New players on the farm

BY Ken Clark

Among the top 10 companies on the 2012 Home Channel News Industry Scoreboard, none grew faster than Brentwood, Tenn.-based Tractor Supply. The farm-and-ranch lifestyle provider showed a 16.3% sales increase and an overall ranking of seventh on the Top 300 retailer list.

Rural King Supply of Mattoon, Ill., moved up the list from 25th to 22nd. Also moving up the rankings were Atwood Ranch & Home of Enid, Okla., and Bomgaars Supply of Sioux City, Iowa.

One group of interested participants is Wall Street investors. They’ve pushed the prices of Tractor Supply shares (ticker symbol TSCO) steadily upward, from under $40 two years ago to $94.50.

And they’re not the only ones taking notice of the sales opportunities in the farm-and-ranch market.

“It’s clearly a trend that we see on the rise in the industry,” said Sonya Ruff Jarvis, VP attendee programs for the National Hardware Show. As a result, there will be some noticeable changes in this regard at the May 7 to 9 event in Las Vegas.

“Many retailers and distributors are looking to expand — or have already expanded — their product offerings to include farm and ranch,” said Ruff Jarvis. “And the National Hardware Show wants to make sure that we supply these buyers with more of these types of products.”

Based on the market research, the event is creating for the first time a distinct farm-and-ranch area on the show floor. It will be located in the Lawn & Garden Outdoor Living area. A Farm & Ranch icon (carrying the iconic images of a barn, silo and fence) has been added to the show’s collection of category icons that include “Hardware & Tools,” “Homewares” and Plumbing & Electrical.”

While definitions of farm and ranch vary slightly across the business, the National Hardware Show will feature products, including animal/pet health, fencing, farm hardware and tools, and the classic feed and seed.

In Salt Lake City, another example of increased emphasis on the farm generated some show-floor excitement at the True Value Fall Market in the form of dogs, chicks and Peaches and Cream, a mother-daughter miniature horse family.

Kevin Rewerts is divisional VP merchandising for automotive-pet-farm and ranch for the Chicago-based co-op and the architect of True Value’s expansion into farm.

True Value believes that its distribution expertise has been underused in this area, and it sees its 12 distribution centers as the foundation for growth in this category.

“We’ve been telling our stores that the secret to our business is we have the products that they want, and they can buy them when they want it, and in the quantities that they want,” Rewerts said. “They can buy one piece or a thousand pieces, and we can meet their needs.”

Rewerts, who came to True Value from farm-and-ranch supplier Central Garden & Pet, said not every retailer should jump on the ranch bandwagon. But he added that it’s not a stretch to suggest that every retailer should have some representation of the broader category of pet and automotive.

“We’ve always said: ‘Don’t just get into [farm and ranch] just because we’re getting into it,’ ” Rewerts said. “If you’re not in it now, there’s probably a reason. But if there’s an opportunity for you, let us guide you.”

True Value, in turn, has been guided by a retail advisory council, representing a total of about 150 locations. Among the feedback was the suggestion that equine grooming could be scaled back.

Larger trends include backyard birding, an industry term for raising chickens, and the grow-your-own-food trend inside and outside cities.

“It’s the rural lifestyle,” Rewerts said. “The lifestyle typically has one or two dogs and two to four cats. They tend to do a lot of their own auto and car repairs. That’s the lifestyle.

“And what we’re providing here is category management, which is so needed in this industry.”

In upstate New York near the Vermont border, True Value member John Rieger operates Country Living Center in Greenwich, N.Y.

“People are reverting to gardening, and we all have pets,” Rieger said. “Things are changing. Twenty years ago, did you hear of llamas? Did you hear of emus? They’re not so rare anymore.”

A potential big change for Country Living Center is the recent opening of a nearby Tractor Supply store.

“Tractor Supply will force the independent dealer like us to do our job better,” Rieger said. “They do a great job of marketing. They have beaucoup bucks behind them. But they don’t have the people we have in the store. When people spend their hard-earned money, they want to feel like they’re getting a value for that money. The personal touch is so important.”

Tractor Supply, sitting at the No. 7 spot of the Home Channel News Scoreboard, is the de facto standard for the retail category.

At Tractor Supply, executives point to a success driven by strong consumer demand for products that promote the farm-and-ranch lifestyle. But the company’s growth to a large extent depends on its ability to manage change and adapt quickly.

