Hardware Connection November 2018

THE HARDWARE CONNECTION HONORED WITH TWO MORE AWARDS

November 2018 Vol. 10, No. 7

THE INDUSTRY’S DIGITAL LEADER

Retailers Share

Best & Worst Business Decisions ALSO INSIDE: Staying Relevant for Nearly a Century Why You Must Manage Price Changes Now Electrical and Lighting Trends

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

“Orgill offers a full selection of high-quality products, which makes it easy to provide my customers with exactly what they need.”

Taylor Baker l Foothills Hardware & Builders Supply, North Carolina l An Orgill customer since 2015

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

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

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CONTENTS November 2018 Q Vol. 10, No. 7

46

DEALER PROFILE: LITTLE HARDWARE

CATEGORY REPORT: ELECTRICAL & LIGHTING

Editor’s Note: Chris Jensen

9

Trend Watch: Craig Cope

13

Digby’s Hardware cartoon: Scott Jensen

17

Amazing But True Hardware Stories

19

How’s Business? Regional Reports on Business Conditions

21

From Tom’s Shop: Hardware Products Review

31

Main Feature: What Are Your Best and Worst Business Decisions?

36

Technology Update: You Must Manage Retail Price Changes Right Now

43

Dealer Profile: Little Hardware

46

Category Report: Electrical and Lighting

51

In the News

54

Upcoming Events

57

Retail Ideas

58

Behind the Numbers

60

The Hardware Connection app is available for iPhone, iPad, Android and Amazon.

Download here. www.TheHardwareConnection.com

Like us on Facebook by clicking here.

51

Connection

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THE HARDWARE Connection ■ November 2018 ■ 3

ADVERTISER’S INDEX Ace Hardware Corp. | www.myace.com . . . . . . . . . . . . . . . . . . . . 5-8, 14 A.O. Smith-Reliance Water Heaters | www.RelianceWaterHeaters.com . . . 35 Do it Best Corp. | www.independentsdoitbest.com . . . . . . . . . . . . . . . . 12 ECi Software Solutions | www.ECiSolutions.com . . . . . . . . . . . . . . 24, 25 EcoSmart U.S. | www.ecosmartus.com. . . . . . . . . . . . . . . . . . . . . . . . . . 45 Epicor Software Corp. | www.epicor.com . . . . . . . . . . . . . . . . . . . . . . . 26 Franklin Sensors | www.franklinsensors.com . . . . . . . . . . . . . . . . . . . . 32 Ganymede Technologies Corp./J3 Point-of-Sale | www.j3pos.biz . . . 29 H&N Industries/TC-11 | www.tc-11.com . . . . . . . . . . . . . . . . . . . . . . . . 39 House-Hasson Hardware | www.househasson.com. . . . . . . . . . . . . . . 23 Kaba Ilco | www.ilco.us . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Orgill Inc. | www.orgill.com . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Ring | www.ring.com . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Robert Bosch Tool Corp. | www.boschtools.com . . . . . . . . . . . . . . . . . . 28 Sunnyside Corporation | www.sunnysidecorp.com . . . . . . . . . . . . . . . 27 WD-40 Company | www.wd40.com . . . . . . . . . . . . . . . . . . . . . . . 10, 20 Werner Company | www.wernerco.com . . . . . . . . . . . . . . . . . . . . . . . . 33 Wooster Brush Company | www.woosterbrush.com . . . . . . . . . . . . . . 16

Connection

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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

4 ■ THE HARDWARE Connection ■ November 2018

Senior Business Advisor: John Hammond jhammond@thehardwareconnection.com National Account Manager: Dan Beck dbeck@thehardwareconnection.com 518-852-9624 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.

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“The future is bright and exciting with Ace” Northwest Ace Hardware, with nine stores in Virginia, recently converted to Ace Hardware after being a True Value member for 54 years. Charlie Overstreet, vice president/owner, and Walter Vance, president, shared the reasons why they switched to Ace. Let Charlie and Walter tell you all about it: northwest2303@msn.com.

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“Northwest feels it is important to be part of a cooperative. Ace is not only a co-op but also the low cost provider in our industry. Their number of SKUs is far greater than our old supplier. Ace’s rebate is a lot bigger – it became a financial decision.”

“At Ace, the company is run for us, the owners. Ace’s focus is member success. The Ace Rewards program is advanced and desirable. My profit plus Ace’s profit will equal more profit for our business.”

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EDITOR’S NOTE

By Chris Jensen

Giving Back to the Hardware Industry

W

hen you are a third-generation hardware retailer, sometimes it’s easy to get caught up in the details of running your business and you don’t have time for anything else. You keep the store operating and try to help out in the community and all that is exhausting enough.

Tom Chasteen is no ordinary thirdgeneration retailer, as anyone who knows him can attest. He has always been able to look beyond his trade area. Tom grew up working in the family hardware business, Tavernier Ace Hardware in the Florida Keys, which he took over from his parents, Eldon and Louise Chasteen, in 1992. Tom got involved in his regional and national hardware associations, serving as manager of NRHA’s Southeast Region for a few years.

In 1988, Tom had the idea that independent hardware retailers would enjoy getting together with their families and selected vendors to share ideas on how to make their stores more profitable. The first Hardware Conference was held that year at the Marco Island Hilton in Marco Island, Fla., and it soon grew into the largest annual gathering of independent retailers regardless of wholesaler affiliation. Tom didn’t just want to gather with his fellow Ace retailers, he wanted to bring the whole industry together.

Since the beginning, The Hardware Conference has kept the same theme: www.TheHardwareConnection.com

Where Relationships Are Formed. Tom has always understood that the success of his hardware store, The Hardware Conference and his other business ventures has depended on the relationships he established.

Tom and his wife Dale operated The Hardware Conference for 26 years before transitioning it to Craig and Shanti Cope in 2015. In September, The Hardware Conference celebrated its 30th anniversary, still being held every year in Marco Island, although now at the JW Marriott.

Craig and Shanti have continued the most important tradition of the Conference: raising money to support the Nicklaus Children’s Hospital Foundation. The total fundraising amount over 30 years exceeds $1.2 million, and at this year’s Conference Yesenia Rodriquez of the Nicklaus Children’s Hospital Foundation presented Tom and Dale with a special book of memories to thank them for all they have contributed to the hospital.

Another relationship Tom forged in the industry was with Evan Bedford, who would end up buying his hardware store from him in 2013. Tom has been an important mentor to Evan as he learned the ropes of hardware retailing.

When I joined the industry as a magazine editor in 1988, Tom’s store in Tavernier was one of the first I visited. I almost missed my flight, because he had a lot of THE HARDWARE Connection ■ November 2018 ■ 9

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ideas to share with me. It was all new to me, so I wasn’t eager to leave. We soon became friends and I would attend The Hardware Conference in Marco Island most years and marvel at the amount of time it took him and Dale to put on an event for 500 of their industry friends.

They knew everyone who attended, including the names and ages of their kids. They signed up vendors to booth space, registered retailers from around the country and convinced the four major wholesalers to support the event. It was truly a labor of love for them.

Operating a hardware store and an annual conference didn’t fill Tom’s capacity for work, so he and I decided to launch The Hardware Connection in 2009, a digital magazine designed to help strengthen the two-step channel of distribution. The first issue was distributed via email to about 13,000 people in the industry in November 2009, about five months before Apple launched the iPad. Tom’s role as publisher was to oversee the business side of the magazine while also serving as the main salesperson. Talk about wearing a lot of hats.

Not only is The Hardware Connection the hardware industry’s sole digital-only publication, we quickly grew it to the largest circulation in the industry with a database exceeding 62,000 while growing from four to eight issues a year.

Tom’s secret weapon during all these business ventures has been Dale, as he was smart enough to marry someone who is a CPA. In addition to working a full-time job as an accounting www.TheHardwareConnection.com

manager at Baptist Health Hospital in the Keys, Dale helped Tom put on the Hardware Conference every year Tom and Dale and has served as CFO Chasteen and database manager of The Hardware Connection. I’m always amazed when I hear Tom at a trade show inviting someone he’s just met to come down and stay at their house in the Keys so he can take them boating and fishing. My wife would not be so understanding of turning our house into a B&B, but many in the industry have made the trek to the Keys to enjoy Tom and Dale’s hospitality.

