Your
Backroom
STOREOPERATIONS
Transforming
September 2006
Dennis Kulpa, warehouse
manager at Elliott’s Ace
Hardware, keeps track of the
inventory stored in the retailer’s
17,000-square-foot warehouse.
26
Hardware Retailing
By Chris Jensen, Executive Editor
etailers who meticulously front merchandise and dust
shelves on their salesfloors often turn a blind eye to their
backrooms. Seasonal and back stock is scattered about
haphazardly, the pile of spare parts and old equipment gets
bigger each year, and screen doors are repaired on a worktable
littered with tools, parts and product returns. It gets even worse
when the cramped area doubles as the breakroom at lunch time.
R
Into Productive Space
Elliott’s Ace
Hardware uses a
warehouse facility
in the back of its
West Allis, Wis.,
store to store bulky,
seasonal and dropship items such as
outdoor power
equipment, grills
and fertilizer.
ALTHOUGH THAT SCENARIO MAY
sound familiar to you, it doesn’t have to
be that way. As more retailers undergo
remerchandising and remodeling projects
to boost their salesfloor productivity,
they are paying closer attention to the
productivity of their backroom operations. In fact, a store retrofit or expansion
is the perfect time to address the clutter
that lurks in your backroom.
Retailers have traditionally tried to
keep their backrooms small, maximizing
the space devoted to salesfloor merchandising. But as more dealers venture into
commercial/industrial sales, expand
their store services and explore spaceintensive niches such as outdoor living,
grills and hearth products, they are taking a fresh look at what activity takes
place in the back.
Read on to see how several hardware
retailers have transformed their backroom operations to streamline receiving
and inventory management, make room
for product niches or to create more efficient storage of products.
Bredfields True Value
It took nearly a year to clean out the
mess in the backroom, but Bredfields
True Value Hardware in Castle Rock,
Wash., finally cleared out enough clutter
so the store could make room for a major
growth initiative—adding a Just Ask
Rental department.
Bredfields’ backroom was used to cut
pipe, but it mainly had become a dumping ground for assorted junk and spare
parts, some of it dating back 25 years,
according to Manager/Owner Janet
Bredfield. “We had thought about rental
for years, because we got a lot of requests
for it. But we needed to find a place to
put it,” she says. “We were long overdue
to do something with our back area.”
The rental department finally opened
in April, but not before a fairly extensive
remodeling of the previously overlooked
space. They moved an existing door so it
would line up with the salesfloor registers and put in two garage doors for
receiving. Drywall, a new ceiling and
insulation were installed. The floor
and walls were painted. “We took out
some dirt and added gravel, then had
to do wiring and put in new lights,”
Bredfield says.
With $50,000 in inventory invested in
rental products, the store hopes to target
d-i-y rental customers. “We used to just
loan items to people; now we can take
care of their rental needs,” she adds.
September 2006 • Hardware Retailing
27
Many hardware retailers use their
backrooms to take care of important store
services such as screen repair and glass
cutting.
Above:
Left: Bray Ace Hardware in Winter Garden,
Fla., used PVC pipe to create a storage rack
in its backroom to hold different types of
screening.
An adjacent building is used to store
some of the larger rental items such as
scaffolding. Bredfield also has another
backroom area that stores back stock and
is used for freight. “Unfortunately that
got worse when we cleaned out the other
area; it’s my next project,” she says.
September 2006
Ace Handiman Hardware
28
Bill Pastermack no longer worries
about the accuracy of his weekly deliveries from Ace. After testing the merits of
blind receiving, he’s a convert.
Hardware Retailing
Pastermack’s store, Ace Handiman
Hardware in Titusville, Fla., first tested
the concept a few years ago, putting
away their weekly truck shipment without verifying it for accuracy. “The order
accuracy then was about 98 percent, so
we felt it made sense to trust it,” explains
Manager Dale Bertels.
After operating with blind receiving
for a while, Bertels and Pastermack
recently decided to conduct another test.
They counted every item from their Ace
orders for three weeks. “With 5,688
SKUs, we only had 17 errors—that’s 99.7
percent. We were only short $24.13,”
Bertels points out.
Since each truck used to take three
people 10 hours to unload and check
in—30 man-hours—Bertels says the labor
savings is substantial with blind receiving. “It’s cost-prohibitive not to do it this
way. We can use two people for five
hours instead of three or four at 10 hours,
which frees up staff to be on the salesfloor,” he says.
Ace Handiman Hardware has a 21,000square-foot salesfloor and a 7,000-squarefoot backroom, which Bertels views as
another store. A section of the backroom
is set aside for future sales (endcaps and
circular items), as well as seasonal stock.
