Solving real-world retail challenges with the best Orgill has to offer Germantown Hardware
B | Orgill Case Study Germantown Hardware Solving real-world retail challenges with the best Orgill has to offer 0 days closed because of remodel 38% sales increase after project completion 58% increase in salesfloor square footage Executive Summary . . . . . . . . . . . . . . . . . . 01 Market and Project History . . . . . . . . . . . 02 Addressing Immediate Issues. . . . . . . . . 06 Extreme Planning Phase . . . . . . . . . . . . 16 Getting the Assortment Mix Right. . . . . 20 Merchandising Innovations. . . . . . . 26 Putting the Plan into Action. . . . . . . . . . 30 Spreading the Word . . . . . . . . . . . . . . . . 36 Learnings to Be Shared . . . . . . . . . . . . . 44 Testimonials: Project Insights. . . . . . . . 46 About Us. . . . . . . . . . . . . . . . . . . . . . . . . . 48
Orgill Case Study | 1 In 2020, Germantown Hardware, in Germantown, Tennessee, was acquired by Central Network Retail Group (CNRG), a wholly owned Orgill subsidiary and multi-format, multi-brand retailer operating more than 140 hardware stores, home centers and lumberyards in 16 states. With the acquisition of Germantown Hardware, located only 10 miles from its headquarters, Orgill saw the opportunity to operate a nearby store and showcase its retail programs and Tyndale Advisors’ services. It could act as yet another real-world laboratory for testing and developing retail concepts and best practices for Orgill customers to use in their own businesses. Germantown Hardware is a fixture of the community and the only independent home improvement retailer in the area. It was previously owned by the Wagner family, who were longtime Orgill customers. They approached Orgill about selling their business in 2020. While popular among local residents, the store had been underperforming for a variety of reasons, primarily centered around a lack of complete assortments and a limited selection within core hardware categories, such as electrical, plumbing and builders hardware. Once CNRG’s acquisition was complete, the company brought all of its resources to bear on improving the operation. The goal was to build a high-performance hardware store that not only offered customers dominant presentations in paint, outdoor power equipment and lawn and garden, but also offered a complete resource for all their home improvement needs. The Orgill team, including CNRG, Orgill and Tyndale Advisors (another wholly-owned Orgill subsidiary) worked together to completely transformGermantown Hardware. This transformation showcased the efforts of a wide range of the three companies’ internal teams to work on the acquisition plan, store redesign and remodel, remerchandising, and marketing and rebranding plan—along with the events surrounding the store’s grand reopening in the community in 2022. The Orgill team tackled different challenges during the Germantown Hardware project, from a changing project scope to rehabbing a store that had not seen significant improvements in almost 20 years. But the final result brought together the best of Orgill, CNRG and Tyndale Advisors’ services and offerings and is a true showcase for Orgill customers of what Orgill can do for them. The Orgill teamwas also able to accomplish all of this without shutting down the store for even a single day. Not only did customers continue to shop, but the business posted double-digit sales increases during the construction phase and saw a 38% increase in year-over-year sales following project completion. The work to transformGermantown Hardware into a living laboratory for Orgill—where store successes can translate into helping Orgill customers—is only just beginning. Executive Summary The Orgill team tackled different challenges during the Germantown Hardware project, from a changing project scope to rehabbing a store that had not seen significant improvements in almost 20 years.