Tom and Dale are retiring from their duties at The Hardware Connection at the end of this year, although Tom will remain an active owner of the magazine. You will undoubtedly still see him at shows from time to time, because he has a lot of industry friends to catch up with. When you see Tom and Dale, thank them for a job well done and for their many contributions to the industry and to the children’s hospital. Life is not about the friends you make, it’s about what you create with them. I’ve been able to create an award-winning magazine with my friends Tom and Dale Chasteen, and that’s been very rewarding for all of us. The other principals of the magazine, Craig Cope and Dan Akers, join me in wishing Tom and Dale good health in retirement, as they hopefully get to spend more time boating in the Bahamas. Q

THE HARDWARE Connection ■ November 2018 ■ 11

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TREND WATCH

By Craig Cope

Dealing with a New Type of Credit Card Fraud

D

o you process credit cards on a standalone terminal or have one as a backup outside of your POS System? If yes, you need to be on the lookout for a fraud so new it has yet to be named. A retailer recently contacted me to describe his ordeal, which ultimately left him filing a police report, a claim with his insurance company and out $1,000.

Credit card fraud costs retailers, banks and consumers billions of dollars annually. With so much money at stake everyone has taken steps to secure transactions. One of the most significant steps taken to reduce credit card fraud was the introduction of EMV chip technology in October 2015. EMV chip technology, named after its original developers—EuroPay, MasterCard® and Visa® —features an embedded microprocessor chip in credit and debit cards. The technology was designed to reduce card-present fraud.

The good news is the technology is working and card-present fraud is on the decline, stopping the year-over-year increases experienced in years past.

However, a 2017 report published by the US Payments Forum highlights the rise in card-not-present fraud (source: www.TheHardwareConnection.com

Card-Not-Present Fraud around the World – March 2017).

“The percentage of CNP fraud (out of total fraud) in the U.S. is currently lower than in other countries, but the recent migration to EMV, combined with a 16 percent per year increase in e-commerce, is expected to contribute to a surge in CNP fraud.” It is estimated CNP fraud in the U.S. will increase from $3.1 billion in 2015 to $6.4 billion in 2018.

Unfortunately, the retailer who contacted me was a victim of CNP fraud.

What follows is his story and steps you can take to better secure your transitions.

Like is the case with many retailers, his wholesaler/service provider manages his merchant services and deposits the money in his bank account monthly.

Nothing seemed out of the ordinary until he reviewed his account and instead of a deposit over $10,000 he owed a little over $1,000. After reviewing the details of his statement, he noticed six refunds totaling $10,250—one for $50, one for $200 and four for $2,500. Another item that stuck out regarding the refunds was their timing. All the six transactions occurred on the same day and within seconds of each other.

THE HARDWARE Connection ■ November 2018 ■ 13

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March 26–28, 2019 REGISTE R

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After eliminating employee theft, he was able to determine one terminal was responsible for all six refund transactions. This is where the story takes an interesting twist. The terminal responsible for the fraudulent refunds was a back-up terminal, connected only to a phone line, outside of his POS system and only used when the store experiences internet outage.

Considering the terminal was connected only to a phone line and each transaction occurred within seconds of each other, fraud was the only conclusion—the terminal cannot even dial at the rate the transaction occurred. The merchant service provider immediately supplied a new terminal and added a password required to approve refunds.

After a few weeks had gone by he received a call from his credit card processor asking if he or an employee was trying to process two refunds of various amounts. He said no and then asks if the refund was initiated from the old terminal and supplied the ID. The processor confirms it was occurring from the old terminal. He then informs the processor that is impossible since the old terminal is currently sitting on his desk unplugged. www.TheHardwareConnection.com

How the fraud was performed is still unknown and has been referred to the United States Secret Service for further investigation. When I began researching this story I was amazed to find there is no information readily available even when using multiple combinations— refund fraud, emulating, spoofing, etc.

So how can you protect yourself from becoming a victim of this type of fraud?

If you process credit cards on a standalone terminal, then ask your provider about adding a password to the terminal. The terminal stores the password and when a refund is submitted, confirms the password with the processor.

If you process credit cards in your POS system and your store loses internet connection many popular systems will store the transaction information and then process the sale when internet connectivity returns. The one downside to this approach is if the transaction is declined the customer has already left the store.

Since this type of fraud is new and still under investigation other precautions are unknown. Q

THE HARDWARE Connection ■ November 2018 ■ 15

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HARDWARE HUMOR

www.TheHardwareConnection.com

THE HARDWARE Connection ■ November 2018 ■ 17

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Amazing but TRUE

HARDWARE HUMOR

STORIES

had one guy bring back a U-Haul truck with six teenagers locked in the back of it.

I really didn’t know wha t to say. Then, they all got out and into a little bitty car and drove of f.

Scott Ridder Midwest Ace Hardwar e Manhattan, Kan.

HARDWARE I

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young man came in to buy gunpowder, something that’s fairly common in gun stores, sporting goods and hardware stores.

I asked what he was shooting, since we only have one kind in stock and we usually don’t sell it at all.

The correct answer to my question would be rifle, pistol or shotgun, or a similar version of those answers. He said, “Oh no, no guns, we use it for exorcisms.” The total sale was $120 plus tax.

Alan Talman Karp’s Hardware | East Northport, N.Y.

e stock Weber f grills and one o the colors is sap er asked phire. A custom nd one of for a blue grill, a goes back the employees e don’t and says that w nes, only have any blue o me of the sapphire. So, so s put signs other employee on all the that read “blue” s a joke. sapphire grills a Nancy Fisher rdware Allison’s Ace Ha Lottsburg, Va.

W

I

had a local college professor storm into our store and declare the tools we sold were nothing but junk. He had purchased a 7-1/4 planer blade to cut off a door. He told us he burned his way through the door. He was right— the blade was blue from the heat. He brought the saw with him because he couldn’t find his wrench to remove the blade. I offered to replace the blade and change it for him. As I was removing the blade, I realized that the blade was on backwards—he had cut off the entire door with the back of the cutting blade. When I pointed that out to him he turned beet red, grabbed his saw and rushed out the door.

James Naughton | Zimmerman True Value Hardware | Pendleton, Ore. THE HARDWARE Connection ■ November 2018 ■ 19

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How’s Business?

Carol Beachy is the owner of West Jefferson Hardware.

MIDWEST Sales and customer counts in 2018? We are increasing in sales and customer counts. We’re up about 11 percent over last year. In commercial accounts, we have seen huge growth.

There’s an area on the edge of town that’s building a lot with Amazon and Target, so that’s really boosted the commercial side of business.

Best niche categories? Window and screen repair. Other stores aren’t offering those services. We also cut glass and Plexiglas. To promote those services, we have in-store signs and post on social media, especially Facebook.

Best and worst business decisions? For best, it has to be how we decided to personalize our business for customers. We try to be very service oriented. We want to create a oneon-one experience for our customers. www.TheHardwareConnection.com

When I’m hiring, I test prospective employees on their ability to be open to the public and see if they’re service oriented. I look for those employees with a natural gift, who are willing to walk a customer through the store and solve problems. As far as worst decision, I have a weakness and I try to help any and every entity that comes along.

Also, the last expansion and reset went above what I was planning to spend and the return on investment has been slower than anticipated.

New initiatives planned for 2019? I have a totally new staff from a year ago, so I plan on training employees. That’s my biggest focus—training, along with cutting costs.

Carol Beachy West Jefferson Hardware West Jefferson, Ohio

THE HARDWARE Connection ■ Novebmer 2018 ■ 21

THE HARDWARE CONNECTION WINS A MAJOR AWARD 2 YEARS IN A ROW!

The Hardware Connection has been honored with the 2018 Eddie Award from FOLIO for Best Breaking News Coverage for our Special Report on True Value. We also won an honorable mention 2018 Eddie Award for Best Single Issue.

These honors are in addition to the Eddie Digital Award we received from FOLIO in 2017 for Best Standalone Digital Magazine in the B2B category, as well as a 2018 bronze award for Best E-Zine from the American Society of Business Publication Editors.

