Home Hardware Stores Ltd

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Home Hardware Stores Ltd.

34 Henry Street West
St. Jacobs, Ontario N0B 2N0
Canada
Telephone: (519) 664-2252
Fax: (519) 664-2865
Web site: http://www.homehardware.com

Private Company
Incorporated: 1963 as Hollinger Hardware Limited
Employees: 25,000
Sales: C$2.9 billion (est.)
NAIC: 421710 Hardware Wholesalers

Home Hardware Stores Ltd., is an Ontario, Canada-based dealer-owned cooperative, supplying more than 1,000 independently operated stores located in every Canadian province and territory. Member stores operate under four banners: Home Hardware, Home Building Centre, Home Hardware Building Centre, and Home Furniture. Home Hardware stores offer typical hardware supplies as well as painting supplies, automotive and farm supplies, sporting goods, and lawn and garden supplies. Home Building Centres sell all the materials needed for home renovation and repair projects. Home Hardware Building Centres combine the product lines of Home Hardware and Home Building Centre stores. Home Furniture stores sell furniture for every room in the house, plus accessories and home electronics.

Roots of Home Hardware Date to Late 1800s

Although Home Hardware was formed in 1963, the heritage of the company can be traced to the 1880s and the village of St. Jacobs, Canada. There, a tin-smithing business was established in a two-story brick building that was once a hotel. A German immigrant named Henry Gilles bought out the owner and opened a combination blacksmith shop and hardware store, which was managed by his son, Alfred Gilles. In 1933, Henry Sittler, who grew up on a farm and had worked as a clerk at a local general store, took over the management of the hardware business. When the elder Gilles died the following year and the store was sold to Gordon Hollinger, Sittler stayed on. Hollinger added a wholesale hardware operation in 1936 to supplement his retail business. This wholesale business would one day form the basis of Home Hardware. Two years later, in 1938, Walter J. Hachborn—the driving forced behind the foundation and growth of Home Hardware—would come to work for Hollinger Hardware as a teenager. The son of a millwright, Hachborn grew up in a house behind the hardware store, so it was not surprising that Gordon Hollinger would ask the young man to come work for him after high school graduation. Moreover, Hachborn was bilingual, able to speak both English and the Pennsylvania Dutch favored by most of the store's customers, Mennonite farmers.

Hollinger made Hachborn his assistant and pupil, but Hachborn's education in the hardware business was interrupted by a stint in the military during World War II, an experience that would serve him later in his career. As a staff sergeant with the Royal Canadian Ordnance Corp, he acted as a warehouse foreman. Not only did he gain general knowledge about warehousing that he could apply to Hollinger's growing wholesale business, he was able at the close of the war to give Sittler the heads up on surplus military items that could be bought cheaply and converted to civilian use. A notable example were metal mortar cases that Hollinger Hardware bought by the thousands and converted into tool boxes.

Hollinger died of a heart attack in 1948, leaving Hachborn and Sittler to carry on running the business for Hollinger's wife. After she died in 1949, the business was put up for sale by the couple's daughter, who had married and moved away from St. Jacobs. After some difficult negotiations, Hachborn, Sittler, and a lawyer named Alfred Zilliax, who would act as a silent partner, bought Hollinger Hardware. The partners grew the business at a steady pace during the 1950s, so that after several years the company was in desperate need of additional space. In 1958, an adjacent property was purchased, and three years later a modern new warehouse, located on King Street in St. Jacobs, was added.

1960s Origins

The early 1960s was a time of transition for hardware retailers in Canada. Large chains able to command greater purchasing power and offer significant discounts—retailers such as Kmart, Woolco, and Zellers of Montreal—had eaten up market share in the hardware business, so much so that an estimated 1,000 local, independent hardware stores would close their doors during the period between 1955 to 1965. At Hollinger's, change was also in the air following a serious heart attack suffered by Zilliax (he would die in 1968). Hachborn, Sittler, and several of their dealer customers met in the fall of 1962 to discuss the future of both Hollinger and the hardware business in general. Out of this meeting grew the idea that independent hardware dealers needed to find a way to join forces in order to eliminate the wholesaler and pool their buying power to better compete against the big box chains. An exploratory meeting was then held in February 1963 at the St. Jacobs Fire Hall, where 25 dealers met. A month later, 122 Ontario hardware dealers convened at the Flying Dutchman Motel in Kitchener and created a steering committee to further develop the idea of a dealer-owned organization. Hachborn and Sittler were two of the nine members of the steering committee. A number of possibilities were explored, but in the end the steering committee recommended that the dealers acquire Hollinger Hardware. Each dealer bought 15 $100 shares of the new corporation, Hollinger Hardware Limited. No more than 15 shares could be purchased, and upon retirement dealers would be repaid. In September 1963, the new company received its charter, and at the close of the year the purchase was completed.

