Hardware Connection May/June 2018

AWARD -WINNING EDITORIAL CONTENT THAT HITS THE MARK

May/June 2018 Vol. 10, No. 4

THE INDUSTRY’S DIGITAL LEADER

Can Amazon Be

STOPPED?

ALSO INSIDE: Examining the Aftermath of the True Value Deal Hardware Show Product Spotlight Estate and Gift Tax Law Changes

Find Out What An Orgill Dealer Market Is All About

Join us August 23-25 for our Fall Dealer Market in Las Vegas!

Register online or give us a call today! ÷ Fantastic buying opportunities ÷ Deep discounts from thousands of vendors ÷ Fully merchandised concept stores ÷ Special product showcases

Watch the video to learn more about Orgill and its upcoming Fall Dealer Market in Las Vegas!

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CONTENTS May/June 2018 Q Vol. 10, No. 4

32

MAIN FEATURE: CAN AMAZON BE STOPPED?

NATIONAL HARDWARE SHOW PRODUCT SPOTLIGHT

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: Can Amazon Be Stopped?

National Hardware Show Product Spotlight Wholesaling: Examining the Aftermath of the True Value Deal Dealer Profile: Revell Ace Hardware Tax Planning: Understanding Changes in Estate and Gift Tax Law Category Report: Hardware The Hardware Conference Preview: Beacon Awards Take Center Stage In the News: Do it Best Corp. Focuses on Member Growth Initiatives Upcoming Events Retail Ideas Behind the Numbers The Hardware Connection app is available for iPhone, iPad, Android and Amazon.

Download here.

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ADVERTISER’S INDEX Ace Hardware Corp. | www.myace.com . . . . . . . . . . . . . . . . . . . . . 9, 26 A.O. Smith-Reliance Water Heaters | www.RelianceWaterHeaters.com . . 17 Do it Best Corp. | www.independentsdoitbest.com . . . . . . . . . . . . . . . . . 7 ECi Software Solutions | www.ECiSolutions.com . . . . . . . . . . . . . . 18, 19 EcoSmart U.S. | www.ecosmartus.com. . . . . . . . . . . . . . . . . . . . . . . . . . 20 Epicor Software Corp. | www.epicor.com . . . . . . . . . . . . . . . . . . . . . . . 21 Ganymede Technologies Corp./J3 Point-of-Sale | www.j3pos.biz . . . 42 House-Hasson Hardware | www.househasson.com. . . . . . . . . . . . . . . 13 Hyde Tools | www.hydetools.com . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Kaba Ilco | www.ilco.us . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Orgill Inc. | www.orgill.com . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Purdy | www.purdy.com . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 STIHL | www.stihlusa.com . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Sunnyside Corporation | www.sunnysidecorp.com . . . . . . . . . . . . . . . 37 WD-40 Company | www.wd40.com . . . . . . . . . . . . . . . . . . . . . . . . 4, 30 Werner Company | www.wernerco.com . . . . . . . . . . . . . . . . . . . . . . . . 35 Wooster Brush Company | www.woosterbrush.com . . . . . . . . . . . . . . 11

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

www.TheHardwareConnection.com

Senior Business Advisor: John Hammond jhammond@thehardwareconnection.com National Account Manager: Cathy Karabag cathy@thehardwareconnection.com 408-772-7961 Contributing Writers: John Franklin, Doug Donaldson, Gary Pittsford The Hardware Connection is published eight times a year by The Hardware Connection, Inc. All editorial contents copyrighted 2018 by the publisher. No editorial may be reproduced without the prior permission of the publisher.

THE HARDWARE Connection ■ May/June 2018 ■ 5

EDITOR’S NOTE

By Chris Jensen

Encourage Consumers to Shop Local

W

hether your store is located in a small town, a suburb or a city, it’s all about getting customers to shop local. If they get in their car and drive to the next town or the next neighborhood to do their shopping, then the whole community loses, not just your business.

There are resources available to help you promote your store’s local roots and independence. Independent We Stand (www.independentwestand.org) is all about independently owned businesses across the country reaching out to their communities and educating their neighbors about the many benefits of “buying local.”

Independent Retailer Month (www. indieretailermonth.com) will be taking place throughout the United States this July. Independent Retailer Month is a shop local campaign that encourages consumers to shop at independent retailers, highlighting their positive social and economic impact.

The Institute for Local Self-Reliance found that each $100 spent at local independents generated $45 of secondary local spending, compared to $14 for a big-box chain.

Take steps to encourage people to shop independent retail businesses

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year round and use July as a time to celebrate the independent retailers that help build our economy, in turn creating more sustainable communities.

This issue’s cover story examines the biggest threat facing independent hardware retailers—Amazon. Turn to page 32 to see what retailers can do to combat this threat.

We are proud to announce that The Hardware Connection has won another award. For the second time in four years we were honored with a regional bronze award for Best E-Zine by the American Society of Business Press Editors.

This latest award follows on the heels of winning an Eddies Digital Award from FOLIO magazine for Best Standalone Digital Magazine in the B2B category last fall. Such recognition demonstrates that The Hardware Connection’s editorial content is hitting the mark and serving our retail readers, which has been the goal since Tom Chasteen and I started the magazine in 2009. Our April issue with a special report on True Value quickly became our most widely read issue by far, so thank you for your loyal readership. Q www.TheHardwareConnection.com

Some think of Do it Best as the industry leader in hardware distribution and retailing expertise. Others know Do it Best as the co-op that serves the largest and most successful lumber dealers in the country. The fact is, both are correct.

Do it Best is the only co-op that serves as a single-source provider with industry leadership in both hardware and LBM. Why do we work so hard to maintain relationships, deliver proven programs and support members with dedicated expertise on both sides of the industry? Because we mlined ordering want to give all members a simpler, streamlined process, backed by strategic purchasing power ower and sult, we offer sophisticated business strategies. As a result, incredible opportunities for growth, regardless ess of the types pproach that has of customers our members serve. It’s an approach proven to be just as successful for single-location ocation retailers as it is for large multi-location businesses. FROM LBM TO HARDWARE AND BEYOND, WE’RE DRIVEN TO BE THE BEST – IN EVERYTHING WE DO.

“ Do it Best is driven to help growth-minded entrepreneurs serve their customers with ion.” outstanding service and unbeatable selection.”

– Nick Talarico Vice President of Sales & Business Development

Call us today at 888-DO IT BEST (364-8237). independentsdoitbest.com

TREND WATCH

By Craig Cope

Home Automation Products are a Niche Opportunity

S

ince the futuristic cartoon The Jetsons debuted in 1962, actually set in the year 2062, the vision of talking robots in the home, video telephone calls and yes, flying cars seemed like a fantasy. Although we are still 40-plus years away from the year 2062, many of the concepts illustrated in the cartoon are already here and may be a great addition to your store’s merchandising assortment.

Home automation, “smart” or “connected” devices are often used to describe products with the ability to be controlled with an internet connection. The list of products that have gotten “smart” appears almost endless. Thermostats, doorbells and locks, light bulbs, electric plugs, refrigerators and even your coffee maker are just a few of the products that can be connected. While I am still puzzled why someone would need or want an internet-connected coffee maker, they are readily available.

Some of the largest companies in the world are investing billions of dollars on the belief that home automation is not only a current trend, but how we will use these and many other devices

in the future. Amazon, Google, Apple, Microsoft and countless other companies are racing to create a home ecosystem to control all these connected devices by a set schedule, push of a button on a smartphone, simple voice command or just your mere presence.

You may wonder how all of this impacts the independent hardware store. For starters, just look at the products I listed earlier: thermostats, door bells and locks, light bulbs, etc.

These are common products currently stocked in hardware stores. Adding a few of few of these smart products to an existing set or rotating end cap does not require a full department reset, significant labor to implement or large financial investment. Further, customers are already accustomed to shopping at hardware stores for these and similar items.

In addition, the home automation market is experiencing tremendous growth now and mostly likely for years to come. According to an April 2017 report by the NPD Group/Retail Tracking Service, home automation adoption was measured at 15 percent of internet households, up from 10

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TREND WATCH

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

U.S. Dollar Sales Growth Year to Date

System Controllers

Security & Monitoring

Power & Sensors

Home Automation Kits

Smart Entry

Smart Lighting

Source: The NPD Group/Retail Tracking Service, Jan.-Aug. 2017 vs. Jan.-Aug. 2016

percent in April 2016. The smart light lighting category is up 88 percent during the same period and the trend remains constant among other smart categories.

Another key fact that will continue to drive the home automation market is the wide usage and adoption of the internet itself. As of 2018, nine out of ten Americans utilize the internet with twothirds of American homes having highspeed broadband. Many of us could not think of day-to-day life without the instant access the internet provides.

We are currently just in the infancy of the home automation market. As consumer awareness continues to grow the list of smart products will expand rapidly and become just another common feature we come to expect in a home.

For an indication on how fast the market adoption may be consider the smartphone. Steve Jobs introduced the first iPhone in 2007 and now 75 percent of Americans have a smartphone.

Many hardware wholesalers currently stock home automation products in their warehouses and these items are available for immediate order. Adding a few of these products to a merchandising mix not only expands your current product offering, but also provides the opportunity for your employees to introduce something new to your customers.

Oh, and about that flying car many of us dream about as we encounter traffic in our daily commute—Uber announced in 2016 their plan to introduce a flying car service by 2023. Q

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HARDWARE HUMOR

12 ■ THE HARDWARE Connection ■ May/June 2018

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House-Hasson Hardware Has Been Focused on Its Dealers’ Success for 112 Years!

H A R D WA R E C O M PA N Y

YES! “We went shopping for a supplier over 15 years ago because we had mixed experiences with previous suppliers. We liked the fact that House-Hasson was a family-operated business, like us. They are the best supplier we have ever had. They listen to us. Our sales rep works with us at least once a week.”

—Todd Eads, Eads Hardware, Paris, KY

Click to Learn What Todd Eads Loves Most About House-Hasson

House-Hasson Hardware: Still a company that knows how to say YES! YES to lower cost of doing business.

YES to merchandising programs that KLSP]LY H KPɈLYLUJL YES to unbundled low prices with monthly promotions.

YES [V LɉJPLU[ VU [PTL KLSP]LY` ^P[O 96% service level.

YES to experienced sales representatives who are focused on relationships and serve as your personal consultant.

YES to national brands in the warehouse (55,000 SKUs).

YES [V ÅL_PISL WYVNYHTZ [OH[ JHU IL tailored to meet your needs.

YES to 100% cash rebates.

For more information on how House-Hasson can increase your profits, contact Pat McCutcheon at 800-333-0520, ext. 212 or go to www.househasson.com.

YES to unbeatable Bonus Buy deals at three dealer markets.

YES to smooth conversions to any other system.

HARDWARE HUMOR H

Amazing but TRUE

HARDWARE

STORIES A

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e like to do a lot of practical jokes on each other in the store. I had an employee who would put a lot of generic-brand, powdered creamer in his coffee. So I took the creamer container home and replaced the creamer with flour. The next day, he dumped a bunch in his coffee, then said: ‘I’ve got to start buying the brand name. This generic stuff isn’t any good.’

Mark Swift Brown’s True Value Hardware Marengo, Iowa

W

woman customer told me the other day that I was kind of old to start a business.

I’m 55.

Kevin Fluharty Ace Hardware Salem, W.Va.

e had a lady looking for a shed. She is living on Social Security and doesn’t have a lot of money. I gave her a really good deal on a shed, and we took it to her house, set it up and hung up all her gardening equipment. Ever since then, she’s been in the store twice a week just to visit.

Peter Federico Circle Ace Hardware | Colorado Springs, Colo.

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and had a guy call in rt for say ‘I need a pa my my commode in I said, bathroom.’ So that’s ‘Bring the part d I might bad up here an part.’ have the same later Fifteen minutes oor and he opens the d e comhe is carrying th uddy mode and his b arrying behind him is c k the the tank. He too to get a whole thing in mode. part for the com Jack Moore ompany D.E. Turner & C Hardware .

