HARDWARE STORES

Inside CNRG: retail growth powered by synergy

Here's how the Central Network Retail Group runs its diverse fleet of dealers.

BY Ken Clark

Orlando, Fla. – In a hotel conference room here next door to the Orange County Convention Center, where Orgill was hosting its recent spring market, leaders of the 15 retail brands of the Central Network Retail Group assembled to take turns presenting to their colleagues from across the country their respective business highlights and forecasts.

Portland, Ore.-based Parkrose Hardware batted first. District Manager Michael Nelson joked about the benefits of recruiting cults to rural Oregon . He then described sales, margins and other business metrics followed by an update on the delayed-by-red-tape plans for a fifth store in the pacific northwest.

Parkrose was followed by a team from Alabama-based Marvin’s Building Centers. The team emphasized its commitment to attack shrink, improve safety and control expenses. CNRG’s largest brand and operator of 28 southeast locations, Marvin’s serves the home owner as well as the pro contractor. The team, in matching black golf shirts, shared details of its new partnership with Milwaukee, its Item-of-the-Month program, vendor-relationship-building advice, and the growth of the brand’s “Start-to-Finish” store credit card.

A powerpoint displayed photos of Contractor Events, Ladies’ Nights (they’ll reconsider the timing in 2019), and Spring Black Fridays – events designed not only to bring in new customers, but also to make the business more fun for the employees in the store.

The 20-minute Marvin’s presentation, carefully timed, even included Marvin’s Super Bowl effort to sell bags of Dot’s Homestyle Pretzels. Some 2,000 units were moved, and success was declared.

The team from Marvin’s in Orlando, Fla.

Throughout the morning all 15 brands took turns at the front of the room. And that type of interaction, according to President John Sieggreen, is what CNRG is all about. The company’s very name is designed to emphasize a commitment to creating synergies.

“Comparing success stories and sharing best practices are bedrock values for CNRG,” he told HBSDealer. “And it’s important to us that sharing takes place in multiple ways.”

CNRG was founded in 2011 when Tyndale Advisors, a wholly owned subsidiary of Memphis-based Orgill, and 18-unit Home Hardware Center of Natchez, Miss., laid out plans to seek growth opportunities in the form of acquisitions or ground-up openings. By any standard, the plan has been successful. Today the company operates a diverse fleet of 104 locations under 15 retail brands.

One of the early acquisitions was Morrison Terrebonne Lumber Center of Houma, La., operators of a contractor-focused lumberyard in one location, and convenience hardware store in another.

“The people with CNRG came in and lent their retail expertise to the design and layout of both stores, just to be more consumer friendly,” said Greg Landry. And the sharing continues in the quarterly strategy sessions. “Each brand gives a report, a synopsis of its marketing efforts, accomplishments and goals,” said Landry. “And from there, we just hear what each store does well, and pick up different ideas.”

Parkrose Hardware’s Michael Nelson presents during the CNRG meeting in Orlando.

Phillip Helms oversees CNRG’s Town and Country stores in North Carolina, as well as the Elliott’s stores in Texas. He has a front-row seat on the knowledge transfer. Specifically, Town & Country is transferring some of its outdoor living and live goods practices to Elliott’s, and its gaining from Elliott’s insights into housewares and kitchen gadgets.

“It is about idea sharing and sharing new concepts and things that are working in the stores,” said Helms. “That’s a tremendous value that CNRG brings us all.”

Marketing is an area rich in opportunities for cross brand synergy, and Helms describes the ability to archive and share marketing campaigns as a win for the brands. Whether it’s an e-mail blast in advance of an ice storm, or a promotion for an in-store event, each brand has easy access to a collection of marketing material that has shown results. “To me, that’s one of great examples of the synergies we’ve achieved in the last several years.”

