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Survival in a tough market
Bob Vereen, Hardware Journal's US correspondent

An independent hardware business in Indiana continues to thrive despite dozens of big chain competitors competing in the same area.

Sullivan Hardware, an independently owned firm in Indianapolis, Indiana, has grown into a four-store local chain while surrounded by and competing with numerous, different giant chain stores. How has it succeeded when many other independent stores in the city and surrounding areas closed?

Four visitors from Mitre 10 pose in front of the Sullivan Hardware in Brownsburg, Indiana. Shane Lipton is in the foreground.

Thanks to leadership provided by Do It Best Corp., the member-owned wholesaler to which Sullivan belongs, its four stores are as bright, clean, attractive and well signed as any of its competitors. And in some cases, they are markedly superior.

Do It Best, headquartered in Fort Wayne, Indiana, realised some years ago that many of its member-dealers operated stores which did not measure up in looks and efficiency to those designed and run by the chains. The solution: hire a design firm to create a modern, attractive and versatile floor plan and color scheme that would distinguish a Do It Best store from all competitors - both chains and locally owned.

Do It Best officials now point to its store design program as a proven performer in its members' fight for survival against larger chains. There are hundreds of success stories like Sullivan - surviving in the midst of intense competition.

Store strategy
The Do It Best store design program has revitalised about 1,500 stores. Approximately 225 stores have installed the newest version, introduced in the Year 2000. It is this version that Sullivan is using in its newest store in Brownsburg, a nearby, commuting suburb. Its other stores embraced the first design plan.

Sullivan's four stores vary in size, depending on trading area. One is very small, functioning very much as a neighborhood convenience store. The others range in size up to 8,000 sq. ft. and feature extensive outdoor live-plant garden areas. Knowing it pays to specialise in some category, Sullivan chose green-goods as its specialty, along with custom-mixed paints.

Aisle signs emphasise "good advice and customer service throughout the store"

The latest Do It Best format retains many of the original design concepts, but introduces a somewhat softer-looking red color as well as varying fixture colors related somewhat to product category - i.e., green for the garden section. What the Do It Best design has done for Sullivan Hardware, and the hundreds of other stores using it, is greatly increase the store's exterior visibility with strong colors and modern graphics.

Inside the store, consumers discover products and departments better identified and more visible. Red floor stripes guide customers through the store, and the use of dump bins, feature-end displays and mass displays convey an image of product newness and price-competitiveness. Too often, the typical independent retailer was viewed as a great convenience outlet with wonderful service, but lacking in price-competitiveness. Nor was it seen as typically having the latest and greatest new hardlines products.

Sullivan's new store overcomes those problems. Its signing also is far superior to that normally found in independent hardware stores or home centres. Departments and categories are clearly identified, making shopping easier and faster for time-pressed customers. The bold price signs convey a strong "value".

Future investment
What kind of stores have invested in the Do It Best store design program? Forty seven per cent are hardware stores, 37% are home centers and 16% are lumberyards. While stores are not required to report sales results to Do it Best, many do, and it is not uncommon for retailers to show 40-60% sales increases in the first year of operation following the reformatting.

It also is not uncommon for retailers to hear customers comment, "I'm glad there's finally a hardware store here", even though the retailer might have operated in that location for years. The Do It Best exterior signage is that compelling.

But back to Sullivan Hardware. Just how tough has his competition been?

Do It Best Profile

  • Founded in 1945

  • Now serving 4,300 hardware stores, home centres and lumberyards

  • 2002 sales: $2.4 billion

  • Total SKUs: 68,000

  • Fill rate: 95.6%

  • Number of suppliers: 5,000

  • Operates 7 distribution centres

  • Operates internationally in about 50 countries

  • In other parts of the US, Lowes' entry in to the huge Chicagoland market took place recently with the "soft" opening of a big new store Schererville, Indiana, a southern suburb in the Chicagoland region. With a prime location at the Highway 30 and Interstate I-65, running north-south, Lowes is next door to another big-box store, Costco, a warehouse club and biggest chain of its type in the US.

    Lowes is also betting $1 billion that it can compete head-to-head with Home Depot in the northeastern United States. It is targering metro areas with 500,000 population or more. Sixty-five per cent of its nationwide expansion is in such markets. It is markets of that size in which Depot concentrated in building its remarkable growth. And to continue its growth in those same markets, Depot now is experimenting with urban stores, smaller units within the most densely populated areas of these metro areas.

    In fiscal 2003, Lowes is adding 130 stores, many in markets where Home Depot already operates, and is planning approximately 140 units in 2004.

    Reportedly, the company does not plan any downsizing of stores for smaller markets or urban areas, as Home Depot is doing. Lowes, which grew from it s small town vase and smaller units into larger stores for larger markets, probably already knows enough about running smaller stores that it could make the shift at any anytime it felt it was necessary.

    Indianapolis is perhaps the only major US metropolitant area (more than 1 million population) in which Home Depot, Lowes and Menards, the three home center giants, are battling it out. (See last month's issue - Ed.) Each operates six units of 100,000 sq. ft. or more in the Indianapolis area. In addition, there are five Sears Hardware stores averaging more than 20,000 sq. ft. each.

    Add in Wickes and Carter Lumber, two smaller chains; Wal*Mart, Kmart and Target discounters, half a dozen 220,000 sq. ft. Meijer hypermarkets plus several dozen drug stores with small hardware/tools/electrical departments and one begins to realise the competitive complexity facing Sullivan. Store remodelling isn't the total key to survival, obviously, but it has enabled the Sullivan stores to portray themselves as fresh, competitive and offering value as well as good service in convenient locations.

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