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CELEBRATING A DECADE OF DIGITAL INNOVATION

February 2019 Vol. 11, No. 1

THE INDUSTRY’S DIGITAL LEADER

Are Your Employees to Take Over?

ReadyA Look at ESOPs

YEARS

Social Media Marketing on Steroids Paint and Decorating Category Trends

D I G I TA

• •

ALSO INSIDE:

DECADE

N O VA

All The Products We Need Orgill’s Inventory Selection Keeps Our Shelves Fully Stocked!

“Orgill offers a full selection of high-quality products, which makes it easy to provide my customers with exactly what they need.” Taylor Baker l Foothills Hardware & Builders Supply, North Carolina l An Orgill customer since 2015

Why We Like Working With Orgill: • Strong vendor partnerships • Broad product selection • Strong retail programs that help us improve our store

Watch the video to learn about the partnership between Orgill and Foothills Hardware!

1-800-347-2860 ext. 5373 • information@orgill.com • www.orgill.com

CONTENTS February 2019 ■

YEARS

MAIN FEATURE: ARE YOUR EMPLOYEES READY TO TAKE OVER?

DIGIT

CADE DE

I N N O VA

Editor’s Note: Chris Jensen

Trend Watch: Craig Cope

Digby’s Hardware Cartoon: Scott Jensen

Amazing But True Hardware Stories

How’s Business? Regional Reports on Business Conditions

From Tom’s Shop: Hardware Products Review

Main Feature: Are Your Employees Ready to Take Over?

A Decade of Digital Innovation

Social Media Marketing on Steroids: Andy Curry

The Hardware Conference: Nominations Now Open for Beacon Awards

Category Report: Paint & Decorating

In the News

Upcoming Events

Retail Ideas

Behind the Numbers

The Hardware Connection app is available for iPhone, iPad, Android and Amazon. Download here. www.TheHardwareConnection.com

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www.ECiSolutions.com/RockSolidMAX

Craig Cope

Grant Howe

Publisher/Principal

Chief Technology Officer

Hardware Connection

ECi Software Solutions

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©2019 ECi, ECi RockSolid MAX, and the ECi Red Box logo are trademarks or registered trademarks of ECi Software Solutions, Inc. All other trademarks are property of their registered owners. All rights reserved.

ADVERTISER’S INDEX Ace Hardware Corp. | www.myace.com . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Do it Best Corp. | www.independentsdoitbest.com . . . . . . . . . . . . . . . . . . 7 ECi Software Solutions | www.ECiSolutions.com . . . . . . . . . . . . . . . . 4, 18 Epicor Software Corp. | www.epicor.com . . . . . . . . . . . . . . . . . . . . . . . . 21 Ganymede Technologies Corp./J3 Point-of-Sale | www.j3pos.biz . . . . 27 H&N Industries/TC-11 | www.tc-11.com . . . . . . . . . . . . . . . . . . . . . . . . . 30 Hyde Tools | www.hydetools.com . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Jack Link’s Beef Jerky | www.jacklinks.com . . . . . . . . . . . . . . . . . . . . . . 23 Kaba Ilco | www.ilco.us . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Orgill Inc. | www.orgill.com . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Spartan Power | www.spartanpower.com . . . . . . . . . . . . . . . . . . . . . . . 22 STIHL | www.stihlusa.com . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 WD-40 Company | www.wd40.com . . . . . . . . . . . . . . . . . . . . . . . 11, 24 Werner Company | www.wernerco.com . . . . . . . . . . . . . . . . . . . . . . . . . 29 Wooster Brush Company | www.woosterbrush.com . . . . . . . . . . . . . . . 16

Connection

TM TM

91900 Overseas Highway | Tavernier, FL 33070 | www.TheHardwareConnection.com Publisher/Principal: Craig Cope craig@thehardwareconnection.com 804-690-0666 Founder/Principal: Tom Chasteen tom@thehardwareconnection.com 305-852-6126 Editor/Founder/Principal: Chris Jensen chris@thehardwareconnection.com 317-514-8864

Senior Business Advisor: John Hammond jhammond@thehardwareconnection.com National Account Manager: Dan Beck dbeck@thehardwareconnection.com 518-852-9624 Contributing Writers: Andy Curry, Doug Donaldson, Gary Pittsford

Marketing & Creative Director/Principal: Dan Akers dan@thehardwareconnection.com 317-797-6609

The Hardware Connection is published eight times a year by The Hardware Connection, Inc. All editorial contents copyrighted 2019 by the publisher. No editorial may be reproduced without the prior permission of the publisher.

www.TheHardwareConnection.com

THE HARDWARE Connection ■ February 2019 ■ 5

EDITOR’S NOTE

By Chris Jensen

Finding Creative Solution to Succession Planning Challenge

fter I graduated college in 1985, I launched my journalism career by securing a job as a reporter at the Mirror-Recorder, a weekly newspaper in Stamford, N.Y. Stamford is a small village of about 2,300 people, located 20 miles from my hometown of Delhi and in the foothills of the Catskill Mountains. I enjoyed the nine months I spent in Stamford, but I don’t have any memories of wandering into the local hardware store. Many towns the size of Stamford no longer have hardware stores, a victim of market forces and retail evolution. However, Stamford was lucky—it had Ralph Beisler. Ralph’s parents had started Railroad Avenue Supply Company in 1963 and Ralph took over the business in 1975 when his father died. He kept the hardware store going in a small town where the economy was never booming. After 35 years of successful ownership, Ralph was looking forward to retirement. There was just one problem—his kids didn’t want to take over the business and he couldn’t find a local buyer. Ralph came up with a pretty creative solution to his succession planning challenge. Turn to page 32 and see how he and other hardware 6 ■ THE HARDWARE Connection ■ February 2019

retailers have passed on their businesses and retained jobs while still meeting their retirement goals. My brother Scott is sure glad Ralph has found a way to keep Railroad Avenue Supply open, because he is a frequent shopper there. He and his family live just down the road in Hobart, and Scott’s trips to the Ace store often turn into inspiration for the Digby’s Hardware cartoon he creates for our magazine. Digby’s cartoon is just one of the components that make our magazine stand out, and we are getting noticed. The Hardware Connection was just named a FOLIO: Digital Awards finalist for Best Digital Magazine. We were up against all the other trade and consumer magazines in the country, so we are pretty proud of that distinction. One of the other finalists for this prestigious award is AARP The Magazine, which has a circulation of 23 million. This latest honor represents the sixth award The Hardware Connection has won for editorial excellence in the past five years. The Hardware Connection is celebrating its 10th anniversary this year, so turn to page 41 to learn more about our decade of digital innovation. ■ www.TheHardwareConnection.com

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TREND WATCH

By Craig Cope

How Are Your New Year’s Resolutions Coming Along?

he changing of the calendar year creates the annual tradition of New Year’s resolutions. For many that means going to the gym, losing a couple extra pounds, quitting a bad habit or setting a financial goal. As we all know, New Year’s resolutions seldom stick. According to an article in U.S. News & World Report, by the second week of February almost 80 percent of resolutions fail. I thought the timing of this article was perfect—the first week in February. I am not going to try to convince you to go back to the gym or anything of that nature. However, I do encourage you to take the time to create or reaffirm a resolution. As small business owners we have the unique opportunity of creating both personal and business resolutions. Our businesses are living, breathing beings and need to be treated with the same care and diligence we give to ourselves. So, I thought I would provide a couple of resolution ideas for both personal and business.

Personal Resolutions 1. Estate Documents. No one likes to discuss the topic of death, so we 8 ■ THE HARDWARE Connection ■ February 2019

OUR BUSINESSES ARE LIVING, BREATHING BEINGS AND NEED TO BE TREATED WITH THE SAME CARE AND DILIGENCE WE GIVE TO OURSELVES. often put estate planning at the bottom of the list. It’s one of those things we all agree we need to do, but how many of us have taken the time to create an estate plan? Just imagine the chaos created for your loved ones in the event of your unexpected passing. Not only are they dealing with the loss of a loved one, but now they are faced with a litany of issues to address. Congratulations if you have already created an estate plan, but you are not done. When was the last time you reviewed your plan and assessed your current situation? Take the time now to dust off those documents and make sure everything is as you wish. Lastly, if your parents are still alive do you know their estate plans? Do you know where the documents are www.TheHardwareConnection.com

TREND WATCH

located? And if secured in a safe do you know the combination or have a copy of the key? After my wife and I created our estate plans it never occurred to me to provide the safe combination to our executor. 2. Home and Property Insurance. I know this one seems a little out of place considering the magnitude of estate planning. However, our homes are normally the single-largest personal asset we own, and it often goes overlooked until it’s too late. Personally, I am guilty of this one. When Hurricane Irma took aim at our home, my wife and I were in Marco Island, Fla., preparing to host The Hardware Conference. When it appeared that we could sustain a direct hit from the largest storm in the history of the Atlantic, we began questioning what our homeowner’s policy covered. Needless to say, having questions about your homeowner’s coverage hours before potential imminent destruction is way too late. Like the commercial says, “mayhem is everywhere.” Lucky for us the storm shifted a little south and damage to our property was minimal.

