them. “It’s a tragedy when you see a well-run operation that’s forced to close its doors because there’s no one to take over the business,” says Tratensek.
To address the issue, the North American Retail Hardware Association has launched several initiatives. These include connecting mentor-owners with would-be shopkeepers and partnering with Ball State University, in Indiana, to create a six-month, college-level certification course that features in-store training and lessons on strategic business planning and retail financing. Tratensek adds: “All of this targets the question: How do we make sure the next generation can take over and run these businesses?”