Mooresville, N.C

I

www.TheHardwareConnection.com

A 2-brand strategy: Classic HYDE® scrapers, top, and a RICHARD applicator program now available to U.S. retailers.

Empowering Regional Sales A Hyde Group strategy for North American selling comes of age.

A

lmost 15 years ago, Hyde Group made the first of four moves that today have proven prophetic.

First, even as American hardware retailers focused on growing their U.S. footprint, Hyde Group invested in buying a Canadian company. A. Richard Tools, whose RICHARD brand was (and still is) the number one Canadian pro brand, had much in common with HYDE®, Hyde Group’s popular U.S. pro brand.

Complementary product lines and manufacturing capability made the purchase especially expedient in 2003.

But fast forward to 2018, where the home centers, paint stores and hardware co-ops Hyde Group serves have extended their ownership beyond the northern border — and the creation of Hyde Group’s two-brand North American Construction Division looks almost like a lesson plan in anticipating markets. Today, Hyde Group is a very experienced

As a result, both brands have a reputation for “reinventing work” – providing carefully designed new products that help pros and homeowners improve the end result and reduce the work involved in surface preparation, painting and a number of other categories. Today, Hyde’s mantra is “Do it the HYDE® way, not the hard way.” It’s a reputation that’s as important in Canada as it is to U.S. pros.

Hyde Group President Rob Scoble has led Hyde’s transformation from U.S. manufacturer to a North American Consumer Products Group.

supplier for retailers doing business beyond the border.

But there’s more to the story.

The very next year, Hyde Group completely overhauled the HYDE® brand, with a rapid-fire, major investment in rebranding that may have seemed wild at a time when U.S. retailers were emphasizing their own house brands. Today, the value of Hyde’s proprietary brands has soared.

Leg three of Hyde’s growth strategy involved new leadership and investment in product innovation. Today, both HYDE® and RICHARD target 20% in new product sales each year, and the group invests heavily in worksite research that informs product selection, design and pricing. “No detail is too small to consider, especially when you’re satisfying paint and drywall pros and do-it-yourselfers,” notes Corey Talbot, Vice President of Marketing and Product Development.

What put the finishing touch on Hyde Group’s evolution from U.S. manufacturer to North American Consumer Products Group was the hiring of specialized category managers, who work a two-brand strategy collaboratively across both countries. Noted Hyde Group President Rob Scoble, “What we’ve sought to create is a company with valuable brands, considerable manufacturing capacity, and an excellent track record for supply chain management that empowers regional sales for our customers.”

Mission accomplished.

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How’s Business?

Karalee and Scott Ridder

We’re also looking to promote Big Green Egg and grilling a lot more. We want to become the grilling headquarters in the area. In October, we’ll set up Sales and customer counts in electric fireplaces and promote those.

2018? We have stores in Manhattan We’re working on developing businessand Junction City. In Manhattan, the customer count is down, but in Junction to-business customers in the Junction City area. We’re reaching out to small City it’s up. We have U-Hauls in the business owners and getting more stores and it really brings in people. involved with the community. We’re also U-Haul has been a good mix for us. expanding pool supplies and selling We also have a service department for commercial pool supplies along with appliances in the Manhattan store that backyard pool supplies. We may also brings in people.

Best niche categories? Along with expand our sporting goods and fishing department. the U-Hauls, we have strong tool and equipment rental departments. We’ve Scott and Karalee Ridder found people are seeking out rentals Midwest Ace Hardware of push mowers, rototillers, aerators, Manhattan, Kan. drills and saws. For other niches, we sell appliances and beds.

New initiatives for 2018? We will be bringing in hot tubs to our Junction Sales and customCity store. We also plan on pushing er counts in 2018? fountains. The hot tub and fountain This year, we had a displays really catch a lot of attention. pretty substantial

MIDWEST

NORTHEAST

16 ■ THE HARDWARE Connection ■ May/June 2018

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uptick in sales from the beginning of the year. We’re up probably about 10 percent over last year. I credit the uptick to the optimism in the economy and tax policies that have provided a Jamesburg Hardware & Appliance boost to people’s general sense has been owned by the Clayton of well-being. Also, now that family since 1922. interest rates are starting to go up, people have been pushed into doing products out there, and we have become improvements. recognized as experts in the area.

Best niche categories? We’re one New initiatives for 2018? We of the largest Weber grill dealers in the have plans to potentially spread out area. We focus on brands that are coninto another store location with window sidered high quality with a good reputa- treatments. tion, like Weber. We are also a Hunter Gary Clayton Douglas window treatment gallery Jamesburg Hardware & Appliance dealer. Hunter Douglas is one of the best Jamesburg, N.J.

CUSTOMER SUCCESS STORY

TAYLORSVILLE HARDWARE RockSolid MAX™ software is a key component to a miraculous business turnaround

T

hese are good times for the Olivers at Taylorsville Hardware in Taylorsville, Kentucky. The family—the husband and wife team of Jason and Gwynn Oliver and Jason’s father, Jim, and his wife, Dee—are new to the hardware business. They only bought the store they now call home in June, 2017. But business, since they took over, has been little short of spectacular!

ROCKSOLID MAX PROVIDED THE FOUNDATIONAL SUPPORT NEEDED TO FOCUS ON GROWTH Sales are up a heady 35 percent, lost customers are coming back in droves, and new regulars are joining them. The store added more than 300 “likes” to its Facebook page in just three months.

Meanwhile, the whole operation has been revitalized and refreshed with stepped up advertising and promotion, much improved merchandising, and a broader and more customer-centric product mix. The new team at Taylorsville Hardware even won first place in the local Chamber’s Christmas tree contest!

The Olivers’ success story, of course, didn’t just happen. It has been the result of a lot of hard work and some smart business decisions. One of the smartest, says Gwynn, was bringing in the RockSolid MAX cloud-based software for hardware stores to run the operation. “RockSolid MAX has not only given us the information we need to manage the store properly, but it’s also made clear to our customers our commitment to them, and given us so much more time to focus on the things that are truly important to our growth.

When the Olivers first took over, they found a business sorely in need of some major changes. The store had been a long-time fixture of the Taylorville community, but it looked old and tired. Its product mix was

life far too difficult for customers and employees alike.

To make matters even worse, the previous owners had been running the business manually, and paper was everywhere.

The first thing the Olivers did was change the name of the store to emphasize its new commitment to the local community. The second thing they did was to search for business software that would provide a strong foundation for everything else they wanted to do.

Fortunately for Gwynn and the rest of the team, it didn’t take long to find the system they needed.

ROCKSOLID MAX’S INDUSTRY EXPERTISE AND TECHNICAL SUPPORT WAS VITAL TO A SUCCESSFUL IMPLEMENTATION “As a long-time Do it Best store, we wanted software that had a proven track record of working smoothly with them,” she recalls. “RockSolid MAX certainly met that requirement and we were also impressed with all the capabilities and efficiencies it had to offer.”

What really made the difference, though, had a lot less to do with technology and a lot more to do with the people at RockSolid MAX. “The RockSolid MAX representatives we talked to clearly knew the program inside out,” Gwynn explains. “They presented it very fluently and there was no hesitation when it came to answering our questions. They also knew the hardware business and they knew Do it Best and all that was really important to us.”

It helped, too, she says, that the program was so easy to learn. Because it is a cloudbased system, the Taylorsville Hardware team would not have to worry about taking care of upgrades, backups, and other maintenance issues themselves.

GET PROTECTION IN THE CLOUD!

RockSolid MAX™ cloud-based software for hardware stores and home centers protects your data from fire, natural disaster, or cyber attacks. With automatic backups to the cloud, you will save time and rest easy knowing that your business information is always safe.

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YOUR DATA, CONFIDENTLY PROTECTED. www.ECiSolutions.com/RockSolidMAX

RockSolidMAXInfo@ECiSolutions.com

800.588.5128

© 2018 ECi, the ECi Red Box and ECi RockSolid MAX are trademarks or registered trademarks of ECi Software Solutions, Inc. All rights reserved.

And once Gwynn decided to go with RockSolid MAX, she found even more reasons to be pleased. “The support we got from RockSolid MAX to help us prepare for the conversion was amazing,” she says.

“They gave us detailed guidelines and a timetable on what we needed to accomplish each month and there was a library of very useful videos online that we could watch and learn from.”

In addition, she says, RockSolid MAX technical support staff walked the Taylorsville Hardware team through set up for every piece of equipment and tested everything once it was hooked up to make sure it was all working perfectly. It was five-star support all the way on the conversion and Gwynn says it’s continued that way ever since. “A lot of times with software, you don’t know what you don’t know until you need it but that hasn’t been a problem with RockSolid MAX.” “The representative at RockSolid MAX who helped us with our initial set up is still as available today as he was back then. He’s there every time we call him and he always has the answer that we need,” she says.

HOURS OF WORK AND MOUNTAINS OF PAPERWORK—GONE! Once RockSolid MAX was live, life at Taylorsville Hardware got a whole lot easier.

About half of the store’s business comes from house accounts. “In pre-RockSolid MAX days, putting monthly statements together and mailing them used to take as long as eight hours,” says Gwynn.

When we talked to Gwynn Oliver, Taylorsville Hardware had been using RockSolid MAX for less than six months, but that was more than enough time to prove to her and the rest of the team that they had made the right software decision. “With all the extra time RockSolid MAX has given us and the information it’s generating on what’s happening in the store, the program is basically paying for itself,” she says. “If we didn’t have RockSolid MAX, we’d still be spending a huge amount of time sorting through paperwork instead of using that time to work on refreshing the store. RockSolid MAX has been a key reason behind our sales growth and we’ve been very happy with our investment.”

SOUTH Sales and customer counts in 2018? Sales and customer counts have been great since spring broke; during winter it was kind of slow. Power tool and equipment sales have been up. Walk-in trade has come up about 5 to 10 percent. Around here, as soon as the weather changes people start projects.

Ace Hardware just opened in Salem, W. Va.

Southside Hardware was founded in 1977 by brothers Jeff and Ken Idol.

Best niche categories? We offer storm door and storm window and screen repair and replacement. We sell propane, too. We also sharpen lawnmower and chainsaw blades. We’ve found that cable television has been a good way to highlight those niches.

New initiatives for 2018? We’re going heavier into the barbecue grill business. I think we’re going to take on the Traeger line of grills. I bought a few at a show and they seem to have piqued people’s interest.

Jeff Idol Southside Hardware | High Point, N.C. www.TheHardwareConnection.com

SOUTHWEST Sales and customer counts in 2018? We’ve seen an improvement over the previous year. I believe we’ve seen the increase because of the improving, recovering economy. The Phoenix area is one of the hardest-hit areas of the recession, which was so bad I called it a depression. Here, a lot of businesses start up, so the housing market was huge with more than 100 different housing projects. When that stopped the local economy fell.

Best niche categories? We’re known for lighting. As a Benjamin Moore dealer, we are also known for our household premium and contractor-grade paint. We have a lot of house

accounts with cities and local painters. We have niches with epoxy flooring lacquers, sporting goods with ammunition and cleaning supplies.

New initiatives for 2018? We’re always reviewing and updating our departments. Right now, we’re improving our plumbing area by bringing in items to fill out assortments. We’re always looking to expand the paint area. And barbecue grills bringing in the Traeger line.

How did you get the next generation involved? Our oldest daughter, Lauren, has always wanted to come into

6 Ways to Seamlessly Engage Your Customers For retailers to succeed today, customer engagement and connectivity is vital.

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Copyright ©2018 Epicor Software Corporation. All rights reserved. Epicor and the Epicor logo are registered trademarks or trademarks of Epicor Software Corporation in the United States and certain other countries.

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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

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How’s Business?

John and Robin Arterburn with their daughter Lauren.