For more than 20 years, the Eddie & Ozzie Awards have recognized excellence in magazine editorial and design across all sectors of the publishing industry.

FOLIO’s cornerstone awards program involved more than 300 magazine professionals serving as judges to narrow 2,800 entries down to the winners across all digital and print sectors.

The 2018 winners were honored during the FOLIO awards banquet in New York City on October 9.

The Hardware Connection, which was founded in 2009, was one of the youngest publications cited for excellence.

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

NORTHEAST Sales and customer counts in 2018? We’re up a bit over last year in both sales and customer counts. The way Trump has run the country has a lot to do with it.

Best niche categories?

We don’t really have niches. We really just service customers with core categories.

Best and worst business decisions? The best has to be when I got out of textiles 40 years ago and got

R&M True Value Hardware has been in operation since 1981.

into hardware. As far as worst, I guess I haven’t because I’m still here.

New initiatives planned for 2019? As product lines change, I’ll go with the new item. I’ll follow the suggestions from the customers to add more products to the store.

Rick Tumminello Sr. R&M True Value Hardware | Pompton Lakes, N.J.

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CUSTOMER SUCCESS STORY

TORONTO LUMBER COMPANY RockSolid MAX™ brings productivity gains, greater business insights to independent hardware and lumber retailer

I

t’s only been two years since Shari Fuller and her team at Toronto Lumber switched to RockSolid MAX™ by ECi Software Solutions to run the business. But somehow, it seems so much longer.

NEW INTEGRATED POS: AN END TO WASTED TIME AND THE START OF GREATER BUSINESS EFFICIENCY Gone are the days when Sharri would have to stay long after the store closed, because she couldn’t use the computer to put together orders during regular hours, and when office manager Jessie Hoag would need eight hours to figure out the company’s sales tax payments.

RockSolid MAX has freed up valuable time for the folks at Toronto Lumber; they can now spend where it matters most—taking care of customers and growing the business. It has also given them a far better idea of how their business is doing than they ever had before.

Toronto Lumber has been a fixture of the Kansas farming community it calls home for more than 100 years. In many ways, it embodies the best of today’s independent hardware and lumber retail community: owned and operated by the same family for the past 38 years, and proud of its ability to give a loyal customer base more than enough reasons to buy from them instead of the nearest big box.

It’s a small operation with just four employees, but business has been good in recent years, fueled by a strong local economy and a willingness to change in response to shifting market trends and new opportunities to run smarter and more efficiently.

NEW CLOUD-BASED SOFTWARE TECHNOLOGY IS ESSENTIAL TO COMPETING IN TODAY’S MARKET Not surprisingly, technology figures prominently among the changes the Toronto Lumber team has put in place in recent years.

Before switching to RockSolid MAX, the business had been run using a Database Management System (DBMS) system. That may have worked just fine once upon a time, but not anymore, says Jessie. “The cost of technical support was also a big issue for us,” she continues. “We don’t have access to any local IT resources and any time I tried to get help from them, I was paying by the hour, and all those charges mount up.”

Jessie and her team started looking for new software and it didn’t take long before the obvious choice emerged. “When we decided to switch out of DBMS, we looked at several other systems, but RockSolid MAX really gave us everything we needed,” she remembers.

FULLY INTEGRATED POS MAKES MANAGING THE WORKFLOW SIMPLE “I really liked the way everything was integrated within the program, so that you could handle all the purchasing, inventory, accounting and so on without having to switch in and out of other programs like QuickBooks®,” she says.

Managing workflow was a whole lot better, too. “With RockSolid MAX, you can follow the paper trail on an order very easily, and that’s particularly helpful for special orders,” Hoag says. “You can track everything from the initial quote all the way through to the sale. It’s easy to search and easy to follow with RockSolid MAX because everything is all linked together. That just wasn’t available to us with DBMS.”

INTUITIVE TO USE BECAUSE IT’S DESIGNED BY HARDWARE STORE PEOPLE, FOR HARDWARE STORE PEOPLE And with RockSolid MAX, there were no worries about buying features that they didn’t need. “RockSolid MAX was designed by hardware store people for hardware store people and it definitely feels more tailored to a business like ours,” Jessie points out.

“RockSolid MAX has made our purchasing and receiving so much easier and its search capabilities— whether it’s a matter of item look ups, order history, customer activity, or anything else you might want to know about the business—are really fast and easy to use.” And, she reports, “Figuring out those sales tax payments that before took eight hours or more now gets done in just 30 minutes.”

CLOUD-BASED ARCHITECTURE ESSENTIAL TO DATA BACKUP AND SECURITY Plus, the program’s cloud-based architecture means nobody at Toronto Lumber has to worry anymore about backing up the system and bringing hard drives home with them every day.

“Without RockSolid MAX, we really didn’t know what was going on in the business,” Jessie admits. “We just didn’t realize how much we couldn’t do and how many capabilities we were missing out on.”

Two years after switching to RockSolid MAX, life at Toronto Lumber is so much better. “Everything runs a lot smoother and our time on just about everything has been cut in half,” she happily reports. “When I compare it to our old system and look at how much time we’re we re saving, RockSolid MAX has made a huge difference.

We’ve taken on a lot of new business in the past few years and we just wouldn’t have been able to do that if we didn’t have RockSolid MAX to run things.”

DO MORE WITH LESS! RockSolid MAX™ cloud-based software for hardware stores and home centers will help your team do more, in less time, with less paper!

All documents including transactions, purchase orders, receipts, and statements are automatically linked to the associated records, so you don’t have to dig through files to find what you need—you can even attach hand written notes! Plus, emailing documents to customers, you’ll save a ton on paper and postage. SAVE TIME. SAVE MONEY. SAVE PAPER. 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.

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How’s Business?

SOUTH Sales and customer counts in 2018? We added some stores about a month ago, so much of our sales increases have been because of that. We have nine stores now. Existing stores have seen a decrease in customer count, but we’ve seen an overall increase in margin. Some individual Darin Workman is president of stores are higher on sales compared to nine-store Ace Hardware Forsyth. last year. Overall, we’re down across the board because of the horrible spring in spending from businesses and that’s and because we’re competing against reflected in the average ticket being the hurricane that came through last down a little bit. year. We’re seeing a little bit of a drop

with tariff price increases will be one initiative.

Ace is pushing them down and preparing us for the increases. So far we’ve seen a trickle of price increases. Another end-of-year initiative is promoting holiday sales.

We’re looking to have

special events the week of Thanksgiving and for Christmas, Santa will visit our stores.

Darin Workman Ace Hardware Forsyth Forsyth, Ga.

Darin’s wife, Gina Workman, also works in the business.

Best niche categories? The majority of our stores are known for STIHL products. We also have strong Big Green Egg grill sales and a strong grilling niche. Pine straw and wheat straw are also huge for us.

We promote our niches through the circular and online marketing.

Best and worst business decisions?

The best has to be becoming a small business owner after leaving corporate Ace offices 17 years ago. The worst decision has to be not finding newer items. I’ve been a little lazy on that.

New initiatives planned? Keeping up www.TheHardwareConnection.com

THE HARDWARE Connection ■ Novebmer 2018 ■ 27

SOUTHWEST Rod’s Ace Hardware was Sales and customer founded in 1993. counts in 2018? It’s amazing, we’ve been in business for Best niche categories? We have 25 years and we are up every year. This year, we’re up about 10 percent over last a pretty good lawn and garden department, especially chemicals such as year. Customers are letting loose with the money because of the economy and fertilizer and weed killers. Sprinkler systems are also a strong seller for us, with are more comfortable spending.

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people in Arizona watering plants to keep them alive and maintaining irrigation. To promote niches, I belong to a local advertising group that focuses on seasonal advertising. For example, this time of year winter grass is popular, so we’re promoting seeding of winter grass.

Best and worst business decisions you have ever made? The best: Thirty years ago I left industry and decided I wanted to go into business for myself. As far as worst, I have probably passed up opportunities to grow the business. I’m pretty conservative and haven’t expanded when others might have expanded.

New initiatives planned for 2019? I’m opening a second store four

Rod Blanco

How’s Business? miles from here. The store will open in February, so right now I’m training employees here, overstaffing this store.

