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How quirky Home Hardware is battling the big-box chains—and winning

ROB magazine

Home of the strange

In every small town, there's a Home Hardware store, packed to the rafters with hammers and lumber and assorted kitsch. But don't be fooled by the quirky vibe—this $6-billion-a-year behemoth is outsmarting the big boxes

In the summer of 2004, in his mid-fifties, Bob Collins became a minority owner in an all but derelict Home Building Centre in Gravenhurst, Ontario. He describes his operation of the era as "a dirt-cheap-fence-and-a-mean-dog sort of place" in a (mercifully) hidden corner of the town. "We had the arse end of the Independent Grocer's on one side of us," says a former employee, "and the train howling through on the other."

Collins is an amiable, forthright man with an instinct for a prank who, in 2008, under order of eviction from his business address and "royally fed up" with retail skid row, took the greatest risk of his not-so-young life—he decided to rebuild. Big. "My partner didn't want to make the move," he says, "so there I was, going from minority owner of a 4,000-square-foot doghouse to the sole owner of a relative mansion, at 20,000 square feet." Collins's gamble was amplified by his choice of location, on a seemingly inhospitable rockscape several kilometres up the two-lane highway that snakes north out of town.

As the contractor blasted out thousands of tons of precambrian granite to ready the site, Collins's friends and customers hinted to him gently that he had perhaps made a mistake. And after 18 months in the new digs, he became more than a little nervous that they were right. "There were days," he says, "when I'd look out over the store, and I swear we didn't have enough customers in there to pay for the heat."

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It didn't help that, by 2012, the home-improvement and hardware industry in Canada had tightened like shrink-wrap around even the most determined and survivalistic operators. Competition had crept quietly out of cyberspace, where retailers such as Amazon were selling power tools and household fixtures at prices barely above cost. It had arrived more visibly in the form of a couple of U.S. price-slashers, Home Depot and Lowe's—both of them vast (Home Depot is the fifth-largest private-sector employer in the U.S., with more than 400,000 workers); both publicly owned and heavily capitalized; both remorseless in their determination to bury their rivals and pave over the remains.

Collins's story has as many twists as the highway on which his store is located. More pertinent for the moment is that the Gravenhurst entrepreneur is a kind of avatar for the rather twisty character of the Home Hardware company at large. Which is to say a company embattled, fearless, resilient, hard-nosed—in some ways ever-so-straight, in others as eccentrically bent as the plumbing elbows and drain snakes that it sells. It is a company beneath whose folksiness and cirque-de-la-lune charm lies an edgy and well-honed business canniness unlike almost anything else in Canadian corporate life.

It is a company frequently misunderstood, even by its own customers. Consider, for example, walking into one of its antiquated Toronto stores—some of which were apparently designed by medieval contortionists so that customers would have to pretzel their way along constrictive aisles, bending past store features or squeezing down narrow stairways to low-ceilinged basements and on into other quarters that have been cobbled together into a facsimile of one business. Enter any of these, with their uneven floors and gerrymandered fixtures, and you would never in a month of guessing realize that you were in an outpost of a $6-billion-a-year operation; or that the corporation that binds the stores into a collective is a rattling-big, coast-to-coast retail machine that brings together 1,100 stores and roughly 30,000 employees under four banners; or that the corporation responsible for such urban idiosyncracy is headquartered in tiny, orderly St. Jacobs, Ontario, in the heart of Mennonite farm country, north of Kitchener-Waterloo.

Nor could you possibly glean from your surroundings that Home Hardware, which is commonly taken for a chain or franchise operation, is exceptional in Canada, in that its shares are held equally and entirely by the individual owners of its stores. "In other words, the store owners are my bosses," says company CEO Terry Davis, "not the other way around."



The 66-year-old Davis is himself somewhat exceptional in the corporate world, having begun as a merchandise "picker" in the company warehouse 47 years ago, rising through the ranks armed not with formal business credentials, but (consistent with the company ethos) a rustic affability, a broad streak of competitiveness and, it would seem, a deceptively keen instinct for where to sink the corporate knife. "I better know where to put it," says Davis, "because right now we're in a battle for survival. The competition is vicious." After a number of years of what Davis calls "pretty good growth in the industry," there is now very little. One of the main reasons is that millennials with houses tend to have their money tied up in mortgages. They're not spending on renovations. And the boomers are scaling back.

