America’s Diverse Marketplace

The American hardware industry is made up of many different players. Bob Vereen takes a look at who is leading the pack…

Just how diversified is the American hardlines market?

An answer to that question can be found in an article published recently in American industry magazine, National Home Channel News. In that story they produced a list of the top 500 retailers (of all types) selling the products found in a typical hardware store or home centre.

Sears Hardware was ranked fourth in the Top 500 list

Close analysis of the wealth of data in that Top 500 listing provides some interesting comparisons of how different retail outlets perform. Quite naturally, the list is headed by Home Depot, the world’s largest home centre chain and, indeed, among the largest retailers of any kind throughout the world. It generated sales of $64.8 billion in 2003 and was operating 1,587 units at year end.

The 500th listing is a paint retailer turning over $22 million from 14 units—an amazing spread. The fact that the 500th retailer is doing so little, indicates the dominance of a few top companies and the continuing role of independent retailers still serving the market. Only 15 firms had home channel sales over $1 billion and only 96 had sales of more than $100 million.

Privately-owned chain, Menards, was fifth, with sales last year of more than US$6 billion

The largest hardware retailer in the list is Orchard Supply Hardware, a division of Sears that operates on the West Coast. OSH cranked out $833 million in sales last year from 82 units, averaging slightly more than $10 million per store. OSH was an industry leader long before Sears bought it. Its stores are much larger than most hardware outlets and feature excellent lawn and garden sections, too. In its Sears Hardware stores, Sears does far less, averaging $4.6 million from each of the 163 smaller units in that division.

NHCN grouped the top 500 firms into eight retail classifications: 81 home centres, 20 hardware stores, 20 lawn & garden dealers, 309 pro dealers, 11 building material outlets, 2 mass merchandisers, 29 paint stores and 28 home décor stores, which mostly sell floor and wall coverings.

Lowes was second behind Home Depot, with 2003 sales exceeding US$30 billion.

The magazine reports that the entire hardlines/home channel marketplace grew 6.4% during 2003, but home centre chains grew the most—up 11.9%. A large part of that difference is accounted for by the expansion efforts of Home Depot, Lowes and Menards, the top three home centre chains.

To help readers get a clearer picture of the diverse American marketplace, we have identified the top retailers in each of the eight retail classifications and show overall sales volume, number of units and average sales per unit for each.

Classification of the Top 8 retailers in the U.S.
Store Type Firm Name 03 Sales Stores Avg. Sales
Home Centres Home Depot $64.8 billion 1,587 $40.8 million
Hardware stores Orchard Supply $833 million 82 $10.2 million
Mass merchants Wal*Mart $14.6 billion 3,551 $4.1 million
Pro dealers Stock Bldg Supply $2.7 billion 224 $4.1 million
Lawn & garden Frank’s Nursery $317 million 170 $1.8 million
Paint stores Sherwin Williams $3.4 billion 2,721 $1.2 million
Building materials Gypsum Mgnt $630 million 107 $5.9 million
Home décor CCA Global Ptnrs $5.3 billion 2,254 $2.3 million

Wal*Mart, the world’s largest retailer, is also the American mass merchandiser most committed to carrying an extensive stock of hardware, housewares, and lawn and garden products. Only in building materials is it not an active player. With its hardlines, plus lawn and garden in season, occupying 20,000 or more sq ft typically, it accounts for more than $14.6 billion in sales from those lines.

Sherwin Williams, the leading paint retailer, is also America’s largest paint manufacturer, whose products are also sold in thousands of non-company stores.

Stock Building Supply, which focuses on the builder and professional market, ranked eighth on the list, immediately followed by two similar retailers—84 Lumber and Lanoga.

Sears, with its own Sears Hardware stores, its OSH stores and its large, multi-line mall-based stores, ranks fourth, right behind Home Depot, Lowes and Wal*Mart, with $10 billion in hardlines sales. Privately-owned chain Menards is fifth.

Among the top 10 firms, Lanoga, a business which primarily serves the professional customer, enjoyed the largest growth during 2003—34.6%, followed by CCA Global Partners, a home décor chain, with 30.9% Wal*Mart grew 21.7%.

Home Depot topped the list by a significant margin with 2003 sales of more than US$64.8 billion

What is not reported in this listing, of course, are the sales efforts of the thousands of independent and small-chain hardware, home centre and lumber-building material dealers who comprise the rest of the hardlines market. These firms, most of whom belong to buying groups of one kind or another, number in the tens of thousands and account for many billions of collective sales, though individual unit sales are nowhere close to the average sales of, say, an Orchard Supply Hardware store.

Though the number of such stores has declined steadily over the past decade or two, they are still a sizeable factor in the marketplace. Those which have survived have learned to position themselves as convenience outlets and have learned that better personal service, coupled with reasonably competitive pricing, is still attractive to millions of American consumers and business people.

Bob Vereen, Hardware Journal’s US Correspondent