During the company’s second-quarter report, Greg Sandfort, who will replace Jim Wright as CEO on Jan. 1, described the company’s operations and execution this way:

“In the past few years, Tractor Supply has operated more effectively than at any time in its history,” Sandfort said. “This is best demonstrated by the fact that we’ve had 17 consecutive comp-transaction count increases, 14 consecutive quarters of double-digit EPS growth, 11 consecutive quarters of comp-sales increases, and 10 consecutive quarters of expense leverage.” 


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Who do you view as your biggest competitor?

One-on-one with STAFDA executive director Georgia Foley

BY Ken Ryan

Georgia Foley has been the executive director of the Specialty Tools & Fasteners Distributors Association (STAFDA) since 2000, but her involvement with the trade organization dates to when she was barely a teenager, when she helped her father — founder Morrie Halvorsen — run the operation out of the family basement.

Through the years, Foley has seen membership grow in numbers and stature even though STAFDA has maintained the same dues rates it first established in 1977.

Home Channel News recently spoke to Foley in advance of the 2012 STAFDA Convention & Trade Show, Nov. 4 to 6, at the Orange County Convention Center in Orlando, Fla.

What excites you about this year’s STAFDA convention?

There are a lot of things that excite me every year about our Convention & Trade Show. First, it provides the best opportunity for members to exchange ideas with not only companies from North America, but globally, while having the chance to attend an 800-booth trade show, where our manufacturers are showcasing their latest product line. We cram a lot into three days — including top business experts presenting educational workshops — giving attendees plenty of take-home value with minimal time out of the office. 

If I am a distributor who is not sure whether to attend or not, why should I attend?

One of the most frequent questions I’m asked from distributors is: ‘What are you hearing from distributors in other parts of the country?’ One of the intangible benefits to a distributor who attends our convention is that he realizes he’s not alone. It doesn’t matter where he’s from, but by visiting with peers from non-competing markets, he has the opportunity to pick up an idea from another distributor, talk products or common business issues, or even commiserate on the economy. Plus, there is a good chance the majority of his vendors are at the STAFDA show, so that alone should encourage a distributor to attend.

How did you get involved in the industry?

My father, Morrie Halvorsen, used to be the VP sales and marketing for Milwaukee Electric Tool and also with ITT Phillips Red Head. He started STAFDA in 1977, along with 18 of his distributor customers. STAFDA began in our basement. He put me to work for him when I was 13, and I helped him make the initial prospect mailing. I worked for him while in junior high and high school, and even during college. After I graduated, I managed an exhibit and trade show industry association for seven years. That outside experience prepped me well to join STAFDA full time in 1994 as member services director. I became executive director in 2000 when my father retired from STAFDA.

What are some of the personal or association achievements that you are most proud of?

It’s personally rewarding to be involved with an organization that started with 18 members in ’77 and now has more than 2,500 internationally. Our membership dues are the same now as they were in ’77 ($350, less than $1/day) and our convention registration fee is the lowest in the industry ($190). We continue to add new services and programs, while dropping those that no longer serve us well. STAFDA is always evolving, and it’s exciting to be part of a dynamic organization serving a great group of people.

How has your industry been able to survive, or in some cases thrive, during this long downturn?

I think ‘thrive’ might be too optimistic of an adjective for the construction industry. During the recession, our members, like other businesses, made tough decisions on what to cut, who to cut and took the necessary steps to eliminate any overhead. The stimulus promoted infrastructure work, which helped our members through the worst of the recession, while others turned their attention to utilities, solar energy and other non-typical STAFDA markets. Those now involved in fracking and alternative energy sources are doing well. Mergers/acquisitions have impacted our industry, but STAFDA members are resilient, flexible, tenacious entrepreneurs who know how to compete.

What does the future look like for STAFDA and the industry it represents?

I believe the biggest driver for STAFDA and the construction industry is technology. It’s changed how we all do business. In a very short window, salespeople have gone from hauling catalogs to sales calls, to laptops and now iPads. Selling online has gone from being a threat to just another component of the sales process. For the construction industry, contractors have more product information, training and a greater assortment of vendors to choose from. Product technology has completely revolutionized our industry. Everything is faster, lighter, safer and easier to use.

But for all of today’s technological advancements, the one thing I don’t foresee changing in the construction industry is the value and importance of personal relationships and the hands-on demoing of new tools. That’s what built our industry and will carry us into the future.


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Who do you view as your biggest competitor?

Distributors who take risks, seize new opportunities

BY Ken Ryan

What keeps Mike Kangas up at night? For the president/general manager of Alaska Industrial Hardware, it’s not concerns about business or the prospect of another dark and foreboding winter in Anchorage. It’s about seizing the next opportunity.

