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Family Guys

BY Ken Clark

Family businesses managed by the grandchildren and great grandchildren of the company’s founder are frequently celebrated in the home improvement industry. But for that kind of company to run an empire of more than 100 stores — there aren’t many of those.

There aren’t many companies like Westminster, Mass.-based Aubuchon Hardware Co. The independent chain of hardware stores operates its own 400,000-sq.-ft. distribution center in Westminster and runs an every-store-is-different chain of 121 stores throughout the Northeast. Another distinguishing feature: 2011 was its best year since it began in 1908. Sales rose 5.2% to $140.5 million.

For its growth, its steady success, its commitment to improvement and its family values mixed with a demonstrated confidence in the hardware business, Aubuchon Hardware was named the 2012 Retailer of the Year by Home Channel News. The company will accept the award during the National Hardware Show in Las Vegas at the Golden Hammer Awards breakfast event May 2.

What makes the company special? A tour of one of the chain’s new prototype stores in Cohasset, Mass., offers a few answers. Distinguishing features include a wide entrance aisle, clear sight lines and a paint contractors’ area. The store is only a year old, but it’s already been fine-tuned with the addition of a colorful DIY “decision area” for homeowners to explore the paint palette from Benjamin Moore in a comfortable space away from the mixers and shakers.

“This is the direction we’d like to take in more stores,” said Bernard Aubuchon Jr., senior VP purchasing. “We’re experimenting here, and we want to bring these ideas to other new stores.”

Other experiments include a South Burlington, Vt., store, where the emphasis is on household decorating ideas, including window treatment and fabric, he said.

According to Kenneth Moore, who is responsible for retail design for the company where no two footprints are alike, the experimentation is systematic. “We start in Westminster at a desk and pencil out a floor plan,” Moore said. “And then we get input from different people and come up with different ideas. If the store develops within that first year, we’ll go back and revisit it, as we did here.”

Aubuchon’s store-footprint comfort is in the neighborhood of 12,000 sq. ft. But across the chain, sizes range from about 8,000 sq. ft. to 20,000 sq. ft. Inside these diverse buildings, Aubuchon brings a consistent merchandise mix born in its planogram department. Each product category has its core mix that can expand or contract depending on space considerations. “And that’s how we can really manage 121 locations and also have consistency through all of them,” Moore said.

CEO M. Marcus Moran Jr., a grandson of the company founder, believes the unique stores are a strength, as are the people who run them. “We just fit into the town,” he said. “The manager is a longtime employee. Most likely he shopped with his father in a hardware store in our small towns. He’s well known, and in some towns he’s known as Mr. Aubuchon.”

The steady drive to improve stores is part of the Aubuchon way, and so is the constant search for the right location — or the wrong one. The company has been transformed, Moran said, by a continuing seven-year effort to be in the right place with the right store, whether that means opening or closing. With this corporate mind-set, one of Moran’s never-ending missions is to evaluate existing locations and scout for new ones.

The reasons to close a store are varied. Moran pointed to the possibility of encroaching competition. It might be a bad lease or an old store that simply can’t perform like it used to and doesn’t look like it ever will. When it makes sense to start fresh, the company acts aggressively, he said. And the 55% to 60% equity transfer to a new town is usually well received by the bank, he added.

Recruitment is ongoing also. Moran explains his process and his pitch: “I go into the store and I look at the age of the owner,” he said. “I look at whether the store is up to date or on a slippery slope to decline. And If I see potential in those two characteristics, I ask to speak to the owner in the backroom. And I say, ‘I don’t know when, but some day you may want to sell. We’re looking for stores to buy. And we have an authorization from the bank to write a check. You’ll have the cash right away.’ ”

The buyer tells the prospective seller: “Basically, I’m your 401K.”

Moran even has the formula for the price worked out in advance: 20 cents on the dollar for good will. Dollar-for-dollar for inventory. Negotiations vary for the fixtures.

Moran has pitched the deal a little more than 400 times, he said, with about 35 or so successful results. And the calls keep coming.

Case in point: The company’s Keene, N.H., location has been operating since 1941 in the same spot. But times have changed. “Wal-Mart, Home Depot, Lowe’s all opened on the other side of town,” Aubuchon said. “We’re going to move that store to that side of town in a bigger location where the people are shopping.”

And behind the innovation, the experimentation and the ability to expand and adjust is the company’s 400,000-sq.-ft. distribution center. It’s a resource that not many independents can match.

“It definitely gives us an advantage,” Bernard said. “We can buy truckloads. We can negotiate and make deals with vendors on our own and offer unique things to our customers. Plus we can change a little faster.”

The distribution center supplies most of the orders through Aubuchon’s Hardwarestore.com website. (The company jumped on the highly desirable URL address when it became available shortly after the dot.com bust in 2002.) For those products it doesn’t carry, Aubuchon’s distribution partner Orgill fills the gaps. Orgill trucks deliver to the Westminster facility about four times a week.

Running it all is the family, literally and figuratively. Moran said there’s about 30 or 40 store managers who started with the company as high school kids. “We have many outside of the family bloodlines that have been with us as Aubuchon family for many years,” Moran said.

About 1,200 people work at the retail company. Roughly 60% are full time and 40% part time. Then there’s the 20 or so relatives descended from the founder.

“We have fourth-generation executives working for the company now,” Aubuchon said. “That is something we’re pretty proud of.” 

