US News: Taking Business Downtown

As developers all over the western world turn previously run down city centres into residential areas and office buildings into warehouse-style apartments, opportunities flourish for urban hardware stores. Bob Vereen reports…

AHJUSNews01July06

As consumers begin returning to live in downtown metro areas of some major US cities, some hardware retailers are finding that these urban dwellers can be profitable customers. The same is probably true of other large cities around the world.

However, operating a metro urban store is far different than being a traditional neighborhood convenience hardware store or a suburban home centre. This was highlighted by Rick Karp, Jeremy Melnick and Steve Fusek – three urban retailers who participated in an interesting panel discussion during the 2006 National Hardware Show in Las Vegas.

Most urban retailers also find that a good share of their business comes from commercial and industrial customers, who find the stores’ downtown locations a time and money-saver for supplies and equipment, especially replenishment or on-the-job needs.

AHJUSNews02July06
L-R: Rick Karp, Jeremy Melnick and Steve Fusek at the National Hardware Show in Las Vegas

Rick Karp, who operates four stores in San Francisco, finds the customer mix somewhat different for each store, which means that inventories likewise must be adjusted accordingly. One store primarily serves as a neighborhood supply source, while another is primarily commercial. Of his other two, one serves a low to middle-income area and his fourth store caters to an upscale neighborhood. This means inventories vary widely, as do quantities on hand and price-point strategies. The commercial store’s customers buy in larger quantities and hence his inventory levels on basics and tools must be much higher than in the other 3 stores. Prices must also be adjusted for the income levels of different customer bases. Cole Hardware has always had a very ‘downtown’ tradition. The original store, Cole Street Hardware, in the famous Haight Ashbury district, has witnessed all the color of mid-city San Franciso over many years – the hippies, the flower children, Hare Krishnas and the Black Panthers!

Jeremy Melnick operates two Ace stores in Chicago, one of which was recently opened in the basement of a major office building. This store gets business from nearby condo residents as well as from offices surrounding it. His other, older store, does more commercial business and serves an older neighborhood clientele.

AHJUSNews03July06

Good signage highlights the service counter at the rear of the store

Steve Fusek of Indianapolis in Indiana, shares a parking lot with the only major supermarket in downtown Indianapolis, so he benefits from the food store’s traffic, but he also finds that by innovative promotional efforts, he has now become a “convenience outlet” for building maintenance people throughout the downtown area.

Steve Fusek knows that his product selection must differ from that of most other retailers: The barbeque grills he stocks are smaller so they can be used on small porches or balconies in high-rise apartments or condos. Bags of fertilizers are also smaller, just large enough to feed planters. Decorative hardware sells well as dwellers personalize their lodgings. Paint and decorating products are repeat sellers. Steve’s downtown consumers are time-pressed so he offers a wide range of services ranging from key cutting and carpet cleaning to screen and window repair and replacement.

AHJUSNews04July06

End caps like this promote specials and identify departments on both sides of the store’s one main traffic aisle

All three said they are making special efforts to attract take-home sales from downtown workers, as well as sales from downtown residents. Fusek, for example, estimates there are 20,000 downtown residents but there are at least 100,000 people working 5 days a week within shopping distance of his store.

Karp writes a regular newsletter – the Hardware Hotline – which is now also available on the Internet, in which he talks about new items added to inventory, provides helpful how-to hints and discusses local civic problems and needs. It also contains a Community Noticeboard. He tries to establish a personal relationship with customers via his newsletter.

One of the interesting promotional techniques Fusek uses is a series of signs attached to the “arms” of parking garages, which raise and lower as cars enter the parking lots. These, he explained, are particularly helpful when big entertainment activities attract visitors, such as Indianapolis’ pro football and basketball games. If people need more picnic supplies (coolers, etc), they know a source of supply is conveniently at hand.

Bob Vereen, Australian Hardware Journal’s US Correspondent