DIVERSITY

One of the key features of CNRG is the diversity of its geography, its footprint, its merchandise mix, and its customer base. The company describes three categories of its brands – hardware brands; pro contractor focused brands and home centers and small-town brands. Even within these groupings, diversity is strong. Managing such a fleet requires constant trend tracking and tailoring of programs, but there is also strength in diversity, says Sieggreen.

“Every market is different,” he said. “We made a decision early on that we were going to be willing to be multi-format, and there’s definitely some positives that come from that.”

At Morrison Terrebonne, a microcosm in some ways of the larger CNRG empire, the diversity has its advantages. Two different types of stores allow for easy cultivation of new groups of customers. And diversity of holdings can smooth out the rough edges of business cycles.

CRNG operates 15 brands and 104 locations. The company’s 2018 sales were $350 million.

“It always used to be that that the lumber yard would carry the hardware store,” said Doug Gregory. “But now, in our particular market here in Louisiana, we’re finding that the hardware store is a significant part of our bottom line.”

ORGILL RELATIONSHIP

In many ways, the story of CNRG is also the story of Orgill. The Memphis-based distributor is the parent company of Tyndale Advisors, of which CNRG is a wholly owned subsidiary.

“Orgill is distribution, Tyndale is retail services, and CNRG is a retailer,” Sieggreen explained. “But beyond being just a collection of retailers, CNRG serves as a kind of laboratory, as a testing ground for all of these retail services that Tyndale has developed and Orgill is offering to its dealers.”

Executives at Orgill, and Tyndale often use the word “laboratory” to describe the operations of CNRG – a way to push out programs and learn from them. But there’s also autonomy for the 104-store retail company.

“Like all Orgill customers, CNRG stores have the ability to choose what works best for the individual location from a wide array of products and services,” said Orgill President Boyden Moore. “The programs have to make sense and work for a specific brand in a specific market.”

Moore worked with Orgill to launch Tyndale, and served as president of Tyndale since the time of CNRG’s formation.

“The fact that we’re developing retail services inside Tyndale, is good for CNRG, it’s good for those other dealers who are clients, and it’s good for Orgill dealers at large,” said Sieggreen. “Because what it does, is it helps strengthen Orgill’s retail services offering for all of its thousands of dealers.” He added that CNRG is Tyndale’s largest client for retail services, but CNRG is not Tyndale’s only client.

E COMMERCE

The biggest retail service that Tyndale is rolling out today is a “comprehensive and integrated” e-commerce platform. Leading the way as early adopters for both CNRG, and the Orgill community, are Town & Country, and Home Hardware Centers. A partnership with Unilog — a company with experience handling massive digital product catalogs for Grainger — was enhanced at the Orgill Spring Market and promoted as a service that allows dealers to establish an immediate eCommerce presence with a low monthly investment.

Moore described it as a platform for all Orgill dealers to increase eCommerce revenue and drive more foot traffic back to their physical stores. Home Hardware Center went live with their new eCommerce site in early February.

“With 23 stores in small towns all over the South, we see eCommerce as a way to extend our relationships to our customers whether they are close to a store, or live many miles away,” says Raymond White, vp of operations for Home Hardware Center.

INTO THE NEXT GENERATION

A robust eCommerce program goes hand in hand with retail growth — particularly with the next generation of hardware and building supply customers. And attracting the next generation through e-commerce or through maximizing all the marketing tools available to the modern retailer will be critical to success, according to several CNRG leaders.

“Absolutely it’s going to be a key, and we’re pleased by the statistics that clearly show that millennials are starting to enter the home-owning phase of their lives in a major way,” Sieggreen said. “And we really believe that that’s a market that will continue to be strong.”

The company continues to budget for growth, and plans to open “a few new stores” in 2019, while keeping an eye on acquisitions that make sense, Sieggreen said.

And as it grows in new directions, Sieggreen describes a consistent approach that defines CNRG — “a focus on building brands and an ability to recognize and utilize the talent which exists in those diverse operations, as well as a commitment to sharing best practices.”

So far, that approach seems to be working.

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