"Basically, we're fighting for share," says Davis. Just over a year ago, to improve the company's chances in the fight, he took a bold step and hired Rick McNabb, the redoubtable former chief operating officer of Swiss Chalet and Harvey's, and put him in charge of Home Hardware's marketing department. Seeking an immediate reframing of the company's image in the take-no-prisoners environment, McNabb quickly cut loose the firm's ad agency of more than four decades, Saffer Group, and hired the funkier John St. agency, with the hope of reaching a broader demographic. "We just didn't feel we were speaking effectively to people in their twenties and thirties," says McNabb. Research showed that young people tended to see Home Hardware as their dad's store, or even their grandfather's. "Not that we don't love dads and grandfathers," says McNabb. "We got the baby boomers 50 years ago when we were starting out and so were they, and they've stuck with us. But as a demographic, they're moving along. And we've got to move too. I was shocked to read recently that eight years from now, more houses in Canada will belong to millennials than to boomers. In this vicious climate, you're not going to make it if you don't stay on trend."

Davis and McNabb work in a warren of offices that adjoin the main distribution centre, a windowless fortress of almost preternatural banality that sprawls across 30 or 40 acres of recycled farm land on the western edge of St. Jacobs. Inside, the centre is anything but banal—is, in fact, a sort of Willy Wonka fantasy, in which one cannot help peeking into boxes and rubbernecking at the towering shelves, which hold some 55,000 different products: everything from bicycles, bird baths and log splitters to nail guns, caulking guns and BB guns. The company operates a smaller distribution centre in nearby Elmira, as well as other centres in Debert, Nova Scotia, and Wetaskiwin, Alberta.

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Headquarters these days doubles as a war room for the ever-escalating death match that one might say began in earnest for Home Hardware a decade ago, when another struggling tinker, the Quebec-owned chain Rona (whose 500-odd stores were purchased by Lowe's in May, 2016, for $3.2 billion), was scouring the Canadian landscape, attempting to poach outlets from rivals such as Timber Mart, Cashway and Home Hardware. The chain's hope was to consolidate the national trade against the U.S. giants. "Rona approached us corporately for the first time in, I guess, 2007, wanting to buy our entire operation," says Davis. "And our board basically told them to get lost."

But the Quebec firm's aggressiveness had the effect of a chop to the neck for Home Hardware. "For one thing, we realized that if we were going to survive, we had to get more aggressive," says Davis. "Why should Rona be consolidating an industry that we were perfectly capable of consolidating ourselves?" Home Hardware had first demonstrated a talent for consolidation in the early 1980s, when it acquired Link Hardware stores in Western Canada, and again in 1999, when it bought all 138 Beaver Lumber outlets across Canada. Indeed, the company had begun as a consolidation, in 1964, when its founders, the owners of Hollinger Hardware in St. Jacobs, grouped 122 independent Ontario stores into a collective that improved buying power to help them compete against the likes of Canadian Tire, Beaver Lumber and Simpsons-Sears.

In 2008, in response to the Rona manoeuvre, and by this time in full battle mode, the company formed a five-person acquisitions team—a kind of tactical procurement squad—whose job it became to lure stores away from other companies. The ensuing effort, which is ongoing, has been so successful that, as of June, 2017, a total of 179 stores have come to the corporation from rival banners—about two a month for more than eight years.

"Unlike Rona, which throws gobs of money at our stores if they'll defect," says Davis, "we can't offer our owners anything to stay—we have to treat them all equally." Nor can Home Hardware offer bribes to rival stores to entice them to come aboard. "When a store joins Home Hardware, they pay us, we don't pay them," says Davis, referring to the corporation's long-established policy of charging independent stores a nominal one-time membership fee. "We tell other chains' stores that if they're happy where they are, God bless them. But if they aren't, we're here, and if they want to join us, we'll treat them fairly and help them prosper."

Davis acknowledges that "a number of Home Hardware outlets" have defected to Rona over the years, but notes that "some of them have returned to Home" when their five-year contracts with the competition expired.

Home Hardware's total yearly gross sales of $6 billion—about the only financial metric the company will reveal—put it in the same league as giants such as Canadian Pacific Railway ($6.6 billion), miner Vale Canada ($6 billion), and Restaurant Brands International, owner of Tim Hortons and Burger King, which tops out at $5.5 billion. Within the $45-billion home-improvement retail industry, Home Depot, with 182 Canadian stores, leads the market with a 17% share, while Lowe's/Rona sits at 15%. Home Hardware clocks in at No. 3, with 13%—beating out Canadian Tire, whose hardware and home improvement sales at 501 stores give it a 12% share of the market.

