News

Making history, learning from it

BY Ken Clark

On page 134 In the Aug. 13, 1984, issue of National Home Center News, Duncan Building Material Warehouse in New Tazewell, Tenn., is shown in all its rugged glory.

It might not look like much. But the photo is attached to an article in which the store’s owner describes the enterprise as the home center industry’s very first warehouse store. It was opened in 1974, beating Home Depot to the punch by a full five years.

Here’s a question: Doesn’t this groundbreaking story deserve a more prominent placement than page 134?

One would think so. But the amazing thing is that the 1980s were so full of groundbreaking stories that editors had little problem filling 133 pages with copy that sings to this day.

It was the Golden Age of home center retailing. It was also a high-stakes battle for sales, traffic, profit and business survival.

What forces shaped the landscape and determine the winners and losers? And what are the lessons learned for today’s home improvement business?

These are questions that will be addressed during an upcoming presentation at the Home Improvement Research Institute’s (HIRI’s) Fall Conference in Chicago Oct. 17. One of the day’s presentations, “Lesson’s Learned from the Revolution,” will be delivered by an actual editor of Home Channel News.

Let’s face it. Duncan never had a chance to grow into a dominant player. But many others could have. In fact, they fully expected to. Builders Square was backed by big money from Kmart Corp. Wickes once had not one, but two separate business units in the top 10 list — at the same time (Wickes and Wickes Lumber). At the top of the scoreboard during much of the Golden Age was Payless Cashways, a fierce competitor and a highly respected operator.

And then there’s Scotty’s. In a 1985 article, CEO James Sweet candidly described the impact of the revolution.

“When we were hit with the competition from the warehouse stores, we really didn’t know what to do,” he said. “At first, we were going around putting out fires. It took us a couple of years before we decided what to do.”

Scotty’s came up with a plan — including their version of what was an industry-wide mania: build a “store of the future.” For a while, Scotty’s was racing with the big boys. It even had its own racecar in the late 1980s, car No. 16. But in 2005, the company fell apart.

Home Channel News asked executives who lived through the period why some succeeded and others failed. The answers are as different as the companies themselves, but they include: passion, focus, execution, timing and, of course, bankroll.

One can add to that list: a little bit of luck.

The HIRI Fall Conference will be loaded with powerhouse presentations with observations from Wall Street to Main Street and a lineup of six research-oriented presenters. Visit HIRI.org for more information. And if you have a lesson from the Golden Age of retailing, by all means, let us know.

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Roark acquires home improvement installers

BY Brae Canlen

A nationwide network of home improvement installers has been acquired by Roark Capital Group, a private equity firm that owns some of the best-known restaurant franchises in the nation. Roark’s plans for The Home Service Store (HSS), which already provides installation services for Lumber Liquidators, Costco and BJ’s Wholesale Club, are equally ambitious; the Atlanta-based investment firm has put Robert Sheft, who helped develop Home Depot’s first foray into installed sales, in charge of its expansion plans.

Sheft now serves as group managing director at Roark, a position he has held since 2007. But in 1998, Sheft was CEO of RMA Home Services, a replacement windows and siding business that Home Depot hired to conduct a pilot with seven stores in North Carolina. Eventually the windows and siding installation became a nationwide program, and Home Depot bought the business from Sheft in 2003.

Sheft’s background in home improvement services will be instrumental in casting a wider net for HSS, which contracts primarily with national retailers. Relying on a network of independent contractors, it coordinates installation jobs for its partners with a system that calculates pricing, processes payments and manages the service. In some cases, HSS generates leads and sales. The Kennesaw, Ga.-based company, which facilitated more than 39,000 jobs in 2011, handles flooring installations for Lumber Liquidators, as well as other home improvement products for Costco.com and BJ’s, including flooring, windows, siding and insulation.

“We’re more than network aggregators,” said Sheft, who believes that the current model, with some tweaking, can be used “across multiple channels.” One example might be a financial services firm that wants to offer home installation in tandem with some of its other products — or, perhaps, a manufacturer.

“We’re developing some front-end software that will put more discipline into the sales process,” Sheft explained. The HSS — which is retaining its original management team, led by Mark Ilderton — hopes to build on its national footprint. “We are offering a very attractive way to reach the customer,” said Sheft, who will serve as executive chairman.

Roark Capital owns approximately 21 franchise/multi-unit brands across 50 states, including Arby’s, Batteries Plus, Carvel Ice Cream, Cinnabon, Corner Bakery, Fast Signs, Il Fornaio and Schlotzsky’s. The firm has more than $2.7 billion of equity capital under management.

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Hilti Proshops exit Home Depot stores

BY HBSDEALER Staff

In a sea of orange smocks, the Hilti store-within-a-store format at many Home Depots had injected a splash of red-shirted Hilti sales reps.

That color combination is fading to black, as Tulsa, Okla.-based Hilti’s “Proshops,” as they are called, are pulling out of the world’s largest home improvement retailer.

The Hilti Proshops had been a fixture at Home Depot for about 13 years. Hilti products will continue to be available online through the Atlanta-based retail giant.

The decision to split was mutual, said Hilti spokeswoman Carla Briggs.

“Over the past month, the Home Depot and Hilti have reviewed our business arrangement in light of the fast-changing retail industry and our respective business models and objectives,” Briggs said.

Hilti, which has more than 1,100 direct sales force team members and 105 Hilti Center locations, said it will not look for another retailer to take Home Depot’s place. Nor would the company describe the level of sales generated by its Proshops in Home Depot.

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