WEST

Sales and customer counts in 2018? We’re about steady from last year. We lost a few accounts, gained a the business with us. But before we’d few new accounts—it all evens out. allow her, we thought it would be best Best niche categories? The store’s for her to get experience somewhere else first. I broke the news to her and she biggest niche is serving apartment asked if she could still work for us while management companies, especially she was trying to find a job somewhere old, 1920s apartment buildings. We specialize in having the parts for those old else. Then we find out she was turning down other jobs and turning down inter- buildings. My grandfather started the company in 1946 and we’ve had that views just to keep working in our store. longtime niche. We’re right in the center She did so well that we finally said she could stay. When she went off to college, of all these apartments.

New initiatives for 2018? We just I told her that we’re sending her off to be recently integrated delivery software a better hardware retailer than me. She with our inventory management softsaid she never could do that. But after ware. Now customers order and the a month in school, she came back with information is kicked over into delivery a list of things we should and shouldn’t be doing in the store. I told her that she’s software. It’s proven to be a nice tool.

As far as other initiatives, we’re going to already a better retailer than I am. She graduated from college and is still in the connect with Ace about how to onboard and hire applicants. business and doing fantastic.

John Arterburn Jesse Gullion Pinnacle Peak Ace Hardware Alvarado Paint & Hardware Scottsdale, Ariz.

Los Angeles, Calif. www.TheHardwareConnection.com

THE HARDWARE Connection ■ May/June 2018 ■ 23

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How’s Business?

Jesse Gullion is third-generation owner of Alvarado Paint & Hardware.

Sales and customer counts in 2018? Overall sales were up over the winter, mostly due to larger accounts being opened through the local cogeneration power plant reopening in the fall. However, customer counts were slightly down, which I attribute to the mild weather this winter.

Best niche categories? Hands down, our best niche department is our housewares and seasonal gift section.

We carry a variety of unique gifts from locally made candles to designer dish towels, kitchen knick-knacks and personalized Melissa & Doug toys. Pretty much all women and children make a beeline for this section, after they say hello to our store mascot, Dixie the dog. www.TheHardwareConnection.com

Second-generation owner Kim Folchi with her son Marco, who represents the third generation.

New initiatives for 2018? This year should be a big year for us in terms of projects. We are looking into expanding our store to its full capacity and remodeling our plumbing and electrical sections, which will create room for a new section of whatever we choose to do. This should really help our bottom line, because these areas are our bread and butter in leaner and colder months.

Kim Folchi Sierra Valley Home Center Loyalton, Calif.

THE HARDWARE Connection ■ May/June 2018 ■ 25

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By Tom Chasteen

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read a short article the other day that suggested consumer discretionary spending is increasing slowly. If this is true, I personally think that is good news for the independent hardware retailer. That consumers are willing to spend money on projects that aren’t necessary is always good for business.

Retailers who are located in those markets that are experiencing increased sales on impulse items and projects that are not absolutely necessary to maintain their homes will be the ones who stand to see the most out of this trend.

One of the key components to taking advantage of these spending trends is to have items that are new and fresh and are displayed in a way that says “buy me, it will be fun” or “you need this, it will make your life better.”

In today’s market we must “entertain” our customers with pictures, demonstrations and videos that exude enthusiasm and present something fun to do. Nothing does that better than new items displayed in such a way that customers feel compelled to buy.

PRODUCT #1: GLITTER INTERIOR WALL PAINT RUST-OLEUM CORP. Rust-Oleum has come out with a line of Glitter Interior Wall Paint in three different colors: Harvest Gold, Sterling Silver and Iridescent Clear. This is a really fun project for hardware store customers to do on a weekend. The Glitter wall paint can also be used on picture frames, doors, furniture, cabinets or just about anything that is inside.

The best feature is the fact it cleans up with soap and water.

Our testers had a lot of fun experimenting with this product. You can put it on thin or thick depending on the look you are aiming for. All of our testers mentioned it takes a little practice to get the desired look, but they all said they had fun figuring out what kind of finish they were looking for and they all were happy with the results.

To learn more about Rust-Oleum’s Glitter Interior Wall Paint click on this link. www.TheHardwareConnection.com

THE HARDWARE Connection ■ May/June 2018 ■ 27

Introducing The

T80 Plus

Cloning Solution for Texas 80 bit for Ford®, Hyundai®, and Kia®

& $ % " # # ! & ! ! % # " & # " ! & ! " What you will need: T80 Plus transponder, RW4 Plus or Ilco EZ®-Clone Plus with M-Box with FREE software update (Version 04.06.091 or higher), Internet connection required; fixed internet connection or hotspot function via smartphone/ tablet.

The T80 Plus transponder is compatible with Ilco Look-Alike® key shells, Smart4Car™ keys, original keys and/or GTHT80 Plus modular head

Kaba Ilco Corp. 1.800.334.1381 www.ilco.us

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PRODUCT #2: TESTORS SPRAY CHALK RUST-OLEUM CORP. Rust-Oleum has also come out with a complete line of temporary decorative Spray Chalk under the Testors brand that comes in pink, blue, yellow and white. All four colors come in either a 6 oz. or 12 oz. spray can and they also have a Spray Chalk Set that has all four colors in 12 oz. cans in a colorful merchandising box. I really like the merchandising box for two reasons: one, you can create a really nice impulse end cap display with a special sales price; and two, when the sale is over you can either stock the set as one retail SKU number or you can take the cans out of the box and sell them individually. giving you four separate SKUs. The Testors Spray Chalk is a fun product that is perfect for an impulse

end cap. Kids can use it on the road, driveway, grass or even snow.

The best part is it’s washable, non-toxic and is safe for vegetation and around pets. The washable chalk formula dissolves naturally with the rain or you can hose it off. Our testers had a great time with their kids using this product.

Just make sure you check the weather so the rain doesn’t wash it right away.

Check out the video.

PRODUCT #3: MULTI-PURPOSE DRILL BIT | ARTU USA ARTU USA is a neat, small family-owned company that sells high-end drill bits. We have all seen claims of drill bits that can drill metal, glass, concrete, etc. However, ARTU has really developed a Multi-Purpose Drill Bit that will drill glass, plexiglass, ceramic tile, cast metal, hardened steel, soft wood, hard wood, granite, marble, fiberglass, brick, masonry, concrete and PVC. That’s not all. They have put these drill bits in a small pocketsize set that has six sizes of drill bits (1/8, 5/32, 3/16, 1/4, 5/16 and 3/8) and a new feature is that each bit has a quick connect www.TheHardwareConnection.com

THE HARDWARE Connection ■ May/June 2018 ■ 29

Click Here to View Our Profile

REACH THE UNREACHABLE. WD-40 EZ-REACH FLEXIBLE STRAW ®

FLEXIBLE STRAW 8-Inch flexible straw bends and holds its shape. pe.

GET TO ANYTHING Long bendable straw lubricates hard-to-reachh places.

Take on any challenge with WD-40 brand lubricants at WD40.com/lubricate.

D40.com/lubricate. ®2018 WD-40 Company

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shank, making them perfect for cordless drills.

In addition, on the back of the plastic case that secures all of the drill bits ARTU has listed the recommended drilling speeds for all of the various materials listed above. These bits are made of cobalt and tungsten carbide tips, ensuring they will outlast regular carbide tip bits and they will withstand temperatures up to 2,000°F. These small sets are perfect for the casual homeowner, the serious do-it-yourselfer and even the

professional who needs a high-quality drill bit that can quickly be changed using a cordless driver or drill.

Stop by the ARTU booth at one of the wholesaler shows and ask Whit to demonstrate the Multi-Purpose Drill Bits in person—you will be impressed.

Click here to check out Whit demonstrating it on different models.

PRODUCT #4: COBALT 29-PIECE DRILL BIT SET | ARTU USA ARTU USA also has a high-quality Cobalt 29-Piece Drill Bit Set (sizes 1/16” thru 1/2”) in a metal drill bit index box.

These are industrial-strength drill bits that have a 135° split point, allowing them to drill faster and last much longer than other cobalt drill bits.

Talk with Whit or Roger at your next wholesaler show and ask them to demonstrate the difference of the ARTU drill bits.

I think you will be impressed—our testers sure were.

Contact me at tom@thehardwarestore.com if you have a product you would like us to test in Tom’s Shop. www.TheHardwareConnection.com

THE HARDWARE Connection ■ May/June 2018 ■ 31

By Chris Jensen

FEATURE

Can Amazon Be

STOPPED?

Amazon currently operates 328 facilities in the U.S. including fulfillment centers, Prime Now hubs, inbound and outbound sortation centers, delivery stations and grocery DCs.

If it seems like Amazon is taking over the world, or at least the retail world, well, appearances are not always deceiving. Amazon’s revenue was $178 billion in 2017 and as of six months ago the company was capturing 43.5 percent of U.S. retail e-commerce. It has 566,000 employees and operates 122 fulfillment centers in the United States with 32 more in the works.

32 ■ THE HARDWARE Connection ■ May/June 2018

www.TheHardwareConnection.com

Amazon was founded in Seattle in 1994. Early on in its history, some in the industry made the argument that Amazon would not have a major effect on hardware and home improvement retailers, because too many items like lumber, grills and paint were either too bulky to sell online or required a knowledgeable salesperson to explain.

Those so-called experts were wrong.

In 2017 Amazon sold an estimated $6.1 billion in tools and home improvement products, a figure that is growing at an annual clip of 25 percent, according to Clavis Insights/Oneclickretail.

Amazon keeps stepping up its game on the delivery side. First came nextday delivery, then same-day delivery and now some markets have access to Amazon Prime Now, which offers free two-hour delivery of household items, groceries and even restaurant orders.

Amazon recently introduced Amazon Key, which enables keyless access so the Amazon delivery person can make in-home deliveries while you’re not home. Amazon has also introduced Amazon Key-in Car, a service that enables Amazon Prime members to receive deliveries inside their cars if they have the Amazon Key app and link their Amazon account to a connected and compatible car service like OnStar.

Amazon Go stores are coming to Chicago and San Francisco soon. The www.TheHardwareConnection.com

Amazon now sells more than 12 million products. The count rises to 353 million when Amazon Marketplace sellers are included.

first one opened in Seattle in January.

It features a cashier-free grocery store, with employees only on hand to stock shelves.

What’s next for Amazon? Apparently the company is working out the kinks of an in-house robot that would operate like a mobile Alexa.

Amazon is the Great Disrupter, taking aim at categories and industries that are inefficient, overpriced or behind the times with technology.

Major retailers like Walmart, Home Depot and Lowe’s are used to causing headaches for smaller retail competitors, but now these giant companies are scrambling to keep from being steamrolled by Amazon.

Last month Home Depot announced it was adding 1,000 more technology staffers and spending $11.1 million to improve its online and in-store shopping experience for customers. Lowe’s rolled out LoweBot service robots in 2016 to assist customers. Walmart is spending $16 billion to buy Flipkart,

THE HARDWARE Connection ■ May/June 2018 ■ 33

FEATURE India’s largest online retailer. Walmart also announced 700 stores would be getting huge self-service kiosks that can retrieve customers’ online orders, along with Amazon Prime subscribers spend $1,300 per pickup lockers. All these year, according to a CIRP survey. moves were made solely with Amazon in mind. use the Amazon Card and get 5 perSmall retailers say they view cent back. We buy a few items from Amazon as their number one threat, Amazon for stock, not just special surpassing big-box chains and risorders. Amazon efficiency is scary.” ing health insurance costs, accordScott Plummer of Plummer’s Ace in ing to a recent poll by Advocates for Independent Business and the Institute Farmington, Mo., points out 50 percent of his business is light commercial— for Local Self Reliance. apartment complexes, nursing homes, Read on to hear what independent city, county, schools, light manufachardware retailers have to say about turing. “We are their warehouse for dealing with the Amazon threat. repair and maintenance. We source a lot of odd items. I have one apartment ULTIMATE CATEGORY KILLER No matter how much retailers com- complex that we supply all appliance plain about the challenge of competing parts for—Amazon Prime is cheaper most of the time. As a competitor, I against Amazon, most find it irresistguess Amazon is the new Sam’s Club ible to buy from them on occasion. or Costco. We all should be aware of “You can create a non-taxable comthem,” he says. mercial account on Amazon Prime.