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Meanwhile, back in Gravenhurst, Collins and his staff had, by mid-2013, noticed an unlikely uptick in the store's fortunes. "Nothing to declare a holiday over," says Collins, but customers were beginning to come in for a look around." Contractors were buying not just a truckload of decking or a few dozen sheets of drywall, but in some cases the makings of entire houses and cottages. Ever hopeful, Collins had emblazoned the marquee above the new store's south door with the words "Contractor Entrance"—which, as one of the store's yard employees put it, "had the double advantage" of making the pros feel special (and of depositing them near the lumber-order desk) and allowing the "hundreds of ham-fisted amateurs who used the door to feel like pros."

Spoiler alert: Collins's store has, for the past two years, enjoyed 17% annual growth, and is on target for a repeat in 2017—this in an era when growth across the industry is a weltering 2% to 4%, and is nearly nonexistent in the Canadian west, where many stores are experiencing revenue shrinkage.

More exceptional yet, the store has done it amid competition as intense as any in the country. Within a lightly populated 30-kilometre radius of Collins's once-empty building centre, there are some 15 stores selling what he is selling, including the Bracebridge Home Depot, about six times his size. Collins is respectful of his bloated neighbour in the way one is respectful of a bully with a blunt instrument. But that he refers to the place simply as "Deepo" suggests an understated scorn that requires no elaboration.

If you asked Collins how he and the store did it, he'd tell you a tale remarkably consistent with Home Hardware's longstanding marketing philosophy. "I have the best people out there I can find," he says reverently. "In plumbing, in paint, in lumber and electrical fixtures—we send them to seminars, give them training in new products. They're here to help you. The reason people come in here for woodstoves, for example, is that we've got Susan Lepard, the best there is—ran her own wood stove operation for years."

Across town from Collins's Building Centre is the Home Hardware owned by Tara and Ian McNaughton. Ian is a member of a competitive barbecue team—with the mercantile equivalent of PhDs in grilling—and he brings back secrets that help his employees better assemble and demonstrate and deal the dozens of barbecues and smokers the store sells each summer.

Home Hardware store owners the McNaughton’s from Gravenhurst, Ontario

Collins will tell you that his store's recent success is due significantly to a hot regional market, in which people are building docks and decks and cottages in unprecedented numbers.

What he won't tell you is that, like many of Home Hardware's owners, he keeps a little black ace hidden up the sleeve of his fire-engine-red shirt. "I'm a bit of an individualist—I like to stir up a little shit," he says in an impish whisper. Not for Collins a Walmart-like "Welcome to Home Building Centre." "When a customer comes into the store, I want our people to call out, 'What the hell are you doing back so soon?' When a guy gets out of his Lexus and walks in asking if I have three eight-foot 2-by-4s, I'm not going to tell him I've got 2,000 of them out in the yard—make him feel like just another stiff. I'll make eye contact and confide in him that he's arrived just in time, because we have exactly three of those left. He walks out of here feeling good, not because he believes for a second that a store like this is down to its last three boards, but because he's been well taken care of, has had some fun, has had a bit of a sense of engagement and community."

It was in precisely this spirit that, when a customer walked into the store a few weeks ago and asked where the axes were kept, a female employee responded, straight-faced, that the axes were "down there to your right, in the killing aisle." When the same customer came in a couple of days later looking for a work light, the same employee responded without missing a beat, "In need of a little enlightenment after the killing, are we?"

For Collins, it is a matter of mixed pride and sheepishness that his store offers dog treats and that "dogs who shop here often" will generally go directly to the cashier, in expectation, upon entering the premises. Collins laughs. "I've seen cashiers say to a customer, 'Excuse me for a second, Ma'am, I've got to take care of this dog.'"

Such idiosyncrasy is possible largely because Home Hardware's owners can do pretty much as they please in their own digs—as long as they conform to basic company ethics, and keep their displays, branding and surroundings up to snuff.

Idiosyncrasy sells. Tiffany Birtch of Woodstock says she'll drive 20 extra minutes to get to Zehr Home Hardware in Tavistock, Ontario, and thence down one of the more memorable retail rabbit holes under the Home banner. Customers of the arcane shop have, in recent years, reported purchases of 19th-century Polish Walbrzych porcelain, pressed-glass egg cups from Provence, and post-war hand-painted salt and pepper shakers from Japan.

Savage competition has, in some cases, pushed even the most contemporary outlets into inventory so esoteric as to make the average Moroccan souk look like a testimonial to predictability. What would life be, one might ask, without an eight-foot chainsaw carving of the Venus de Milo, or a pair of Chinese paisley rubber cowboy boots, or bluetooth speakers installed in small plastic replicas of the Stanley Cup, or a supply of Anal Angst hot sauce, or a Canada sesquicentennial solar-powered garden icon looking remarkably like Prime Minister Justin Trudeau in a sparkly white wedding gown?