“We don’t top-stock any shelves, so
inventory management is important to
ensure we don’t have excess stock in the
back,” he says. “We do suggested orders
on the computer, but still look through
the store and adjust as necessary.”
A commercial/industrial sales office
also takes up space in the backroom. “We
have our own stocking/ordering process
for that,” Bertels says. “Inventory is an
important part of being successful in
commercial/industrial sales.”
Although they plan to go forward with
blind receiving, Bertels says they will
check the accuracy of their orders again
in the fall. “It’s a good thing to check
every six months or so,” he says.
Koopman Lumber
Although it operated three good locations to sell hardware products, Koopman
Lumber in Massachusetts lacked the
space to efficiently service and deliver
lumber and building material products.
“I heard of a retailer in the South who
had a DC (distribution center) to make
deliveries, and that sounded like a good
solution for us,” explains Dirk Koopman.
It took two years to find the best location and bring the plan to fruition, but
the Orgill retailer finally opened an
eight-acre distribution center in 2003.
Centrally located to the retailer’s three
stores, the facility is mainly used to
house building materials, handle special
orders and serve as the launch site for
job-site deliveries.
“Customers love it. They see we’re a
growing company, and it shows we mean
Above: Koopman
Lumber’s
distribution center features
three loading bays, making
it easy for the retailer’s 11
delivery trucks to get products
quickly to their job sites.
At left: Cragin Industrial Supply
Co., a Do it Best retailer in
Chicago, used to have a 1,500square-foot showroom, with
most merchandise stored
behind the counter and in the
backroom. Two remerchandising projects boosted the showroom to 6,500 square feet and
were designed to get more
merchandise in front of the
customer.
Elliott’s Ace Keeps Things Moving
ith four locations in the greater Milwaukee area,
Elliott’s Ace Hardware has to deal with a lot of
products flowing in and out of its stores. The simple solution was to add a 17,000-square-foot warehouse to the
back of its West Allis, Wis., store.
The warehouse, which has been in place for some time,
enables Elliott’s to take care of its customers’ needs while
operating at peak efficiency.
Each location still receives regular deliveries from Ace,
with the warehouse mainly used to store bulky, seasonal
and drop-ship items. “We use the warehouse to stock two
grill lines, stationary tools, garden tools, snow blowers,
lawn mowers, fertilizers, dehumidifiers and lawn furniture,” says Warehouse Manager Dennis Kulpa.
Since they have the space, Kulpa says Elliott’s can
afford to buy more direct shipments from vendors, which
come into the warehouse and are then distributed to each
store. Some products are hand stocked, while others are
pallet loaded onto warehouse racks. The facility typically
stores about 300 SKUs, he says.
Kulpa uses a computer system in his office area to manage the inventory in the warehouse, with his team using
pull sheets as they pull orders off the shelves.
W
He oversees the delivery of products from the warehouse to each store every other day, except for the main
store in Elm Grove, which receives shipments six days a
week. “We also have pick-up trucks with a small goods
driver, who shuttles back and forth from the stores all
day,” Kulpa says.
While they do check drop-shipments by scanning the
merchandise, Kulpa says they stopped checking in
freight coming from Ace a year ago. “The time savings
is substantial,” he says. “We start unloading the truck at
6 a.m. and have it on the floor by noon. Before, when we
were checking everything in, we wouldn’t be done until
about 3:30 p.m.”
Kulpa operates with an assistant and two other fulltime employees, as well as part-time help in the summer.
When shipments arrive, the employees quickly get the
goods split and separated by store.
He says there are a lot of checks and balances to Elliott’s
receiving and inventory management system. “When
buyers have things coming in we get notes alerting us.
I can scan it in off the sheet. You know when something
comes in (off the truck) that’s not right,” adds Kulpa, who
has been with the company nearly two decades.
September 2006 • Hardware Retailing
29
With about 42,000 square feet of heated and
unheated storage and office space, Koopman
says they are finally able to operate efficiently.
“Just having a lot of space is nice,” he says.
business,” Koopman says. “We can really
take care of our customers’ needs.”
Koopman’s distribution center in
Uxbridge, Mass., features three loading
bays, with 11 delivery trucks and 21 fulltime employees. A second shift of
employees is charged with readying the
trucks for the next day’s deliveries,
which now go out by 6 a.m.—an hour
earlier than before.
“We keep a limited SKU count there,
carrying locksets, glue, flashing, joist
hangers and the like,” says Koopman,
who adds that some customers stop by to
pick up special orders or long lengths.
Since opening the facility, the retailer
is trying to get away from using backrooms and basements for storage. “We
also do more blind receiving now, so we
can get products on the floor right away,”
Koopman says.