J.C. Warren of Stars Ferry Building There are no discounts, but it saves Supplies in Burley, Idaho, voices a having to pay the sales tax on items you will be charging tax on later,” says familiar complaint when it comes to Alan Talman of Karp’s Hardware in East Amazon. “I am looking to start stocking a (branded) air hose and garden Northport, N.Y. “We have used them for items we have no regular suppliers hose. I contacted the salesman at the for like marine batteries and emergen- company and got pricing from him.

Then I was looking online and found cy medical supplies.” that they are selling through Amazon Adds Steve Murphy of Bruno’s for our cost. So I’m asking myself Hardware in Brooklyn, N.Y., “We 34 ■ THE HARDWARE Connection ■ May/June 2018

www.TheHardwareConnection.com

Amazon added 55,000 robots to its fleet of roboworkers in 2017.

where is the benefit to us? I’m looking at this from a customer’s perspective. If I went into a place, purchased a product, then looked online and found it for almost half the price, I would definitely question that business’ prices.”

“Amazon is the biggest threat to everyone out there,” says Frank Tropepe of Deerfield Ace Hardware in Deerfield Beach, Fla. “The only thing to compete on is service. Amazon can now deliver in three to four hours, so Ace is stepping up with its Express Delivery same-day or nextday service.”

Tropepe ran an e-commerce business for 25 years, which he recently sold, so he learned what it’s like to

Click Here to View Our Profile

FEATURE compete directly with Amazon. “We were selling online when everyone else was just using the internet as a search engine. You learn as you go and see what works,” he says.

Tropepe adds, “You need to be all in it and can’t dabble in it. Amazon owns the e-commerce market now. They use you for market research and development. Once a product starts selling, they’ll take it over. I would search for a product for weeks, start selling it online and all of a sudden it’s on Amazon for less because the vendor sold it to them cheaper.”

Eric Jensen with Cleveland and Holly Springs Ace Hardware in North Carolina makes an important point.

“Remind customers that Amazon prices products based on the highest price they think you will pay. Your neighbor might pay more or less than you based on your big data profile. They accumulate a lot of data on your spending habits,” he says.

“I had a very senior lady come in and ask for an item that we didn’t stock,” explains Bob Brame of Cadiz Hardware in Cadiz, Ky. “The salesperson did a good job of explaining that we could have it on our next truck. She was incensed that we didn’t have it and said ‘I should have stayed home and saved gas. I could have ordered from Amazon over the iPad.’” Amy Earls of Page Hardware & Appliance in Guilford, Conn., has

Adam Taylor is dealing with the Amazon threat by keeping his store, Trust PRO Hardware in Indianapolis, open 24 hours a day, 365 days a year.

observed that Amazon is taking a different approach to self-checkout.

“They will be using technology where sensors detect what you are taking out of the store, and will bill you through an app. Presumably there will be some way to ensure that people turn on the app when they walk in. If so, shoplifting would be impossible. No cashiers needed, and robots will probably stock the shelves, too. We will be able to differentiate our stores simply by having humans in the building,” she says.

36 ■ THE HARDWARE Connection ■ May/June 2018

www.TheHardwareConnection.com

FEATURE GET IN THE GAME

within a three-mile radius of each of its five stores.

Even retailers who don’t want to The business has already develmanage a full-blown e-commerce oped a 3D walkthrough of its downsite recognize the benefits of particitown store that links to the e-compating in their wholesaler’s “shipmerce website. The complete plan to-store” program. After all, there is no sense in completely surrendering would allow customers to virtually walk through the aisles of the store, all e-commerce sales to Amazon.

“In-store pickup from online ordering click on an item and have it delivered the same day. has definitely been worth it for us.

To implement the system, Woods We usually average an order a day, Hardware needs to make significant if not more,” says Dennis McCarthy, manager of Mayer Paint & Hardware improvements to its POS system so it can send accurate inventory data to in Rochester, N.Y. the website in real time. The company Matt Mazzone of Mazzone Ace also wants to hire a full-time IT profesHardware in Brooklyn says using his sional to manage the system. wholesaler’s ship-to-store program “We’ve had this ready to rock and definitely brings in new customers, roll—now we just have to hire the team but that Amazon is becoming more to upgrade our systems,” says Woods. of a concern for them at retail. “We “With this prize, we can start taking constantly see customers looking up steps to put our plan into action.” products and comparing prices on After seeing Amazon buy Whole Amazon. We’ve walked away from a Foods for $13.7 billion, Ken Walchak of bunch of special orders because the Clark Devon Hardware in Chicago says customer emails me the Amazon link he came to the conclusion that indeand asks if I can get that product for them. Turns out Amazon’s price is bet- pendent retailers need to figure out how to keep from becoming irrelevant. ter than our drop-ship or warehouse “We have to find ways to sell the stuff price,” he says. they can’t. That includes more serMatt Woods, CEO of Woods vices. For us that is the lock rekeying, Hardware in Cincinnati, received $100,000 from the National Hardware paint mixing and Stihl power equipment. More and more types of ‘stores’ Show as this year’s winner of the are chasing the same customer,” Reimagine Retail program. The store plans to use the prize money to imple- Walchak says.

Retail experts like to say that ment a program allowing them to offer same-day delivery to customers retailers can influence consumer

38 ■ THE HARDWARE Connection ■ May/June 2018

www.TheHardwareConnection.com

Amazon currently has 566,000 employees, and their median pay was $28,446 in 2017.

Adam Taylor opened Trust PRO Hardware on the outskirts of Indianapolis in July 2012 with a 3,200-square-foot sales floor. About 20 months ago he expanded to 6,400 square feet.

Then the big change came 18 months ago, when Taylor took the plunge and started staying open 24

hours a day, seven days a week. He did this even though at the time he only had one other employee. He has three employees now, but still finds it a challenge to find someone he trusts to handle the overnight shift.

“Amazon is going to steamroll a lot of retail businesses. The number one way to compete against Amazon is to stay open. The internet never closes,” Taylor says. “When Amazon says they are closed for a period of time so their employees can spend more time with their families, then I will close then too. Otherwise I’m staying open. I don’t close for holidays. I’m open 365 days a year.”

Taylor points out that his rent is the same whether his store is open eight

www.TheHardwareConnection.com

THE HARDWARE Connection ■ May/June 2018 ■ 39

purchasing decisions in four major areas: price, selection, convenience and service. If Amazon is increasingly proving itself the supreme leader in the first two areas and dominates online convenience, then retailers better start concentrating on wowing customers with service.

IF YOU CAN’T BEAT THEM

FEATURE hours a day or 24, so his expenses don’t really go up staying open. “It takes a while for people to learn about you and develop new shopping habits, but I’m not going anywhere. If you’re not going to stick to something big like being open 24/7, then don’t bother in the first place,” he says.

Trust Hardware was open from 5 a.m. to midnight for a short time and while Taylor got some response to that, he found that didn’t really grab people. “Being open 24/7 eliminates the question of wondering ‘Are they open?’ which forces customers to go to the internet to fill a product need,” he says.

Right now 15 to 20 percent of Taylor’s sales are coming in nontraditional store hours and that figure is slowly growing. “I have my regulars like nurses and firemen who work later shifts, and I have people travel from an hour away all the time,” he says. “I just had three guys come in who were headed to a jobsite early in the morning and needed piping. You want to be here for them.”

He adds, “If you’re open and you’re here, it’s a big deal to customers. I’m not going to surrender to Amazon.” Q 40 ■ THE HARDWARE Connection ■ May/June 2018

READ MORE ON AMAZON If you want to gain greater insights into Amazon’s business strategy and how to compete against them, click on links to the following stories:

UÊ The Amazon-Walmart Showdown that Explains the Modern Economy UÊ Tools & Home Improvement The Amazon Effect UÊ Not Even Home Depot is Safe From Amazon UÊ Amazon’s Uneven Playing Field UÊ 3 Eras in the Evolution of Brick-and-Mortar Retail to a Digital Future with a Happy Ending UÊ Amazon Doesn’t Just Want to Dominate the Market—It Wants to Become the Market UÊ A Small Town Kept Walmart Out. Now It Faces Amazon UÊ Don’t Let Amazon Swallow Your Small Business

www.TheHardwareConnection.com

NHS PRODUCT SPOTLIGHT

National Hardware Show his year’s National Hardware Show® in Las Vegas was filled with promising new products.

The following pages profile 10 innovative products found at the Hardware Show that offer strong sales potential.

Click on the links to the vendors’ web sites and discover if these new items are the right fit for your business.

T

Product

Spotlight

BETTER FINISH™ NAIL HOLE FILLER UÊ This unique new product packages 3 oz. of drywall joint compound in a patented, resealable tube that will last 3 years on the shelf even after it’s opened.

UÊ The benefits are many: Since this is the same compound used in the original finishing of walls, it’s also the most compatible substance for repairing drywall.

UÊ It’s easier to apply and sand than spackling compound, makes a less visible repair and even after being www.TheHardwareConnection.com

opened, it stays fresh for the next application. That solves all of the top consumer complaints about spackle.

UÊ Available in HYDE® and RICHARD brands for North American retailers.

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

THE HARDWARE Connection ■ May/June 2018 ■ 41

NHS PRODUCT SPOTLIGHT SMART-KILL™ ELECTRONIC PRODUCT LINE • Victor’s Smart-Kill Electronic Product Line features the latest innovation in at-home and mobile app technology, offering users a seamless, No-Touch, No-See™ easy disposal solution to mice and rat problems.

• Incorporating advanced smart circuit technology, this product line has introduced a new wave of remote connectivity, revolutionizing the pest control industry since its introduction in January 2018.

• Once set, users need only download Victor’s Smart-Kill app to monitor traps from anywhere in the world.

• When a catch is made, homeowners receive a real-time notification directly to their smartphone, eliminating redundant check-ups in hard-to-reach spots.

• With 37 percent of Americans having had a rodent problem in their home in the past year, Victor’s Smart-Kill technology serves growing demand for an effective defense solution.

Victor, div. of Woodstream Corp.

717-626-2125 www.woodstream.com

If Your Store is too Busy to Deal with Bad POS Support,

TRY J3! © Copyright 2018 Ganymede Technologies Corp.

GORILLA SPRAY ADHESIVE UÊ It is heavy duty, multi-purpose and easy to use. It forms a clear, permanent bond that is moisture resistant, and it can be used indoors and outdoors.

UÊ In addition to being photo-safe, it has a wide pad nozzle that fits comfortably in the hand and offers a controlled, fine mist spray.

UÊ While using this spray adhesive, items can be repositioned for up to 10 minutes. Once the materials are just right, the bond becomes permanent. For an even stronger

bond, spray both sides of the project and then apply pressure for maximum adhesion.

UÊ Available in an 11 and 14 oz. cans, Gorilla Spray Adhesive bonds to wood, photos, metal, fabric, foam, paper, glass, leather and more.

The Gorilla Glue Company 800-275-2718 www.gorillatough.com

GT20DT DUAL TEMP GLUE GUN UÊ The GT20DT™ Dual Temp Glue Gun heats up fast and features a dripresistant precision glue tip for glue control and accuracy.

UÊ The high-temp setting melts glue to a liquid consistency to deliver maximum bonding for heavy-duty projects. The low-temp setting allows glue sticks to melt at cooler temperatures to protect fragile materials with low melting points.

UÊ Designed for precision, the tool is lightweight, compact and ergonomic.

www.TheHardwareConnection.com

UÊ Ideal for upholstery, woodworking, crafts and general home repair projects.

Arrow Fastener Company 201-843-6900 www.arrowfastener.com

THE HARDWARE Connection ■ May/June 2018 ■ 43

NHS PRODUCT SPOTLIGHT DOMINATOR SCREWDRIVER CURVED PRY BAR SET UÊ All three pry bars have curved ends, which provide greater prying leverage when working in tight areas. Dominator set includes 7”, 12” and 18” bars.

UÊ Patented, two-composite, ergonomically designed handle provides a comfortable and secure grip and is oil, solvent and temperature resistant.

