Orchard Supply Hardware: 2015 Retailer of the Year
San Jose, California-based Orchard Supply Hardware, the 2015 Hardware + Building Supply Dealer Retailer of the Year, describes itself as a company that wants to change the conversation about home improvement retailing.
How? By listening to the customer. By offering something different. And it definitely helps to have a conversation piece like the upscale, 40,000-sq.-ft. “neighborhood format” concept store format.
Orchard Supply executives talk passionately about being the first choice for repair and maintenance, for paint and for anything to do with the backyard. And its new format store earlier this year was honored with the Retail Design Institute’s National Award for the large format store.
But more than that, the retailer — a stand-alone division of Mooresville, North Carolina-based Lowe’s — is bringing ambitious plans to the West Coast. The 78-store chain is on pace to reach its three-year plan of $1 billion in annual sales and a fleet of 100 stores by the end of 2017, leading the industry from San Diego to Seattle.
And it starts with the store. Orchard Supply goes to market with a clear strategy: to fill the underserved space between the corner hardware store and the warehouse home center. That’s where the company’s 30,000-sq.-ft. to 40,000-sq.-ft. prototype comes into play.
“The store design is a crucial part of the strategy, because we want to change the conversation about hardware retailing,” said Bob Tellier, president. “This is not your hardware store where you look for one or two items. You come in to have a conversation and solve problems and have an exciting place to shop.”
In early April, Orchard Supply opened three brand new locations, all in California: Woodland Hills, Cerritos and Irvine. A week later it converted three existing California stores to its new “neighborhood format” — Sand City, Milpitas and Foster City. Three more were slated for re-grand openings as this article went to press: Pasadena, South Pasadena and Granada Hills.
By the end of the year, 65% of the Orchard Supply store base will be contained in the new, award-winning “neighborhood” format. That’s a long way from 2011, when only one store out of 80 sported the new look and feel. Also at the end of the year, the company’s focus will shift from remodeling mode to new-location mode.
Background and structure
Orchard Supply Hardware, which dates back to 1931 and its formation as a farmers co-op, has seen more than its share of ownership and management changes in the past decade. Under the ownership and management of Sears Holdings, the top post was held by Rob Lynch (now CEO of Lumber Liquidators) and then by Mark Baker, a former Home Depot executive.
Most recently, Lowe’s purchased the company out of bankruptcy proceedings in September 2013. Initially, Lowe’s executive Richard Maltsbarger was installed as president. In January, the stand-alone nature of Orchard Supply became more pronounced as Lowe’s promoted Tellier to run the Orchard business.
The relationship with Lowe’s has been positive and supportive, Tellier said. And the decision to elevate longtime Orchard merchant Tellier to the post of president is seen as a clear message in San Jose that Lowe’s is allowing Orchard to be Orchard.
“Even though we share ideas and we share information, there is no one from Lowe’s on-site here in San Jose,” Tellier said. “ Lowe’s was clear: They bought us because they like our concept, and we were a great alternative to their big-box stores. They agreed with our strategy. They’ve done everything they’ve promised, and they’ve been very supportive. We couldn’t have done it without them.”
So far, that cooperative spirit does not include sharing of brands. Though Orchard does carry Craftsman, closely identified with Sears, it doesn’t carry Lowe’s brands such as Kobalt. Conversely, there are no Orchard brands on Lowe’s shelves.
“On the merchandising end, our strategy, our customer base and our merchandising philosophy are quite different than Lowe’s,” Tellier said. “They provide a full project solution to customers, and we’re a repair and maintenance, paint and backyard company.”
He added that Orchard Supply actually competes with Lowe’s in many markets — “friendly competition,” he added.
Ultimately changing the conversation about hardware retailing involves changing the customer experience. At Orchard, a key part of that involves the phrase “lifestyle merchandising.” Tellier describes Orchard Supply’s business model as evolving more and more to an off-the-shelf merchandising style. The stores strive to create an atmosphere where consumers can see the products in their natural state — the way they would be used in their homes or their backyards.
“Our mission is to connect with our customers,” he said.
Noteworthy at the National Hardware Show
Looking back over its 70-year history, the National Hardware Show could check a couple things off its list on this significant anniversary.
For one, it’s managed to expand well beyond the wildest dreams of original NHS founders Abe Rosenburg and Charles Snitow — today requiring the sort of massive square footage only the Las Vegas Convention Center can provide.
On the other hand, it’s managed to build a sense of continuity into its legacy, with many of the same exhibitors returning year after year.
Many of the products identified here (as worthy of your time) come from these familiar NHS stalwarts, but as an institution that never truly stays still, there’s always room for some up-and-comers.