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May-09-2012 02:01 pm

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All-Star assignment

BY Ken Clark

Here’s an actual email from Home Channel News freelance editor Ken Ryan, after he completed research and writing duties for our “Second Annual Hardware All-Stars: Fifty Stores in Fifty States” project:

“Thanks for the assignment. It was fun to do.”

Fun? That guy has a great attitude, because we didn’t make it easy on him — or any of the other editors working on the project.

Essentially, the assignment went like this: Get a long list of retailers on the phone for an interview. Ask them to talk about what makes them special. Capture the essence of the business. Find out what makes them tick. Describe their inner workings and their competitive advantages beyond the basics of convenience and customer service.

And oh, by the way, do it in 50 to 75 words.

Our “Hardware Store All-Star” report begins on page 20. Relying on a combination of store visits, news searches and nominations from trusted industry sources, our editorial selection committee has assembled an All-Star lineup of retailers, one from each of our 50 states. They’re listed alphabetically from Alabama’s Hopper Building Supply to Wyoming’s Ace Hardware Buffalo.

These aren’t necessarily the state’s biggest stores, or even the most profitable. But they all show All-Star qualities.

By necessity, we left a lot on the cutting room floor.

We included the two-story, hardware-housewares strategy of Fuller’s Home & Hardware in Hinsdale, Ill. But we left out any mention of Dips & Dogs, the retailer’s standalone, on-premises hot dog and ice cream stand that dominates the town’s kid-focused social calendar.

We included Home Hardware & Supply’s big business in Weber grills. But we left out some amazing statistics. When the Waldwick, N.J., store began selling grills in 1987, you could count unit sales on two hands. That figure peaked at 1,000 during the housing surge, and has since leveled off to about 600 per year. And they do it with two Home Depots within a 10-minute drive.

We included the rebuilding of Wagner Hardware in Glenwood, Minn., which recovered from a snowstorm-induced roof collapse and opened a bigger, better store. But we left out the early struggles with the insurance company and the intense effort to stay in front of the public during the downtime that followed the destruction.

And we had to cut one of my favorite exchanges with a hardware store operator:

Home Channel News: “We think your store belongs on our list of All-Stars. Are we right?”

Pam Brown, Kohl’s Hardware & Lumber: “(Long pause.) Oh, yeah.”

There’s an old saying in newsrooms: If you leave good material on the cutting room floor, then you really got something.

And we’re already looking ahead to our 2013 list. If you have a nomination, tell us about it. And join the fun.

[email protected]

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M.Wallbergg says:
May-16-2012 11:07 am

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Readers Respond

BY HBSDEALER Staff

On the legality of healthcare reform

“Small businesses need healthcare reform to lower costs. If Obamacare is thrown out, something needs to replace it. Romney needs to address what he would replace it with.

“Responsible small businesses offer health care to their employees. The current system keeps increasing costs at double digits each year. That cannot last.”
— Dick Wegner
Portland, Ore.

How big is too big?
The following letters are in response to an article about large-format stores.

“If the builder of these stores provide powered carts for the disabled, as many supermarkets do, that’s fine. Asking someone who is aged to walk through those big stores is asking your customer to go above and beyond to shop there.”
— Bill Keller
St. Louis
 

“Menards are larger in Chicago, and I shop there first. The larger selection, the better. Depot should have done this five years ago. I do not mind the huge non-home improvement product offering. In fact I go there just to see what is new.”
— Anonymous

“If you’ve ever gone to a ‘regular’-sized big-box store and walked the entire perimeter looking for just three things, then you know a store twice the size will require electric carts to navigate.

“Bigger stores are insane. I was thinking smaller might work better or better layouts that actually help you find stuff.”
— Tom D.

“In my opinion, how many facings of one product does one need? I prefer smaller stores and smarter employees.”
— Michael Jones

The Buffett Rule: Pros and cons
The following letters responded to an article about a proposal, which failed in the Senate, for a minimum 30% tax on millionaires and billionaires.

“It really doesn’t make as significant a financial difference ($4.5 billion over 10 years) whether the Buffett Rule is passed or not. This just sets a tone where one party favors more equal treatment for all income levels, and the other favors or protects the higher income-level people. Some people still believe that ‘trickle down’ economics really works, after years of evidence that it doesn’t work. That is so much a part of their DNA that they can’t see any other way.

"A more important issue is to let the Bush tax cuts expire for all income levels. That will generate around $226 billion in additional revenue over 10 years that can help to pay down the debt and support programs that can continue to stimulate the economy that is growing, but at too slow a rate.

"Also, the entire tax code needs to be redone to eliminate most of the loopholes that were added for special interest groups of all kinds and determine the correct tax rates and brackets that would be considered ‘fair’ to all income levels, personal and business.”
— Wayne Reimer

“The question should be, do we want even more money taken out of our economy? There are two opposing views. The first believes that we are better off when the government is in charge of and has more money. The second believes that we are better off when private citizens are in charge of and have more money. The multiplier effect is always greater when private citizens are in charge of their money as stated by almost all economists. Whether a person is rich or poor, taking more money from anyone weakens our economy. America’s problem is not that tax revenues are too low. Our problem is that government is too big.”
— Jeff Wilson

“Your question assumes the assertion that millionaires are paying a lower rate (percentage) of tax than the average household. Check the facts with the IRS. Millionaires pay an average of 23%, while the average household paid 11%. (Source: Michael Medved, 04/17/2012)

“Maybe if enough media sources (like yours) would tell the true story, we would expose the lies of this sort.

“So the question is moot.”
— Bruce Hood

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