UÊ Metal striking cap at the end of the handle is in direct contact with the

shaft, allowing the user to strike the tool without damaging the handle.

UÊ Black oxide finish for additional rust protection and Made in the USA with a lifetime warranty.

Mayhew Tools 413-863-4860 www.mayhew.com

T6 STUD FINDER UÊ The T6 is perfect for small projects around the house. It has a max detection depth of 1.1” and runs on AAA batteries.

UÊ Patented Multi-Sense Technology provides more sensor readings, resulting in a larger sensing area and deeper, more accurate stud detection.

UÊ No calibration required. Just press and scan to instantly find studs.

UÊ Wide 3” horizontal LED display shows the stud’s center and edge simultaneously.

Franklin Sensors 208-918-2403 www.franklinsensors.com 44 ■ THE HARDWARE Connection ■ May/June 2018

www.TheHardwareConnection.com

VIDEO DOORBELL UÊ Battery-powered video doorbell allows you to answer the door from anywhere. Get instant alerts when visitors press your doorbell or trigger the built-in motion sensors.

UÊ Then use the free Ring app to see, hear and speak to guests from your smartphone, tablet or PC. UÊ Crystal clear 720HD video, custom motion zones and two-way talk with noise cancellation.

UÊ With infrared night vision and weather-resistant design, you can monitor your home day and night.

Ring 310-237-6494 www.ring.com

METAL STAMPING KIT

rubber feet and five 1” aluminum 14 gauge practice blanks.

UÊ All the essential tools for hand stamping metal jewelry and crafts. UÊ Can be used on anything from bottle openers, key chains, pet UÊ Includes: ImpressArt Basic tags, garden markers and more.

Uppercase metal stamp set, 3mm, ImpressArt San Serif Font, ImpressArt ergo 631-940-9530 angle metal stamping hammer, www.impressart.com ImpressArt 2” steel block with www.TheHardwareConnection.com

THE HARDWARE Connection ■ May/June 2018 ■ 45

NHS PRODUCT SPOTLIGHT

PEEL-AND-PRESS PANELING UÊ mywoodwall™ introduces Arcadian peel-and-press paneling solutions for a more natural look than paint and wallpaper.

UÊ The adhesive-backed panels quickly transform rooms due to easymount panels that incorporate the same permanent taping materials used by auto manufacturers to adhere exterior parts. Arcadian also comes in pro-grade, non-adhesive version for remodelers.

UÊ Arcadian panels come in 6 natural colors that accent multiple design

styles. Individual panels are sold in boxes of 10.5 sq. ft. with 13 panels at 23-5/8” x 4-7/8” x 3/8” lengths.

UÊ Arcadian is manufactured with the wood species Albasia, a fast-growth tree that the company harvests and replants on its own plantations in Indonesia. The products are CARB Phase 2 compliant and use non-toxic glues and water-based finishes that are safe for all interior applications.

Mywoodwall 206-801-9233 www.mywoodwall.com

PORTABLE REFRIGERATOR UÊ The CFX 75DZW Portable Refrigerator contains an ultra-high efficiency cooling system that allows you to refrigerate or freeze food or drinks down to -7°F without the need for ice.

UÊ The CFX Series models are fitted with heavyduty features like reinforced corners, stainless steel hinges and a robust lining to perform in the most extreme conditions.

UÊ The CFX 75DZW includes WiFi capabilities, allowing temperature control and monitoring from the Dometic CFX app.

UÊ 2.5 cu ft. capacity and holds 113 cans.

Dometic | 800-366-3842 | www.dometic.com 46 ■ THE HARDWARE Connection ■ May/June 2018

www.TheHardwareConnection.com

Examining the Aftermath of the

True Value Deal

A

fter receiving approval from 83 percent of members, True Value Company on April 20 finalized a strategic partnership to have ACON Investments take control of the company. With the move, True Value ceased to be a dealer-owned cooperative and instead has created the first branded national hardware wholesaler without a membership requirement.

John Hartmann, president and CEO of True Value Company, said, “Providing access to the benefits of a national brand without any membership fee is truly a game-changer for this industry, and we are excited to be at the forefront of this important shift.”

What this means for True Value retailers and other independent retailers remains to be seen. Starting on May 14, retailers had to begin paying $150 per month to continue using the True Value name.

ACON’s strategic investment totaled about $230 million in returns and credits to current True Value retailers, who received 70 percent of their invested capital and all of their promissory notes on top of their 2017 patronage dividend.

Retailers will retain a 30 percent holding in the new True Value Company, www.TheHardwareConnection.com

WHOLESALING

By Chris Jensen

which will be led by the existing management team. Some retailers were furious to learn that senior managers were getting $10 million in bonuses along with a 5 percent share of the new company, facts that only came out during a lawsuit filed

by True Value member Richard Reese of Standard Plumbing Supply.

For current and prospective True Value retailers, the company is offering a 1 percent rebate for warehouse purchases greater than $250,000; 2 percent rebate for warehouse purchases over $500,000; and 5 percent annual growth rebate on warehouse purchases above previous year.

In talking to retailers and wholesale executives both inside and outside the True Value family, it is clear that the industry stands at a pivotal moment, with lots of uncertainty about how this will all shake out.

RETAILERS STILL SPEAKING OUT Lex Stevens of Back Bay Hardware in Boston, said, “I know enough about investing that I immediately understood

THE HARDWARE Connection ■ May/June 2018 ■ 47

WHOLESALING the structure of this deal. I realized that we would not be given enough information to make a truly informed decision.

I also thought that since the board and management of True Value and some influential members had given up on the co-op model, the True Value co-op was dead. Regardless of what I thought or felt, the way forward for me was clear.

Therefore, there was no reason for me to discuss the issue. I imagine many other members had similar experiences.”

Vickie Temple Davison of Bloomington True Value Hardware in Bloomington, Ind., commented, “I am one of many True Value members that was not happy with being bought out

by ACON. I fear I will lose my remaining 30 percent investment in the co-op. I feel that my pat dividend is held hostage. We count on that money and not having it hurts cash flow. I also fear the fees will go up to make it even more costly to do business with the co-op. Since stores are not encouraged to use the True Value name any more through co-op advertising does that name lose value now?”

She adds, “Since we are no longer a co-op, what happens to the co-op deals like Weber and Scotts—are those lost?

I know I have heard talk from manufacturers for years that True Value was in financial trouble. There’s no reason for any deals to be honored now. Our store believed in John Cotter and signed up in 1978. We have been loyal, we have advertised for years as ‘Your local True

Vickie Temple Davison of Bloomington True Value Hardware fears the uncertainty in the aftermath of the deal.

Value.’ I invested money, personal time on committees and years of drinking the kool-aid. I am not sure what to think now. Our future looks scary to me and I have lived through several of True Value’s scary years.”

John Morgin of Roselawn True Value in Roselawn, Ind., said, “My experience has been stores that seem to leave usually have issues that they would rather blame on True Value. You can call your store Purple Cow Hardware and if you have great customer service, correct product offerings for your customers, friendly service and an updated, clean store you will have a great store.”

Morgin adds, “I did not vote yes to the sale, but I still have a great store that has been great due to our work, not the name on the store. Ask other co-ops for a written comparison of your top 20 percent items you sell cost to cost and see what they say. Yes, I plan to stay with True Value; yes, I plan to make sure what they offer is the best price and terms for me; yes, I will shop other distributors if they screw up from this point forward.

This is the only change I will make going forward. Look inward before you look to exit and you will probably find the answers you need. You are the change that your business needs.”

48 ■ THE HARDWARE Connection ■ May/June 2018

www.TheHardwareConnection.com

VALUE OF THE CO-OP MODEL Alan Talman of Karp’s Hardware in East Northport, N.Y., notes that recent discussion of rebates and suppliers on Hardlines Digest has missed important pieces of the puzzle. “The co-op model is designed so that the stock investment in the company by members is in lieu of an investment owned by outside shareholders. This is not about paying more and getting rebates, or paying less with no rebates. It’s about the time value of money. Theoretically, the co-op holds the stock money as operating capital as a no-interest loan from the owners of the co-op (a.k.a. store owners). Theoretically, the endof-year rebate money paid out to members was money borrowed by the co-op for short term use, also as a nointerest loan.”

Karp continues, “The co-op owners (members) also have a hedge against receivables in the form of that stock, in theory protecting everyone from the sudden insolvency of a few large stores. The co-op members should benefit from their short-term and longterm loans to the co-op in the form of lower operating costs (no interest loans) and the absence of outside shareholders to appease with a percentage of the profits in the form of dividends. The co-op members should benefit from their ownership position as the laser focus of the co-op management at every moment should be for www.TheHardwareConnection.com

the benefit of the members, not outside shareholders. Simply put, your co-op should love you best.”

He concluded, “I think the co-op model is best understood by understanding its origins, as a large business designed to help like-minded small businesses be more competitive.”

John Fix III of Cornell’s True Value in Eastchester, N.Y., commented, “In the past, the like-minded small businesses were generally similar. Multistore operations were rare, and it was easy to service all the stores in an equal fashion. Today there is a wider range of stores, some buying $150k per year from their co-op while others buy in the millions (and tens of millions). There are also corporate stores, unbranded stores, stores that participate in loyalty programs and those that do not, and all sorts of permutations. As our stores have grown more diverse the challenge to treat us all equally has grown. Are all the stores in a particular co-op truly ‘like-minded?’

Do we stick with the co-op business model because that’s the way we’ve always done it, or because we’ve evaluated other business models and determined that the co-op model is as valid today as it was in 1960 or 1990?

It certainly is good to evaluate your supplier on a regular basis, and it also is likely a good idea for the suppliers to examine their own business models as well. Exciting times are ahead.” Q THE HARDWARE Connection ■ May/June 2018 ■ 49

DEALER PROFILE

LISA ROOKS

REVELL ACE HARDWARE JACKSON, MISS.

Introducing

Hardware Click to View a Photo Gallery of Hardware for Her

For Her

E

stablished in 1950, Revell Ace Hardware has locations in Byram, Brandon, Clinton, Florence, Jackson and Pearl, Miss. A second Jackson location opened this past November, becoming the seventh Revell Ace Hardware site. Owners are brothers Joe, Dunaway and Tim Rooks, who also operate Revell Rental & Outdoor and a commercial/industrial supply house, Revell Supply Group, both of which are in Pearl. The newest

50 ■ THE HARDWARE Connection ■ May/June 2018

Lisa Rooks has turned her love of cooking into a specialty kitchen shop called Hardware For Her.

store in Jackson incorporates a storewithin-a-store concept called “Hardware For Her,” which is the brainchild of Joe’s wife, Lisa Rooks. Read on to see how Lisa has taken this idea and run with it.

Wholesaler: Ace Hardware Corp.

Sales floor: 14,000 sq. ft., with 2,500 sq. ft. dedicated to Hardware For Her Opened: November 6, 2017 www.TheHardwareConnection.com

Revell Ace Hardware in Jackson, Miss., has opened Hardware For Her as a standalone kitchen store designed to appeal to women.

How did the Hardware For Her concept come about? My husband’s family has been in the hardware business for 68 years, and hardware stores used to sell a lot of housewares. I told him many years ago that I’d love to have a full kitchen shop. We’ll be celebrating our 30th wedding anniversary soon, and we finally got our last of three sons off to college, so I thought now’s the time.

I knew we could get KitchenAid mixers through Ace plus lots of other items, so I felt this was an idea that would work.

What is your background in this area? I’m a basic Southern cook, but I also worked at Williams Sonoma. I have another lady working here who also worked at Williams Sonoma and was a culinary operator at a catering business.

We put our thoughts together to develop Hardware For Her and opened with what we thought were the best sellers at Williams Sonoma.

What categories are the focus? It’s all kitchen-related products, not floral or picture frames. I wanted to stay focused on the kitchen, cooking and food items, because I feel like most of our customers www.TheHardwareConnection.com

Upper right: Cookbooks are a popular item.

Middle Right: All-Clad cookware is carried.

