Independent hardware stores rely on co-ops

Kevin Shields, of Shields Hardware, works in the

Kevin Shields, of Shields Hardware, works in the store's plumbing supplies aisle. (Sept. 17, 2013) (Credit: Newsday / Audrey C. Tiernan)

Travel deals

Independent hardware stores evoke misty-eyed remembrances of creaky wood floors, nails sold by the pound -- and going-out-of-business signs.

A cadre of Long Island's hardware retailers, however, is focused on the future, using a mix of ingenuity and support from their distribution cooperatives to stay in business or even, in some cases, to expand.

In an era dominated by big-box home-improvement chains, the decline of independent hardware retail locations has been gradual, shrinking less than 1 percent nationally over the last five years, according to the North American Retail Hardware Association. Local numbers aren't available.

Some independent stores doing well on Long Island say they offer customer service and convenience that the big-box stores don't match.

Customers "want the warmth in the attitude of the staff," said Michael Costello, who is one of six siblings running Costello's Ace Hardware, a chain of 20 Long Island stores. Its 21st is expected to open in Copiague at the end of the year.

 

Co-op membership

But many independent hardware retailers also attribute their staying power to their long-term membership in one of the national cooperative distributors such as Ace Hardware Corp., True Value Co. and Do it Best Corp.

Ace's Long Island store locations rose from 33 to 49 in the last five years. True Value's local stores have remained steady at 58 during the same period. Do it Best, which has 10 local member stores, also has maintained a stable presence.

These cooperatives give hardware stores purchasing power and the ability to widen their selections. And as the needs of their members expanded, the cooperatives grew in sophistication, offering pricing systems, consumer research, marketing programs and financial assistance.

Cooperatives "made the independent home-improvement industry go down a different path than drugstores, bookstores and toy stores," said Dan Tratensek, vice president of the North American Retail Hardware Association. "Co-ops and independent distributors realized, 'We need to do more than just offer economies of scale in purchasing. We need to provide sophisticated and strategic tools they need to succeed.' "

The cooperative business model, in which members buy shares and become owners of the enterprise, exists in many different forms, including credit unions, grocers' buying groups, farmers co-ops with well-known brands such as Ocean Spray, home ownership organizations and utility co-ops.

There are other retail sectors such as small gift shops and toy stores that have formed buying groups but not on the large scale of the retail hardware industry, said Patricia Norins, a specialty retail expert and adviser to American Express' "Small Business Saturday," a winter holiday shopping event.

"The concept can work in other industries, but it hasn't been created," said Norins. "It's a huge opportunity."

Nationally, 3,000 new big-box home-improvement stores opened in the last 12 years, according to Kane Calamari, vice president of Ace retail operations. "That has forced us to get better at everything we do," he said.

 

Growth assistance

Cooperative distributors have pitched in to spur growth, boosting financial assistance such as low-interest loans to renovate or open a new store, free initial stock orders for new stores, or discounts on orders for renovated stores.

"As the financial crisis became more and more evident, we introduced up to 100 percent financing for our existing retailers to remodel their stores and become more relevant," said Mark Flowers, vice president of retail growth at True Value.

In the last 12 years, Costello's Ace Hardware has added 15 stores, taking over former Pergament Home Center locations after that home-improvement chain closed its stores.

"As much as Pergament struggled to compete with Home Depot, they had a strong customer base," said Costello, whose father, Vincent Costello, started the chain. "We knew we could appeal to some of those customers."

Brinkmann True Value Hardware, now run and owned by the family's second generation, started with a Sayville store in 1976 and added a Blue Point location in 2004. That store was remodeled, more than doubling in size in 2010. Last year, the family launched a third hardware store, in Holbrook.

"In a poor economy there is certainly still demand," said Hank Brinkmann, who owns and operates the company with his brother, Ben Brinkmann, and sister, Mary Niemeth. "We were up 12 percent in sales throughout the hardware stores this year."

Remaining relevant

Tailoring a store's inventory and services to customers' needs is key, experts say. It's necessary to create an environment where hardware store customers -- now estimated to be 50 percent female -- can wander and shop.

The aisles in Plainview's Trio Hardware, which is celebrating its 50th anniversary, are stocked floor to ceiling with everything from mailboxes and power tools to buttons, garden decor and bra extenders. Since its start, the store has more than doubled its size and tripled its inventory. Loyal customers helped the store recover from a devastating fire in 1996.

"You want a part for a faucet that's 40 years old, we have it," said Todd Kirschner, a partner at Trio Hardware, a member of the Do it Best cooperative. "You want a part for a faucet that's five years old, we have it. We have to make sure we have everything all the time."

When Brinkmann True Value renovated its Blue Point store, it used the Destination True Value design and layout package. The plan determines store aesthetics such as lighting, as well as the flow of the product displays and aisles. Items featured at the ends of the aisles also change every three to four weeks under this plan.

"The whole premise of Destination True Value is to make it more of a 'shoppable' experience," said Larry Zimmerman, regional retail consultant.

The Blue Point store also added a pet aisle with natural, grain-free foods from brands such as Wellness and Blue Buffalo. With pet owners averaging 19 yearly visits to pet stores, the company is hoping to attract these shoppers to help boost sales.

 

Problem of succession

One threat to independent hardware stores, as with any small business, is the issue of succession -- what happens once the owners decide to retire. It's such a concern that the cooperatives such as Ace offer training programs on the topic and financial aid if one retailer wants to buy a store that's closing.

"One of the main causes for independent hardware stores and lumber yards closing is an inadequate succession plan for the business," the hardware association's Tratensek said.

If the succession plan does not include their children, the owners still can mentor a manager and work out a long-term plan to finance the eventual purchase of the business, Tratensek said. Financial plans often are crafted to allow employees or family members to buy out the current owners over time.

Trio Hardware's owners Bruce and Francesca Carlow took over the business from Bruce's father, Bernie Carlow, but their children chose careers outside of the hardware industry. Laying the foundation for their eventual retirement, the Carlows brought in long-term employees Todd and Ritsa Kirschner, a couple who met working at the store more than two decades ago, as partners in 2012.

Always tinkering, Todd Kirschner said the hardware industry is second nature to him.

"I find it challenging," Kirschner said. "I like helping people solve their problems -- physical not mental [problems], mind you."

The partner arrangement, Bruce Carlow said, is assurance that the business his father built will pass on to knowledgeable hands.

"They will see Trio's 100th anniversary."

advertisement | advertise on newsday

Follow Newsday Biz

advertisement | advertise on newsday