Then I’m going to split them up, based on where I think they’ll be best. We have a good reputation for customer service, so we’re working hard to take that to our next location.

Rod Blanco Rod’s Ace Hardware Mesa, Ariz.

WEST

adding grills, because those have done better than any other product. As far as worst, we tried holiday products, such as Christmas and Halloween decorations, and those didn’t sell well. Holiday items just don’t fit in with our business, so I concentrate on core product lines, not miscellaneous products.

New initiatives planned for 2019? The store is a year old, so we’re still trying to improve our core merchandising to be more in line with what the neighborhood demands. I’ll talk to customers when they come into the store.

A little while ago, we handed out free samples of Bio-Clean stain remover and the customers liked it so much that now we sell two or three cases a month.

Sales and customer counts in 2018? The year started off good, but Rick Mancuso the past couple of months have been Ace Hardware of Lodi | Lodi, Calif. slower, maybe because of the extreme heat. Overall, we’re a little down from last year, but I’m hoping during the next couple of months we can make last year’s number.

Best niche categories? Grills have become a strong niche for us. We sell Traeger pellet grills and that has been a good product line for us. We devote about 500 to 700 square feet in the store to grills. To promote our grill niche, we rely on the Ace circular. And Traeger lists us as an authorized dealer, so that has helped drive customers to us.

Best and worst business decisions? The best has probably been 30 ■ THE HARDWARE Connection ■ November 2018

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From

p o h S s Tom’

By Tom Chasteen

W

TS REVIE E PRODUC

HARDWAR

O

ne of the big advantages I always felt I had as an independent hardware retailer was my knowledge of my specific market and the unique relationship we had

with our customers.

A good retailer is not afraid to take chances on putting new products in his or her store.

PRODUCTS #1-3: DANIK HOOK Danik Hook has developed three unique products that may fit into stores that have a strong marine, sporting goods or automotive merchandise mix. All three Danik hooks work on the principle of adjusting tension on tie-down ropes or bungee cords without having to tie a knot. This is accomplished by using a simple cam clamp with a hook that will not allow the rope or bungee cord to slip once it has been tightened.

However, it can be easily released using one hand.

What makes the Danik Hook products so unique and what all of our testers mentioned in their comments was the quality and finish. All of the cam clamps that prevent the rope or bungee cord from slipping are well made with rigid edges that really grip and prevent slippage of the rope or bungee cord, but the ridges are close enough together that they won’t cut or fray the rope or bungee cord being used.

Danik Hook makes their hooks with two types of material. One is made of stainless steel and is great for coastal www.TheHardwareConnection.com

areas, food processing areas or where a greater load capacity is needed. The finish on the stainless Danik Hooks our testers used was very high quality equal to yacht finish. These hooks would accept rope sizes between 3/8” and 5/8” and are capable of lifting 8,000 pounds.

The other hook is made from a highstrength composite material and comes in two sizes: for 3/8”–7/16” size ropes and bungee cords and a larger hook that accommodates 3/8”–5/8” size rope and bungee cords. Both size hooks have a locking cam and a stainless wire

THE HARDWARE Connection ■ November 2018 ■ 31

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keeper that keeps the hook from slipping off whatever you hook it to.

The third product is the Danik Hook adjustable bungee cord set, which has a 48” length of bungee cord with a Danik hook on each end, making it easy to tighten the bungee cord from each end. The end of the bungee cord also has plastic ends with molded clips so the user can secure the ends of the bungee cord.

Our testers had more fun coming up with different applications for the Danik Hooks that ranged from tarps to securing cargo. Then they came up with some unique applications from adjusting fenders on boats to anchor buoys. However, one of the most interesting and effective uses was tying down an airplane on the tarmac. All of our testers agreed that what makes the Danik Hooks so effective was the quality and the ability of the cam clamp to not slip. Watch this video to see many more uses for Danik Hook products.

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PRODUCTS #4-6: SHARPAL Sharpal is a company dedicated to sharpening tools of all shapes and sizes. The three products we tested were the “All-in-1” knife and pruner sharpener, the “Credit Card Size” Diamond Sharpening Stone and the “Faceoff” Dual Grit Sharpener.

The “All-in-1” sharpening tool is for sharpening knives, pruners, hedge shears and scissors.

The easy-grip handle and hand guard make sharpening an easy chore with minimal risk of cutting yourself. There are four different sharpening tools in the “All-in-1” hand sharpener and each of them make it easy to see what you are doing while keeping your hand away and protected from the sharpened surface.

The diamond sharpening stone is literally the size of a credit card and comes with three different grits (coarse, fine and extra fine) and each www.TheHardwareConnection.com

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has a unique finger holder on the bottom of the steel sharpening stone that makes it very easy to sharpen pocket knives, chisels, fish hooks and sharpening tips of tools like ice picks, screw starters and darts.

The “Faceoff” sharpener is about the size of a round hockey puck and is made to sharpen bigger objects like axes, shovels, machetes, chisels, hatchets and lawn mower blades. The “Faceoff” sharpener easily fits into the palm of your hand and makes it easy to grip with your fingers. The coarse grit makes it easy to get the sharpen surface ready for the finishing touch with the fine grit, both of which come in the package along with a storage pouch. www.TheHardwareConnection.com

The retail packaging of each of these products is superior and makes it easy for the consumer to decide which sharpening tool they will need for their project.

We supplied samples of all three tools to each of our testers to try and all of them were pleased with the performance of the Sharpal products.

Check out the three videos here: All-in-1 Credit Card Size Faceoff Both of these companies make unique items that will appeal to hardware store owners and their customers. These are the types of products that can set the independent hardware store owner apart from the big-box chain stores.

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FEATURE

By Chris Jensen & Doug Donaldson

What Are Your

Best & Worst Business Decisions?

Scott and Karalee Ridder operate two Ace stores in Kansas.

H

ardware and home improvement retailers are forced to make lots of big and small decisions on a daily basis. Most of these decisions are not significant in the grand scheme of things, but looking back with the benefit of hindsight, retailers can determine that certain strategic decisions proved to be vitally important to the success of their businesses. Then there are the headscratching moves that could have been crippling and can now be chalked up as a valuable lesson learned.

We asked retailers to share their best and worst business decisions and what follows are their responses, which can

be used to help other retailers navigate the same path toward success.

Without even thinking twice, the best decision has to be bringing in U-Haul. About a year ago, we bought a truck and it’s taken off from there. For any other retailers who want to add U-Haul, we recommend having a place to put them as they do take up a lot of room. As far as worst decision, we brought in a line of riding mowers that hasn’t sold well.

Scott and Karalee Ridder Midwest Ace Hardware Manhattan and Junction City, Kan.

36 ■ THE HARDWARE Connection ■ November 2018

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David Strano is co-owner of three familyrun stores in the Pittsburgh area.

Best decision was when we decided to expand and take an opportunity to open up a new Do it Best store in a vibrant area. Also, when Benjamin Moore came to us with another opportunity to open up a standalone paint store. By opening these businesses, it gave us leverage on the competition and buying power. This has been a great learning experience and also gives us a fallback plan in the event that one store does not succeed. Worst business decision so far is holding on too long to employees who bring you down because you feel loyalty to them.

David Strano Ambridge Do it Best Home Center, Ambridge, Pa.; Hampton Do it Best Home Center, Allison Park, Pa.; Color Palette, Pittsburgh, Pa.

Jamesburg Hardware has branched out into appliances and window treatments.

www.TheHardwareConnection.com

Diversifying has to be the best decision. We traditionally have been a hardware store, and we got into major appliances in a big way by becoming a GE appliance dealer.

Hunter Douglas window treatments have been a great business. We have found that these businesses support one another. If one element of the business is down, another might be up. As far as worst decision, it was being a RadioShack dealer. That entity crashed and burned pretty significantly. RadioShack was terrible at chasing faddish electronic trends.

That has to be one of our biggest disappointments.

Gary Clayton Jamesburg Hardware & Appliance Jamesburg, N.J.

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

The best decision has to be moving from a strip shopping center to our standalone building. The timing really worked out. The strip center was going downhill, and they were going to increase our rent twofold.

