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Bright spots on the Scoreboard

BY HBSDEALER Staff

ROCKY’S ACE HARDWARE

Rocky’s stays true to its mission

Rocky’s Ace Hardware began operations in 1926 as a mom-and-pop hardware store at the corner of Main and Union streets in Springfield, Mass., at a time when the neighborhood hardware store was literally just around the corner.

Eighty-two years and three generations later, Rocky’s still operates as a mom-and-pop neighborhood store, albeit with a few more locations.

Ten years ago, Rocky’s had eight stores; today, it has 34, ranging in size from 7,000 square feet to 20,000 square feet. It has locations in four New England states and Florida. Last year, it added three Florida locations, giving it five in the Sunshine State.

“We are aggressively planning for the future with regard to expansion,” said Claire Falcone, a vp and daughter of the founder, James Falcone. “We wouldn’t hesitate to go into a new state if we found the right market, but the key is to find the right market.”

It saw opportunities in what Falcone called “untapped markets” in growing areas in Florida cities (Wellington, Coconut Creek and Prima Vista). It opened the Prima Vista store (near Port St. Lucie) in May 2008.

Although the market isn’t as robust as it was a few years ago, Falcone said Rocky’s Ace Hardware has seen slight increases overall. “We have expanded our seasonal program and gotten into more of the leisure time products like grills and patio sets,” Falcone said. “We’re just embellishing the basic departments we have.”

She said the retailer is strong in lawn and garden and paints, where it is known as a destination store (it carries Benjamin Moore, the Ace brand and Pratt & Lambert).

In Florida, Rocky’s has capitalized on the year-round market by selling more outdoor furniture, as well as storage and garage organizers—“the little niches,” according to Falcone.

Its store in Wellington, for example, sells equestrian supplies because the area is horse country, known for breeding and equestrian sports like polo.

“We look at each of the individual stores, and if there are niches within that community we expand that area,” Falcone said.

“We’re not huge; we don’t pretend to compete with Home Depot or Lowe’s. We try to give our stores a more user-friendly feel to it, a neighborhood feel. We have nice stores that are easy to shop and easy to get to. That is our edge.”

Rocky’s has made customer satisfaction an edge as well. The company spends a lot of time and money on staff training to ensure that their customers are getting the same attention and care that they received 82 years ago.

WATERS TRUE VALUE

It’s good to be in Kansas

There were times in the last decade when True Value dealer Jim Waters envied those areas that benefited from the soaring housing market. In Kansas, where all seven of Waters True Value stores reside, there never was much of an increase during that run-up.

Today, however, Waters is glad he’s in Kansas. His stores have generated a 7 percent increase year to date, and that takes into consideration an 18,000-square-foot store in Manhattan, Kan., that was virtually destroyed by a powerful tornado in January.

“Everybody talks about how horrible it is out there, but truthfully the economy in Kansas is pretty good,” Waters said. “We don’t have the housing problems other places have.”

While Kansas didn’t show huge increases in housing values in the last decade, the flip side is that it hasn’t seen much depreciation either. Mortgage lenders in the region were much more conservative in their lending practices and, as a result, there were fewer instances of equity crunches and foreclosures.

To which Waters said, “I’m glad I’m here and not someplace else.”

With the exception of paint, every category in Waters True Value has shown a sales increase in 2008. The rental business and lawn and garden departments have seen the greatest growth, with rental up more than 20 percent and lawn and garden 27 percent.

“We’ve been in the rental business for 10 years, but we’re getting better at it,” Waters said. “We have more equipment and have put a focus on it. A lot of this is what you decide you want it to be, and we wanted to put more effort into our rental business and the result is that we’ve had really good growth.”

Waters True Value has put a similar focus on its lawn and garden business. Its sales of green goods (trees, shrubs, plants) are up 27 percent, while the other product sectors within lawn and garden have seen a 13 percent increase.

Tool sales have increased 10 percent, with power tools and hand tools seeing the greatest growth. The hardware sector is up 12 percent. Waters credits the Destination True Value concept with helping the hardware side (Waters has one Destination True Value store).

Despite the adversity of losing a store to a tornado (it will be rebuilt and reopened later this year), coupled with the uncertainty of a shaky U.S. economy, Waters said he feels fortunate to be in his current position. “Knock on wood,” he said.