Quantity on hand and other inventory
management data is available on the
computer system in the warehouse, and a
fax/copier/scanning machine is also
located there for receiving purposes. “We
can scan where the paperwork has to go,
and all fax orders come in through
there,” he says. “Special orders can go
straight to the sales guy. We do some
scanning of truck tickets.”
With about 42,000 square feet of heated and unheated storage and office
space, Koopman says they are finally
able to operate efficiently. “Just having a
lot of space is nice,” he says.
Kinney Bros. & Keele True Value
When he added on to his building
11 years ago, John Kirby knew it was
What Are Other Retailers Doing In Their Backrooms?
ore hardware/home improvement retailers are
taking steps to transform their backrooms to
make this space more productive and efficient. Here’s
what is going on in a few retailers’ backrooms:
M
September 2006
• Cardinal True Value in Kalispell, Mont., opened up a
wall between its salesfloor and backroom and created
a new area for store services. Owner Gary Hanson
also uses his backroom to scan in items for receiving.
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• Frager’s Hardware in Washington, D.C., devotes
about 350 square feet to store services such as
screen/glass repair, which generates more than
$100,000 for the store each year.
• True Value of Molalla (Ore.) converted part of its
backroom to expand into rental products.
Hardware Retailing
• Handyman Ace Hardware in St. Cloud, Fla., uses a
table in its backroom to work on screens, build adult
tricycles, repair lawn mowers and replace motors on
pumps, according to Owner Rick Heuser. Several
employees are trained to do the service work during
slow periods.
• 84 Lumber Co. has begun treating its warehouse
area as an extension of its stores, showcasing products such as doors and mouldings.
• To further appeal to its pro-oriented customer base,
Stock Building Supply has been moving products
from the backroom to the salesfloor. By displaying
samples of products such a silt fence, grade stakes,
ventilation products and polyfilm, Stock is able to
remind pro customers what business they are in.
the perfect time to take his hearth products business to another level. “We
were already in hearth products as a
niche, but we needed a working area
for doing repair work as well as a retail
area,” he says.
His store, Kinney Bros. & Keele True
Value in Ontario, Ore., now has a 3,000square-foot space in the back devoted to
hearth products, a niche that is taking
off even more due to the rising cost of
natural gas and heating oil. “We’re selling a lot of pellet stoves. A lot of dealers
get into (hearth products), but don’t
service and maintain what they sell,”
Kirby points out.
Hearth product parts are merchandised
by brand and model number on plain
racking, while vents are organized by
size. Outside under cover is pallet racking
used to store high-temperature chimneys
for wood stoves, flashings and stoves.
The retailer offers in-home installation and repair service, which is handled in a specially designed area.
Customers who go in the back to check
out the displays will see the work
tables, which reinforces the fact they
service what they sell. “I put in an
exhaust vent, because we pre-burn
stoves to get the stink out,” Kirby says.
His partner, Bob Reed, heads up the
hearth products department and oversees three part-time employees who
handle installation and repairs.
A separate warehouse and receiving
area resides on the other end of the
building, where additional store services such as screen repair get done. “We
used to just have a warehouse/receiving
area; now we have more functional
space,” Kirby says.
With $100,000 invested in hearth
products inventory and about $500,000
in hearth product sales last year, Kirby
has seen his little niche take off. “It’s a
good fit with hardware. It gives people
another reason to come to us.”
Agnew Hardware Hank
Scott and Marge Agnew, who own
Agnew Hardware Hank in Onamia,
Minn., recently moved to a new, larger
location with a dock and loading ramp in
the back of the store to reduce the manual labor required to receive and put away
merchandise. In their previous location,
they had to store about one-third of the
merchandise in their backroom or basement; now they have room to display
more products on their salesfloor.
With more goods in front of customers, the Agnews saw first-year sales
in the new store rise 36 percent. Sales
are up another 25 percent this year,
according to Marge Agnew. “We still
have some backroom storage with a
20-foot mezzanine area,” she says.
“We also use that area for pipe cutting,
screen and window repair and to do
our receiving.”
Agnew says they receive their deliv-
Koopman Lumber has been able to operate
more efficiently since opening a distribution
center for its three stores.
ery from United Hardware around 11
a.m. on Tuesday, and it used to take
them until Thursday to put it all away.
Now, the stock is put away by 5:30 p.m.
Tuesday. “It’s been a tremendous
improvement for us,” she says.
The Agnews also went to shelf pricing
and are scanning in products at the
receiving stage. “This allows us to get
products to the salesfloor much more
quickly and efficiently,” she says.
September 2006 • Hardware Retailing
31