Bottom right: Products for men such as beard oil can be found in the “From Her to Him” area.

are women and they are the target audience, even though some men like to cook. We carry KitchenAid mixers, AllClad cookware, Cuisinart food processors, Breville coffee makers, Caspari paper products, Messermeister cutlery, Mason Cash mixing bowls, Mosser Glass glassware, Farmhouse Pottery, Lodge cast-iron cookware and Vitamix blenders. We also sell cookbooks, premium coffee and specialty foods.

THE HARDWARE Connection ■ May/June 2018 ■ 51

How do you attract male customers? We have an area called From Her to Him stocked with gifts for men such as beard oil. And we get quite a few men shopping on the hardware side who wander over and say they need help finding a birthday gift for their wife.

What unique items are selling well? We found a coffee roaster out of northeast Mississippi and got them to come up with Blonde, Redhead and Brunette blends that can be packaged with mugs for gifts. We’re selling a whole lot of Crechale’s Comeback Salad Dressing, which we’ll incorporate in the salads we make. We carry Bright Arrows Farm goat milk soaps and lotions. We started with plain, basic aprons but customers wanted fancier aprons for gifts, so we changed and saw better sales.

What was your approach to merchandising? We have a working kitchen and two tables that look ready for dinner with place settings and center pieces. That shows our customers how to arrange a table and hopefully sparks ideas. We didn’t want this area to look like a duck out of water, so we tried to incorporate hardware products. The shelving was made out of pipe from the

Left: A local coffee roaster provides Blonde, Redhead and Brunette blends.

Middle: Two tables are set with place settings and center pieces to show how to arrange a table.

Right: Specialty foods come from Southern Sisters Gourmet.

store. We’re trying to show the softer side of hardware.

What special services do you offer? We offer free cooking demonstrations every Saturday. We’ll post on Facebook what we’re doing and might get up to 15 people. We feature a product we sell, do a recipe out of a cookbook or demo knife skills. It might be soup in the Vitamix or a pizza on the Big Green Egg. A lot of people just gather once we get started. We offer a giftwrapping service. Also, we have a pickup box and if you subscribe to receive fresh produce from Two Dog Farms you can pick it up here. Just looking for ways to get the community involved.

How do you promote Hardware For Her? We just held a grand opening in March. We do a lot of posts on Facebook and Hardware For Her has its own Instagram page, where we post pictures and tips. Q

52 ■ THE HARDWARE Connection ■ May/June 2018

www.TheHardwareConnection.com

TAX PLANNING

By Gary Pittsford, CFP®

Understanding Changes in Estate and Gift Tax Law The impact of the new estate and gift tax law will force all of us to re-evaluate our current documents and the plans that we now have in place. The provisions in our wills and trusts may need to be changed to fit our asset management plans for the future. Corporate stock redemption agreements may need to be modified to help protect the family assets under the new law.

This new estate tax law may also allow you to speed up the gifting of stock in the family business. Also, the transition or exit plan for closely held

OLD 2017 TAX BRACKETS FOR TRUSTS Marginal Rate 15% 25% 28% 33% 39.6%

Estates & Trusts 0 - $2,550 $2,551 - $6,000 $6,001 - $9,150 $9,151 - $12,500 Over $12,500

businesses will probably be modified to fit the new law as well.

This new law is scheduled to sunset at the end of 2025. Therefore, we have eight years to use these new rules as efficiently as possible to benefit every family that we work with.

REVIEW YOUR WILL AND TRUST The estate tax exemption was substantially increased in the new tax law. Because of the estate and gift tax exemption increasing from $5.6 million to $11.2 million in 2018, it may be necessary to review the provisions of your revocable living trust. For example, if you had a net worth of $7 million in 2017 and passed away, $5.4 million would normally go to your marital trust.

If you are married, $1.6 million would go to the “credit trust” or “family trust.”

If your net worth in 2018 is $7 million, then 100 percent of your assets would go to your marital trust because it’s less than $11.2 million and $0 would go to the credit trust, or family trust.

A couple of weeks ago I was talking to a client after reviewing his 10-yearold estate planning documents and we

NEW 2018 ESTATE INCOME TAX AND TRUST TAX BRACKETS Not over $2,550 Over $2,550 but not over $9,150 Over $9,150 but not over $12,500 Over $12,500 www.TheHardwareConnection.com

10% of the taxable income $255 plus 24% of the excess over $2,550 $1,839 plus 35% of the excess over $9,150 $3,011.50 plus 37% of the excess over $12,500 THE HARDWARE Connection ■ May/June 2018 ■ 53

TAX PLANNING talked about the fact that his document said that the full amount of the estate tax exemption would go to the credit shelter trust and all the remaining assets would go to the marital trust. Since his net worth is approximately $5 million, 100 percent of his net worth would go to the credit trust and zero would go to the marital trust.

In the last 20 years your net worth has probably increased and the estate tax laws have changed at least 10 times. Because of the doubling of the estate and gift tax exemption to $11.2 million for both a husband and wife, and because your net worth has increased, it is important to recalculate your net worth and to understand how the language in your trust documents will control the flow of those assets.

Remember that the new exemption of $11.2 million per person, or $22.4 million per couple, is only available until December 2025. We have eight years to use these higher exemptions

as effectively as possible. We will be reviewing wills and trusts for each of our clients as we meet with them throughout 2018 and 2019.

WHO WILL PAY ESTATE TAX? According to the IRS in 2016, 12,401 estates filed a federal estate tax return, which is IRS Form 706. Of those estates filing a tax return only 5,219 of those filing paid federal estate tax, which totaled $18.3 billion.

If the new higher estate tax exemption had been in place in 2016, no more than 2,204 estates would have paid estate tax and the total payments would have been approximately $2.3 billion. With the new $22.4 million exemption for a married couple, the tax filings in 2016 would have dropped to 900. For comparison, in the year 2000 the federal estate tax exemption was $675,000 per person, and there were 52,000 estate tax returns that paid tax that year.

LIFETIME FEDERAL ESTATE TAX EXEMPTION Old Law - 2017: $5.49M per individual ($10.98M for married couples).

Would have gone to $5.6M per individual and $11.2M for married couples in 2018 under old law.

New Law - 2018 $11.2M per individual ($22.4M for married couples).

54 ■ THE HARDWARE Connection ■ May/June 2018

Planning Comments Still have portability for the exemption. Make sure to elect portability at the passing of the basis on assets subject to estate tax.

Less incentive for high-net-worth families to do gifting for estate tax purposes. Creates good transfer planning options for business owners. www.TheHardwareConnection.com

COMPARE FEDERAL AND STATE ESTATE TAX LAWS Many of our clients have a net worth of less than $22 million for a married couple. Because of that, most will probably not pay any federal estate tax when both spouses are deceased. However, a lot of individual states still have either a state estate tax, or a state inheritance tax.

Because of that, the taxes being paid in the state where you live could be substantial.

Fifteen states and the District of Columbia have an estate tax. Six states have an inheritance tax: Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania. Maryland and New Jersey have both estate and inheritance taxes.

Many states have changed their estate tax laws over the last few years to keep up with the federal laws at that time, and some states are slow to change. You should talk with your financial advisor and estate tax attorney to discuss the amount of state taxes that would have to be paid upon your death, even though the federal estate tax would be zero.

DISCOUNTS A couple of years ago the government was trying to do away with discounting the value of minority ownership in a closely held business, especially if the stockholders were family members. Fortunately, we have been able to keep this valuable tool for business transition purposes.

For example, if a family owns a business that has been valued at $1 million www.TheHardwareConnection.com

and the plan is to gift 10 percent of the stock to their child who will be taking over the company some day, then that minority interest in the company can (and should) be discounted.

Ten percent or even 49 percent ownership of a business does not give the stockholder the ability to control the company. They do not have voting control, they cannot control their salaries and bonuses, and they cannot control business decisions.

The discounting of the value for a minority ownership in a privatelyheld business has been between 10 percent and 32 percent. Therefore, 10 percent of the business valuation would be $100,000, but after taking the normal discount for lack of voting control and lack of marketability, the discounted value would be closer to $70,000. This means that the business owner would use less of the estate and gift tax exemption. If the business was valued at $10 million, then 10 percent would be $1 million, and using the same discounts the gift would be valued, under this method, at about $700,000.

Discounting the value of a business for minority stockholders is very important and it is a valuable tool for transitioning S corp stock, C corp stock, limited liability company units and limited partnership interests from one generation to the next. It is an important estate planning tool that we use every day.

THE HARDWARE Connection ■ May/June 2018 ■ 55

TAX PLANNING STEP UP IN BASIS

be taxed on that income at their parent’s highest income tax rate. For example, if The new estate and gift tax law did not change the rules for step up in basis the grandparents of the children established a trust with investment assets, and at death. That means if someone dies with an asset that they paid $100,000 for, the trust earned interest and dividends that and the asset is now valued at $300,000, were distributed to the children, the children would claim that unearned income then upon death the value of the asset on their personal tax return. This “kidtakes a step up in basis to $300,000. die tax” requires that the income is to be There would be no capital gains paid if taxed at their parent’s highest tax bracket. the asset was sold at that higher value.

Under the new 2018 income tax laws, This is another very important planthe kiddie tax law has changed. Now, ning tool that we use for families that have assets that may appreciate rapidly the unearned income will be subject to current trust tax rates instead of the over the next five to 10 years. children’s parent’s tax rate. The trust For example, if one of our clients has tax rates can be much higher and more a closely held business that is growing at 12-15 percent per year, they may want compressed than the parent’s tax rates.

For example, if a child received to gift some of that stock to other family members, or trusts, in order to get future $15,000 of income from a trust in 2018 of which half was interest income and the appreciation out of their taxable estate. other half was qualified dividends, the At the same time, if that client has an interest income would be almost immeasset that is growing at 2-3 percent per diately taxed at a rate of 37 percent. The year, and producing excellent income dividends would be taxed at 20 percent. through lease payments, interest or dividends, then that slow-growing asset That same income could have been taxed at a lower rate if the income was may be kept by the older generation. only subject to the child’s parents who Reviewing the growth potential of are earning under $200,000 of income. Q every asset is an important part of the estate planning process and we are glad Gary Pittsford, CFP®, is that we still have this option to use with president and CEO of Castle our clients when appropriate.

KIDDIE TAX Under the prior federal tax rules, children who were under the age of 19 (or under the age of 24 if they were a full-time student) and had unearned income would

Wealth Advisors, LLC. Castle specializes in helping families and closely held business owners with valuations, succession planning, estate and income tax analysis and retirement income projections. For more information visit www.castle3.com, call 1-888-849-9559 or email Gary@Castle3.com.

56 ■ THE HARDWARE Connection ■ May/June 2018

www.TheHardwareConnection.com

OUR 63,000+ READERS AREN’T THE ONLY ONES WHO’VE NOTICED OUR EXCEPTIONAL EDITORIAL!

The Hardware Connection has won another award that demonstrates the quality and credibility of our editorial content.

We just received a Regional Bronze Award for Best E-Zine by the American Society of Business Press Editors. This follows winning an Eddies Digital Award from

FOLIO: magazine for Best Standalone Digital Magazine in the B2B category last fall.

We strive to bring our readers editorial content that is relevant and retail-focused, while helping our advertising partners build their brand message in the twostep channel.

Just Another Reason Why We Are the Industry’s Digital Leader!

CATEGORY REPORT

HARDWARE TRENDS Sales of Door Locks (Independent Hardware Channel) 12 Months % Change vs. Year Ago Door Locks: Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5.6% Door Locks: Dollars. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-3.2% Source: Vista Information Services, div. of Epicor Software Corp.

Unit Sales Breakdown for Door Locks Total of 3,545 Items with Sales Total Category Top 5 Items % of Unit Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.5% Top 10 Items % of Unit Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1% Top 20 Items % of Unit Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.4% Top 30 Items % of Unit Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.0% Source: Vista Information Services, div. of Epicor Software Corp.