Upon hearing that a British Columbia store is selling bolo and neck ties, Terry Davis guffaws and says, "It just goes to show you that if people trust you, they'll buy anything from you."


But don't get too flaky if you're wearing a Home Hardware blazer. Davis can get shirty over lassitude or delinquency, and recently expelled some 30 stores from the corporate corral for long-term non-compliance with updated standards or marketing initiatives. He says, "I tell them, 'It's great to be unique—that's who we are, and I love it—as long as you're uniquely good.' What bugs me is when they're uniquely bad or uninspired—out of touch in a way that is no longer compatible with what Canadians expect of the brand."

One of the people most immediately responsible for what Canadians expect of the brand is Joel Marks, the robust and jovial vice-president of merchandising, whose professional persona combines the genial hucksterism of the midway barker with a good-natured pride in the value and efficacy of pretty much everything the company sells. While he has a skilled platoon of product managers beneath him, Marks acknowledges being "personally and perpetually" on the lookout for products that might become the industry's "next big thing"; or for the early signs of decline in a product that has lost its snap and, like 5,000 other products a year, must be trimmed from the company's inventory, while another 5,000 are installed. At the same time, he is constantly on watch for additions to, or subtractions from, Home Hardware's 13,500 private-label products—items produced by a mix of domestic and offshore manufacturers, but at specifications controlled by the company and marketed under house brands, such as Benchmark tools, Home household goods, Ultimate gizmos, or the rather darkly suggestive Survival birdseeds. The advantage of such products is that by purchasing them in vast quantities from the manufacturer, or by manufacturing the products themselves, as the company does with its Beauti-Tone paints, costs can be kept low, allowing for greater profits at the cash register.

"Dig this!" enthuses Marks, drawing forth the store's Ultimate-brand spin mop with magic pail, "as seen on TV." The item is available only at Home Hardware and is "guaranteed to make mopping fun again." (By the end of Marks's demo, at least one member of his audience of four is keen to fire up the $39 doohickey and get some of that fun, fun mopping accomplished.) Likewise, Marks demonstrates the Benchmark power screwdriver, the Twistor, which allows its operator "to screw for up to four hours in a remarkable 380 positions" (no double entendres acknowledged). "I have a lot of time for innovators and dreamers," says Marks, "and a pretty good instinct for something new."

Perhaps more telling these days is that Marks and his fellow executives have never forfeited their instinct for something old. A few hours among the staff at headquarters, or at the flagship store a kilometre away on the main street of St. Jacobs, is like a vaguely recalled dream you had 50 years ago, when no one had even heard of post-industrial malaise and when the future was still a plausible idea, rather than some darkly glimpsed hell of big-box stores and corporate insatiability and Amazon drones. Across Henry Street from head office is, of all things, a three-acre staff-operated vegetable garden, the produce from which goes to the local food bank and to refugees, or to employees who simply want some decent organic vegetables. The company is involved in the Special Olympics and is a founder of the national Communities in Bloom initiative. Hip to this zeal, employees at headquarters don't merely "contact" fellow workers or outsiders, they "reach out" to them.

Vice President of distribution John Dyksterhuis (above). The flagship store in St. Jacobs, Ontario, has a shelter out back for horses and buggies, the transportation of choice for hundreds of area Mennonites.


"Our employees have been with us an average of 15 years," says John Dyksterhuis, the vice-president in charge of distribution. It is a remarkable stat in an era when the average employee at many merchandising operations has been around for perhaps 15 months. Terry Davis knows by name hundreds of the company's 1,100 store owners/shareholders, and hundreds more of the employees at head office and in distribution.

The flagship store has about it one of the more genuine hints of country conservatism and stability, a rather satisfying whiff of the barnyard—this, because there is a shelter out back for horses and buggies, the transportation of choice for hundreds of area Mennonites. The store sharpens knives, sharpens skates, cuts keys, and advises on salt licks and chicken coops. Staff members tout axes and Swede saws and snow shovels with the same ardour that a curator at the Canadian Museum of History might tout the constituent artifacts of nationhood. In an era of carbon and titanium hockey sticks, the place sells sticks of the old-fashioned wooden variety—made in Canada, no less.

There is, of course, business in it all—what one store employee called "a calculated absence of calculation." Nice sells. Community sells. Service sells. Product knowledge sells.