“My sleepless nights are due to anticipation of what’s around the corner the very next day,” said Kangas, a member of the board of directors of the Specialty Tools & Fasteners Distributors Association (STAFDA). “I’ve been in this industry my whole life. Every corner I turn, I’m always learning with enthusiasm — whether I’m buying product, selling in the stores or using tools hands-on in my shop. I couldn’t have picked a better job in my wildest dreams.”

Kangas’ enthusiasm and positive energy is a trait shared by other STAFDA board members, including Rick Lamb, marketing manager, Frank’s Supply Co., Albuquerque, N.M.; and Nils Lindbloom, president, The Tool Shed, Greenville, S.C.

Despite tough economic conditions — commercial activity and prospects in Albuquerque rank near the bottom among 100 metro areas, according to a recent study, Lamb said — these business leaders are resourceful entrepreneurs who have proven they know how to get the job done.

Kangas said that like the rest of the nation, the construction industry in Alaska has not been spared, but he does not despair. “Thank goodness work continues, albeit at a slower pace,” he said. “Sales continue, but customers are much more frugal. However, one thing we can always count on is winter in Alaska. Ice melt, heaters, snow shovel and outerwear will continue to do well.”

Lamb said commercial building in Albuquerque is stagnant these days, but because Frank’s Supply operates four other stores in other markets — and those are doing quite well — the business as a whole has endured. “Overall, it’s a good stable market,” he said.

Lindbloom said in Greenville, S.C., there are some fairly strong pockets of manufacturing growth that The Tool Shed is looking to capture. He said he knows it could be a lot worse. “We haven’t been as weak here as in some other areas of the country,” he said. “I’m guardedly optimistic about the future; however, a lot of people are waiting to see what happens in November.” 


In this still recovering market for home building and materials, distributor executives such as Kangas suggest that to experience any growth, companies must be willing to search out new opportunities. “Whether it be remodeling or expanding locations, increasing an existing category, or thinking out of the box and trying something new,” he said. “Several years ago, we tried some portable storage shelters, just one or two sizes at first; now we are selling roughly 20 containers annually. Never miss an opportunity. Believe me, not everything we venture into is a success story, but if you never expand your horizons, growth will be limited, at best, in today’s market.”

The Tool Shed, as with other STAFDA members, is putting more focus on the Internet, including social media.

“The Internet is a tough market to break into,” Lindbloom said. “Still, we’ve been revamping our website, trying to make it look more professional. We’re using Facebook, email marketing, social media. But, really, we haven’t changed our clientele. We’ve been selling to professionals for 35 years. We have had to expand our product selection over the years; that is always expanding.”


The STAFDA directors point to the continuing advancements in Lithium-ion technology as the major trend driving power tool sales in 2012, with more to come in 2013. “Since Lithium-ion batteries are now very close in price to the old Ni-Cad platform, there seems to be a surge in cordless tool sales,” Kangas said. “Consumers are beginning to realize the advantages of Li technology. Brushless motors, although beneficial, haven’t caught up to the learning curve. I think 2013 will be the year brushless technology takes off.”

Lamb added that “advances in Lithium ion will be the story in 2013 as manufacturers build the family of tools that work around that system. Companies like Milwaukee are getting into trade-specific products, for such trades as electrical and plumbing.”

Lindbloom said there has been significant sell-through with the Fein MultiMaster, particularly the cordless versions, which he said are expanding quite nicely.

“We’re seeing growth in power tools from newer platforms that allow better ergonomics — lightweight yet longer-running batteries that allow for more exotic products. We’re seeing for the first time 18-volt sanders and other cordless varieties that we haven’t seen,” he said.

Lindbloom said ergonomics is increasingly important to today’s professional, and advances in ergonomics are being incorporated into lighter-weight power tools. “Tools with better grips and anti-vibration technology that ease the stress on the professional,” he said. “There is a lot more attention paid to worker safety these days.”


For Alaska Industrial Hardware, STAFDA is a highlight event on the trade show calendar, according to Kangas.

“I attend several shows throughout the year, but nothing compares. One of the things I benefit from is that being from Alaska I get to connect with industry peers from the lower 48, as well as around the world. There isn’t any price tag you can put on that opportunity.”

Lamb added: “STAFDA by far is one of the best conferences you can go to. Even though the economy is down, there has been an increase in manufacturer membership because they know it is an important show to be at. You really can’t beat it.”


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Who do you view as your biggest competitor?