Thinking Past The Price Tag Independent Hardware Stores Say Good Customer Service Is The Best Way To Compete With National Chains

Hardware stores in Kootenai County are getting a taste of bare-knuckle marketing from national building center chains moving into the region.

In Coeur d’Alene, the gloves came off in early December when Eagle Hardware & Garden opened its store on Appleway.

Home Depot is next in line with a 130,000-square-foot store planned at the corner of U.S. Highway 95 and Kathleen Avenue in about a year.

Home Depot selected the property to be as close as possible to Eagle. The site also is directly across the street from Atlas Building Center.

“There used to be a gentlemen’s agreement that you didn’t do that sort of thing,” said Carol Tice, West Coast editor for Home Center News.

“That’s all over now. Anybody who thinks they’re going to continue doing business the way granddad did won’t be in business next year.”

Local stores are fighting back with the very tools that built empires for chains such as Eagle and Home Depot - volume buying and comparative shopping.

“We’ve got a schedule in place for our salespeople to be shopping Eagle on a weekly basis,” said Tom Richards, general manager for Atlas Building Center. “Eagle does the same thing here.”

Borrowing a page from his competitor’s playbook, Richards sends his staff out in pairs to comb the aisles and read prices into a hand-held tape recorder. Although Eagle may stock “more of everything,” as its advertising promises, Richards is eager to prove his service-minded store can compete at the cash register.

“We’re going to start pulling invoices of people doing projects and shop the whole thing at Eagle,” he said.

Karl Ziegler, vice president of operations for the 21-store network that includes Ziegler Lumber Co. in Spokane as well as Ziggy’s Building Materials and Zig’s Electric & Plumbing outlets in five states, competes with Eagle and Home Depot in four markets.

Ziegler said the chain stores “only fiddle in building materials.”

“We call their inventory ‘pots, pans and weed whackers,”’ he said. “They sell bubble gum and candy bars, too.

We sell building materials.”

Ziegler’s family-owned stores make up a combined buying group that enjoys volume purchasing discounts and acts as an internal distribution system.

It’s that kind of collective retailing that will help independent stores outlast the onslaught of national chains, said Jim Richardson, marketing director for Key America, a buying group made up of 4,100 stores with $3 billion in buying power.

“In our industry, buying groups constitute over 10,000 independent retailers,” said Richardson, whose organization provides discounts through volume buying of appliances, electronics and furniture.

Trying to stand alone against the national name recognition and advertising reach of the retail chains can be like “taking a pop-gun into battle,” Richardson said. By serving as a centralized advertising consultant and marketing director, he strives to turn that pop-gun into a high-powered rifle.

“We’ve learned that our value is not only in the buying of a product, but in the selling of it,” he said.

Ace Hardware affiliates like Atlas Building Center belong to one of the largest buying groups in the industry. The cooperative serves more than 5,000 local hardware dealers in 50 states and 60 countries and had sales of $2.7 billion in 1996.

Like Key America, Ace advises its members to think past the price tag.

“Our company studies show that maybe 30 percent of our customers are purely driven by price,” said Mike Altendorf, manager of administrative services for Ace Hardware Corp. “So if our competitors are slugging it out at that level, they’re leaving 70 percent of the customers unattended.”

With 31 stores in eight states, Eagle has become Home Depot’s fastest-growing competitor in the Northwest since Seattle-based Ernst Home Center declared bankruptcy and closed its 53 remaining stores in the region about a year ago.

Still, Home Depot is the leader in the $135 billion home improvement market, with approximately 590 stores in operation and plans for 1,000 locations by 2000.

A new Home Depot opens somewhere in North America at the pace of about three a week.

“There’s such tremendous growth in this market that we have to keep opening them at that rate just to keep up,” said Amy Friend, a public relations specialist for Home Depot.

Although it claims nearly 15 percent of the home improvement market, Home Depot leaves room for independent stores, she added.

But one local company already feels it has been crowded out by the big chains.

Just days after the Dec. 4 grand opening of the Coeur d’Alene Eagle Hardware & Garden store, Duncan’s Garden Center owner Steve Badraun announced he would close his Kathleen Avenue store rather than try to compete with the “predatory” national retailers coming into his sales territory.

Blowing out the competition is the last thing Home Depot wants to accomplish, Friend said.

“If there weren’t any competitors, there would be nobody to be better than - it keeps everybody on their toes,” she said.

As manager of the three Badger Building Center stores in Post Falls, Sandpoint and Kalispell, Mont., Lee Badger believes he runs “one of the last truly independent lumber yards.” He’s not part of a buying group, but said his father, owner Mike Badger, “buys smart.”

With Eagle in the region and Home Depot on the way, Badger said his building centers have sharpened their advertising, developed new product lines and expanded employee training programs.

“I wouldn’t exactly say we welcome the competition,” he said. “But we’re better for it.”

, DataTimes ILLUSTRATION: 2 Photos (1 Color)