Business Resolutions 1. Corporate Documents. Corporate documents (shareholder agreements,

10 ■ THE HARDWARE Connection ■ February 2019

succession plans, corporate minutes, etc.) are the equivalent to personal estate planning documents. While this topic is extremely broad, take the simplest approach and annually review your company’s keys documents with a professional. They will help you identify gaps, areas that require additional work or at least provide comfort knowing your business is well prepared. 2. Data Protection. I have written a few articles on data protection, but it cannot be stressed enough. The stats are overwhelming: • 90% of small businesses have been the target of a cyberattack. • 60% are unable to sustain their business over six months after a cyberattack. Having and following a data protection plan is almost as critical as having a business plan. We have come to rely on computers for so many aspects of our business and removing them for even a short period of time could be catastrophic. Here is one tip from personal experience:Take time to make sure your backup data could be used after experiencing a complete data loss. I wish everyone a happy, healthy and successful 2019! ■

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HARDWARE HUMOR

12 ■ THE HARDWARE Connection ■ February 2019

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E U R T t u b g n i z a m

HARDWARE HUMOR

E R A W D R A H

S E I R O T S

little old man came in a couple months ago and bought a hammer drill. He came in today and said he didn’t want it because it jerks around too much like a jack hammer. We checked it out and nothing was wrong with it. It worked the way it should—sort of like a jack hammer. Dennis Deffenbaugh Lakewood Ace Hardware Langley, Okla.

ustomer recently bought a six-volt battery and thought it was dead. He came back in and I showed him that you have to pull the plastic cap off so the contact would connect. I’ve had that scenario repeat itself a few times a year. Once the customer laughs, then you’re allowed to laugh, too. Craig Smith Twins Ace Hardware Fairfax, Va.

14 ■ THE HARDWARE Connection ■ February 2019

his is the time of year people come in for snow shovels, so sometimes we’ll put an extension cord on the end of a snow shovel and tell people we have electri c snow shovels. Bill Hornung Hornung’s Ace Hardware Ling glestow wn, Pa.

ust had a guy g call complainin to about having stricread all the re coutions on a $10 ading it pon. He said re che ada gave him a he come to so he couldn’t the store. Bill Cotton ardware Cotton’s Ace H e, Mo. Ste. Geneviev

www.TheHardwareConnection.com

How’s Business? Jamie and Abby Stadlin have owned and operated Dunn Hardware since 2012.

MIDWEST How were sales and customer counts in 2018? How optimistic about business in 2019? Sales and customer counts were pretty much flat. In the spring, we had great weather but then things leveled off or dipped the rest of the year. I’m always optimistic because Ace has a strong offering of products and has been hitting the same target year over year. Also, our offerings in paint and design services are getting better and better. Best niche categories? Decorative hardware, window treatments and wallpaper is what we’re known for. We’ve also done really well with non-traditional, non-hardware impulse items, such as food, socks and greeting cards. We sold a tremendous amount of socks last year. For other retailers looking at such impulse items, I’d recommend having www.TheHardwareConnection.com

Dunn Hardware operates a mobile small engine repair unit that goes to customers’ homes.

the guts to take a healthy margin. Make those impulse items worth your while. Best methods for finding new employees? We rely on referrals from other current employees. We have about 30 employees and several are 20-somethings who provide recommendations. We also have family of current employees, a granddaughter of one employee works here, for example. About one-quarter of the staff have been hired through such referrals. New initiatives for 2019? We’re looking at expanding our grill assortment to include Big Green Egg. We’re also putting in Benjamin Moore Store of the Future fixtures. We’ll also bring in some STIHL products. We’re looking to use print advertising as less of a draw. And we’re hoping we sell a whole lot more socks. THE HARDWARE Connection ■ February2019 ■ 15

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Any humorous stories to share? We bought the business and found that the store is sometimes known for the personalities who work here. We have customers come in and ask “Is the loud guy here?” One of our employees has a huge personality, sort of like having an amateur standup comedian working for you. Another recent funny thing: We have store music playing and when a song inadvertently plays some dirty lyrics, I think everyone notices and feels embarrassed. Jamie Stadlin Dunn Hardware Richmond Heights, Ohio

NORTHEAST How were sales and customer counts in 2018? How optimistic about business in 2019? We’ve been steady. In our particular market, we don’t see peaks and valleys. My goal is to keep things steady. In 2019, I’d be very happy with a steady, conservative increase. Best niche categories? Kitchen and bath and outdoor design, including decking material. We have a beautiful source for treated lumber that has been very popular for us. We promote these niches through radio and social media. We also have a strong www.TheHardwareConnection.com

Lewisburg Builders Supply dates back to 1941.

advertising presence in the local quarterly magazine. We always promote decking in the magazine. Best methods for finding new employees? That’s a tough one. I struggle with that one. Mainly, we rely on word of mouth, advertising and social media. It’s a challenge because we’re rural. New initiatives for 2019? Just stay the course. We want to build relationships with our customers. We want to spend time creating partnerships and growing that into the blessing of sales. We’re looking to strengthen our contrac-

The kitchen and bath design showroom is a major niche at Lewisburg Builders Supply.

tor and industrial sales business. Any humorous stories to share? We’re a very dog-friendly environment. Contractors bring their dogs in so often that the dogs know where to go for the treats. One border collie goes right to the office where the treats are, rolls over and makes the funniest expression, like a smile. Another dog puts his paws up on the counter like a person and hangs out for treats. Elizabeth Griffin Lewisburg Builders Supply THE HARDWARE Connection ■ February2019 ■ 17

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Lewisburg, Pa.

Royall Ace Hardware features an outdoor garden center.

SOUTH How were sales and customer counts in 2018? How optimistic about business in 2019? Sales were slightly up, about 1 percent. I’m very optimistic about the future because of the rapid growth in the area and because of our very loyal customer base. To promote the store, we do a lot of community sponsorships, such as baseball teams and the symphony. We advertise, but not in the traditional sense. We use sponsorships rather than ads and the community seems to respond to that. Best niche categories? Well pumps have become an important niche for us. Well pumps are very common in our area and nobody had a quality brand until we started selling them. We also service and repair well pumps. We promote this niche mostly through word of mouth. We cater to the contractor base, those who do irrigation contracting. Best methods for finding new employees? That’s a million dollar answer. We have had a lot of trouble finding new employees. It’s tricky. We look to current employees to see if they have friends interested, but it’s very informal. www.TheHardwareConnection.com

New initiatives planned for 2019? We have a second store north of here and we’re remodeling that store. That has been our focus. William Royall Royall Ace Hardware Mt. Pleasant, S.C.

SOUTHWEST How were sales and customer counts in 2018? How optimistic about business in 2019? We were up in sales and finished well at the end of the year, too. I’m definitely optimistic about 2019. When talking with vendors, they seem optimistic. The local economy is healthy and growing. Best niche categories? Because this area is a recreational and THE HARDWARE Connection ■ February2019 ■ 19

Xienna Arlanza– Assembler

Cynthia Grifﬁn – Assembler

Sergio Ortiz – Utility Operator

Built in America. Believing in America.* STIHL believes in the power of American manufacturing and our employees are proud to help rebuild our economy one Americanbuilt product at a time. We also believe in local businesses and that’s why for more than 40 years we have only retailed our products through servicing dealers like

yours. Because it’s real people, STIHL people, who help make STIHL the number one selling brand of gasoline-powered handheld outdoor power equipment in America.* To become a STIHL dealer: STIHLusa.com/Dealer

*A majority of STIHL gasoline-powered units sold in the United States are built in the United States from domestic and foreign parts and components. “Number one selling brand” is based on syndicated Irwin Broh Research as well as independent consumer research of 2009-2017 U.S. sales and market share data for the gasoline-powered handheld outdoor power equipment category combined sales to consumers and commercial landscapers. © 2019 STIHL

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working town, we have seasons, such as tourist season in the summer and people from the north who winter here. We get a lot of customers who are hunters and fishermen. The RV and sports categories do really well for us. Ace helps promote for us in those niches. Best methods for finding new employees? People come and interview, fill out applications and we keep a file, sort of a database of potential employees. Then when we have an opening, we review the applications. New initiatives planned for 2019? We are always getting in new product lines and refreshing merchandise. This year we are planning a big electrical reset.

Canyon Lake Ace features a large gift department that includes greeting cards.

Lyndy Sherman Canyon Lake Ace Hardware Canyon Lake, Texas

WEST How were sales and customer counts in 2018? How optimistic about business in 2019? We own two stores—one in Jackson, the other in Plymouth. Each store is on a little difference track. In Plymouth, we added an entire line of STIHL power equipment. The area is growing with housing developments under construction along with a large winery region. We were pleased with the sales growth in 2018 for both stores, particularly in Plymouth.

Best niche categories? The Jackson store’s best niche would definitely be lawn and garden. We have a strong niche with foothill-oriented plants that are deerand drought-resistant. None of the big boxes offer anything like that. Outdoor living is also a large part of the lawn and garden sales. We do a lot of grill sales with Traeger and Weber. Customers in the area also turn to us for pest control designed for the foothills. We help get rid of rodents and gophers. The niches in the Plymouth store are similar, perhaps with more agricultural products and power equipment. We market

Chris and Sandy Fragapane celebrated 25 years of ownership of Jackson Ace Hardware this past June.