2 | Orgill Case Study MARKET AND PROJECT HISTORY Germantown, Tennessee, is an affluent suburb east of Memphis, located near the Mississippi River in Shelby County. The community is known for its historic features, charming neighborhoods and quaint blend of rural and suburban lifestyles. Located 22 miles, or about 30 minutes away, from downtown Memphis, Germantown is one of the safest and most desirable communities to live in the Memphis area. It also offers highly regarded education, housing and cultural and recreational amenities. The city of Germantown takes up about 20 square miles and has a population of about 41,000 residents. Key business sectors in Germantown include medical, life sciences, manufacturing, education and information technology. It is also home to five commercial districts, with a wide range of retail offerings. Market and Project History 01 Germantown, Tennessee Photo by Brandon Bartoszek
Orgill Case Study | 3 The housing stock in Germantown ranges from upscale new-build communities to a variety of historic homes. The community is very particular about the standard of living and looks to ensure that businesses adhere to the community aesthetic and overall appeal. Like many such areas, the household income level in Germantown is among the highest in the region. Because there is a large amount of disposable income available to Germantown residents and a great deal of pride in homeownership, the community is ideally suited for a strong home improvement market. Even with these opportunities in the community, home improvement stores aren’t plentiful in the city itself. While there are a number of hardware and home improvement stores in the greater Memphis area, in Germantown, the options are primarily limited to big-box retailer Lowe’s and longtime independently operated Germantown Hardware. Germantown Hardware also sits less than 10 miles from Orgill’s headquarters in Collierville, Tennessee. A Legacy in the Community Since 1998, Germantown Hardware (located at 2083 South Germantown Road, near the corner of South Germantown Road and Poplar Avenue), has been a fixture in the community for hardware and home improvement supplies. The location is in an ideal spot for a retail outlet as Poplar Avenue is a primary artery between downtown Memphis, the freeway and the suburbs. Thousands of affluent consumers pass by the location on a daily basis to and from their places of employment. John and Marcia Wagner, along with their son Justin, owned and operated Germantown Hardware for the last two decades, originally purchasing the roughly 14,000-square-foot former Ace Hardware location in 2001. John worked for many years in finance, and upon his retirement, he and his son Justin acquired Germantown Hardware. The Wagners also owned the entire shopping complex where the hardware store was located. Along with Germantown Hardware, the complex contained a pool supply retailer and a drive-through car wash, also operated by the Wagner family. In addition to Germantown Hardware and Germantown Car Wash, the Wagners also owned and operated another business, Memphis Paints. John was very involved in the community of Germantown. He served on boards and committees at the Germantown United Methodist Church and was active with the City of Germantown and served the City’s Economic Development Commission, Financial Advisory Commission and the Great Hall Committee. Under the Wagners’ ownership, Germantown Hardware offered an assortment of hardware, plumbing, electrical, outdoor power equipment and outdoor living products and lawn and garden supplies. It also featured a small engine repair shop. The store carried a variety of well-known brands including Weber, Big Green Egg, Stihl outdoor power equipment and Benjamin Moore paint. While the business had done well since the Wagners’ acquisition, there was room for improvement. The store had not been remodeled for some time and, while it had some categories it was well known for, such as lawn and garden, paint and grilling, the product selection and inventory levels made it difficult for customers to shop for complete projects. Before - Germantown Hardware Exterior
4 | Orgill Case Study Orgill’s Involvement The Wagners had a business relationship with Orgill spanning many years, having used the distributor as their main supplier at the hardware store as well as a resource for other business services. In 2020 the Wagners began to discuss the possibility of selling the Germantown Hardware business. With John heading into full retirement, the Wagners were looking to transition some of their business interests. Justin, who had managed Germantown Hardware for some time, was looking to focus his attention on the family’s Memphis Paints business and expansion opportunities. When the Wagners shared their thoughts with Orgill, the distributor immediately began to weigh the options of how they might be able to help the Wagners achieve their goals. They also began to internally discuss the opportunities this might present. Orgill’s wholly owned subsidiary, Central Network Retail Group (CNRG) has a long history of acquiring and improving retail brands. CNRG is a multi-format, multi-brand retailer operating more than 140 hardware stores, home centers and lumberyards in 16 states. Not only was Germantown Hardware a good fit for the type of store CNRG can typically find ways to improve, but the close proximity to Orgill’s headquarters less than 10 miles away, in Collierville, Tennessee, also allowed for some additional, unique opportunities. “We had a longstanding relationship with Germantown Hardware, so we knew the business quite well,” says John Sieggreen, CNRG president and executive vice president of retail at Orgill. “We knew that there was a lot we could come in and do to help the business improve right away. But we also wanted to look beyond the typical business improvements that we felt we could implement. We saw an opportunity to really embrace Germantown Hardware as a local laboratory. Not only could we use it, like we do the other CNRG brands, to test retail concepts, but because it was so close to our