We bought property about a halfmile south and put up a building. As far as worst decision, it has been not using our extra land to add building THE HARDWARE Connection ■ November 2018 ■ 37

FEATURE materials. We don’t have a big selection of building materials, but people need that.

Jeff Idol Southside Hardware | High Point, N.C.

Jesse Gullion is the owner of Alvarado Paint & Hardware.

We emphasize constantly talking in the store and providing customer service and the power of communication and building relationships. I constantly check in with my office staff each day to figure out where the problems may be. We’re always trying to fix systems and make changes to be more efficient. We are willing to change to a John and Robin Arterburn with their new system and even after a week daughter Lauren. find ways to make it better and more efficient. I can’t really point to many The best decision is probably bad decisions. We put in the time, expanding our paint from premium effort and research before decisions. home paint to a full line including contractor-grade paints. To appeal to We don’t look at negatives but ways to improve. contractors, we offer color consultaJesse Gullion tion and have a paint salesman on the road working with customers. We Alvarado Paint & Hardware also have dedicated paint department Los Angeles, Calif. staff. Because of how we have positioned ourselves, we can provide the benefits of both a hardware store and a paint store. As far as worst decision, it was picking a particular product line that didn’t work out because the market changed. We also worked with some vendors that tried to follow trends instead of sticking to core Owner Kim Folchi with her son Marco, products. who represents the third generation.

John Arterburn Pinnacle Peak Ace Hardware My best decision has been to keep Scottsdale, Ariz. the atmosphere and aesthetic of the 38 ■ THE HARDWARE Connection ■ November 2018

www.TheHardwareConnection.com

store pretty much the same as it has been since 1901. We have modernized here and there, of course, but have kept the charm of an old-fashioned hardware store, which our base clientele knows and loves but we also get non-stop compliments from tourists. My worst decision is keeping a certain forklift nicknamed “Trouble” for so many years and sinking so many dollars into it. Sometimes you just have to spend money to save money, I guess.

Kim Folchi Sierra Valley Home Center Loyalton, Calif.

Rough River Hardware opened in 2013.

The best decision has to be selling my RadioShack business and opening a hardware store. I saw the writing on the wall, so I got out of that business.

As far as worst decision, it may have been partnering with someone in a phone business. That one really cost me and was a loser.

David Dillman Rough River Hardware McDaniels, Ky. www.TheHardwareConnection.com

FEATURE

From left, Marilyn Archer and Robert Archer with son Colin Archer and his wife Sarah Archer.

Roger Schneider (left) and brother Gerald Schneider operate the store started by their grandfather in 1923.

As far as a best decision, about 25 years ago I talked my father and brother into letting me go out as a full-time salesman. I got accounts from schools, banks, apartments and hospitals in eight towns. It’s steady income and the customers appreciate the service we provide. Not sure about worst decision.

Roger Schneider Schneider Hardware West Orange, N.J.

Moving into this new store has to be one of the best decisions. As far as worst decision, it was probably trying to branch out with a lumberyard in Amarillo. I’ve found it’s best for me just to keep one location.

Robert Archer Morton Lumber Ace Hardware Borger, Texas

Allison’s Ace Hardware has been in business since 1971.

The best decision has to be moving from a side road to the main highway.

Business tripled after we moved. The worst was giving up Benjamin Moore paint.

Nancy Fisher Allison’s Ace Hardware Lottsburg, Va.

Basic American Supply opened in 2014.

One of the best decisions we made was to carry building materials such as dimensional lumber, drywall and rebar.

Even though the margins are not very high we have substantial throughput with these products. Currently this department generates the largest revenue. From January through October 2018 we experienced over a 55 percent increase in revenue compared to the same timeframe in 2017. When we first opened the store we had not planned

40 ■ THE HARDWARE Connection ■ November 2018

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on selling these products. There is not really something that sticks out as a really bad decision. One of the learning curves we have gone through is how we purchase products, especially at trade shows. We made some mistakes in the beginning that were tough such as buying too much of a product that took months and months to move.

Chuck Bradshaw Basic American Supply | Colorado City, Ariz.

Mallia Evans is manager of Brady and Cavany Ace.

Brady and Cavany Ace features a large clothing department.

The best decision was offering our customers more than just hardware.

By offering a diverse line of products such as the addition of our clothing Paul and Becky Rogers underwent an lines, Carhartt and Ariat, we have expansion and remodel in 2014. expanded our business tremendously. Also, the addition of the YETI line Worst decision was when we did our and Big Green Egg products has also large expansion and remodel. We had agreements with our local unit of govern- increased our bottom line. The worst decision was not delegating some of ment, the village—they were verbal and we did not get it in writing. Then when it my responsibilities to other members of my staff sooner. Our business has came time for them to hold up their end grown so much and so fast that I realof the agreement they backed out. Even ized too late that it was more than one with witnesses from our meetings they refused to meet the obligations. The best person could handle. I have a tremendous staff here and should have realdecision was our decision to expand/ ized that they are capable of helping remodel/reset our store. Even after four run this business. years we still get great comments and Mallia Evans our sales continue to grow.

Brady and Cavany Ace Hardware Paul Rogers Tunkhannock, Pa. Rogers Do it Best Hardware | Sparta, Mich. www.TheHardwareConnection.com

THE HARDWARE Connection ■ November 2018 ■ 41

FEATURE Whitney McKellar, with husband Sean Stevens, represents the third generation of her family to operate M&M Lumber.

Best decisions: UÊ We’ve hired some great folks over the years that have been fantastic. Having great people makes the days a lot more fun. When people like who they work with we are a lot more efficient by working together, joking and getting things done.

UÊ We joined an industry roundtable a few years back after another owner/ operator told us to do it. It has been invaluable in being able to talk to other people in the same position as us who have the same issues as us, comparable operation size and just open up to candid conversations and more importantly, ideas and solutions based on things the other stores have tried.

UÊ Metrics and tracking. We found that tracking what is important to us gets results. When we focus on fixing something or improving something the metrics drive the results we want. The saying of inspect what you expect is very true, and the data behind it can’t lie.

Worst decisions: UÊ We’ve hired some folks who were not great fits and we have tried to work with them longer than we should to get them where they need to be on our team. It’s hard to realize you made the wrong choice in a hire and you need to change directions.

UÊ We’ve tried product categories thinking we could ‘grow into them’ and ended up donating them to Habitat or other entities. O2 nail guns, various safety clothing lines, air filters, you name it. Our walk-in traffic is mostly builders and they don’t come to shop for things they don’t need Whitney McKellar M&M Lumber | Tulsa, Okla.

Lorrie Tignor (left) co-owns Tignor’s Hometown Hardware with son Matt and daughter Katie.

The best and worst business decisions were both in 2008. We decided to move the store to a smaller location, which seemed like a great decision at the time with the financial turmoil. It reduced rent cost significantly, gave us better visibility and allowed us to be in a convenience hardware footprint. However, the actual moving of the store turned out to be so painful.

We finally opened in 10 days, by necessity.

Our customers lost us for a while. Now, 10 years later, it was a great decision to move the store. We have a customer base that loves the convenience of in-and-out shopping. They love that we have a lot of parking available. We have developed into the go-to place in our community. Q Lorrie Tignor Tignor’s Do it Best Hometown Hardware Wooster, Ohio

42 ■ THE HARDWARE Connection ■ November 2018

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By Fred Fischer

TECHNOLOGY UPDATE

You Must Manage Retail Price Changes

Right Now W

e have been pretty lucky the past eight or nine years when it comes to managing price updates. It is always surprising how many retailers only adjust retail prices when ordering new stock by changing prices from the invoice when they place product on the shelf.

If you are still using price tags, the problem and expense is compounded.

Not only does the labor cost of changing price as well as bin tags add up quickly, you are missing out on updating your prices to attain your desired profit margin.

If you are changing the retails only when new stock arrives, you are frequently selling at the lower price www.TheHardwareConnection.com

Retailers need to stay on top of price changes caused by tariffs or they will lose significant gross margin dollars.