Channellock Slim Jaw, Wide Azz(r) Wrench
This wrench packs more than just a fun name. The adjustable wrench’s jaws open extra wide to 1-3/8 in., with length for added grip and a thinner profile for more maneuverability in tight spaces. (channellock.com)
Benjamin Moore Arborcoat Premium Exterior Stain
This is a stain that portends to do more than just deliver outstanding looks to decks, siding and outdoor wood furniture. It also touts its color retention and protection properties, with many varieties containing a mildew-resistant and water-repellant formula. (benjaminmoore.com)
Olympia FL450 LED Floodlamp
An essential commodity for both indoor and outdoor use, the FL450 is compact, light to carry and long-lasting: three hours of battery life at 450 lumens, to be exact. When time is up, its cordless, rechargeable design provides continuity. (olympiaproducts.com)
AMES NeverLeak Water System
These poly and steel hose-winding carts, cabinets and reels stand by their name. The aluminum water system won’t be bothered by extreme temperature dips, and it’s designed to prevent cross-threading. (ames.com)
Gorilla Super Glue
This impulse aisle heavyweight is hard to miss with its extra-tough formula that provides lasting repairs and dries in only 10 to 30 seconds. It’s also reinforced with rubber to help it bounce back from drops and bumps. (gorillaglue.com)
General Tools Express Drivers
Featuring a dual drive mechanism that doubles the speed of any job, the new Express Ratchet Driver and Ratcheting T-Handle Express Driver make versatile screwdriving an intuitive feat. The ratcheting mechanism allows the tip to rotate in the same direction no matter how you hold the handle. (generaltools.com)
Earthcore Industries Burnie Grill
This new impulse buy is like fire in one’s pocket. It’s a portable, single-use fire that’s perfectly self-contained, with no need for any wood, lighter fluid or clean- up. One match is all it takes to set the alder wood campfire aglow. (earthcore.co)
Hyde Tools Black & Silver Putty Knife
In celebration of its 140th anniversary and the trademark tools that put its name on the map, Hyde Tools will be showcasing special edition versions of its Black & Silver putty knives at the National Hardware Show. (hydetools.com)
BeraTek Hold and Go Slow Cooker
Slow cooking with the ease and speed of on-the-go design? This slow cooker boasts a 5-quart for appearances at tailgates and parties. The lid locks to prevent leaks, plus the handle can hold the lid for you while you serve. (beratek-industries.com)
It’s all here at the National Hardware Show
Trends and innovation are only part of the story at the 2015 National Hardware Show, slated for the Las Vegas Convention Center May 5-7.
Equally important this year are the networking, education and even the history of the event, now in its 70th year.
“As we celebrate 70 years of the National Hardware Show, we continue to look ahead to the future of the home improvement industry,” says Richard Russo, VP of the National Hardware Show.
The first National Hardware Show was held in New York City in 1945, just as the post-war housing boom began. The current show will take advantage of the new Las Vegas layout that is designed to maximize the connections between buyers and sellers.
Some old favorites will be in new locations directly on the Show floor at this year’s event.
- The Central Hall will include Inventors Spotlight, New Product World, the all-new 3-Day Auction, International Sourcing Area, Plumbing & Electrical, Homewares, PDRA Paint & Accessories Show, and the Lancaster Buying Show.
- Lawn, Garden & Outdoor Living will be on Level 1 of the South Hall, and Hardware & Tools; Pet Products; Farm & Ranch; Made in USA; and an additional Lawn, Garden & Outdoor Living area will all be on Level 2 of the South Hall.
- Outdoors, Tailgate & Recreation has moved to the outdoor area between the Central and South Halls with access points from both halls. The NRHA Village & Stage has also moved to the Show floor in the Central Hall, near the tailgate area.
Also in a new location this year is the traditional Golden Hammer Awards ceremony, which will kick off May 5 at 4 p.m. at the Channel Leaders Club Lounge on the show floor at Booth #3055.
“We hope that by moving some key categories to new spots on the Show floor, it’ll be easier for buyers to visit both new and returning exhibitors within their target product categories, along with stopping into some of our popular Show features,” said Russo.
New products are one highlight. The Inventors Spotlight area features in one place products that aren’t yet on the market, making it easier to find products for sale or license.
Over 70 years, the Show has developed a fan base. “I attend each year to see the hottest new products about to hit the market,” said Adam Busscher, owner of Picton (Ontario) Home Hardware. “It is the one place where vendors from all over the world attend, and independent retailers like me can access all of their product offerings.”