Family Owned vs. Big Box Stores

I am a huge supporter of locally owned businesses. Obviously, it would be hypocritical of me to say that I don't also support chains, because I do. They keep our economy thriving and supply jobs to millions of people. With that being said, my shopping experience seems much more fullfiling when I know that my purchase is helping a private owner. This is a good example...

Retailer helping the 'do-it-yourselfers'
by Cathryn Creno - Nov. 8, 2008 12:00 AM

The Arizona Republic

Buying a home might be out right now, but you might have the cash to make improvements to the place you have.
Major upgrades requiring a contractor might give you pause, but a simple faucet upgrade, paint job or switch to energy-efficient lighting probably is manageable Ace Hardware, a fixture in nearly every neighborhood, is benefiting from that trend.
As home construction has declined, so have sales at big-box home-improvement stores.
But Ace Hardware Corp., with its smaller-store format and focus on building long-term relationships with customers who do their own home repairs, reported revenues that were even with the year before in its most recent quarterly earnings statement. And Ace's quarterly net income was up 13.2 percent, to $33.4 million.
Giant retailers Home Depot Inc. and Lowe's Cos. Inc. last quarter both reported declines in both sales and net income. "They are into renovations. We are into home preservation," said Tom Knox, Ace's national director of retail and business development.

Eighty-four-year-old Ace, a cooperative of independent hardware stores that share a brand, buying power and training programs, historically has been successful because of a philosophy of focusing on the wants and needs of customers within a five-mile radius.
Now, in the down housing market, customers new to do-it-yourself projects are coming in .
. The trend is particularly strong in metro Phoenix and other areas hard-hit by the real-estate downturn.
"People here get me what I need, which is much better than a big-box store," said Ryan Lawson, an investment banker who was at an Ace last Saturday to get advice and supplies for painting a closet interior.
Retail analyst Neil Stern, senior partner at McMillan Doolittle LLP in Chicago, says it's no surprise to him that Ace is going strong. "My guess is that the hardware piece, which includes light DIY, remains healthy and will probably be even more so as people opt to fix rather than replace in this economy," Stern said.

Popcorn and horse feed
Many people enjoy browsing the aisles of a hardware store, and the most successful Ace stores capitalize on that.
In metro Phoenix, you can get free bags of popcorn at four Paul's Ace Hardware stores, owned by sisters Julie Buchkowski and Tricia Dauwalder. Free classes on how to feed your horse are offered at two of three Karsten's Ace Hardware stores, owned by David Karsten.
"Each Ace has a personality. Popcorn is our personality," said Buchkowski, whose family has sold hardware for three generations. The family's stores in Tempe, Scottsdale, Gilbert and Fountain Hills are named for her grandfather, Paul Dauwalder.

Karsten's Ace at 28220 N. Tatum Blvd. in Cave Creek is a hub for the horsy, outdoorsy residents in the northern reaches of the Valley. Karsten's Goodyear store also caters to animal lovers, while its Carefree store has a more traditional format.
The Cave Creek store provide free clinics on topics ranging from crafts kids can make at home to the care and feeding of backyard horses. Last Saturday , Megan Wilson, a 14-year-old Cactus Shadows High School freshman, was in the Cave Creek Karsten's to check out listings of horses and tack for sale on the store bulletin board. Rural Farm Broadcasting, a satellite station, was playing on a television nearby.
"I like coming in here," said Wilson, who has been riding horses since age 7 and whose family owns four horses. "I've been to a couple clinics here. 'How to keep weight on your horse' was really good."

Foreclosure fixer-uppers
In southwest Phoenix, Quinton Reeves, who opened Reeves Ace Hardware at 7620 W. Lower Buckeye Road in August, has found a niche among new residents of the area who have purchased foreclosure homes.
"They come in and say, 'I got a great deal, but it has holes in the walls,'" Reeves said. Reeves was the operations manager for an air-conditioner-manufacturing company before he and his father put together $1 million to start the Ace store.
He expects to have $1.4 million in sales his first year and sales growth of 10 to 15 percent annually the next several years.

The business model
Ace is not a franchiser. The company is owned collectively by its store owners. Each owner is awarded private shares of Ace according to how much they spend on Ace-brand products each year.
Before a potential owner hangs an Ace Hardware sign in front of a store, the company does a background and financial investigation. Ace requires potential owners to show they have at least $250,000 to invest before they can join the company.
One fan of Ace is Stacy Mitchell, the Maine-based author of Big Box Swindle: The True Cost of Mega-Retailers and the Fight for America's Independent Business.
"From my perspective, it's an ideal combination," she said.
Reach the reporter at cathryn.creno@arizonarepublic.com or