Friday 31 October 2014

Do it yourself – if you really want to survive against the competition

Hardware merchants form a band of brothers to beat the bigger guys and secure their own future

Sean Gallagher

Published 02/03/2014 | 02:30

AS we happily wave goodbye to the dark winter days and begin to look forward to the brightness of longer spring evenings, many of us will be planning a visit to our local hardware store. DIY enthusiasts will be busy stocking up on the bits and pieces they need to finally finish those niggling jobs around the house that have been put off.

Gardening enthusiasts too, will be thinking about what plants to sow and whether the lawnmower needs sharpening again this year.

However, for the owners of these local hardware stores, it has been a tough few years. They have faced increased competition from the super-sized stores that have popped up in corporate parks around the country. And they have had to contend with the large retail stores who have expanded into the hardware space.

As a result many local stores were forced to close. Many more were facing the same fate were it not for the swift and innovative response of a group of five inspiring entrepreneurs who decided it was time to do something about the situation. Each one runs their own independent general hardware store and all were acutely aware of the threat to their industry if no action was taken.

In a real example of self-help, the five men came together to set up the Expert Hardware Group, an umbrella group which now represents about 50 independent hardware stores nationally. Together they have played a major role in re-energising the industry as a whole and in helping individual stores survive in the hugely dynamic world of retail.

"It was a cold winter's evening in 2005 when we held our first meeting in the Central Hotel in Exchequer Street, in Dublin," recalls Alan Grant, the group's marketing director. "There were only the five of us at that first meeting. Each of us had ran our own store very successfully up to that point but all of us were struggling to compete against these bigger stores," he explains.

HAMMER TIME: From left, Gearoid Boland, Brian Beegan, Sean Gallagher, Peter Doyle, Alan Grant and David Baer of Expert Hardware. Photo: Gerry Mooney

"While customers recognised our superior level of product knowledge and our strong commitment to personal service compared to some of the larger outlets, nonetheless, small hardware stores were closing at a rate of one per week throughout the country."

Each of the five store owners separately came to the realisation that their days were numbered unless they were able to come up with some new solution to address these challenges.

"We didn't actually set out with the view of creating the group as it is now," explains the group's chairman, David Baker. "We came together initially as a discussion group or a type of forum to talk about the problems each of us faced and to explore ways in which we could sustain our business into the future," he adds.

The five quickly began to understand that their power lay in their collective strength rather than their individual isolation. And so Expert Hardware Group was born.

Their first move was to create a national retail brand under which each member store would operate. With little or no budget available, they turned initially to their suppliers for support. Thankfully for the group, the suppliers immediately saw the advantages of dealing with a larger representative group compared with small independent stores.

The suppliers stepped up to the mark and offered deals to the stores based on their now collective buying power. This, at last, enabled them to compete with the larger stores whose high volume purchasing power had, up to that point, given them the distinct advantage of being able to offer better pricing to customers.

In return for this support, the group agreed that these suppliers would become the preferred suppliers for the whole group and that all stores would agree to buy exclusively from them in the future.

"This made sense too for the suppliers as they had a vested interest in ensuring that no more stores would close or they would lose more of their own market share," explains Alan.

The group also developed their own range of branded Expert Hardware products consisting of more than 300 items such as paints and paint brushes, ironmongery, picture hooks, screws, electrical sockets, plugs and light switches.

"It has become a hugely empowering network for members," explains Alan. "We are able to share costs such as marketing and advertising and work together more effectively to manage our stock," says David.

He explains how, recently, he had a request from a customer in his store who was looking for a wall mounted postbox for her home which he did not have in stock. Instead of turning the customer away empty-handed, David emailed the other store owners within the group. Within minutes, another store owner mailed to say that he had one in stock.

David was then able to complete the sale and receive payment from the customer, while the other store owner sent the product directly to the customer.

"In this way we can provide a better service to our customers while at the same time being better able to manage our own inventory and stock levels," explains David.

While many store owners originally joined the Expert Group because of improved pricing and better marketing opportunities, everyone quickly realised the value of the support they were getting from other network members, insists Alan.

It was support they would all come to appreciate. As things began to go well for the group they had no way of knowing that a massive downturn in the economy was just around the corner.

"In the same way that many independent grocery stores would not be in business today if they were not part of a bigger chain of stores or one of the symbol groups, many of our members would not have survived in business had it not been for the Expert Hardware Group," explains David.

Each of the five directors of the group has been on their own entrepreneurial journey.

David Baker had worked for many years in Dockrells hardware store in George's Street in Dublin until the store eventually closed and he was made redundant. Determined not to remain unemployed, he found a small shop unit on the same street and soon after started his own store.

Peter Doyle's father died when he was only 15. His family couldn't afford to send him to school so he left to take up a job in a local hardware store. By 19 he was managing the store. At 29 he decided to explore other options and left to take up a sales role in a security company. However, he soon realised he missed retail and in 1994 took the step of opening his own store in Kimmage.

Growing up, Alan Grant's family ran J G Engineering, a retail store in Inchicore which sold nuts, bolts and fasteners. After school, Alan travelled to London where he studied Media Production. However, in 2003, he returned home to Ireland where his brother set up their own general hardware business as part of the JG Group.

Brian Beegan spent most of his working life in the IT sector. Unfortunately, in 2005, when the IT function of the bank where he worked was relocated to Scotland, Brian found himself redundant. While struggling to find another job, he came across a hardware business in Ranelagh, Dublin, which was for sale and decided that he would take charge of his own destiny and become an entrepreneur instead.

Gearoid Boland studied Engineering at Trinity College. He didn't particularly like the subject and decided instead to join his father and uncle who ran a general store.

"We had drapery, a barber's, a post office and sold fuel and hardware. We had everything except the undertakers and the pub," laughs Gearoid.

Although he only intended to work in the business for three months, he never left. That was almost 30 years ago.

With around 50 member stores already in the Expert Group, do they see their work as finished?

"Not at all," insists David. "With more than 300 independent hardware stores in the country, we hope to double the number of members over the next three to five years."

They also want to further expand their range of own- brand products. They are excited too, about a new initiative which will soon see them start selling services direct to customers. These services will include chimney sweeping, stove maintenance, home insulation, boiler upgrades and lawnmower servicing and sharpening.

It is part of the group's strategy to expand their offering to customers and one which, they hope, will also help to differentiate them from the larger stores.

"It's a win-win for everyone," says Alan. "Customers will now be able to find local service providers who will have already been vetted by our local store owners; service providers will now to able to increase their business by gaining access to our existing customer base," he adds.

As I wish these five men well, I cannot but be impressed by their energy and entrepreneurial spirit.

While they could have seen each other as potential competitors, they chose instead, to look at the bigger picture. They came to understand that the issues that united them were far greater than any that might divide them.

While they started out to create simple purchasing, branding and marketing synergies, they ended up developing a sophisticated group structure that helped them not only survive but thrive over recent years.

And they did all of this in addition to running their own individual businesses.

I am even more impressed when I learn that, to date, none of the five have taken a salary for the work they have done on behalf of the group. Now that's what I call real leadership.

 

Company
Expert Hardware Group Business General Hardware Stores

Set up
2005

Founder(s)
David Baker, Peter Doyle, Alan Grant, Brian Beegan and Gearoid Boland

Annual turnover
€150m (combined)

Number of employees

There are 4 working in the HQ, and throughout its 47 member stores there are 375 full-time and 120 part-time staff

Location
Nationwide

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