The team at Jackson Ace Hardware includes owners Chris Fragapane (in the middle) and his wife Sandy (next to him on right).

our niches with the Ace circular, which allows us to customize and focus on new product lines. Best methods for finding new employees? It’s funny, but we’ve been blessed as far as employees go. It just seems to work out. We don’t typically seek employees, but sometimes other employees will recommend someone. Customers who shop here say they’d like to work here. We don’t have a recruiting formula.

New initiatives planned for 2019? In the coming year, we’d like to utilize social media more. We’re also going to ramp up our Ace Rewards program. We’ve been hesitant to put the investment into the rewards program, but looking at the data from last year we feel comfortable that it will pay for itself and then some. We will continue to customize our circulars. And I’d like to add some non-typical products, like the salt bug gun and the Penofin® stain.

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From

p o h S s Tom’ W

TS REVIE E PRODUC

By Tom Chasteen

HARDWAR

f you have been in the retail hardware business for any length of time you have probably seen a lot of companies come and go. One of the biggest pitfalls any business falls victim to is not making enough profit margin to stay in business. Retailers cut store hours, promotional expenses and inventory, and they even may lower their retails to be competitive. If these strategies are not carefully thought out, then they can complicate the fundamental issue of not making enough profit to stay in business. When manufacturers develop welldesigned and well-made products and experience success in the market, there is no shortage of companies—domestic and foreign—that are in the wings ready to reverse engineer the same product with cheaper materials or a cheaper design in an attempt to steal market share. I have never seen any business cut themselves to greatness—just look at Sears for the most recent example.

Profit is necessary and critical to maintaining a healthy business for the long haul. Robert Bosch Tool Corp. is not one of those companies. They have steadfastly refused to try to be the cheapest in the marketplace. They have resisted the urge to compromise their products’ quality or design to be competitive with the industry’s cheapest tool manufacturers. And in the process, they have developed a solid reputation of making good products and standing behind them for many years. In this issue of Tom’s Shop, we will be looking at Bosch’s new 12-volt lithium-ion battery-powered tools, specifically the FlexiClick® Driver, the Cordless Planer, the Cordless Palm Router and the Barrel-Grip Jig Saw. All of these tools use the same-size 12-volt lithium-ion battery that is interchangeable with all of the 12-volt tools we tested.

PRODUCT #1: FLEXICLICK® DRIVER | ROBERT BOSCH TOOL CORP. The 12V Max FlexiClick® 5-In-1 Drill/ Driver System is not your average 12-volt driver. Bosch has incorporated a very unique 5-in-1 tool feature that sets this driver apart in a league of its own. The FlexiClick comes with four different heads that are easy to change by a quick quarter turn. One head is a standard keyless 3/8” drill chuck, www.TheHardwareConnection.com

another head is a 1/4” locking bit holder, another is an offset 1/4” locking bit holder (fantastic for cabinet installations) and the last attachment is a THE HARDWARE Connection ■ February 2019 ■ 25

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90-degree angle that attaches to the driver and accepts the other three heads. All of our testers really liked this tool and said their biggest challenge was remembering where they stored the various heads. Check out the video.

PRODUCT #2: CORDLESS PLANER ROBERT BOSCH TOOL CORP.

want to break out a cord and set up a work table. Setting the planer depth is a breeze with the control knob and lock on the front The GHO 12V-20 Cordless Planer is a great small planer for of the planer. An Allen wrench those small jobs where you don’t and extra blade tuck nicely into

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the battery compartment. All of our testers’ immediate impression was how convenient the tool is for the user. After using the cordless planer, they commented on how smooth and easy it was to use on cabinet doors and wood window jams and were surprised by the power of this small planer. Check out the video.

PRODUCT #3: CORDLESS PALM ROUTER ROBERT BOSCH TOOL CORP. The GKF 12V-8 Cordless Palm Router was equally well received

by our testers. This router has a lot of power for such a small cordless router and it accepts all 1/4” shank router bits. If you are going to use a 3/4” corner round router bit you may have to make more than one pass. It’s never going to compare to a 1-hp electric router, but all of our testers were impressed at how smooth and solid the palm router was during use. The cordless aspect of not needing to get out an electric cord was a huge plus, as were the easy adjustment features. Check out these videos: Video #1 Video #2

Visibly Different. Functionally Safer.

PRODUCT #4: BARREL-GRIP JIG SAW ROBERT BOSCH TOOL CORP. The Bosch JS470EB BarrelGrip Jig Saw had many of the same comments as the palm router did, in that it would never compare to an HD electric jig saw but the ease of use and power made it the second most popular 12-volt Bosch tool we tested next to the FlexiClick Driver. It accepts all standard quick-change jig saw blades and our testers also commented on how easy it was to change the blades. They also like the variable-speed feature, the 3/4” cutting stroke and the ability to change the cutting angle of the saw deck to a maximum of 45 degrees.

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The Werner LEANSAFE™ Ladder lets you work wor ork k in in positions a traditional stepladder won’t. Learn more at: WERNERCO.COM/LEANSAFE

All four of these tools share convenient features such as LED lighting and easy-tochange batteries (the 2 Ah batteries held up well for all of our testers). These tools had excellent ergonomics and they are not too heavy to handle but not unstable either, which really helped to reduce arm fatigue. All of our testers were impressed with how easy and powerful these tools were to use and the unique features of the FlexiClick were extremely well received. Not one tester questioned the quality or the durability of these tools. We have to rate the Bosch line of 12-volt tools with five stars and a tip of the hat for not attempting to cheapen the quality of their tools to compete with the cheapest brands in the market. Clearly Bosch understands the value in their brand and of having loyal customers.

SUCCESSION PLANNING

By Chris Jensen

Are Your Employees To Take Over?

Ready

Mountain Hardware and Sports in Truckee, C Calif., a if., al has been an ESOP company since 2001.

A Look at ESOPs

any hardware retailers struggle with succession planning, waiting too long to get started and then finding their options are limited if their children don’t want to take over. Some retailers are discovering the benefits of a creative approach to succession planning: selling shares to an employee stock ownership plan (ESOP) or worker-owned cooperative. Read on to see how these two different approaches have paid off for independent retailers in the hardware industry.

32 ■ THE HARDWARE Connection ■ February 2019

www.TheHardwareConnection.com

PUTTING FAITH IN EMPLOYEES Mountain Hardware and Sports operates Ace stores in Truckee and Blairsden, Calif., plus a standalone equipment rental store in Truckee. Doug Wright serves as president and ESOP trustee for the company, which dates back to 1977. He was hired as general manager in 1999, two years before Mountain Hardware and Sports switched to an ESOP, and he has been the ESOP trustee since its inception. Wright says the idea originated with the financial adviser of one of the founders, which led to a period of evaluation in which no one could come up with a good reason not to go for it. It took seven months to put everything together. As an entity the ESOP purchased 49 percent of the business in 2001. In 2005, another 2 percent was bought so the ESOP became majority owner. In 2007 the ESOP paid off its initial stock purchase loans—the notes carried by the founders—and in 2013 the remaining 49 percent was purchased by the ESOP with open market loan funds. Three founders—a fourth left in the early 1980s—are retired from working in the business but are still active on the board of directors. The company currently has 94 employees and close to 60 are fully vested, according to Wright. “Our staff has a lot of autonomy to make decisions, which gives them more flexibility. We encourage everyone to be involved and engaged,” he says. www.TheHardwareConnection.com

Click to watch video on the employee owners of Mountain Hardware and Sports. Employee-owners are also provided with health insurance, gym memberships, ski passes and more benefits. “We are benefit rich, but you still have to be relevant on the balance sheet,” says Wright. “People have a stock, literally, in the future of the company. Turnover happens everywhere, but less here.” ESOPs provide fairly significant tax benefits, according to Wright. Company contributions to repay any loans taken out by the ESOP to purchase company shares are tax-deductible. If it’s an S corporation, then the ownership shares held by the ESOP are not subject to federal income tax. Employees pay a reduced tax rate when they retire or leave the company, but pay no tax on the amount

THE HARDWARE Connection ■ February 2019 ■ 33

contributed by the company to the ESOP on their behalf. “A portion of profits go to administering the plan and we have an ESOP attorney on retainer,” says Wright, who adds that regulations and recordkeeping have expanded over the years as a result of abuses that occurred at other ESOPs. Mountain Hardware and Sports maintains a traditional board of directors and the board selects the ESOP trustee. Wright is grooming his successor by having the CFO serve as co-trustee. “An ESOP is not for every company and it’s not a magic switch that you flip. You have to be a certain size,” says Wright, who adds that the company contribution to the ESOP is 25 percent of gross payroll as a maximum. To be eligible to participate, employees have to be over 21 and work 1,000 hours a year. Shares are held for them in a trust. The distribution payout is supposed to be once an employee leaves they don’t get anything for five years, and then from years six through 11 they get 20 percent each year at the share value. “This keeps you from having a run on the bank,” explains Wright. “We started paying out the first year they leave, because we don’t want anyone to leave disenchanted and want them to get their rewards.” The company works hard to communicate regularly with employees and promotes its status as employeeowned on social media and other 34 ■ THE HARDWARE Connection ■ February 2019

marketing. Mountain Hardware and Sports was honored for its communication excellence with a national ESOP award in 2017. “We have a great communications committee led by Heather Svahn. We put out a newsletter and try to make everyone feel like part of a family. Most employees get access to financial information except salaries, so they are informed about the business,” Wright says. The last recession was a good test of the ESOP’s ability to withstand a business downturn. “We had some sales decline, but when attrition happened everyone else picked up the slack. We knew we didn’t have a lot of distributions in front of us, so the cash could be used in the business,” say Wright, who proudly notes the company has never laid off any employees in 42 years. “I am a firm believer in the ESOP model. It takes a lot of work, but it is really worthwhile,” concludes Wright.

