Hardware Retailing

MAY 2017

Hardware Retailing magazine is the pre-eminent how-to management magazine for small business owners and managers in the home improvement retailing industry.

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HARDWARE RETAILING | May 2017 154 due diligence, we realized that the cash flow of the business was really in the two stores we didn't initially want to purchase, as well as in their online division. We started peeling away at the onion and realized there was a lot of potential in acquiring all four stores and the online division. The biggest challenge is that this was our first acquisition, so we didn't know what to expect as far as timelines, attorney's fees or understanding how the acquisition process takes place. We thought it would be a six-month process, and it ended up taking almost 12 months to close the deal. That was last October, and we ended up moving our main location down the street in January of this year. Now we are in the process of remodeling each of those four stores. They are all going to have a similar footprint and design, with the same inventory across all stores. HR: What are some of the key opportunities that you feel independent retailers operating urban locations have today? MW: We are seeing more millennials and empty nesters starting to move back downtown. Property might be a little more expensive in the city, but when you are going from a 4,000-square-foot home to an 1,800-square-foot home, it actually nets about the same. People want to be back in a community where you can walk to the local café. So you are seeing higher density, and it's challenging for the competition to come in, due to higher costs. It's not like a big box is going to come in a wipe out an entire city block to build a store. We really want to continue to focus on adding urban locations; however, we won't pass up an opportunity for a good suburban store. We just feel like people moving into urban areas is a trend that will continue. We're keeping our eyes out for finding the right location and the right people to run it. But with all we have been through recently, we're focused on these six locations right now. I haven't boxed myself in on how many stores we'll have one day. Over the next two years I want to continue to refine the model and the SOPs (standard operating procedures) and then continue to grow from there. HR: So growing through acquisition is part of the plan moving forward? MW: I heard a statistic that 45 percent of the attrition that independent hardware retailers are experiencing is due to lack of succession planning. We feel this will create acquisition opportunities moving forward. As long as interest rates remain low and credit is available, there will be more acquisitions in our future. But it's not easy. It seems like there would have been more people interested in the acquisition we just went through. But very few wanted to take on the entire company at the same time, and the owners didn't want to piecemeal the deal. It was also uncertain if the former owners would get a buyer, and they were Woods' parents added a convenience hardware store to their locksmith and door business in 2006. The company has grown as more people make their homes downtown. Fast Growth: In a 15-month span from October 2015 to January 2017, Woods went from owning a single, 1,500-square-foot store located in downtown Cincinnati to being a multi-store retailer after acquiring an existing four-store chain. During the same timeframe, he also moved his original store down the street to a much larger 8,000-square-foot building.

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