Hachborn became general manager of the enterprise, which started modestly in January 1964, owning but a single half-ton Ford pickup truck to make deliveries. By the end of the year, however, business was so brisk that the King Street warehouse went to three shifts. The extra hours would be needed in large part because in 1965 Home Hardware published its first consumer catalog, 100 pages in length, and the company began shipping to dealers in the Atlantic provinces. Plans were also underway to further increase Hollinger Hardware's purchasing power, an idea that originated with Hachborn and was brought to fruition by him. In 1965, United Hardware Wholesales Limited was created. Hollinger and three other Canadian dealer-owned hardware wholesalers—Edmonton-based Link Hardware Co. Limited; Winnipeg-based Falcon Hardware Ltd.; and Montreal-based Les Marchands RoNa Inc.—formed the super-wholesaler. In addition to acting as high volume buyer for its four members, United Hardware provided coordinating functions for promotion and inventory control. In reality, the company was just an office housed in Hollinger Hardware's St. Jacob's headquarters. Hachborn would serve ten years as the company's president before devoting himself exclusively to the running of Home Hardware.

In 1967, the company underwent a name change. Although Hollinger Hardware benefited from name recognition, Gordon Hollinger had been dead for nearly 20 years and there seemed no reason to attach his name to what was essentially a new venture. Hachborn commissioned a friend to create potential names and logos, suggesting that the word "home" be incorporated. He been inspired by an annual sale, "Happy Home Value," held by in the United States by the National Retail Hardware Association. Out of the ideas offered to him, Hachborn chose Home Hardware Stores Limited. The logo featured back-to-back H's, which had the added advantage of being able to stand for Hollinger Hardware as well as Home Hardware. Hachborn also had in mind that one day the name could be shortened further, becoming Home Stores—an indication on his part that the concept of hardware was malleable and that he was willing to branch in any number of directions.

In 1969, Home Hardware sowed the seeds for a new division, Homeland Furniture. Furniture and hardware had coexisted in a number of member stores. In fact, the Hollinger Hardware retail operation had always carried a furniture line. As a result, some members were eager to pool their buying power on furniture in the same way they did with hardware, and in 1969 a buying group was established. To spur sales volume, part of Home Hardware's downtown St. Jacob's warehouse was turned into a furniture showroom, with the upper floors serving as warehouse space. In 1978, the Home Hardware board approved the creation of a separate furniture division.

Also in 1969, Home Hardware unveiled its first television commercial, aired on 20 Ontario stations. In addition, the company created radio jingles that dealers could use in local buys. By the end of 1970, Home Hardware consisted of 324 dealers and 334 stores; shipments totaled C$16 million. An even greater rate of growth would follow in the decade to come, causing an ever-increasing need for new warehouse space, as well as the introduction of an electronic order entry system for its dealers. In 1973, 140,000 square feet of warehouse space was opened, but just a year later the company initiated the addition of another 100,000 square feet. In 1978, ground was broken on a 260,000-square-foot warehouse to be built in Nova Scotia, and later in the year the board approved 130,000 square feet of multi-purpose space to be built in St. Jacobs to handle large bulk shipments, a special orders and relay shipments department, a truck wash and maintenance area, and an educational and conference center. By this point, annual shipments were in the C$115 million range.

Home Hardware established a building supply division in 1972, in keeping with Hachborn's belief that hardware and building supplies would one day find common ground. His vision would be born out with the emergence of the home center concept, epitomized by the likes of Home Depot and Lowes. Home Hardware's entry into building supplies took time to gain traction. Not only were dealers uncertain that the company was committed to the program, but the large suppliers of building products dismissed Home Hardware as a viable customer until 1975. With the advent of competition from home centers, and the obvious demand for affordable products from do-it-yourselfers, the Home Hardware's building supply business began to accelerate. In 1978, the division adopted the HomeAll trade name for the business, which began to produce its own catalog and develop its own advertising program.