PRESERVING THE STORE AND JOBS Ralph Beisler had hoped to be retired by now. At 75 years of age, he has finally enacted a succession plan that can work for his business, Railroad Avenue Supply Company in Stamford, N.Y. More importantly, it was the only plan Beisler could come up with that kept the Ace store open and enabled his five employees to keep their jobs. On January 1, 2019, Beisler and his five employees formed a worker www.TheHardwareConnection.com

Railroad Avenue Supply in Stamford, N.Y., is now a worker cooperative. The six employee owners include (left to right): Stefano Bagnardi, Kelly Chien, John Bonhotal, Ralph Beisler (former owner), Bob Shafer and Sarah Weishar. (Photo credit: Liz Page, Mountain Eagle.)

cooperative. The six now collectively own the business. A worker cooperative is a business entity that is owned and controlled by the people who work in it, so it is different from an ESOP. The biggest difference is that a worker cooperative follows the principle of “one worker, one vote.” In an ESOP, employees earn shares over time and are vested at different amounts. “My main goal was preserving jobs for my employees,” says Beisler, who had the store on the market for nearly 10 years. Another objective was to keep it with Ace. Other Ace members in the area were not interested in the business due to its sales volume, which is roughly $700,000. That’s pretty good volume in a town of 2,300 www.TheHardwareConnection.com

people, but was not enough to attract an outside buyer. Beisler’s two sons both work for ECi and were not interested in taking over the store. He didn’t want to liquidate the business and leave the town without a hardware store. The next eyeopening moment came in 2017, when Beisler and his wife took a cross-country trip to California in an RV. “We were gone two months and when we came back the store was still there,” he says. He read an article in a trade publication about a business in Ohio that converted to employee ownership. Then a retired locksmith came into the store one day and suggested they form a worker co-op. Beisler looked into it and started working with an attorney. THE HARDWARE Connection ■ February 2019 ■ 35

He reached out to the non-profit Cooperative Development Institute (CDI) out of Northampton, Mass., and they sent information. “CDI helped us to develop and revise our articles of incorporation, review bylaws and prepare a purchase agreement,” Beisler says. Beisler, who owns the store building, is financing the security agreement and loan agreement. He hopes five years down the road the employeeowners will be able to buy the building from him. At one point, Beisler had majority ownership while his two sons and two employees had minority shares. In August, he purchased all the minority shares so they could start with a clean slate. Each employee-owner purchases one share and gets one vote. The buy-in was $2,000 each, with the new employee-owned corporation buying stock from Beisler. Some employees did a lump sum payment and some are paying over time with a portion coming out of each paycheck. Profits will be distributed in cash and membership allotments will be held for three years like Ace corporate bond issues. “They will have a date when they mature and there’s a process for paying them out,” Beisler explains. In a worker cooperative, profits can be distributed based on hours worked, seniority or any other criteria devised by the employee-owners. They keep the same tax ID and same company name, with a board 36 ■ THE HARDWARE Connection ■ February 2019

that elects officers and selects the GM. “The store has to be in good financial shape and without debt,” he says. “Banks aren’t excited about lending to co-ops, since no individual is co-signing. I still have a $12,000 line of credit I’m co-signing. Most important, you have to have a good mix of employees who work well together.” Not surprisingly, Beisler’s employees are enthusiastic about the new arrangement. Stefano Bagnardi, who has worked there almost four years and serves as treasurer, thinks it’s a wonderful opportunity. “We work very well together as a team and have a good core of people It’s still early in the process, but no worries so far. We’re very appreciative of Ralph doing this for us,” he says. Five-year employee Sarah Weishar had been functioning as office manager, and now she serves as general manager of the worker cooperative and has picked up new responsibilities. Everyone agrees she was best suited to handle that position. Kelly Chien has worked at Railroad Avenue Supply since August 2016. He was hired for a four-month trial and it worked out. He finds it intriguing and exciting to be an employee-owner. “My biggest fear was that Ralph would retire and there was uncertainty over who would take over. I have a personal stake now that I didn’t have before,” he says. Chien adds, “Each of us on the team has strengths from previous www.TheHardwareConnection.com

Dazey’s Supply in Redway, Calif., formed their ESOP in 2016.

positions. I handle media and public interface. We definitely planned how the business would be run collectively. It’s encouraging that the business has been growing too.” Railroad Avenue Supply saw sales grow 8.5 percent in 2018, which is spectacular considering the area economy has been relatively depressed for some time. Beisler attributes the growth to a well-executed strategy to pursue B2B sales. Beisler says it will take a couple of years to get up to speed with the new arrangement as a worker cooperative. People still talk to him like he’s the owner, so he has to train himself on www.TheHardwareConnection.com

his new role. “Everyone has to work together. Everyone’s showing goodwill so far, but we’re just a few weeks into it,” he says.

PLATFORM FOR FUTURE GROWTH Dazey’s Supply is a Do it Best member with three stores in California and one in Oregon, plus a wholesale operation that sells to more than 250 stores. Steve Dazey built a business by catering to rural homesteaders in southern Humboldt County looking for timber, salvage glass and garden and ag supplies. “Forming an ESOP has been great for the owner, great for the employees and great for me,” says Darren Tomasini, THE HARDWARE Connection ■ February 2019 ■ 37

HARDWARE RETAILERS THAT HAVE EMPLOYEE OWNERS 1. Railroad Avenue Supply Company—Stamford, N.Y. 2. Elery Nau True Value—Montoursville, Pa. 3. GW Smith Lumber Company—Lexington, N.C. 4. Dazey’s Supply—Redway, Calif. (Click here for more) 5. Jackson’s Hardware—San Rafael, Calif. (Click here for more) 6. Ganahl Lumber—Anaheim, Calif. 7. Mountain Hardware and Sports—Truckee, Calif. 8. Franklin Building Supply—Boise, Idaho 9. Jerry’s Home Improvement Center—Eugene, Ore. (Click here for more) 10. Bingaman & Son Lumber—Kreamer, Pa.

Dazey’s president and CEO, who has been with the company 10 years. Turning to an ESOP came after careful consideration, with a desire to take care of employees of paramount importance. As Tomasini explains, “Steve was in his early 70s and had no kids to take over the business. He was unsure what to do. I’m 55 and had looked into buying the business, but wasn’t going to be around long enough to make it worthwhile.” Tomasini attended a seminar at a Do it Best market on succession planning and ESOPs. He shared what he learned with Dazey and they made some calls to research it further. Both saw it as a viable option. After going through a process that lasted one year, Dazey’s ESOP closed September 30, 2016. Tomasini became CEO afterwards. Dazey’s Supply currently has about 90 employees, and if their employee 38 ■ THE HARDWARE Connection ■ February 2019

count exceeds 100 it requires an annual audit. ESOPs don’t require a lot of paperwork, according to Tomasini, who says they spend about $60,000 a year in ESOP administration fees. Dazey’s has an ESOP administrator who has to make sure they are in line with Labor Department and IRS regulations. The company remains an S Corp. like it has always been. “Our accounting firm does the financials like we’ve always done, then they go to the trustee, then to the ESOP administrator, who signs off and sends a statement to the employee-owners showing how much the plan is worth, how vested they are and what the profits are to share,” Tomasini explains. “We no longer pay state and federal taxes, so that puts me 35 percent ahead of my competitors,” he points out. “We usually make $5-7 million in profits, so before we were giving $2-3 million back to the government.” Dazey’s still has a traditional management structure in place, so even though employees are co-owners that does not mean they are involved in every decision that is made. “If someone’s not working out you tell them to move on,” Tomasini says. The most common method to pay off employee-owners who are vested is six years. “After waiting a year, you pay them 20 percent each of the next five years. That’s if someone quit and www.TheHardwareConnection.com

is at least 60 percent vested,” Tomasini says. “If they have less than $5,000 stock value you just write them a check. If it’s more than $5,000 and they are fully vested, then you wait five years and then pay out over five years.” Forming an ESOP and turning employees into co-owners has improved morale, according to Tomasini. “Employees definitely care more and make the extra sale. It’s been a great thing.” Dazey’s also offers a matching 401k as an additional benefit. Tomasini tells the young employees starting out that if they stay until they are 55 they can be a multi-millionaire. Most ESOPs can grow quickly if they want, since they operate tax free and can plow money back into the business. On January 1, 2018, Dazey’s bought two other stores: Hubbard’s Hardware in Medford, Ore., and Willow Creek Hardware in Willow Creek, Calif. “It was an easy negotiation to buy the two stores. The fact we were an ESOP company was very attractive to them,” explains Tomasini. Hubbard’s Hardware, a Do it Best member like Dazey’s, was founded in 1884. It was owned by five siblings of the Seus family, who had 29 children in the next generation. The succession plan was not just a nightmare, it was nearly an impossible challenge to overcome. The Seus family knew the employees would get taken care of in the deal and the business would live on. It now operates as Dazey’s Hubbards. www.TheHardwareConnection.com

