CNRG’s California Adventure
The three letters “OSH” have deep roots and deep meaning in the fertile field of the Golden State retail landscape. For generations they’ve meant Orchard Supply Hardware.
But for a growing number of California communities today, the letters stand for Outdoor Supply Hardware, one of the newest divisions of the Central Network Retail Group. CNRG has been steadily expanding the brand’s footprint and sales by focusing on the home improvement triple play – backyard, paint, and repair – while navigating the unprecedented impact of a pandemic.
“We’re feeling good about the stores,” said CNRG president John Sieggreen, who also carries the title of executive VP of retail for Memphis, Tenn.-based distributor Orgill. “It's going well for us.”
Since late summer of 2019, CNRG has opened Outdoor Supply Hardware stores in former Orchard Supply Hardware locations in Napa, Moraga, Capitola, Berkeley and San Jose. Another half dozen OSH stores are in various stages of opening or planning.
Today, the new OSH stores are either meeting or exceeding sales expectations, the company said. But back in early March, there were some questions to be raised, and a virus to navigate.
From a business standpoint, the pandemic disrupted marketing efforts, grand-opening ceremonies and in-store events at the new stores. And there was concern over the impact of the virus on customer traffic in the new age of social distancing.
“I was a little nervous,” Sieggreen said. “But, frankly, it’s been going really well. And like so many other home improvement retailers, our CNRG sales have been strong overall, and business has been strong in California.”
Inside the stores
The old Orchard Supply Hardware was recognized as a Golden Hammer retailer of the year in 2015. The brand was known for upscale store design along with strong lawn and garden programs. The new Outdoor Supply Hardware brand promises more of the same.
“Customers who enjoyed Orchard Supply Hardware will enjoy the new stores as they carry many of the same quality items used in the home and around the yard,” said Sieggreen. “There are also some new items and brands that we believe will create an even better shopping experience.”
The paint scheme remains the same. The store organization remains essentially the same. The fixtures are similar. And of course, the initials are the same.
“If you were a customer that was familiar with that brand, and of course that includes many customers out there, we wanted you to feel immediately familiar with our stores,” Sieggreen said. “And I believe we've accomplished that.”
Perhaps more important than the product are the people inside the stores. And here again, the new OSH brings continuity through active recruitment of former executives and managers.
CNRG’s district manager for the Outdoor Supply Hardware brand, Craig Loop, worked for Orchard Supply in a variety of management roles over about a dozen years before joining CNRG's Parkrose brand in 2013.. With Loop’s connections, and other recruitment efforts, CNRG reached out to former managers, who in turn reached out to key former employees.
In ballpark figures, about 70 percent of the Outdoor Supply Hardware management team and about 30 percent of the non-management team at Outdoor Supply Hardware brings some degree of former Orchard Supply Hardware experience to the job.
“It's worked out really well to create instant credibility with customers, and it’s been great with product knowledge,” Sieggreen said. “It creates familiarity – or what we call "muscle memory" -- with respect to the brand.”
OSH: the history
The original OSH – Orchard Supply Hardware -- was founded as a purchasing co-op for California growers in 1931. It became a hardware chain in the 1950s. It was acquired by Sears in 1990, spun off and then the brand filed for chapter bankruptcy in 2013.
Lowe’s bought the brand out of bankruptcy shortly after, and injected more than $300 million into the stores, improving layouts and signage. The brand expanded into Oregon, and – curiously, according to some, -- leapfrogged the store all the way to Florida.
The end came in 2018, when Lowe’s, led by recently hired CEO Marvin Ellison, made the decision to focus on its core, big blue warehouse store and close all 99 Orchard Supply Hardware locations. All the stores were shuttered by November 2018.
In addition to CNRG, Westlake Ace Hardware has also expanded into several locations formerly operated by Orchard Supply Hardware.
“Having the right people in place and having the people who have familiarity with the brand are so important. They serve as the conduit for information and to make sure that we're saying and doing and stocking all the right things in our stores,” he continued.
The CNRG-OSH Deal
The wheels began turning for CNRG’s California adventure when Lowe’s announced its decision to close 99 Orchard Supply stores in November 2018. (See sidebar)
“We were as surprised as anybody when Lowe's decided to go in a different direction,” said Sieggreen.
After the Lowe’s decision, the former CEO of Orchard Supply, Mark Baker, reached out to Orgill’s President Boyden Moore to explore a deal that would turn management services of the stores to Tyndale Advisors, an Orgill subsidiary. Those discussions eventually led to a plan to approach landlords in high-performing markets. CNRG originally sought to open seven stores in its first wave, but two sites couldn’t be negotiated into fruition.
Outdoor Supply Hardware became the 16th retail brand in the CNRG family. (A 17th brand, Germantown Hardware, was created in June.) And while the brands have their own personalities, they are connected by a culture of sharing success stories and best practices across the 110-store enterprise.
“Every community in the U.S. has its own character, but I think that's probably even more true in California,” Sieggreen said. “That's a positive for us. Neighbors helping neighbors, was a slogan for Orchard Supply, and we've adopted that. That sense of community is really important in California.”