THE HARDWARE Connection ■ November 2018 ■ 43

TECHNOLOGY UPDATE and buying at the higher price. As an example, if you have six widgets on the shelf that cost $1.00 and you sell them for $2.00 that’s a 50 percent profit margin. If the supplier increases the cost to $1.50, you need to increase the retail to $3.00 to make the same profit margin. When you sell the six widgets for $12.00 retail ($2.00 X 6 = $12.00), it now will cost you $9.00 to replace them. In this example, you have $12.00 to replace the six widgets, which now cost you $9.00. This takes an extra $3.00 out of your pocket.

It has been generally accepted for the past eight or so years that inflation is averaging 2 percent to 3 percent per year. If you add markup, you are now pushing a 4 percent inflation on the retail price. Per $100,000 of sales, that equates to $4,000. Over the course of a year, that could amount up to $20,000 in additional profit on $500,000 in annual retail sales.

The bottom line is most wholesalers can provide price updates on at least a weekly basis. If you have a good point-of-sale system you are now talking about only changing bin tags, because prices are managed by you and the point-of-sale system without price tags.

If you are still using a cash register, not only do you have to change bin tags, but you have to replace all of the price tags on the existing product

in your store. Changing price tags is labor intensive and, in most cases, just doesn’t get done. The idea is to work smart, not hard.

This problem will be compounded in the next few months as multiple layers of tariffs are being renegotiated. Regardless of political viewpoint, until the tariff issue gets worked out, they could have a significant impact on your gross profit (or lack of gross profit).

As an example, in the past week, my business received notification of price increases on electronic scales between 11 percent and 17 percent due to tariff costs being added. They are also saying it is possible to see another 25 percent increase around the first of 2019.

If you sell lumber, you have been experiencing substantial cost changes along with the freight and shipping cost circus. Not only are increased freight costs being experienced, but sometimes just getting a truck to haul the product can be a challenge.

Freight clearly needs to be accounted for when establishing a new retail selling price.

Some manufacturers are going to add the tariffs into the cost of the product. Many are choosing to add tariffs as a line item at the bottom of the invoice. Why? Tariffs are changing pretty dynamically. Many manufacturers have contracts with wholesalers

44 ■ THE HARDWARE Connection ■ November 2018

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that require 90-plus days of notification before a price increase. With the tariff issue, the manufacturers don’t have the time or ability to give this notification, so it comes as a line item on their invoice. Your point-of-sale system should have a way to distribute that cost across the product and invoice items.

It is scary how many hardware and lumber dealers are still using cash registers and hand writing invoices. Of those who have implemented a point-of-sale system, most miss out on the features of their point-of-sale system that manage pricing.

What keeps your front door open is not how much money you take to the bank, but how much gross profit you make on product when you sell it. If you are struggling to manage retail price updates and changes, you are not alone. It is critical to your future survival and success that you find a good solution, and now.

With interest rates slowly increasing, combined with the unknown tariff and freight factors, you need to stay on top of retail pricing for the future success of your business.

Fred Fischer is president and ceo of J3 Point-of-Sale–Ganymede Technologies Corp. Contact him at fred@j3pos.biz or 888-600-5522. www.TheHardwareConnection.com

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DEALER PROFILE

The family members involved in the business include (from l to r): Gray Little, Leslie Little, Ben Little, Alec Little, Kearns Little and Nevan Little. Not pictured: Kyle Little.

Staying Relevant for Nearly a

Century

L

ittle Hardware dates back

Little Hardware has been serving the Charlotte area since 1922.

to 1922, when Alec Little opened a hardware store in Cornelius, N.C. When the

Great Depression hit, Alec headed to Charlotte, where he later helped his sons finance the purchase of a hardware store on Mint Street. They tried to carry a little bit of everything, with a specialty in auto parts. It was the hardware side that eventually took off, and today the business attracts a combination of industrial, commercial, contractor and residential customers from all around the bustling downtown area of Charlotte. Third-generation family member Gray Little serves as chairman. His brother Nevan is president, cousin Alec is treasurer, and sister Leslie and cousin Kearns are vice presidents. Gray’s son Ben and Alec’s son Kyle represent the fourth generation of the Little family in the business.

46 ■ THE HARDWARE Connection ■ November 2018

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Gray Little Little Hardware Charlotte, N.C. Wholesaler: Orgill, although we buy a lot direct from manufacturers.

Sales floor: 22,000 square feet for sales.

The total space is 30,000 square feet including the warehouse and basement storage area.

Number of employees: 35, most of them long-time employees.

Sales: Really good in 2018. Sales last year were way up. We feel we’ve done well and survived the last recession. 2008 and 2009 were bad for us, but it’s slowly building back up. We want to set up the next generation pretty good.

Top categories: Our biggest category is power tools and accessories. We compete well with internet prices in the category. We operate a power tool repair center—Bosch closed theirs in town, so we hired their lead technician. We even repair tool brands we don’t stock. The next biggest categories are hand tools and fasteners and we sell a lot of janitorial supplies.

When was the business hit by a fire? We had a fire on April 11, 1986 that caused total destruction except for a separate warehouse. We rebuilt on the same spot, then built a section that connects the store with the old warehouse. Now we www.TheHardwareConnection.com

Upper: The store is known for its knowledgeable, long-time employees who are problem solvers.

Middle: The top category is power tools and accessories.

Lower: The merchandise mix caters to light industrial, contractor and commercial customers.

THE HARDWARE Connection ■ November 2018 ■ 47

Upper Left: Having a power tool repair and service center keeps them competitive against online sellers.

Lower Left: If Little Hardware doesn’t have what the customer needs, they will do whatever it takes to find it for them.

Right: The store covers two city blocks in downtown Charlotte, with lots of back stock in the warehouse.

to having business in non-traditional areas. Our forte is the commercial contractor, the maintenance man and the heavy DIYer. We are known for our knowledgeable, long-time employees. We do a lot of special orders, which probably accounts for 50 percent of our purchases, and are known for having hard-to-find items.

We get it for the customer, order for them or call ahead somewhere else take up two city blocks. The area was that has it for them. A lot of our comlight industrial, then residential, then heavy industrial and now it’s back to res- petitors buy from us. We buy from idential with a lot of condos in the area. a local ice melt company that has a blended mix—all they do is sell salt.

We pride ourselves on always being What makes the store unique? in stock on ice melt and still sell it in We will help anyone. We find joy in the off-season. being problem solvers, which led us 48 ■ THE HARDWARE Connection ■ November 2018

www.TheHardwareConnection.com

Any new initiatives planned?

We reroofed the whole building three years ago and just completed a switch to LED lighting inside and outside the store. The goal is always trying to do what we do better.

Do you fear competition from Amazon? We don’t worry about Amazon. We’re here for the customer who needs a problem solved right now. Our plans are to stay here and serve folks in the neighborhood. Our biggest fear is that the cost of land will force us to move.

What is your biggest challenge?

An aging sales force is our biggest challenge. Replacing great people is hard. In the back office, it’s hard to keep up with all the paperwork and regulations.

How difficult is it to operate a business with so many family members involved? There are seven family members currently involved full time in the business, plus four that work part time. Some other family members are involved in ownership. We get on each other’s nerves www.TheHardwareConnection.com

Upper: The glove category reflects the industrial and contractor base, with lawn and garden only covered by chemicals and longhandled tools.

Lower: Little Hardware carries a deep selection of levels and measuring tools.

sometimes, but it’s all good and we have fun in the store. There are unique challenges working with so many family members, but everyone has the best interests of the business in mind. Q THE HARDWARE Connection ■ November 2018 ■ 49

Connection

TM

TRUE VALUE MEMBERS SPEAK OUT ABOUT PROPOSED SALE

AWARD -WINNING EDITORIAL CONTENT THAT HITS THE MARK

April 2018 Vol. 10, No. 3

THE INDUSTRY’S DIGITAL LEADER

PREVIEW OF THE 2018 HARDWARE CONFERENCE IN MARCO ISLAND

May/June 2018 Vol. 10, No. 4

THE INDUSTRY’S DIGITAL LEADER

T H E H A R DWA R E C O N F E R E N C E C E L E B R AT E S 3 0 T H A N N I V E R S A R Y

THE INDUSTRY’S DIGITAL LEADER

THE HARDWARE CONNECTION HONORED WITH TWO MORE AWARDS

Sept/Oct 2018 Vol. 10, No. 6

July/Aug 2018 Vol. 10, No. 5

THE INDUSTRY’S DIGITAL LEADER

Honoring Industry’s SPECIAL REPORT: What Does the Future Hold for

True Value?