A CLOSER LOOK AT ESOPS According to the National Center for Employee Ownership (NCEO) in Oakland, Calif., as of 2015 there were 6,669 employee stock ownership plans (ESOPs) in the U.S., down from 7,138 in 2010. They held assets of nearly $1.3 trillion. A total of 2,857 ESOPs had less than 50 participants. The number of total participants in these ESOPs was 14.4 million, up from 13.4 million in 2010. NCEO estimates that 30-40 percent of ESOP companies are 100 percent owned by employees. ESOPs were first given statutory authority in 1974. Almost all ESOPs are profit-sharing plans and the majority are C corporations. Six percent of ESOPs are in the retail trade and nine percent are wholesale trade. Nearly half the ESOPs are more than 20 years old, and 32 percent of ESOPs are in the Midwest, followed by 30 percent in the South, 23 percent in West and 16 percent in Northeast. Click here to learn some of the advantages of ESOPs.

While the main store has seen some business fluctuations, the two new stores are up 40-50 percent under Dazey’s ownership, according to Tomasini. “We’re a very successful business with strong growth potential.” While forming an ESOP has worked out great for Dazey’s Supply, Tomasini notes that it is not the perfect solution for every owner looking to sell. “The owner can’t just say what the business is worth. It has to be fair market value and you have to want to do it that way.” He adds, “Steve Dazey is a great guy and employees are important to him. THE HARDWARE Connection ■ February 2019 ■ 39

G.W. Smith Lumber Company in Lexington, N.C., formed an ESOP in 1985.

He’s getting paid off with monthly payments over 10 years. He could’ve gotten more money selling the business to an outside group, but he wanted to do this for the employees. It’s not a bad deal for him. He still owns the building and gets paid rent.” Dazey’s future is looking up, as they are looking to expand down the road, when Tomasini knows their ESOP status will make them an attractive option to retiring hardware retailers who might be struggling to find the right buyer.

REWARDING LONG-TIME EMPLOYEES G.W. Smith Lumber Company in Lexington, N.C., was founded in 1905 by Griff and Nora Smith, who delivered lumber loads by horse and wagon. Steve Smith, one of four third-generation brothers to own the business, served as president from 1977 until his son Mark took over in 2010. This century-old lumber company is now in the fourth generation of family ownership, 40 ■ THE HARDWARE Connection ■ February 2019

but employees joined the ownership group in 1985. That year an ESOP was formed to reward long-time employees and help them set aside money for retirement. Says Steve Smith, “It was a good way to bring employees into the business and buy out two brothers (R.B. and Dan) from their ownership shares. We think of our employees like family here.” He adds, “Every year we pay out a dividend, which represents about a 10 percent increase for employees. It operates like a 401k plan. They can’t get the money until retirement. Employees own about 20 percent of the business now. It’s been a really good thing for everyone.” Smith explains that the ESOP has its own board of trustees. “The ESOP has money invested in other things, so it’s not as much at risk,” he points out. “We felt it was important to diversify so that our employee-owners are not held up by the value of the company.” ■ www.TheHardwareConnection.com

INDUSTRY’S DIGITAL LEADER

THE HARDWARE CONNECTION MARKS A DECADE of DIGITAL INNOVATION L

www.TheHardwareConnection.com

YEARS

The Hardware Connection may not have the lengthy history of some of the industry’s iconic brand innovators, but we are very proud to be celebrating our 10th anniversary in 2019. It has been a decade of digital innovation. Chris Jensen and Tom Chasteen founded The Hardware Connection in 2009, distributing the first digital edition in November 2009 to about 13,000 industry readers. It was five months before Apple introduced the first iPad, an important milestone that signaled the world was going digital. As a thirdgeneration hardware retailer, Tom brought unmatched insights into what hardware retailers were thinking. His “From Tom’s Shop” columns

CADE DE

DIGIT

he hardware industry has been marked by innovation as manufacturers, wholesalers and retailers have battled for market share over the past century.

I N N O VA

contain reviews of hardware products from a retailer’s perspective. The Hardware Connection became the first industry publication to be exclusively digital. We recognized the inherent advantages of digital publications—being able to link to videos and websites within ads and articles made each issue more interactive and userfriendly than a static print magazine. We remain the only industry magazine that shares analytics with advertisers to help them gauge the effectiveness of their ads. Starting out as a quarterly publication, we soon expanded to six issues a year until growing to eight issues a year in 2015. We also quickly grew our circulation to the largest in the industry, currently reaching about 62,000 industry readers, mainly independent hardware and LBM retailers. The Hardware Connection, the only industry publication to see its THE HARDWARE Connection ■ February 2019 ■ 41

circulation grow over the past decade, can be viewed on a desktop or tablet or via our mobile version on a smartphone. To illustrate our industry-leading database and as a service to advertisers, in 2011 we developed The Hardware Connection Industry Map™, a comprehensive map of hardware dealers in North America. It is the industry’s first interactive dealer map that lets you look at the location of our retail readers by primary wholesaler. Dan Akers joined the company as our third principal in 2012, bringing his talents as creative director. In 2013, we launched the Beacon Awards™, a recognition program to honor the “Best of the Best” industry retailers. In 2014, The Hardware Connection introduced the Hardware Ambassador Program™, which was designed to strengthen the twostep retail hardware channel. Retailers can find vendor products stocked by their primary wholesaler through each vendor’s Hardware Ambassador profile on our website. Part of the Hardware Ambassador Program™, the Women in Hardware™ program was designed to give professional women a platform to network and exchange ideas. Craig Cope joined the company in 2015, later becoming our fourth principal and publisher. The four principals of The Hardware Connection remain committed to finding ways to strengthen the two-step channel of distribution while featuring the success stories of independent hardware retailers. 42 ■ THE HARDWARE Connection ■ February 2019

RECOGNIZED FOR EDITORIAL EXCELLENCE The Hardware Connection has received six awards for editorial excellence in the past five years. We were just named a finalist for a prestigious FOLIO Digital Award for Best Digital Magazine. This award covers all digital trade and consumer magazines, regardless of size, and one of the other finalists we are up against is AARP The Magazine. In 2018 we won a FOLIO Eddie Award for Best Breaking News Coverage for our special report on True Value, as well as an honorable mention FOLIO Eddie Award for Best Single Issue. In 2015 and 2018, The Hardware Connection received bronze Azbees for Best E-Zine from the American Society of Business Publication Editors. The Azbee Awards recognize the highest-quality reporting, editing and design in both print and digital magazines. Our biggest honor to date came in 2017, when The Hardware Connection received an Eddie Award from FOLIO for Best Standalone Digital Magazine in the B2B category. For more than 20 years, FOLIO’s cornerstone Eddie & Ozzie Awards program has recognized excellence in magazine editorial and design across all sectors of the publishing industry. These many awards for editorial excellence demonstrate why The Hardware Connection is the industry’s digital leader, capping off a decade of impressive digital innovation. ■ www.TheHardwareConnection.com

SOCIAL MEDIA

Social Media Marketing

On Steroids By Andy Curry

ocial media can be one of the most important and valuable crazy-cheap marketing tactics you have. If you are not using social media to market your business, then you may be missing out on a valuable marketing source. To get started on using social media for marketing your business, invest in a “repeat banner.” A repeat banner is a large, freestanding banner with either the business’ name or its website repeated on the banner. Having your website URL on the banner is preferred. If you do not have a website, then your business name and phone number is the next best choice. The picture at the top right shows an example of a repeat banner. Below right is the effect of a repeat banner when you take a photo of a customer in front of it. www.TheHardwareConnection.com

THE HARDWARE Connection ■ February 2019 ■ 43

SOCIAL MEDIA As you can see, the effect is quite striking. When this photo is passed around, the name of the business is seen over and over. Use the banner for every event you plan. Let’s say a restaurant owner wants to get the word out about his new location. He takes photos of people standing in front of his banner to use in social media so word of the new location will spread automatically. To encourage sharing the photos, he offers a grand prize of a year’s worth of meals at the restaurant. For ease, let’s say this prize has a $1,000 value. The restaurant owner makes it known that he is offering a $1,000 grand prize, and to be eligible for the grand prize people have to stand in front of the banner and have their photo taken and also have to “like” the restaurant’s Facebook page. When you use this tactic, first log each person’s name before taking his or her photo. (Be accurate with this, because you do not want to tag a photo with the wrong name.) Second, ask the customer to go into their Facebook page and like your business page. Next, upload the photos on your Facebook business page immediately—and by immediately, I mean within minutes of taking them. Write a quick blurb about each photo, and include the person’s name. 44 ■ THE HARDWARE Connection ■ February 2019