Authenticity sells. And mythology. Not surprisingly, a company with an almost ecclesiastical ethic has its own creation myth, a sort of secular Genesis, construed mainly around its first president, Walter Hachborn, who died in 2016. Yet, in the year that has passed since his death—indeed, the 30 years since his retirement—his spirit has remained a kind of binding agent in which past and future seem to coalesce. An individualist nonpareil, Hachborn famously lost a finger as a kid; wore a bowtie; knew princes and potentates; was a member of the Order of Canada; lived to be as old as Methuselah; and was still travelling the back roads, visiting his protegés, the store owners, when, as one company wag put it, "the Almighty took him in a cloud of grass seed."

The universality of Hachborn's continuing presence is represented graphically, if unintentionally, at head office, where every depiction of him comes in hallucinogenic multiples: here in a kind of Warhol-derivative fourplex in primary colours; there in a seven-photo mural depicting the phases of his life from childhood to old age; over here in a 12-foot likeness of his oracular face, imprinted on the risers of a set of steps, so that he looks as if he had had a run-in with a Home Hardware Kuraidori-brand mandoline slicer (catalog number 4125-691). Even the sculpture of him outside the front doors has a kind of bifurcated look—notably Walter, with the bow tie, the Order of Canada pin and the missing finger; but clearly, too, a semblance of Colonel Sanders, as one might imagine him at the gates of retail heaven. The arguably dowdy sculpture might as easily be interpreted as a steadfast and optimistic member of the Politburo, for which no heaven existed outside of a good worker, a good wheelbarrow, and the dignity and advancement of the realm. All of which is appropriate for a guy who understood both the role of the individual and the numbers in corporate survival.

Hachborn’s continuing presence is represented graphically at head office, where every depiction of him comes in hallucinogenic multiples: he’s imprinted on the risers of a set of steps, and in a kind of Warhol-derivative fourplex in primary colours

"Our strength," said Terry Davis in mid-2016, "is in our numbers, is in sticking together in the marketplace." A year later, he said: "Our strength is in our individuality—in relating personally to our clientele and our communities."

"The trick in this changing world of retail," said Rick McNabb that same day, "is in seizing your strengths as a competitive advantage and bringing them to life."

When McNabb joined the company a year and a half ago, research revealed that its long-time banner slogan, "Homeowners helping Homeowners," was perceived by millennials as stodgy, dated and exclusionary.

The company's revitalized ad campaign, unveiled during a recent Home Hardware-sponsored Toronto Blue Jays telecast, features the snappier phrase, "Here's How"—intended to suggest a friendly, knowledgeable, highly specific sense of engagement between an employee and a customer in need of advice or instruction.

"Customer care is the one area in which the big stores can't touch us," says McNabb. "They just don't have the people in their buildings."

Beyond customer care, the company's marketing priorities during the months to come will be its digital presence and its evolving online catalogue services.

Not all store owners agree with committing energy and resources to the latter—which, if all goes as planned, will include door-to-door delivery of all goods ordered from the company website by 2018.

"Online isn't about personal attention," says one owner. "It's about technology and logistics. We made our reputation doing other things well. I'm not sure we should be going there."

McNabb, however, insists, "We've gotta compete." When asked what has most obsessed him during his first year on the job, he responds with a laugh, "The competition! And when it's not the competition, it's the competition!" He describes Home Hardware's rivals as "big and smart and aggressive. They're spending to build share, and cutting staff to lower their overhead. We can't do that. It's not who we are. Once we abandon service, we're no longer the brand we want to be. We become them."

"Actually," jokes Davis, "we don't have the capital to become them." He reflects for a moment and adds, "And they don't have the sense of humour to become us."

THE HOUSE THAT WALTER BUILT

1938
Walter Hachborn gets a job as a stockboy at Hollinger Hardware in St. Jacobs, Ontario. His salary: $8 per week

1950
Hachborn and two partners buy the company

1954-1964
Roughly 1,000 small hardware stores across Canada shut down in the face of competition from big-box retailers

1964
122 independent hardware retailers in Ontario buy Hollinger and form a dealer-owned co-op, with Hachborn at the helm

1965
The chain is rebranded as Home Hardware and prints its first 100-page consumer catalogue

1976
Store count hits 500, with a fleet of 100 delivery trucks

1980
Home Hardware produces its first gallon on Beauti-Tone paint at a factory in Burford, Ontario. It also launches an insurance company

1987
Store count hits 958

1996
Annual shipments hit $1 billion for the first time

April 2004
Canada Post releases a Home Hardware stamp to mark its 40th anniversary

2016
President emeritus Hachborn—who retired from day-to-day operations in 1988—dies at 95

2017
Store count exceeds 1,100 across Canada, with 13,500 exclusively branded products

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