Local Hardware Stores: How Do They Compete with the Big Guys?
Co-op buying, centralized product distribution and customer service are three of the hallmarks that allow at least one group of small merchants to go head-to-head with the big-box dynamos in the hardware industry.
While most of the Mom & Pop shops long since have boarded up their doors, some local hardware stores have found ways to compete—and on occasion beat—the big-box giants by utilizing buying co-op power and putting a new thrust on an old business axiom: customer service.
Ever hear of Ace Hardware?
The chain consists of nearly 4,800 retail stores throughout the United States and around the world. Each store is owned and operated locally by an independent agent.
Dan Harris is the store owner at Palos Ace Hardware. He stocks about 35,000 items on his shelves and caters his merchandise to a client base that largely lives within a 2-5 mile radius of his front door at 6465 W. 127th St. in Palos Heights.
He is a past president of the Palos Chamber of Commerce, a member of the Orland Park Rotary Club and also sits on the board of the Sertoma Club, which aims to serve to mankind through a network of charitable centers, including one in Alsip.
Harris recognizes nearly everyone who shops in his store by face and can call many of his customers by their first and last name. He is in his 14th year selling hardware in Palos. And he survives—if not thrives—because of Ace Hardware’s unique business model. He does it even though his 22,000-square foot store is lucky to measure in at half the size of his Big Boy counterparts.
“We’re a little bit different than what a lot of people think of as retail hardware stores or community-based stores,” Harris said. “Ace Hardware Corporation is a buying co-op.
“It was started about 85 years ago by a group of independent store owners who decided to combine all of their buying power together and, with that combined buying power, go out and get the best deals they can, hopefully better deals than what they could get buying individually store-to-store.”
Harris said Ace makes use of a centralized transportation system that allows for cost-efficient delivery of goods to store docks. The company’s buyers negotiate with venders to purchase goods at competitive prices and the goods are shipped to Ace warehouses.
“The warehouse we’re serviced out of here in this portion of the United States—in the Chicago area—is in Princeton. It stocks about 60,000 different items in that warehouse. If you think about it in that way, you realize how big … if you’ve ever been down Interstate-80 past Princeton, it’s a huge facility.”
Harris and others like him place orders on a regular basis. Most often, their orders are filled within 36 hours. Technology has changed the way “little guys” do business and helped level the playing field, too.
“With the computer technology that is out there right now, every item ordered electronically that we stock on our shelves is based on forecasts of what we’ve sold in the past, based on a seasonality factor,” Harris said. “We order everything on a week-to-week basis and the computer generates probably 95 percent of the order for us.
“It tracks it coming in the door. It tracks it once it leaves the store and creates a re-order based on a point of where the adequate amount of items are in stock. Everything has a tag—a part number—in the system. That’s how we order.
“Many years ago when this business first started, it was basically Mom and Pop ordering on their pad, writing everything down and sending it off. They mailed their lists off. Those days are long-gone and forgotten and, in many cases, for the better.”
At Ace, one business principle has endured the test of time. The company has won the J.D. Powers award for highest customer satisfaction in the home improvement retail sector for six consecutive years.
Bob Sneddon, a Palos Heights resident for the last 12 years and a regular customer at Palos Ace Hardware, said he shops in Harris’ store because of the service and the knowledge of his staff.
“They have everything,” Sneddon said. “The prices are as good as the big-box stores. But it’s mostly the service and the knowledge of the personnel. You can’t get that with the kids at the Home Depots or the Menards or the Lowe’s. They just shrug their shoulders.
“Here, from plumbing to electrical to paint, they know where it is and they’ll help you find it. And they know the right product for the right situation. That’s why I come here. Now, I’m buying weed and feed for the lawn. I saw a great price on sunglasses so I’m buying sunglasses, too.”
Sneddon said he learned something new on his most recent visit to Palos Ace Hardware.
“Just now, I asked the guy how I should apply (the weed and feed),” Sneddon said. “He told me something I didn’t know—put it on in the morning because the morning dew on the grass has starch in it. The product sticks to the weeds and kills the weeds better.”