Family businesses managed by the grandchildren and great grandchildren of the company’s founder are frequently celebrated in the home improvement industry. But for that kind of company to run an empire of more than 100 stores — there aren’t many of those.
There aren’t many companies like Westminster, Mass.-based Aubuchon Hardware Co. The independent chain of hardware stores operates its own 400,000-sq.-ft. distribution center in Westminster and runs an every-store-is-different chain of 121 stores throughout the Northeast. Another distinguishing feature: 2011 was its best year since it began in 1908. Sales rose 5.2% to $140.5 million.
For its growth, its steady success, its commitment to improvement and its family values mixed with a demonstrated confidence in the hardware business, Aubuchon Hardware was named the 2012 Retailer of the Year by Home Channel News. The company will accept the award during the National Hardware Show in Las Vegas at the Golden Hammer Awards breakfast event May 2.
What makes the company special? A tour of one of the chain’s new prototype stores in Cohasset, Mass., offers a few answers. Distinguishing features include a wide entrance aisle, clear sight lines and a paint contractors’ area. The store is only a year old, but it’s already been fine-tuned with the addition of a colorful DIY “decision area” for homeowners to explore the paint palette from Benjamin Moore in a comfortable space away from the mixers and shakers.
“This is the direction we’d like to take in more stores,” said Bernard Aubuchon Jr., senior VP purchasing. “We’re experimenting here, and we want to bring these ideas to other new stores.”
Other experiments include a South Burlington, Vt., store, where the emphasis is on household decorating ideas, including window treatment and fabric, he said.
According to Kenneth Moore, who is responsible for retail design for the company where no two footprints are alike, the experimentation is systematic. “We start in Westminster at a desk and pencil out a floor plan,” Moore said. “And then we get input from different people and come up with different ideas. If the store develops within that first year, we’ll go back and revisit it, as we did here.”
Aubuchon’s store-footprint comfort is in the neighborhood of 12,000 sq. ft. But across the chain, sizes range from about 8,000 sq. ft. to 20,000 sq. ft. Inside these diverse buildings, Aubuchon brings a consistent merchandise mix born in its planogram department. Each product category has its core mix that can expand or contract depending on space considerations. “And that’s how we can really manage 121 locations and also have consistency through all of them,” Moore said.
CEO M. Marcus Moran Jr., a grandson of the company founder, believes the unique stores are a strength, as are the people who run them. “We just fit into the town,” he said. “The manager is a longtime employee. Most likely he shopped with his father in a hardware store in our small towns. He’s well known, and in some towns he’s known as Mr. Aubuchon.”
The steady drive to improve stores is part of the Aubuchon way, and so is the constant search for the right location — or the wrong one. The company has been transformed, Moran said, by a continuing seven-year effort to be in the right place with the right store, whether that means opening or closing. With this corporate mind-set, one of Moran’s never-ending missions is to evaluate existing locations and scout for new ones.
The reasons to close a store are varied. Moran pointed to the possibility of encroaching competition. It might be a bad lease or an old store that simply can’t perform like it used to and doesn’t look like it ever will. When it makes sense to start fresh, the company acts aggressively, he said. And the 55% to 60% equity transfer to a new town is usually well received by the bank, he added.
Recruitment is ongoing also. Moran explains his process and his pitch: “I go into the store and I look at the age of the owner,” he said. “I look at whether the store is up to date or on a slippery slope to decline. And If I see potential in those two characteristics, I ask to speak to the owner in the backroom. And I say, ‘I don’t know when, but some day you may want to sell. We’re looking for stores to buy. And we have an authorization from the bank to write a check. You’ll have the cash right away.’ ”
The buyer tells the prospective seller: “Basically, I’m your 401K.”
Moran even has the formula for the price worked out in advance: 20 cents on the dollar for good will. Dollar-for-dollar for inventory. Negotiations vary for the fixtures.
Moran has pitched the deal a little more than 400 times, he said, with about 35 or so successful results. And the calls keep coming.
Case in point: The company’s Keene, N.H., location has been operating since 1941 in the same spot. But times have changed. “Wal-Mart, Home Depot, Lowe’s all opened on the other side of town,” Aubuchon said. “We’re going to move that store to that side of town in a bigger location where the people are shopping.”
And behind the innovation, the experimentation and the ability to expand and adjust is the company’s 400,000-sq.-ft. distribution center. It’s a resource that not many independents can match.
“It definitely gives us an advantage,” Bernard said. “We can buy truckloads. We can negotiate and make deals with vendors on our own and offer unique things to our customers. Plus we can change a little faster.”
The distribution center supplies most of the orders through Aubuchon’s Hardwarestore.com website. (The company jumped on the highly desirable URL address when it became available shortly after the dot.com bust in 2002.) For those products it doesn’t carry, Aubuchon’s distribution partner Orgill fills the gaps. Orgill trucks deliver to the Westminster facility about four times a week.
Running it all is the family, literally and figuratively. Moran said there’s about 30 or 40 store managers who started with the company as high school kids. “We have many outside of the family bloodlines that have been with us as Aubuchon family for many years,” Moran said.
About 1,200 people work at the retail company. Roughly 60% are full time and 40% part time. Then there’s the 20 or so relatives descended from the founder.
“We have fourth-generation executives working for the company now,” Aubuchon said. “That is something we’re pretty proud of.”