Seasonality of Sales of Door Locks (Index=100) 120

100

98

108

107

106

110

102

101

100

95

93

104 95

90

90

80 70

Jan. 2017

Feb. March Apr. 2017 2017 2017

May June July Aug. Sept. Oct. Nov. Dec. 2017 2017 2017 2017 2017 2017 2017 2017

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

Door Locks Share of Sales by Type (Latest 12 Months) Keyed Entry

33.5%

Combo

23.9%

Keyless Entry

22.7%

Deadbolt

17.1%

Handleset

2.9% 0

5

10

15

20

58 ■ THE HARDWARE Connection ■ May/June 2018

25

30

35

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

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

www.TheHardwareConnection.com

Left: Revell Ace Hardware in Jackson, Miss., is establishing itself as a destination for fasteners.

HARDWARE BUYING UPDATE UÊ Keyless door locks went from 30.6 percent share of sales in 2017 to 22.7 percent in 2018, according to Vista Information Services, a division of Epicor Software Corp.

UÊ Combo door locks rose from 16.4 percent share of sales in 2017 to 23.9 percent in 2018, according to Vista Information Services.

UÊ Sliding barn doors are in demand as a decorative and functional alternative to traditional swinging doors.

UÊ The market for builders and cabinet hardware is estimated to reach $18.1 billion by 2020, driven by a recovering construction market, technological advancements and innovation in hardware design, according to Global Industry Analysts Inc. www.TheHardwareConnection.com

Right: Keim Lumber in Charm, Ohio, uses custom-built shelves to display door hardware.

UÊ Some conventional pin and tumbler locks are susceptible to lock bumping, so security concerns are leading manufacturers to design features such as side-locking bar technology to reduce vulnerable points.

UÊ Polished nickel has surpassed polished chrome as the hottest finish in door hardware, according to HGTV personality Scott McGillivray.

UÊ Satin brass pulls are rising in popularity for kitchen cabinet knobs as a way to evoke a vintage 1950s look.

UÊ Brushed bronze cabinet and drawer pulls are trending up as a warm accent to stainless steel appliances and white kitchen cabinets.

THE HARDWARE Connection ■ May/June 2018 ■ 59

HARDWARE PRODUCTS

POWER PRO™ ONE® SCREW • Outperform and replace standard wood screws, sheet metal screws and concrete/ masonry screws with a single, innovaREALTREE® CAMOKEY tive, new engineered fastener design.

• RealTree® is the most popular Eliminate the confusion when trying to camouflage branded product in decide which screw to use. the outdoor sporting market and • The ONE® screw program simplifies your Ilco offers the popular officially toolbox with a single screw design to satlicensed patterns in its line of isfy projects that fasten into wood, metal, Personali-Keys®. concrete, drywall and plastic.

• Available keyways include Kwikset/ • Star Drive eliminates camout, while posiTitan, Schlage/Baldwin, Weiser tive “stick-fit” bit engagement provides and Master. stable driving with no wobbling.

• Available options include open • Colored screw finish system is zinc plated stock, carded and flat panel counter for interior applications and bronze epoxy display that includes 20 hooks and coated for exterior projects and treated shelf talker. lumber.

Kaba Ilco Hillman Group www.ilco.us www.hillmangroup.com 800-334-1381 513-851-4900 60 ■ THE HARDWARE Connection ■ May/June 2018

www.TheHardwareConnection.com

Beacon Awards Take

HARDWARE CONFERENCE

CENTER STAGE "Where Relationships are Formed"

30

he Hardware th Conference began in 1988 Anniversary with a small group 1988-2018 of hardware retailers who wanted to get together once a year with key manufacturers. This small group continued to expand, under the direction of Tom and Dale Chasteen, and is now the nation’s largest independent dealer conference.

The 2018 edition, set for September 7-9, will mark the 30th year for The Hardware Conference, now directed by Craig and Shanti Cope. It is held each year at the JW Marriott Marco Island Beach Resort in Marco Island, Fla. Join colleagues and new friends for this three-day learning and networking event.

Share ideas with top retailers on how to grow your business, interact with key vendors on how to increase sales in your store and attend all-industry cocktail receptions and dinners in an exclusive five-star resort setting.

The Hardware Conference is open to any independent retailer, regardless of wholesaler affiliation. Ace, Do it Best, Orgill and True Value all support the Conference, joined by key vendors who participate with tabletop exhibits.

The event is a chance for retailers to mingle and discuss ways to improve

T

www.TheHardwareConnection.com

Upper: The Hardware Conference is held at the JW Marriott right on the beach in Marco Island, Fla. Lower: The open dialogue sessions Saturday and Sunday mornings feature candid discussion between vendors and retailers.

their businesses and grow sales and profits in the face of competition, while at the same time combining family fun at a world-class resort on a beautiful sandy beach.

The Marco Marriott recently was upgraded to JW Marriott status after undergoing a $320 million

THE HARDWARE Connection ■ May/June 2018 ■ 61

HARDWARE CONFERENCE remodel, and this will be the first time in the new exhibit space.

“You have the opportunity to see new products, talk to other dealers and learn from both dealers and vendors in a very relaxed setting,” says Rick Heuser of Handyman Hardware in St. Cloud, Fla. This year’s Hardware Conference will again be highlighted by the fifth annual Beacon Awards, which honors the “Best of the Best” retailers in the industry. The Beacon Awards are co-sponsored by The Hardware Conference and The Hardware Connection with special sponsorship support from Apex Tool Group, Sunnyside Corporation, Epicor, Sashco and RustOleum. They are also co-sponsored by Ace, Do it Best, Orgill and True Value.

On Friday evening, September 7, the Beacon Awards banquet will recognize the industry’s Best New Stores, as well as Retail Beacon Award winners from the participating wholesalers.

Beacon Award winners will receive all-expense paid trips for two to the 2018 Hardware Conference including conference registration, airfare, hotel and meals. They will also receive a special Beacon Award plaque and be featured in The Hardware Connection.

The Hardware Technology Forum starts the day before the Conference officially opens on Thursday, September 6. Epicor and ECi Software Solutions will again offer a full-day, hands-on training session for their retailers. Bring your tablet or laptop so

you can log right in as you learn new tips and tricks to make your POS software more productive.

The registration fee for attending just The Hardware Conference is $149 per person, while the registration fee to attend both the Technology Forum and the Conference is $299 per person and includes all training plus breakfast, lunch and cocktail reception on Thursday in addition to the other Conference meal functions and activities the rest of the weekend.

Marquee sponsors for this year’s Hardware Conference include The Hardware Connection, Wooster Brush, Krylon, Hyde, The Hillman Group, Minwax and the Miami Children’s Health Foundation. Vendor booths are auctioned off Saturday night with the proceeds benefiting the Miami Children’s Health Foundation.

Start making plans to attend a fun, entertaining and beneficial event that can have a positive impact on your business. It is the perfect opportunity to bring your whole family to a five-star resort right on the Gulf of Mexico with three miles of pristine white beaches.

The Conference hotel room rate is only $181 per night (plus tax), less than half the regular off-season rates of $375+ per night. For more information on attending the 2018 Hardware Conference, call conference directors Shanti or Craig Cope at (305) 853-0049 or go to www.thehardwareconference.com. Q

62 ■ THE HARDWARE Connection ■ May/June 2018

www.TheHardwareConnection.com

CONFERENCE2018 SEPTEMBER 7-9

REGISTER HERE TODAY!

“Where Relationships Are Formed”

3 Days of Networking, Relaxing and Learning Meet colleagues and new friends at the industry’s largest conference for independent hardware retailers. Share ideas with top retailers on how to grow your business, interact with key vendors on how to increase sales in your store and attend educational seminars, all-industry cocktail receptions and dinners in an exclusive 5-star resort setting.

Learn More About Your POS System at the Hardware Technology Forum Epicor and ECi Advantage/ECi RockSolid will offer full-day, handson training sessions for their retailers. Bring your tablet or laptop so you can log right into your store as you learn new “tips and tricks” to make your POS software more productive in your store.

Honor the Industry’s Best Retailers at the 2018 Beacon Awards The Beacon Awards are an important recognition program that honors the best of the best dealers who represent the future of the industry.

Sponsors:

Co-Sponsors:

FOR MORE INFORMATION ABOUT ATTENDING THE BEACON AWARDS ALONG WITH ALL OTHER EDUCATIONAL SEMINARS, OPEN FLOOR DISCUSSIONS AND SOCIAL ACTIVITIES AT THE HARDWARE CONFERENCE, VISIT WWW.THEHARDWARECONFERENCE.COM

IN THE NEWS NEW STORES:

PEOPLE ON THE MOVE:

% Westlake Ace Hardware is opening new stores in Parkville, Mo., and Cary, N.C. % Dorn True Value Hardware opened a new store in Verona, Wis. % Drexel Building Supply is opening its seventh store in Columbus, Wis. % Dan and Jessica Wolf opened Wolf’s True Value Hardware in Greenwood, Wis. % David Hedrick is the new owner of Barr’s Hardware in Williamsport, Pa. % Mike Roberts opened Ace Hardware of Pace in Pace, Fla. % Smith’s True Value has opened its third store in Ashford, Ala.

% Heath Ashenfelter, who was most recently CMO for True Value Company, has been hired as executive vice president and chief merchandising officer for Mills Fleet Farm. % Home Hardware Stores has named CEO Terry Davis to the additional position of president, succeeding the retiring Paul Straus.

WHOLESALERS IN THE NEWS:

KUDOS TO: House-Hasson’s warehouse

% Sunnyside Corp. is celebrating its in Prichard, W.Va. 125th anniversary. % Kevin Nyberg of Nyberg’s Ace % House-Hasson Hardware is Hardware in Sioux Falls, S.D., was launching a major expansion of its named South Dakota Small Business Prichard, W.Va., warehouse. The Person of the Year for 2018.

50,000-square-foot addition will take % Ace Hardware is collaborating it to 300,000 square feet of space. with the Veterans of Foreign Wars When the project is completed, of the U.S. to honor veterans by House-Hasson will have nearly pledging to give out 1 million 800,000 square feet of combined American-made flags nationwide warehouse space in Prichard and on May 26. at the corporate headquarters % Kevin Headley is celebrating the 50th warehouse in Knoxville, Tenn. anniversary of Headley’s Hardware “Business is good; we’ve run out of Hank in Holdingford, Minn. room in Prichard,” said Don Hasson, 64 ■ THE HARDWARE Connection ■ May/June 2018

www.TheHardwareConnection.com

president of House-Hasson. “Our dealers in Pennsylvania, Ohio and West Virginia are doing very well and we’re adding new dealers all the time.”

Devon Hardware in Chicago, passed away in early May at the age of 93. A World War II veteran, he is survived by his wife Phyllis, sons Ken and Edward, daughter Aviva and five grandchildren.

OTHER NEWS: % Vaughan & Bushnell Mfg. Co. has acquired substantially all the assets of Dasco Pro. Dasco’s products will continue to be sold by Vaughan under the Dasco trade name. % ECi Software Solutions announced upgrades to the LotVue® interactive sitemap software for residential builders and developers. This new release will provide users with deeper insight into individual lot and community map traffic, locale information and financial stats—all while helping to solve the visual and marketing challenges faced by today’s homebuilders and developers. % Saleslink LLC, based in Carol Stream, Ill., has acquired Group MW Inc., located in Lisle, Ill. % Hultafors Group of Goteborg, Sweden, has acquired Johnson Level and Tool Mfg. Co. of Mequon, Wis. % The Hardware True Value in Fairmont, N.C., was destroyed by fire on April 20.

DO IT BEST CORP. FOCUSES ON MEMBER GROWTH INITIATIVES

% Bernie Walchak, chairman and second-generation owner of Clark

Do it Best Corp. welcomed thousands of member-owners along with a record number of nearly 200 prospects to its spring market, held May 18-21 in Indianapolis.

“This is certainly an exciting time of tremendous opportunity during this transition in our industry, and our team’s sole focus is on helping grow our members’ businesses with the proven programs and products available only through Do it Best,” explained President and CEO Dan Starr.