HARBOR FREIGHT TOOLS

Looking for a few more locations

Harbor Freight Tools is operating full-speed ahead, as the Camarillo, Calif.-based discount retailer has aggressively ramped up its expansion, adding 30 new stores a year.

Known for its discount pricing and hard-to-find special tools, Harbor Freight now has more than 300 locations in 42 states, with the New England states of Connecticut, Massachusetts, Maine and Vermont next on the expansion board.

In its 40-year history, Harbor Freight Tools had always been a strong regional player, but its position now—as a national player—was forged when it built a distribution center in Dillon, S.C. (it has two distribution centers in California). That distribution center served as Harbor Freight’s gateway to the East. When it first opened in 2001, just off I-95, Harbor Freight Tools had the capacity to serve 44 stores in the East. In 2003, it doubled the size of the Dillon DC from 476,000 square feet to more than 1 million square feet, enabling it to serve hundreds of stores.

That expansion continues today as the company actively seeks new locations (it does not franchise; it owns all its stores), going so far as to advertise that message on its Web site.

Harbor Freight Tools offers more than 7,000 varieties of tools through its Web site, mail order catalog and retail stores. Its proprietary brands include Chicago Electric Power Tools, which sells cordless drills, hammer drills, impact wrenches, miter saws and heat guns; Cen-Tech, which makes electrical tools like multimeters, infrared thermometers and laser levels; and Pittsburgh Hand Tools, which sells a wide assortment of hand tools. The vast majority of the tools come from overseas, primarily China.

As it expanded to the East, Harbor Freight also made a big push into online retailing. The company has several million customer records in its database, and it uses that list to plan marketing campaigns. In a story that first appeared in InformationWeek, vp-marketing David Martel said that Harbor Freight stores these records in an internally developed data warehouse, which it uses to identify trends. It then loads that data in e-mail campaign-management software to send customers personalized information on sales and in-store specials.

Those sales and in-store specials are the bread-and-butter of Harbor Freight Tools, which is known for its “blowout” sales and “parking lot” events that are ideal for the bargain tool hunters. Earlier this month it held parking lot sales through many locations nationwide. Sale prices (with coupons) included scissors for $.97, a four-piece paint brush set for $.89, and an electronic bug swatter for $2.49.

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Around the Web: Obama tackles housing market

BY HBSDEALER Staff

The Barack Obama administration started a temporary program to boost state and local housing finance agencies (HFAs). The purpose of the program is to spur lending and buying in a depressed housing market.

“Through this initiative, the administration aims to help HFAs jumpstart new lending to borrowers who might not otherwise be served and to better support the financing costs of their current programs,” U.S. Treasury Secretary Timothy Geithner said in a prepared statement.

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True Value fall market held in Atlanta

BY HBSDEALER Staff

When True Value president and CEO Lyle Heidemann addressed co-op members at the opening session of the 2008 fall market Oct. 17 in Atlanta, he stressed the importance of Destination True Value — encouraging retailers to adopt the new, more consumer friendly store format in one form or another.

“Much of our future is centered on Destination True Value, both for our existing stores as well as our growth with new ones,” Heidemann told the group assembled at the Georgia World Congress Center. “This year we will open, expand, relocate, convert or remodel more than 100 stores to the new format. In addition, another 75 stores will implement the DTV decor package.”

The point hit home with show attendees Kurt and Kathie Stringham, owners of Stringham’s True Value in Santaquin, Utah, which will undergo a DTV remodel starting next month. “Our sales are down this quarter, but we’re not pessimistic,” Kathie Stringham said. “I’m not sure about the economy, but for hardware stores, if you’re wise you can still do well.”

Carol Wentworth, vp-marketing, also addressed members at the opening session, trying to drive home the importance of national and local advertising in these tough economic times. She said stores that participated in three spring circular programs saw a 7 percent increase in sales and an average of $45,000 more in revenue during the spring season than stores that didn’t use the promotions.

“I think those numbers tell a pretty compelling story about using circulars to help you get ready for the spring selling season,” Wentworth said.

More than 1,000 vendors are introducing new items and offering market-only deals on merchandise from every major product category. Retailers attending the market will also have an opportunity to attend educational classes on everything from merchandising and marketing best practices to the True Value Rewards program and leveraging point-of-sale technology. 

The market is open through Oct. 20.

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