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

Best Retailers

Can Amazon Be

STOPPED?

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

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Rebounding from

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ALSO INSIDE: Boosting Profits with a Simple Marketing Strategy Plumbing Product Trends

CLICK HERE & SUBSCRIBE YOUR ENTIRE STAFF FOR FREE!

November 2018 Vol. 10, No. 7

Parkrose Hardware

Agricola Hardware & Lumber

Ace Hardware of Clarkston

ALSO INSIDE: Profiles of Beacon Award Winners Retailers Recover From Hurricane Florence

Retailers Share

Best & Worst Business Decisions ALSO INSIDE: Staying Relevant for Nearly a Century Why You Must Manage Price Changes Now Electrical and Lighting Trends

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 62,000 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

CATEGORY REPORT

ELECTRICAL TRENDS Sales of Lamps (Independent Hardware Channel) 12 Months % Change vs. Year Ago Lamps: Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10.5% Lamps: Dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-11.6% Source: Vista Information Services, div. of Epicor Software Corp.

Unit Sales Breakdown for Lamps Total of Items with Sales Total Category Top 5 Items % of Unit Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6% Top 10 Items % of Unit Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2% Top 20 Items % of Unit Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.5% Top 30 Items % of Unit Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.7% Source: Vista Information Services, div. of Epicor Software Corp.

Seasonality of Sales of Lamps (Index=100) 140 133 129 126 119 111 112 98 97 93 98

88

84 70

Sept. Oct. Nov. Dec. 2017 2017 2017 2017

83

82

88 79

Jan. Feb. March Apr. May June July Aug. 2018 2018 2018 2018 2018 2018 2018 2018

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

Lamps Share of Sales by Type (Latest 12 Months) LED

34.3%

Incandescent

23.4%

Halogen

21.5%

Fluorescent

19.7%

HID

1.1%

0

5

10

15

www.TheHardwareConnection.com

20

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.

THE HARDWARE Connection ■ November 2018 ■ 51

CATEGORY REPORT CATEGORY REPORT

ELECTRICAL & LIGHTING BUYING UPDATE UÊ Energy-efficient light bulbs have been introduced that produce significantly less harsh blue light than the average LED bulb.

UÊ The industrial look of cage pendants is growing in popularity for kitchen lighting.

UÊ Dining room chandeliers are moving away from the traditional look with a new focus on artistic style that makes a design statement.

UÊ String lighting has become common in outdoor settings, but now it’s moving inside to serve as mood lighting in bedrooms and rec rooms.

UÊ Rustic, farmhouse style lighting, especially repurposed or 52 ■ THE HARDWARE Connection ■ November 2018

Left: Ace Hardware in Colorado Springs, Colo., stocks the latest in LED lighting.

Right: Nicollet Ace Hardware in Minneapolis offers customers high-quality, energy-efficient light bulbs that produce full-spectrum light.

distressed fixtures, is exploding in popularity.

UÊ Sconces are back in favor and are sometimes used in conjunction with the very popular Edison bulb. Another application is backlit disc scones, which offer a soft light option.

UÊ Cylinder pendant light fixtures emerged as a trend in 2018.

UÊ Smart light bulbs are not just in demand by millennials, as all ages of consumers see the benefits of having a connected home. Q www.TheHardwareConnection.com

HARDWARE PRODUCTS

FL85R RECHARGEABLE LED HEADLAMP UÊ Coast’s most powerful rechargeable, front-loaded LED headlamp is impact resistant, weather resistant and virtually unbreakable.

UÊ Offers both lithium and alkaline battery charging options and its all-in-front controls provide the ultimate in hands-free lighting and reliability.

UÊ The Pure Beam Focusing Optic combined with 700 lumens of power provides a seamless transition from crystal-clear flood beam to a long-distance Bulls-Eye Spot beam and projects up to 656 feet away.

UÊ Comfortable and hard-hat compatible, the FL85R has a heavy-duty, adjustable headband. The reflective straps provide increased visibility and safety for the user.

Coast Products Inc. 503-234-4545 www.coastportland.com www.TheHardwareConnection.com

LED PORTABLE WORK LIGHT UÊ Ideal for any job site or work area.

UÊ Features a rugged die-cast aluminum housing body, steel H-stand with no-slip feet and tool-free head adjustments.

UÊ 5000 kelvin color temperature, 1.5kV surge protection, 5-foot 18/3 power cord with 120-volt plug and weatherproof on/off switch.

UÊ Comes with one-year warranty and is UL and cUL listed.

Woods Industries, div. of Southwire 770-832-4884 www.southwire.com

THE HARDWARE Connection ■ November 2018 ■ 53

IN THE NEWS NEW STORES:

warehouse and plans to expand its Knoxville, Tenn., warehouse U Alex and Ashley Ziegenbein by 100,000 square feet in 2019. have opened Springfield Ace U Do it Best Corp. named the Hardware in Springfield, Neb. following as 2018 vendors of U Leitchfield Ace Hardware has the year: Metal Sales Mfg. opened in Leitchfield, Ky. Corp., Simpson Strong-Tie, U Bob Leis has opened Newport Bonakemi USA Inc., Southwire, Ace Hardware and Outdoor in Apex Tool Group, Klein Tools, Newport, Ore. PrimeSource Building Products, U Jim Wennersten opened his fourth The Gorilla Glue Company, Ace Hardware store in Gilbert, Ariz.

Shaw Industries, Swift U Westlake Ace Hardware opened Response, InterDesign, Rain its 122nd location in Cary, N.C. Bird Corp., Norbord, Larson U Kodiak Building Partners has Mfg. Co., Broil-King, Red River acquired Frontier Building Commodities, Rust-Oleum, Supply, which operates five Oatey Company, Milwaukee lumberyards and a millwork plant Tool, Bobcat Company and in Washington.

Liberty Distribution. Libman U Breckenridge Building Center in was honored for supply chain Breckenridge, Colo., and Edwards excellence, Interfor for overall Building Center in Edwards, Colo., sales growth and Wooster have been acquired by American Brush Company for outstanding Construction Source (ACS) products and services. through Clearlake Capital Group and Angelos Equity Partners. ACS was recently formed to facilitate the OTHER NEWS: acquisition of Meek’s Lumber and U Independent We Stand’s 8th other LBM businesses. annual Indie Awards competition is open for nominations until November 11. These awards KUDOS TO: recognize outstanding small U Knapp & Schlappi Do it Best businesses across the country, Lumber Co. in Penn Yan, N.Y., is and the winner will receive a celebrating its 60th anniversary. prize package valued at $25,000.

U Cappels Ace Hardware is Nominate your store today celebrating 75 years in Atlantic, Iowa. here.

UÊ Lowe’s is closing 20 WHOLESALERS IN THE NEWS: underperforming stores in the U House-Hasson Hardware has U.S. and 31 stores in Canada by completed a 50,000-square-foot February 1, 2019. expansion of its Prichard, W.Va., 54 ■ THE HARDWARE Connection ■ November 2018

www.TheHardwareConnection.com

ORGILL ANNOUNCES EXPANDED ROLES FOR EXECUTIVE TEAM Orgill Inc. has announced that members of its veteran executive team will have new responsibilities beginning January, 2019. Ron Beal, Orgill’s chairman, president and CEO, will drop the president title but remain the company’s chairman and CEO. Boyden Moore, who currently serves as Orgill’s general manager of retail, as well as president of the company’s subsidiary, Tyndale Advisors, will assume the position of Orgill president.

Brett Hammers will become Orgill’s executive vice president of worldwide sales and supply chain.

He will be responsible for all sales and product sourcing in support of Orgill’s U.S., Canadian and international customer base.

Eric Divelbiss will become executive vice president of finance and administration in addition to his current role as Orgill’s CFO. “I’m very proud of what our team has achieved, and these changes will ensure a customer-focused continuity of leadership well into the future,” Beal says. “Boyden brings an extensive understanding of the challenges and opportunities facing independent retailers, and will add fresh ideas as to how we can best assist our customers to help them be successful.