Depending on Facebook’s current algorithm, the photo should show up in their friends’ feeds. Certainly, the posts with their photos will show up to the people themselves. They will often share the photo because it is fun. After you share a photo on your business page, ask the person in the photo to log into Facebook “right now” and share it on their wall. When they do, you will have just had your business name passed around. There is much you can do to increase your visibility on social media. Offer customers an extra 20 chances to win the grand prize if they share their photo on other social media. If you find that 20 chances is not enough to motivate them to share, then up the ante. Make it 30 chances, or 20 chances per every social media platform they share it on besides Facebook. If they agree, get them to do it right now, and after you verify that they have done so, they receive the extra chances to win. Use the Ronald Reagan method: “Trust, but verify.” Be creative. Be bold! When you ask people about their social media use, do not ask them if they specifically use Pinterest, Snapchat or Instagram, just ask what other social media they use. This question is open-ended and will let you know all the other social media www.TheHardwareConnection.com

SOCIAL MEDIA other social media accounts, such as Instagram and Twitter. If you are part of your local chamber of commerce, you will surely have strong support from them. Meet with your chamber and ask for backup help. Many chamber members will be glad to put up photos on their own pages. This idea can be expanded further by inviting a local charity to participate in your event. Charities often receive free press, so ask them to contact the newspaper to do an article about the event. Before Multiply the Effectiveness of Results the event, discuss what you are planning with the charity staff, and invite them to Here are more ways to boost the participate in spreading the word by phoeffectiveness of this tactic. Ask your tographing them in front of your banner. employees to take photos during Have the charity showcase the event on the event and upload them to their all of their social media platforms. Their Facebook accounts, too. The avercontributors are usually passionate givers age person has over 300 friends on and are often connected on social media, Facebook. Not all your employees’ so they will see the event, too. friends will see the uploaded photos of your event, but many will. When Andy Curry is the Cheapemployees upload photos as the event Marketing Champion who is unfolding, it supercharges the excitebelieves in inexpensive but ment. Make this more effective by haveffective marketing and getting ing them upload the photos on other a big bang for your marketing buck. This excerpt comes social media platforms as well. from his latest book: “CrazyAsk friends and family to come to the Cheap Marketing.” An expert event and to bring their friends. These marketer, Andy owns several people will often go overboard to help, businesses (including a home center) and shares his tactics and it makes for more people who can with audiences around the help spread the word using all of the world. He is also the author of “Automatictactics you just learned. You should also Pilot Sales.” Download Andy’s free report upload exciting images of your event called “Gets More Customers Buying More Often” at: www.AndyCurry.com/gets-more. to your personal Facebook page and platforms they use. When they tell you which ones they use, then you can sway them to post on all of them. What’s more, you are conducting research at the same time, because you are learning exactly which social media platforms people are using. If you think it through ahead of time, you can post photos early and diligently on the event day, giving you an incredible amount of attention and business over the course of the all-day event.

www.TheHardwareConnection.com

THE HARDWARE Connection ■ February 2019 ■ 45

Nominations Now Open for Beacon Awards

BEACON AWARDS

The Beacon Awards banquet is a firstclass event to recognize “the best of the best” retailers.

This year’s Hardware Conference, set for August 16-18 at the JW Marriott in Marco Island, Fla., will give independent retailers a chance to network and share ideas with fellow dealers. The Hardware Conference, now celebrating its 31st anniversary, will again be highlighted by the Beacon Awards, a recognition program that was introduced in 2013. The Beacon Awards, which are cosponsored by The Hardware Conference and The Hardware Connection, are designed to honor the “best of the best” independent hardware/home improvement retailers while encouraging a new generation of retailers to make their mark in the industry. Beacon Award sponsors for 2018 included Apex Tool Group, Epicor Software Corp., Sunnyside Corporation and Rust-Oleum. Additional wholesaler sponsorship support comes from Ace Hardware Corp., Do it Best Corp., Orgill Inc. and True Value Company. 46 ■ THE HARDWARE Connection ■ February 2019

The Beacon Awards honor the Retail Beacon Award winners for each of the participating wholesalers, plus the Best New Stores in two categories: under 20,000 square feet and over 20,000 square feet. Whether it’s an existing retailer opening a branch store or a newcomer opening a ground-up business, these new stores represent the future of the industry. Here are last year’s Beacon Award honorees: • Best New Store, Under 20,000 sq. ft.—Agricola Hardware & Lumber, Lucedale, Miss., owned by Brenda and Elliott Massey. • Best New Store, Under 20,000 sq. ft.—Ace Hardware of Clarkston, Clarkston, Mich., owned by Jason and Melanie Haley. • Best New Store, Over 20,000 sq. ft. —Parkrose Hardware, Vancouver, Wash., owned by Central Network Retail Group. Brand Manager: Michael Nelson. Store Manager: Craig Loop. www.TheHardwareConnection.com

• Retail Beacon Award—Matt’s Building Materials, San Benito, Texas, owned by Danny, Diana, Ben, Isaac and Jeremy Smith. • Retail Beacon Award—Gillman Home Centers, Batesville, Ind., owned by Charlie Gillman. • Retail Beacon Award—Proctor Ace Hardware, Neptune Beach, Fla., owned by Joe, Steve and Lizz Proctor. • Retail Beacon Award—Handyman True Value Hardware, Florissant, Mo., owned by Glenn and Dave Otto. Winning the Beacon Award was a great honor, according to Jason Haley. “We subscribe to the theory that ‘iron sharpens iron.’ The more we push each other in this industry, we all get better and we all win,” he says. Get your nominations in now for the Best New Store award, as the deadline of May 1 is fast approaching. Any dealer can nominate his store and nominations are also accepted from wholesalers. Judging will be based on any or all of the following criteria: financial performance (sales, profits, margins, etc.); community involvement; store design; merchandising displays; promotion activities; specialized product areas/niches; employee training/recognition programs; and innovative retailing concepts.

The honorees and sponsors of the 2018 Beacon Awards.

been significantly expanded or remodeled. • Can be a store built to replace one destroyed by natural disaster. • Store must feature all the core departments: electrical, plumbing, tools, hardware, paint and lawn & garden. • Can be a branch store. The Beacon Awards Banquet will be held Friday night, August 16, 2019 at the JW Marriott in Marco Island, Fla. Honorees will receive: all-expenses paid trip for two to the 2019 Hardware Conference in Marco Island including conference registration, airfare, hotel and meals; Beacon Award plaque and feature article in The Hardware Connection.

TO COMPLETE NOMINATION

Please include detailed information for each of the judging criteria, attach any relevant pictures, list the date of new store opening and also provide retailer name, store name, square BEST NEW STORE QUALIFICATIONS: • Store must have been open at least footage, address, phone number and one year, to a maximum of 4 years. email address. Email nominations by the • Should be a new ground-up store or May 1 deadline to Chris Jensen at it can be an existing store that has chris@thehardwareconnection.com. ■ www.TheHardwareConnection.com

THE HARDWARE Connection ■ February 2019 ■ 47

CATEGORY REPORT

PAINT AND DECORATING TRENDS Sales of Interior Wood Stain (Independent Hardware Channel) 12 Months % Change vs. Year Ago Interior Wood Stain: Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-1.1% Interior Wood : Dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6% Source: Vista Information Services, div. of Epicor Software Corp.

Unit Sales Breakdown for Interior Wood Stain Total of 1,140 Items with Sales Total Category Top 5 Items % of Unit Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.5% Top 10 Items % of Unit Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.9% Top 20 Items % of Unit Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.1% Top 30 Items % of Unit Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.1% Source: Vista Information Services, div. of Epicor Software Corp.

Seasonality of Sales of Interior Wood Stain (Index=100) 120

109 107

110

113

106 106 109 100 99

100

Dec. 2017

Jan. Feb. March Apr. May June July Aug Sept. Oct. Nov. 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018

80 70

Source: Vista Information Services, div. of Epicor Software Corp.

Interior Wood Stain Share of Sales by Color (Latest 12 Months) Walnut Oak Mahogany Natural Early American Pine Pecan Teak Chestnut Maple Provincial Cherry Gray Black All Others

17.8%

Source: Vista Information Services, div. of Epicor Software Corp.

13.8% 6.8% 5.7% 5.4% 5.1% 4.4% 4.4% 4.3% 4.1% 3.9% 3.9%

Manufacturers and retailers use Vista’s retail POS and Consumer Panel data to better sell to their customers. Go to www.vistainfoservices.com.

