The merchant prince

When Bernie Marcus and Arthur Blank, the founders of Home Depot, were formulating their idea of a self-serve warehouse of home improvement supplies, they crossed paths with a guy named Pat Farrah, a larger-than-life Irishman who was executing a similar idea near the Long Beach Airport in Southern California. Farrah was selling building materials to homeowners out of a 130,000-sq.-ft. former discount store that he opened in 1978. He had learned the LBM business at National Lumber and Supply, where he worked just out of high school and eventually became VP and general manager.

As the home channel would later learn, Farrah’s genius lay in merchandising, not accounting. Marcus and Blank briefly considered buying Farrah’s company, Homeco, but instead started their own retail chain called Home Depot in 1979. Shortly afterward, Homeco went bankrupt. Marcus and Blank brought in Farrah as a partner, putting him in charge of merchandising.

“I consider myself a damn good merchant, but Pat is better,” Marcus wrote in “Built from Scratch.” “He is the best any of us have ever seen.”

Farrah trained several generations of Home Depot merchants, mentoring executives like Ron Jarvis, now senior VP environmental affairs, and Annette Verschuren, who oversees Home Depot’s Canadian and Chinese stores. He also developed a reputation as a wild workaholic who tore down merchandise displays that looked too “neat,” chartered planes to take his merchants on trips and attended every store opening until it was physically impossible to do so.

“I gave 20% of my Home Depot stock away to one guy to get him to come work for us when we opened in South Florida,” recalled Farrah in an interview with Home Channel News. “It was never about money with me.”

For Farrah, it’s always been about people, or to use his words, “having better people than anyone else.” The first Home Depots in Florida were operated by retirees from New York and New Jersey, according to Farrah. “I had 75-year-old lumberyard managers. They knew what they were doing. I told them, ‘Run this like it’s your own store.’”

Farrah left the Atlanta retailer in 1985 and got involved in the world of competitive ocean sailboat racing. He also opened his own lighting fixture company, M.G. Products, with a manufacturing plant across the U.S.-Mexican border in Tijuana. But Farrah stayed in touch with his colleagues at Home Depot, and in 1995 after a 10-year absence, he rejoined the company.

In “Built from Scratch,” Marcus credits Farrah with rejuvenating the Home Depot culture, raising morale and injecting some “aggressive behavior” into the buyers when he returned. “He brings a special verve to our business that no one else can match,” Marcus observed. “It’s a style of looking at a product and knowing how we can make it better, or how we can get the vendor to do something differently and thereby drive more volume through the store.”

Farrah gives some of the credit to his friends in the vendor community. Interviewed last month en route to a lighting fair in Frankfurt, Germany—a Chinese manufacturing client was sending him there—the 66-year-old executive reflected back on the advice he gave the hundreds of merchants he trained over the years.

“Nobody knows everything, and you can learn a lot from your vendors,” he said. Line reviews are a good place—but not the only place—to pick up information, he said, adding: “Just create a [learning> environment, and they’ll show you the way.”

Farrah retired from Home Depot in 2001, soon after Bob Nardelli took over as president and CEO. But Farrah’s career in the home channel was far from over. In 2008, he went to work for Scotts Miracle-Gro, where he was put in charge of the struggling Smith & Hawken chain. Farrah was welcomed by Home Depot alumni Mark Baker, who was serving as Scotts’ president and CEO. But a turnaround was not in the cards for the upscale retailer, and Smith & Hawken went out of business in July 2009.

Farrah is now a managing partner at Re: Retail, a consulting firm he founded with three other partners. One of them is Kim McKesson, another Home Depot veteran who served as senior VP store merchandising. Although the firm’s combined expertise can handle “almost any kind of [retail> challenge,” according to Farrah, “we’re [also> looking for something that we can invest in.”

“I have a boat, and I can’t wait to get rid of it,” he said. “I hate relaxing.”

But Farrah does spend time with his two young grandsons, Mackenzie and Maverick. Their father, Mike Farrah, is president of the power tools division at TTI-North America, overseeing the Ridgid and Ryobi brands that are exclusive to Home Depot. (Ryobi is sold through other retailers outside North America.) Before joining TTI, the younger Farrah worked for Home Depot for 10 years, leaving in 2007 as global product merchant for power tools.

Asked what he learned working alongside his father, Mike Farrah said, “It’s critical that you get into the stores and talk to the customer and get your suppliers to do the same.” He described his father’s merchandising formula as “20% buying and 80% selling.”

“You’re selling the entire organization,” Farrah explained. “You have to win the hearts and minds of everyone: the customers, the associates in the stores and the vendors. Then everyone is on your side, and you have to succeed.”