“We serve our members as the only single-source distributor for hardware, lumber, building materials and industrial/ commercial businesses—simplifying operations, lowering costs and driving growth across the industry. And the spring market is simply the best way for them to experience everything their coop has to offer them,” Starr said.

“Our drive to be the best—and help fuel our members’ continued growth— has never been stronger,” Starr added.

One highlight of the spring market was the Digital Dashboard, which is part of a broader strategic emphasis on

www.TheHardwareConnection.com

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IN MEMORY:

customizable, integrated marketing strategies for store owners. Popular programs that made their debut in recent markets were featured prominently, including a dedicated Connected Home interactive display, which features four dedicated living spaces, all utilizing connected home products run by a voice interface; The Color Bar in-store paint experience; and Best Look paint applicators and tools.

Special vendor partnerships with Milwaukee, Yeti and Big Green Egg further highlight the growing number of exclusive product opportunities available to Do it Best members.

Starr outlined another new marketing initiative designed to help members grow sales: Winning the Weeks That Matter in the Ways That Matter. “We’re looking at key sales periods like Father’s Day matched to integrated marketing with the right kind of data. We’re helping members manage different elements and pulling together all connectivity points such as Best Rewards loyalty program data with their POS system,” he said.

Do it Best wants to be recognized as the first choice and best choice for independent hardware and LBM

retailers, Starr said, and a lot of what determines first choice comes down to operational efficiency. “We’ve made significant investments in our warehouses and transportation management systems to ensure we have the most optimized routes and the ability to automate more manual processes. It’s all about doing fundamentals well,” he said.

Starr said Do it Best Corp. is growing in a way that supports the health of the individual member and the co-op, and he listed three related goals. “We want additional shelf space from our members and don’t want them going to secondary suppliers; we want to help them sell more at retail; and we want to make sure we’re growing our membership base.”

DO IT BEST’S MIKE ALTENDORF PREPARES FOR RETIREMENT Mike Altendorf, who joined Do it Best Corp. in March 2009 as the director of IT business planning and architecture, will be retiring as of August 10, 2018. He was appointed to the position of vice president of information technology in October 2009. Altendorf was previously employed for 22 years at another hardware co-op, with the last five of those years serving as the vice president of IT. Altendorf started working at a local home center in Chicago when he was in high school, and he says that decade

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of experience was helpful to him in his later career in information technology.

“My dad retired when I was 10 and he got a part-time job at a hardware store.

The owner later hired me, so I got to work with my dad for several years.

I developed a love for products and I understand the difference between a foot and a roll of wire,” he says.

He says his greatest accomplishment at Do it Best was building a great team in the IT department and getting everyone involved in getting results for the team.

“I’m not even an IT person, so that taught me the value of delegation,” he points out.

Do it Best Corp. recently held its ninth annual Techapalooza, which is something fun that Altendorf started.

“I started at Do it Best during the recession, and we were cutting back on attending conferences. Tech people thrive on learning what’s new, so I decided to bring the conference to us,” he said. “If you go to a conference you get a chance to renew your batteries, but you can’t send everyone. When you bring the conference to them, everyone can attend and things take root when there’s group enthusiasm. We brought in speakers and experts to talk about specific trends and grow skills, and the entire company got to benefit.”

While he points out that much has changed in technology over his 30-plus years in the industry, he noted connectivity was really expensive and hard to access in the early days and now it’s prevalent.

“Thirty years ago if a store had POS www.TheHardwareConnection.com

you were leading edge and now it’s like a green’s fee,” Altendorf comments.

As for future Mike Altendorf technology trends, he sees cloud applications becoming a lot easier to operate. “At the retail level data protection becomes less of a requirement if you let someone else worry about surge protection and running backup every night—just leave it to the cloud,” he says. “Cloud’s impact on development and putting platforms together will enable companies to leverage all the data that is available to make better business decisions.”

Machine learning and artificial intelligence will make it easier to automate in the future, Altendorf reasons. “There’s so much stuff on the ‘Internet of Things’ that you will need artificial intelligence to deal with it.”

Altendorf and his wife, Sue, are planning to move back closer to family in Batavia, Ill., where they raised their kids. He previously served on the faculty at Northern Illinois University and would like to teach again, and he would love to bring an IT perspective to a corporate board. Always active in community and charity organizations, he will be seeking out similar ways to engage in the community once they move. “First off, I’m going to take a couple of months and not do anything,” he says. Q

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Connection

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PREVIEW OF 2017 HARDWARE CONFERENCE IN PONTE VEDRA BEACH

SEE COMPLETE COVERAGE OF THE HARDWARE CONFERENCE

November 2017 Vol. 9, No. 7

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THE INDUST INDUSTRY’S DIGITAL LEADER

Community Involvement That Makes

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ALSO INSIDE: Christmas Display Ideas Lawn & Garden Product Trends

THE INDUSTRY’S US S DIGITAL G LEADER

How to Build

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Honoring the Beacon Award Winners Successful Women in Hardware

NOMINATIONS OPEN FOR RETAIL BEACON AWARDS

REGION-BY-REGION LOOK AT BUSINESS CONDITIONS

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ALSO INSIDE: SIDE Creating a Fun Shopping Environment Using Technology to Improve Results

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TRUE VALUE MEMBERS SPEAK OUT ABOUT PROPOSED SALE

March 2018 Vol. 10, No. 2

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April 2018 Vol. 10, No. 3

THE INDUSTRY’S DIGITAL LEADER

ALSO INSIDE: Technology Update Trends in Hand and Power Tools Digby’s Hardware cartoon

SPECIAL REPORT: What Does the Future Hold for

True Value?

ALSO INSIDE: Preview of 2018 National Hardware Show Hardware Show Product Spotlight

Visit www.TheHardwareConnection.com and learn why The Hardware Connection has the industry’s most retailer subscribers.

The Hardware Connection is a digital-only publication distributed 8 times a year via e-mail to more than 63,000 independent hardware retailers, wholesalers and hardware industry executives world-wide.

We offer the most retail-focused editorial so you’ll gain the know-how and advice you need to help grow your business.

Sign up your entire team for a free subscription to the only industry magazine written by retailers for retailers.

We know hardware. We live it every day! www.TheHardwareConnection.com

UPCOMING EVENTS HDW Fall Market September 14-16, Shreveport Convention Center, Shreveport, La.

JUNE House-Hasson Hardware Summer Dealer Market June 14-16, Sevierville Events Center, Sevierville, Tenn.

Home Hardware Fall Market September 15-18, Henry Sittler Building, St. Jacobs, Ontario

SuperZoo Pet Industry Show June 26-28, Mandalay Bay, Las Vegas, Nev.

Jensen Marketplace 2018 September 13-14, Oregon Convention Center, Portland Ore.

JULY

Monroe Hardware Fall Market United Hardware Fall & Winter Buying September 14-16, Myrtle Beach Convention Center, Myrtle Beach, S.C. Market July 27-29, Minneapolis Convention Center, Minneapolis

AUGUST Ace Hardware Corp. Fall Convention August 16-18, McCormick Place, Chicago Florida Hardware Fall Market August 11-12, Double Tree Hotel & Convention Center, Orlando, Fla.

The Hardware Conference September 7-9, JW Marriott, Marco Island, Fla. www.thehardwareconference.com True Value Fall Reunion September 28-30, Colorado Convention Center, Denver

OCTOBER

Orgill Fall Market August 23-25, Sands Expo & Convention Center, Las Vegas

House-Hasson Hardware Fall Dealer Market October 25-27, Sevierville Event Center, Sevierville, Tenn.

SEPTEMBER

Do it Best Corp. Fall Market October 12-15, Indiana Convention Center, Indianapolis

Blish-Mize Fall Market September 21-22, Overland Park Convention Center, Overland Park, Kan. Bostwick-Braun Fall Dealer Market September 20-22, Seagate Convention Center, Toledo, Ohio

STAFDA Convention October 28-30, Phoenix Convention Center, Phoenix Taiwan Hardware Show October 17-19, Taichung International Exhibition Center, Taichung, Taiwan

For a complete listing of calendar dates, click here. www.TheHardwareConnection.com

THE HARDWARE Connection ■ May/June 2018 ■ 69

RETAIL IDEAS

CAPITALIZING ON THE GROWING SMART HOME TREND

opportunity is as much in educating consumers about the category as it is promoting specific products.

With this in mind, Christofora and The “smart home” category has seen his team recently created a sophistiexplosive growth with no signs of letting cated, comprehensive marketing camup. Revenue in the smart home market amounts to $18.8 billion in 2018, according paign—including brochures and in-store signage—emphasizing the service and to a report from Statista. Other findings: expertise side of the category as a way UÊ Smart home revenue is expected to to differentiate itself from competishow an annual growth rate through 2022 of 14.8%, resulting in a market vol- tors who are also increasing their smart home presence. ume of $32.8 billion in 2022.

Doing so helps position Woodstock UÊ Household penetration of smart home Hardware positively among customproducts is at 32.0% in 2018 and is ers in two key areas: install services for expected to hit 53.1% by 2022.

UÊ The average revenue per installed smart smart home products, as well as ongoing expertise, resources and support. This home currently amounts to $141.66. approach is proving that the key to success As “smart home” continues to be a in a product category starts with helping growing product category, it can be easy your customers feel smarter and more for consumers trying to understand the segment to feel less than smart. Like many knowledgeable about the products. retailers, Woodstock Do it Best Hardware in Woodstock, N.Y., recognizes the opporWoodstock Do it Best Hardware in tunity the smart home category presents.

Woodstock, N.Y., has had success promoting “smart home” products.

Owner Vince Christofora recognizes the

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SOCK IT OUT OF THE PARK EVENT SETS WORLD RECORD In eastern Tennessee, high school baseball teams from the neighboring towns of Alcoa and Maryville have long held an intense rivalry. Those teams, and nearly 1,000 fans, joined forces recently to take on a more serious opponent— cancer—while setting a world record in the process.

At the Alcoa-Maryville game on Friday, April 27, the teams accepted donations to the Stephen Y. Coleman Fellowship of Oncology. The fellowship was established by the Coleman family to honor Stephen, who in 1996 became the fourth generation of his family to work for Anderson Lumber Company, a Do it Best member in Alcoa. Stephen passed away at the age of 37 in 2011 after a 33-month battle with brain cancer.

The event, which was promoted as “Sock It Out of the Park,” involved 933 people who made a donation and received a pair of mismatched socks, which they wore onto the field before the game began. That number set a new Guinness World Record, beating the previous mismatched socks record by almost 400 participants. www.TheHardwareConnection.com

A total of 933 people set a Guinness World Record for wearing mismatched socks, all to raise money for the Stephen Y. Coleman Fellowship of Oncology, honoring the late CEO of Anderson Lumber Company. An official from Guinness World Records was on hand to certify the record.

HAGAN ACE HARDWARE RAISES FUNDS FOR CHARITY Hagan Ace Hardware, with eight Florida stores, has helped make miracles happen for Angelwood, which offers services and group homes for children, adults and families living with disabilities.

Hagan Ace and its customers all over northeast Florida helped generate $17,000 for Angelwood through a campaign dedicated to collecting donations.

Said President Bill Hagan, “We’re proud to help make miracles happen for children, adults and families in need, just like Angelwood.” Q

Hagan Ace Hardware’s eight stores in Florida raised $17,000 for Angelwood, a local organization serving people with disabilities.

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E H T D N I H E B NUMBERS

43.5%

Amazon’s share of U.S. retail e-commerce as of October 2017.

$178 billion

Net sales reported by Amazon in 2017, with $3 billion in net income.

$51.04 billion

62%

Percentage of U.S. consumers who think Amazon is a likable company.

Also, 55% think the company is innovative, 24% think it is environmentally friendly and 23% think it operates transparently, according to Statista.

Net revenue reported by Amazon in the first quarter of 2018.

55%

Percentage of online product searches that begin on Amazon.

64%

Percentage of U.S. households that have an Amazon Prime membership.

1 million

Number of small and medium businesses that sell on Amazon.

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