2.7% 2.6% 15.3%

48 ■ THE HARDWARE Connection ■ February 2019

www.TheHardwareConnection.com

PAINT AND DECORATING CATEGORY REPORT BUYING UPDATE • Cavern Clay SW 7701 is SherwinWilliams 2019 Color of the Year. A warm terra cotta color with ancient, elemental roots, Cavern Clay is a nod to mid-century modern style, but with the soul of the American Southwest, which together create the desert modern aesthetic. • “We believe 2019 will be a renaissance of the 1970s—with a twist. In the coming year, we will embrace our pioneering spirits and artisan ingenuity,” says Sue Wadden, director of color marketing, SherwinWilliams. “Our 2019 Color of the Year, Cavern Clay, embodies renewal, simplicity and free-spirited, bohemian flair.” • Cavern Clay pairs well with other casual, balanced neutrals such as a warm gray or deep brown. Combined with Moth Wing SW 9174 or Dark Clove SW 9183, Cavern Clay evokes a carefree yet sophisticated aesthetic. Alternatively, consider a refreshed version of the popular ’70s earth tone combinations by pairing Cavern Clay with a dusty denim blue, such as Distance SW 6243 or even a fresh avocado, such as Haven SW 6437. Even when paired with an Origami White SW 7636, Cavern Clay is decidedly fresh. • Benjamin Moore revealed its 2019 Color of the Year: Metropolitan AF-690, a stylish gray with cool undertones. www.TheHardwareConnection.com

Parkrose Hardware in Portland, Ore., makes a statement with its paint department.

Agricola Do it Best Hardware & Lumber in Lucedale, Miss., adopted The Color Bar program.

• Benjamin Moore also unveiled its Color Trends 2019, a corresponding palette of 15 harmonious hues that further amplify Metropolitan AF-690. Ranging from ethereal neutrals and rothy pinks to rich blues and greens, the Benjamin Moore Color Trends 2019 palette features: Putnam Ivory HC-39, Balboa Mist OC-27, Kendall Charcoal HC-166, Smoke 2122-40, Black Pepper 2130-40, Soft Fern 2144-40, Cloud White OC-130, Beau Green 2054-20, Metropolitan AF-690, Hale Navy HC-154, Head Over Heels AF-250, Kona AF-165, Decorator’s White OC-149, Pashmina AF-100 and Hunter Green 2041-10. ■

THE HARDWARE Connection ■ February 2019 ■ 49

CATEGORY REPORT

PAINT AND DECORATING PRODUCTS

DUAL-HEAD SPRAY TIP EXTENSION MINI-KOTER® LINE • Mini-Koter miniroller line has fresh new look and several new items. The full Mini-Koter line now offers 6 different fabrics in both 4” and 6” sizes and are sold as bagged 2-packs and clamshell 10-packs. • The different fabric choices include: Shed-Resistant (offered in both 3/8” and 1/2” nap), High-Capacity, Microfiber, Mohair Blend™, Foam and High-Capacity Yarn. • There are also 3 miniroller frames available to complement the line. The professional Mini-Koter frame offers a full-size, polypropylene grip that is Sherlock GT® compatible. The two standard Mini-Koter frames are offered in 12” and 19” lengths. • With all-new packaging and a more complete product offering, Wooster’s relaunched Mini-Koter line is the ideal value-priced, rodbased miniroller system.

• Dual-head airless spray tip extension allows pros to paint twice as fast, with better coverage. • The HYDE® Dual Head Tip Extension was designed by an aerospace engineer using the highest-quality aircraft aluminum to create a lightweight, durable, easy-to-clean extension. • Using two tips spaced 6 inches apart, the Dual Head Tip Extension creates a spray fan that’s twice as wide as the fan from a spray gun or single-tip extension. Because the tips are offset, the second tip follows behind the first—creating a perfect pass with a feathered overlap. The result is greater speed and better first-coat coverage. • The Dual Head Tip Extension fits all “G” thread spray guns and is recommended for use with .47 GPM or larger pumps. It uses 5 and 6 series tips.

The Wooster Brush Company 800-392-7246 www.woosterbrush.com

Hyde Tools Inc. 508-764-4344 www.hydetools.com

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www.TheHardwareConnection.com

CATEGORY REPORT

PAINT AND DECORATING PRODUCTS

SCUFF-X® INTERIOR PAINT • The first-of-its-kind, one-component interior latex paint is engineered specifically to resist scuffmarks in high-traffic, commercial environments. • Ultra Spec® SCUFF-X® provides superior scuff-resistance to twocomponent coatings, without the strong odor, pre-mixing, short pot-life and application difficulties associated with similar products. • The proprietary scuff-resistant technology minimizes repainting, retouching and cleaning, while offering easy application and quick dry-time. • SCUFF-X is low-VOC and available in more than 3,500 Benjamin Moore colors and three finishes: matte, eggshell and satin.

• The ETX™ professional spray gun is a self-contained, cartridgebased system. No external power or pressure is needed. • Easy to use and easy to clean, it is as simple as connecting a cartridge and spraying your texture. When you’re done, connect the cleaner cartridge and spray for 2-3 seconds to clean. • Professional spray gun is high quality with non-corrosive aluminum body and brass internals. • Comfortable and durable polypropylene handle keeps it light and its ergonomic design reduces hand fatigue.

Benjamin Moore 800-343-3100 www.benjaminmoore.com

ExperTexture 714-992-2276 www.expertexture.com

www.TheHardwareConnection.com

ETX™ DRYWALL TEXTURE SPRAY SYSTEM

THE HARDWARE Connection ■ February 2019 ■ 51

IN THE NEWS NEW STORES: • McCoy’s Building Supply opened its 88th store in Midlothian, Texas. • Jamie and Katrina Dohm are the new owners of O’Hara True Value Hardware in Albia, Iowa, which they have renamed Albia True Value. • Jim Lemens has acquired Batten True Value in Luxemburg, Wis., from Ken Batten and will move Lemens Hardware to the larger space. • Rockingham Cooperative has acquired Verona Ace Hardware in Verona, Va., from Matt Deitz. • Mike and Staci Nelson, who own Nelson’s Ace Hardware in Selma and Kingsburg, Calif., are opening a new Ace store in a former Orchard Supply Hardware location in Visalia, Calif. • Westlake Ace Hardware has opened a new store in Parkville, Mo., and acquired Groom & Sons’ Ace Hardware in McKinney, Texas. • Lori and Todd Terpstra, thirdgeneration owners of Rylee’s Ace Hardware, have sold the three stores to Great Lakes Ace Hardware and will continue to operate as Rylee’s Ace.

Rylee’s Ace Hardware

52 ■ THE HARDWARE Connection ■ February 2019

• Bob, Rob and Dan Schmidt have opened their 7th Gasser’s True Value Hardware in Cascade, Iowa. • Michael Grimes and Mike DeEmedio are the new owners of Ocean Beach Paint & Hardware in Ocean Beach, Calif., preventing the closing of a business that is celebrating its 100th anniversary this year. • Gary Powers is opening Chico True Value Hardware in Chico, Calif. • Gordon Winters opened his 6th Ace Hardware store, City Hardware, in Burlington, Vt. • The Furrie-Vitullo group has opened Cornersburg True Value Hardware in Youngstown, Ohio. • Kay McCarty and Chuck Quenon have opened Gypsum Eagle Ace Hardware in Gypsum, Colo.

Gypsum Eagle Ace Hardware

KUDOS TO: • Ace Hardware Corp. has honored Hensel’s Ace Hardware in Arcata, Calif., and Madison Ace Hardware in Madison, Fla., with “Coolest Hardware Store” awards. • Samantha Post of T & M Hardware & Rental was awarded the Spirit of Independents Award by Independent We Stand and NRHA.

www.TheHardwareConnection.com

IN THE NEWS ON THE MOVE:

IN MEMORY:

• Benjamin Moore & Company has promoted President Dan Calkins to chairman and CEO, replacing the retiring Mike Searles. • Home Hardware has appointed Marianne Thompson vice president-merchandise LBM and named Joel Marks vice presidentmerchandise hardlines. • Meagan McCoy Jones has been promoted to president and COO of McCoy’s Building Supply. Brian McCoy is now chairman and CEO, while Reid McCoy has joined the board of directors as vice chair. CFO Chuck Churchwell retired January 1 after 48 years with the company.

• Florence Leopoldi, who opened Leopoldi Hardware in Brooklyn, N.Y., with her husband Joseph in 1966, passed away December 19 at the age of 83. Joseph predeceased her in 1989, but she continued to operate the store with three sons. She is survived by children Joe, Peter, Laureen and Robert, 11 grandchildren and three great-grandchildren. • David Heerensperger, former chairman and CEO of Pay ‘n Pak Stores, passed away December 2 at the age of 82. He started his career by opening Eagle Electric & Plumbing Supply in Spokane, Wash., in 1960 at the age of 23, which he later merged with 19-store Pay ‘n Pak, growing to 112 stores. Heerensperger later founded Eagle Hardware & Garden in 1989 with his late son Sam, growing that into a chain of 32 big-box stores in nine states before selling to Lowe’s in 1999 in a deal valued at $1 billion. He owned a horse that competed in the Kentucky Derby in 2001. He is survived by four children and six grandchildren. • Lawrence Fazio, who started out working in his father’s Ace Hardware store, died January 8 at the age of 62. He partnered with two cousins to open Village Ace Hardware in Baldwinsville, N.Y., in 1980, adding locations in Weedsport and Fayetteville. He is survived by his wife Linda.