Company Perspectives:

Home has four kinds of stores to serve you. Each store offers a distinctive array of products and services designed to meet your needs in different ways.

Struggles and Expansion: 1970s–Early 2000s

Difficult economic conditions during the 1970s, in particular inflation (which ran as high 20 percent), hurt the business of many Home Hardware dealers, some of whom went out of business. A number of applicants to the Home Hardware network were also turned away because of poor finances. By late 1977, however, the economy began to rebound, and the number of acceptable applicants began to grow once again. By the end of 1980, the number of Home Hardware stores topped the 800 mark.

Home Hardware launched several initiatives in the 1980s. It opened its own paint factory in 1980 and also formed its own insurance division, Programmed Insurance Brokers Inc. Prior to 1965, Home Hardware acquired insurance from a number of brokers and companies, then switched to a collective insurance program put together by an army friend of Hachborn, Herbert Farrow. Dealers were able to save money on their general insurance needs, and over the years group, auto, disability, and life insurance coverage were added. When Farrow sold his agency in 1980, Hachborn decided to have Home Hardware own and operate its own insurance entity. In a similar manner, the company became involved in the travel business. As Home Hardware grew into a national enterprise, Hachborn found himself traveling a great deal and relying on several local travel agencies. One of those agencies began to experience financial problems, and in 1982 Hachborn arranged for Home Hardware to acquire a half-interest in the business. The result was an agency called Link With Home Travel Agency, which handled the travel arrangements for the growing number of Home Hardware staff and dealers.

One venture that did not pan out for the company was the launch in 1985 of the Home Circle Division, run by an executive named Dave Rodgers. The intent of the business was to provide dealers, particularly in small towns, with small wares. After Rogers retired, however, the division was closed down. A more positive develop took place in 1985 when Home Hardware launched its own credit card, the Homecard, supplementing the Visa and MasterCard program that had been established for dealers in 1977. In 1987, Home Hardware expanded its presence in western Canada by acquiring 55 Revelstoke building supply stores, which were then incorporated into the HomeAll division. A major milestone occurred in July 1988 when Hachborn announced his retirement. On January 1, 1989, a new general manager, Paul Straus, succeeded him.

In 1990, the HomeAll name was replaced by the Home Hardware Building Centres name, and in 1992 Home Furniture replaced the Homeland banner. In addition, in 1992 Home Hardware improved its purchasing power by forging a purchasing alliance with U.S.-based Do-It Best Corp., the joint venture named Alliance International LLC. New warehouse space was added on a regular basis in order to keep pace with the expanding number of members dealers and mounting sales. At the end of 1996, the company topped the C$1 billion threshold in annual sales.

A major addition to the Home Hardware business came in 1999 with the purchase of 138 Beaver Lumber Stores, improving buying power as well as increasing sales. Retail sales for Home Hardware stores topped C$2.2 billion, while Beaver sales totaled C$747 million. The Beaver stores, jointly owned by corporate parent Molson Inc., were subsequently converted to the dealer-owner format of Home Hardware. Also of interest during the decade, Home Hardware, in 1994, began publishing its own hardware magazine, Home at Home. At the close of the 1990s, Hachborn was named "Retailer of the Century" by Hardware Merchandising magazine. In 2000, he received an even greater honor when he was named a member of the Order of Canada. On a more somber note, Hachborn's long-time partner Henry Sittler died in January 1999. By the end of the year, the organization he was instrumental in founding would record shipping totals in excess of C$1.2 billion.

To keep up with its steady growth, Home Hardware continued to add warehouse and distribution space, so that by early 2001 it passed the two-million-square-foot mark. By the end of 2003, the company boasted retail sales of C$3.8 billion from more than 1,000 members. It offered 55,000 different products distributed by four regional centers, shipped on more than 100 leased power units and 350 trailers. Despite the ongoing growth and might of big box retailers, Home Hardware's local dealers, by pooling their resources, were still able to flourish in a competitive market.