Brett and Eric add their years of experience in finding the best ways to support these efforts.”

Beal adds that this plan has been in the works for several years, and is part of an ongoing process designed to both provide for an orderly www.TheHardwareConnection.com

Orgill’s top executive team includes: Ron Beal (seated) and top l to r: Eric Divelbiss, Boyden Moore and Brett Hammers.

succession among Orgill’s management team and to maintain Orgill’s position among the most innovative companies in the industry.

“I am extremely humbled to be part of Orgill’s dynamic and dedicated team in this new role.” Moore says.

“I look forward to continuing to work closely with Ron, Eric, Brett and the entire Orgill team to carry on Orgill’s long history of customer-centric service to independent home improvement retailers.”

DO IT BEST ANNOUNCES EXEC PROMOTIONS Do it Best Corp. announced the promotion of one of its senior leaders while also transitioning another proven manager into an executive leadership role. Effective immediately, Do it Best Corp. Vice President of Merchandising Steve Markley will serve as the company’s new Executive Vice President of Operations while William “Dent” Johnson, previously a divisional merchandise manager, will advance into the role of vice president of merchandising.

Markley has built on more than 30 years of industry experience, beginning his career in what was

THE HARDWARE Connection ■ November 2018 ■ 55

the original distribution center in Fort Wayne. He later worked in the vendor community and also served as a manufacturer’s representative.

Steve returned to Do it Best in 1998 to develop the company’s global sourcing capabilities and vendor export programs. He was promoted to vice president of merchandising in 2007.

“We’ve been making considerable strategic investments in the company to ensure that Do it Best is the first and best choice for independent home improvement businesses,” said President and CEO Dan Starr. “We are fortunate to have someone of Steve’s caliber and extensive abilities ready to lead our teams forward as we drive growth for our member-owners through our supply chain excellence.”

With Markley’s promotion, Johnson moves into a new role overseeing

Dent Johnson

Steve Markley

hardware products purchasing, global sourcing, inventory control, category management, content management, Alliance partner activities and pricing teams. He joined Do it Best in March 2018 and has worked with product category teams on strategic program development, vendor negotiations, promotional opportunities and supply chain enhancements. He previously served for more than 20 years in senior roles with Michelin Tire Corp. and was the site manager for Michelin’s BFGoodrich factory. Q

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UPCOMING EVENTS Monroe Hardware Spring Market February 15-17, Myrtle Beach Convention Center, Myrtle Beach, S.C.

NOVEMBER Distribution America/PRO Group Executive Planning Conference November 14-16, JW Marriott Starr Pass Resort, Tucson, Ariz.

Orgill Spring Market February 21-23, Orange County Convention Center, Orlando, Fla.

JANUARY 2019 Emery Jensen Distribution Marketplace January 31–February 1, Hynes Convention Center, Boston, Mass.

True Value Spring Reunion February 21-24, Kay Bailey Hutchison Convention Center, Dallas

MARCH 2019 House-Hasson Hardware Winter Dealer Market January 10-12, Opryland Convention Center, Nashville, Tenn.

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

United Hardware Spring Buying Market January 11-13, Minneapolis Convention Center, Minneapolis

Blish-Mize Spring Market March 21-23, Overland Park Convention Center, Overland Park, Kan. Hearth, Patio & Barbecue Expo March 14-16, Kay Bailey Hutchison Convention Center, Dallas

FEBRUARY 2019 Florida Hardware Spring Market February 8-10, Double Tree Hotel and Convention Center, Orlando, Fla.

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

HDW Spring Market February 7-9, Ernest N. Morial Convention Center, New Orleans International Builders’ Show February 19-21, Las Vegas Convention Center, Las Vegas, Nev. LBM Advantage Annual Meeting and Trade Show February 18-20, Rosen Center & Orlando Convention Center, Orlando

Southern Hardware Company Spring Market March 27-28, Tunica Road House Casino, Robisonville, Miss.

Wallace Hardware Spring Dealer Market March 27-29, LeConte Center, Pigeon Forge, Tenn.

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

THE HARDWARE Connection ■ November 2018 ■ 57

RETAIL IDEAS

GRILLING AT KIBLER LUMBER PAYS OFF FOR LOCAL GROUPS A dozen years ago, a local nonprofit organization approached the team at Kibler Lumber’s Mt. Orab location about hosting a fundraiser in their parking lot on an upcoming Saturday.

Having been an ingrained part of the southwestern Ohio community it serves through its four Do it Best locations for more than 100 years, the team at Kibler did more than just say yes.

In addition to use of their parking lot, they donated food and a grill to the organization, encouraged them to sell the food as part of their fundraiser and let them keep all proceeds raised from the sale.

“It didn’t catch on at first with groups Upper Left: Customers come to Kibler taking advantage of this, but it’s really Lumber every Saturday to support a local organization that grills food for donations. caught on the last five or six years,” explains Jenny Conrad, sales manager.

Upper Right: Kibler Lumber’s Facebook page Now, organizations from throughout lets customers know what local group is the region are lining up to hold their grilling for donations that Saturday. fundraisers at Kibler’s Mt. Orab locaMiddle: The Eastern FCCLA raised money to tion. They hosted 18 groups in 2016, support their trip to the national convention.

21 groups last year and will end up hosting 32 groups this year, accordBottom: For the past 12 years, Kibler Lumber has been turning over its grill on Saturdays to ing to Conrad. That is just about every help community organizations raise money.

Saturday from March into November.

In addition to school and church The fundraisers are always held from groups, fundraisers are held for Scouts, Lions Club, local library, historical soci- 10 a.m. to 2 p.m. on Saturday. The store lends the grill and donates hot dogs, ety, FFA and more.

58 ■ THE HARDWARE Connection ■ November 2018

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hamburgers, buns, soda, water and condiments. Some groups might also offer chili and soup on a cold day, and all food and drinks are available for a donation.

Kibler Lumber promotes the fundraisers in its sales fliers, with posts on Facebook, a banner on the front gate and in-store signs. The local groups also promote their events, which helps drive traffic to the store. “People still come every Saturday,” says Conrad, who adds that the local groups have raised about $14,000 this year.

In addition to giving back and supporting their community, Kibler benefits from these fundraisers in more direct ways, as they bring a lot of extra people to the location on Saturdays. Regardless of any positive impact it has on their bottom line, Kibler Lumber’s generous approach to these fundraisers shows that community spirit is contagious.

The annual exercise is certainly valuable for the store as well. Not only does the Limeberry team benefit from a wealth of youth-focused business ideas each year, they also build strong, often lifelong connections with young consumers from throughout the community. Some of the students even end up working at the store. Q

LIMEBERRY LUMBER GOES BACK TO SCHOOL Limeberry Lumber & Home Center, a Do it Best member in Corydon, Ind., extends its extensive community involvement to a local high school, where it works with a marketing class.

Each year, students from the class work with Owner Scott Limeberry and his team preparing marketing ideas for the business, with Limeberry leaders providing valuable feedback, input and expertise. www.TheHardwareConnection.com

Each year students from a local high school present marketing ideas to Limeberry Lumber & Home Center in Corydon, Ind.

THE HARDWARE Connection ■ November 2018 ■ 59

E H T D N I H E B NUMBERS 61%

Penetration of the global lighting market by LED bulbs, according to Statista.

18%

Estimated decline in exports from China to the U.S. if the United States imposes a tariff of 15% on products of Chinese origin, according to Statista.

$72.1 billion

Estimated size of pet supplies market in the U.S., in 2018 up from $69.5 billion in 2017, according to the American Pet Products Association.

1.28 million

Number of seasonally adjusted housing starts reported in September 2018 by the U.S. Census Bureau, down 5.3% from the revised August estimate.

Building permits dropped 0.6% to a seasonally adjusted rate of 1.24 million.

38.3

Median age in the U.S. in 2020, according to Consumer Tracking Service. It will keep rising until plateauing at 40 years of age by 2030.

70%

Percentage of consumers who plan to shop at online-only retailers over the holidays, according to NPD Group.

Online shoppers anticipate spending an average of $748 this holiday, compared to $492 spent by those shopping only at brick-and-mortar stores. Q

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