Meagan McCoy Jones and Brian McCoy

OTHER NEWS: • RPM International Inc.’s RustOleum unit has acquired Siamons International Inc. and its Concrobium brand of specialty mold cleaners. • Lowe’s Cos. is now the official home improvement retail sponsor of the NFL.

www.TheHardwareConnection.com

FOR THE FULL STORY: • Bid to save Sears faces new challenges. Click here.

THE HARDWARE Connection ■ February 2019 ■ 53

UPCOMING EVENTS

FEBRUARY Bradley Caldwell Spring Show February 26-27, Hershey Lodge, Hershey, Pa.

Blish-Mize Spring Market March 21-23, Overland Park Convention Center, Overland Park, Kan.

Florida Hardware Spring Market February 8-10, Double Tree Hotel and Convention Center, Orlando, Fla.

Hearth, Patio & Barbecue Expo March 14-16, Kay Bailey Hutchison Convention Center, Dallas

International Builders’ Show February 19-21, Las Vegas Convention Center, Las Vegas, Nev.

Home & Housewares Show March 2-5, McCormick Place, Chicago

PACOA Spring Market Kitchen & Bath Industry Show February March 2-3, Queens College-Fitzgerald Gymnasium, Flushing, N.Y. 19-21, Las Vegas Convention Center, Las Vegas, Nev. Reiss Wholesale Hardware Trade Show LBM Advantage Annual Meeting and March 23-24, Brooklyn, N.Y. Trade Show Southern Hardware Company Spring Market February 18-20, Rosen Center & Orlando March 27-28, Tunica Road House Casino, Convention Center, Orlando Robisonville, Miss. Monroe Hardware Spring Market Wallace Hardware Spring Dealer Market February 15-17, Myrtle Beach March 27-29, LeConte Center, Pigeon Convention Center, Myrtle Beach, S.C. Forge, Tenn. Orgill Spring Market February 21-23, Orange County APRIL Convention Center, Orlando, Fla. True Value Spring Reunion February 21-24, Kay Bailey Hutchison Convention Center, Dallas

MARCH Ace Hardware Corp. Spring Convention March 26-28, Orange County Convention Center, Orlando, Fla.

Home Hardware Spring Dealer Market April 7-9, St. Jacobs, Ont.

MAY Do it Best Corp. Spring Market May 17-20, Indiana Convention Center, Indianapolis National Hardware Show May 7-9, Las Vegas Convention Center, Las Vegas, Nev.

For a complete listing of calendar dates, click here. 54 ■ THE HARDWARE Connection ■ February 2019

www.TheHardwareConnection.com

RETAIL IDEAS

RISING FROM THE ASHES TO SERVE THE NEIGHBORHOOD Papenhausen Hardware in San Francisco was destroyed by a fire on January 23, 2018. That’s the bad part of the story, which has a happy ending. With a large helping hand from the community, Owner Matt Rogers, Manager Karl Aguilar and staff opened a temporary pop-up store on the one-year anniversary of the fire. The Do it Best member store has served the community at the same location since 1936. They overcame a previous fire in 1998 and were confident the lessons learned from that experience would make the recovery go quicker this time. “Twenty years ago we had a wooden building and the damage was more extensive. It took nine months to reopen,” says Aguilar. “Matt and I knew our insurance was better with a year of continuance coverage for wages and ordinary income and two years coverage for everything else. We thought we’d be able to reopen in six months.” Unfortunately, the bureaucracy that now defines the insurance industry made the process much more difficult. “There was a lot of back and forth. Our insurance company asked whether they could put us in a temporary location and we said no, because we’d be reopen in six months before the coverage ended,” Aguilar says. When it got down to four months left of coverage they started worrying about their loyal employees, because they knew the store would not be rebuilt by January. “The rebuild was stalled,” he explains. “We had not signed a contract on the roof and the

The staff scrambled to get the pop-up store ready in seven weeks.

www.TheHardwareConnection.com

THE HARDWARE Connection ■ February 2019 ■ 55

The devastating fire in January 2018 took away a cherished part of the community.

Lots of local dignitaries were on hand for the reopening. (Photo credit: Nano Visser).

The community was excited to see the popup store open. (Photo credit: Nano Visser.)

A local artist turned their boarded-up building into a work of art.

During the down year store employees spent time volunteering in the neighborhood.

contractor pulled out after working for three Papenhausen Hardware’s latest fire came 20 days. We had to take control of the situation.” years after a fire destroyed their old building. They spent three weeks looking for a temporary location with no luck, so they told employees they should start looking for other work. “I had been doing some social media posts throughout the process, so I decided to throw our situation out to social media and see what happened,” says Aguilar. Within a few days they were getting a lot of goodwill and encouragement. “A good customer called her friend who is a leasing agent with a property four doors down. The pop-up store features 3,000 square feet of space. We had looked into that site but were told it was leased, plus we thought it was too big and too expensive. He said I can make this deal happen for you. We hammered out a deal and signed a five-month lease effective December 1,” according to Aguilar. The pop-up space is 3,000 square feet, which is larger than the old store’s 2,500-square-foot sales floor. “It’s just amazing that we ended up with a site that is 50 feet away from our old store on the same side of the street,” he adds. Then they heard about another opportunity. They visited the former corporate office of Orchard Supply Hardware on November 29 and looked at their fixture lab where planograms were tested. “We determined that Rebuilding the old store has taken a lot we could use every fixture and it was exactly longer than anticipated what we needed,” says Aguilar. 56 ■ THE HARDWARE Connection ■ February 2019

www.TheHardwareConnection.com

volunteer work for the past year, which helped the store retain a bond with the neighborhood. Aguilar points out that they had an employOpening in a temporary space has enabled the store’s staff to reconnect with a ee continuance policy problem five years ago. community that values their contribution. “Our insurance company wanted us to only have two months of continuance coverage, Papenhausen Hardware received a $7,500 which is nothing. This led us to go with an grant from the Office of Economic Workforce Development to help get the pop-up store up and insurance broker and drove home the importance of having strong employee continuance running. “It was a lot of long nights, but we put the store together in seven weeks,” Aguilar says. coverage,” he says. “Our store culture is all They had a huge turnout for the grand open- about our valued employees. They are people who understand our business and we can’t ing on January 23, including a large contingent of local officials and the San Francisco fire chief. lose them. If we had lost more employees, then we wouldn’t have been able to reopen.” Twelve news agencies were on hand covering The new store building should be comthe novel concept, which received a lot of coverpleted in mid-March and they are planning to age. “People know who we are and what this reopen in June. ■ store means to the community, so they were just appreciative we were back. There were a lot of hugs,” Aguilar says. SHARE YOUR STORIES They didn’t like the look of their burned-out building, so last February they reached out For most independent hardware retailto local visual artist Aaron De La Cruz, and ers, their store is a living, breathing organism he turned their board into a wonderful work entwined with the fabric of the community. The of art. “I learned later how in demand he is employees and customers become like family, as a mural artist all over the world,” says with shared experiences of humanity. Aguilar. “He read our Google reviews and This realization has been an inspiration for saw that we are community minded and he Karen Munson of Escalante Do it Best Home was behind the project. First, we had to build Center in Utah, who has been collecting and a 25-foot long flat surface. For him to do that writing a series of short stories for an upbeat mural on his one day off is very special for book based on her business life as it unfolds us. People love seeing that mural over our in the aisles of her hardware store. boarded-up store.” Karen wants her book to include similar stoPapenhausen Hardware has 10 employees ries from other independent hardware retailers. and Aguilar says they did lose four employees She is looking for short stories of about 700 who took advantage of the paid year off to finish words that illustrate memorable, inspiring and school and pursue other career opportunities funny encounters. Email to her at escalantelike in the theater industry. Aguilar and other homecenter@gmail.com and include the substaff were visible out in the community doing ject line “In the Aisle stories.” ■ www.TheHardwareConnection.com

THE HARDWARE Connection ■ February 2019 ■ 57

E H T D N I H E B NUMBERS 68%

Percentage of Amazon’s sales that come from Amazon Marketplace vendors, compared to 32% from direct sales, according to eMarketer Retail.

-6.4%

73%

1,748

61%

Percentage existing-home sales declined in December to a seasonally adjusted rate of 4.99 million, the lowest mark since November 2015, according to National Association of Realtors. Existing-home sales were down 10.3% from December 2017.

Number of stores operated by Tractor Supply Company in 49 states as of September 29, 2018, plus 181 Petsense stores in 27 states.

Percentage of online searchers who trust a local business more due to positive reviews, according to Local Consumer Review Survey 2018 by BrightLocal. Consumers read an average of 10 online reviews before feeling able to trust a local business.

Percentage of shoppers who said they prefer local and small retailers because they offer a unique product selection, according to the UPS Pulse of the Online Shopper Survey. ■

1,500

Number of U.S. jurisdictions that have signed a national U.S. Communities contract with Amazon to get B2B supplies through the company, according to the Institute for Local Self-Reliance. 58 ■ THE HARDWARE Connection ■ February 2019