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Orgill carves a spot in farm and fleet distribution

BY HBSDEALER Staff

The farm and ranch category by many accounts is a bright spot on the retailing landscape. On the recently published Home Channel News Top 500 Scoreboard, the farm and ranch segment — making its first appearance on the list as a stand-alone retail category — led all other segments in growth with a 10.2 percent jump over the previous year. The home center category was a close second, with 9.9 percent growth. Separately, farm-and-ranch stalwart Tractor Supply’s comp-store sales of 4 percent outperformed the big boxes, handily.

Memphis, Tenn.-based distributor Orgill has been taking steps to capitalize on it, as well.

“For well over a century, Orgill has handled farm and agricultural products,” said Jeffrey Brake, Orgill’s merchandise manager for farm and pet. “But we have never really focused in and looked at it with capital letters.”

Orgill’s new emphasis on the sector is the result of several events, including those of the geographic variety. They include the acquisition of Omaha, Neb.-based distributor Wright & Wilhelmy, early in 2006. There was the opening of the Hurricane, Utah, distribution center in 2005. And there was a separate pick up of accounts in Texas and Oklahoma.

“So if you look at the locations, they all kind of point inward to the heart of our nation,” said Brake. “This is prime farm and ranch territory.”

Fine tuning the product mix is a never-ending strategy. Recently, Orgill brought in John Deere die-cast toys, completely re-engineered its wild bird assortment and enhanced rodent control and fly control — a crucial element of livestock management.

One of the product solutions consists of a machine the size of a five-gallon cooler that can trap 50,000 flies a day, said Brake. “Fly control is critically important, and for a dairy farmer, cleanliness is critical also,” he said.

Orgill finished both 2006 and the first half of 2007 with sales gains during the most severe housing slump since the 1980s. After ringing up sales of $936 billion in 2005, the company surpassed the $1 billion mark ($1.036 billion) in 2006. Judging from sales in the first half of 2007, Beal expects mid-single-digit increases this year — putting sales close to $1.1 billion for the year.

Orgill President and CEO Ron Beal attributes that growth to resiliency and focus on the customer.

“In basically every category, we’ve gotten into different niches so the local guy has a lot of tools to compete in his market,” Beal said. “We are flexible, and we are there for the independent to do what he needs to do.”

For an in-depth look at Orgill’s plans for 2008 and beyond, read the Aug. 13 issue of Home Channel News magazine.

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The grass is sometimes greener

BY HBSDEALER Staff

An increasing number of consumers are shunning high-powered gas lawn mowers in favor of manual or “reel” mowers — which are both reasonably priced and kind to the environment, according to some manufacturers and distributors.

While the human-powered reel mowers have their drawbacks — gas-powered mowers get the job done faster, for instance — reel mowers are gaining traction in the market among consumers with small lawns and an environmental conscience. According to Teri McClain, inside sales administrator for American Lawn Mower, based in Shelbyville, Ind., sales of reel mowers nationwide have been increasing steadily over the last 15 years, and in the last five years have jumped from 250,000 units to 300,000 units sold annually.

Many new homes in the last decade have been built on one-third-acre lots with smaller lawns, allowing homeowners to mow their yards in less time, which for some makes reel mowers a practical choice, she said. In addition, Americans are encouraged to engage in cardiovascular activities, and pushing a reel mower can burn about 500 calories an hour, according to McClain, who added, “It’s a lot cheaper than a gym membership.”

Do it Best currently has six reel mower skus in its warehouses — representing 18 percent of its total mower skus and ranging in price from $69 to $200. According to Jeff Ridgeway, the company’s merchandise manager for outdoor power equipment, member purchases of reel mowers were up more than 30 percent for fiscal year 2007, which ended in June.

Several factors contribute to the increase, Ridgeway said. “People are building bigger homes on smaller lots which means less lawn; they’re concerned about the environment and the high cost of gas; and we’ve heard some parents find reel mowers to be a good source of exercise for their children — it gets them away from their favorite video game for awhile.”

In addition, Ridgeway explained that reel mowers can be easier to use in contemporary outdoor living spaces, which tend to involve more elements. “They’re light and maneuverable and don’t throw grass everywhere,” he said.

True Value stocks nine reel mowers, compared to 15 gas mowers and three electric models. The units have suggested retails of $69.99 to $219.99, but seasonal global product merchant Steve Clymer doesn’t believe price is a determining factor in whether or not a consumer buys a reel mower as opposed to a gas or electric powered unit. “Features of the unit and the size of the yard are the key elements,” he said.

Although Clymer has not seen an increase in unit sales of reel mowers over the last couple of years, he does say that environmentally friendly products — often classified as “green” products — are steadily gaining in popularity.

“Push reel mowers have an impact in this category, but the overall impact is minimal when compared to other environmentally friendly products,” he said. “Most consumers, when it comes to mowers, are concerned more about getting the job done quickly, and whatever mower has the most attractive features for the price ends up being what they purchase most of the time.”

Lars Hundley founded clearairgardening.com, a Web site featuring “environmentally friendly lawn and garden supplies,” almost a decade ago and has seen double digit growth in reel mower sales each year — with the biggest increases coming in the last couple of years.

“The organic trend is really taking off, but we’re also seeing interest from mainstream consumers,” said Hundley, whose site offers eight reel mower models ranging in price from $119 to $200. He cited the trend toward bigger houses on smaller lots, adding, “If you have a 20 by 20 lawn area, you don’t need a big power mower to take care of that.”

Hundley also said that reel mowers appeal to women, who don’t like the “noise or hassle of starting up a power mower.” They are lighter in weight — 20 to 30 pounds, as opposed to 90 pounds or more for a power mower — and “there’s basically nothing that can go wrong with them because they’re so basic,” he said.

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Kingfisher agrees to sale, leaseback of DC

BY HBSDEALER Staff

Kingfisher, British parent of B&Q and Castorama retail home improvement stores, has agreed to a 73 million pound (US$148 million) property sale and leaseback of its 875,000-square-foot national distribution center in Worksop, Nottinghamshire.

The deal, with Mutual Finance, will allow the DC to be leased back at an open market rent, the company said. The company will receive a pre-tax gain of 40 million pounds (US$81.2 million).

Kingfisher will use the proceeds to repay existing debt and invest in its worldwide store opening plans.

“This is consistent with our policy of recycling property when economically attractive, with the aim of creating value for shareholders,” said Duncan Tatton-Brown, group finance director for Kingfisher.

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