home office, we would have this lab store right in our own backyard.” With the potential to serve as a next-door living retail laboratory, the Orgill team, including CNRG and Tyndale Advisors, began discussing the possibility of an acquisition with the Wagners in earnest. A Period of Transition Representatives from the Orgill team met with John Wagner over a number of weeks to discuss the possibility of an acquisition and what that would look like— and to help the Wagners feel comfortable with the acquisition and transition. Many of these discussions took place candidly and informally at breakfast and lunch with John at the Panera Bread in Germantown. “With my background and Mr. Wagner’s background in finance, there was a common interest in numbers. I was able to say, ‘I have a better solution for you,’ and helped him feel good about the numbers as we progressed down that road,” says John Dorrill, Tyndale Advisors senior advisor. “It created a good comfort level, and a good level of trust between us.” Orgill worked with John Wagner to create an agreement and plan that was fair and reflected the worth of the business and also took into account the tenant holding the lease for the pool supply store. Orgill also offered to do a physical inventory of Germantown Hardware and paid for the inventory. “Anytime somebody sells a business, especially one they've had for 20+ years and put so much of their time and effort into, it's a personal transaction as much as it is a business transaction," Dorrill says. It's a part of themselves—they've been Before - Germantown Hardware Salesfloor
Orgill Case Study | 5 part of the community. Helping them feel better about that, and the path moving forward, is part of the process so they are as proud of the business after the sale as they were before.” The original plan only included the lease of the Germantown Hardware property and purchase of the business and did not include the additional retail spaces used for the car wash and pool supply store—but CNRG expressed interest in more space if it became available. Discussions later shifted to include those areas in the plan. When John Wagner came back and offered the additional space in the complex, CNRG leapt at the opportunity. This additional space would allow CNRG to greatly expand the footprint of the store. Executing the Acquisition In 2020, the Wagners formally agreed to sell their business and operating assets to CNRG. The Wagners would keep ownership of the property itself and lease it to CNRG. “For all the reasons we talked about, we thought this would be an ideal candidate to become part of the CNRG family of brands,” Sieggreen says. “The store had a great reputation with local customers and was a staple of the community. And being in close proximity to Orgill’s headquarters and our concept center, it allows us much better access to the site. This also makes it easier for us to use it as a showcase for when we want to illustrate our range of programs and services to visitors.” According to Sieggreen, as of the end of 2022, the team’s work to transform Germantown Hardware into a living lab for Orgill—where the store’s successes can translate into helping Orgill customers—is still not finished. “At this point we have made a lot of changes that centered around expanding on the product offering they had in the past, keeping many of the brands like Stihl and Benjamin Moore that they had been known for,” he says. “We also rounded out assortments and added products to make the selection more complete and take advantage of the additional space we were able to access. With that phase done, we’d like to continue experimenting with products and assortments and in other areas in the store. We're just getting started and scratching the surface of what we can do as a living lab at Germantown Hardware.” “The store had a great reputation with local customers and was a staple of the community. And being in close proximity to Orgill’s headquarters and our concept center, it allows us much better access to the site." John Sieggreen, CNRG President and Executive Vice President of Retail at Orgill
6 | Orgill Case Study Addressing Immediate Issues 02 ADDRESSING IMMEDIATE ISSUES Taking the First Steps While Germantown Hardware had a relatively positive reputation in an upscale community and was located in an ideal spot along a busy thoroughfare, the business had somewhat languished over the past decade. The owners had not made any significant investments in store improvements and had not done any remodels or merchandising reviews for some time. “This isn’t all that unusual,” says John Sieggreen, Central Network Retail Group (CNRG) president and executive vice president of retail at Orgill. “A lot of the time, it can be easy for owners to take a conservative approach to their businesses and they may not take a hard look at what they might have to do to improve. That’s where we can kind of come in with a fresh set of eyes and easily see where there are areas for improvement.” Before - Germantown Hardware Salesfloor
Orgill Case Study | 7 Even prior to the closing of CNRG’s acquisition of Germantown Hardware in June of 2020, the Orgill team had already begun creating an “immediate improvement” plan for the business that would focus on what could be done over the short term to make the business more viable and quickly enhance its productivity and update the presentation to customers. This is where the team overseeing the project could marshal their resources and find ways to quickly make a dramatic impact on the operation. The Orgill team developing the initial plan for improvement included representatives from Orgill, Tyndale Advisors and CNRG. Among those taking an initial look at the operation were Sieggreen; Raymond White, senior vice president of operations at CNRG; Chase Holmes, vice president of operations at CNRG/ Home Hardware Centers; and Phillip Helms, the former senior vice president of merchandising services at CNRG/Home Hardware Centers. “I consider myself a lucky individual in these kinds of situations,” White says. “Our teams are exposed to so many businesses out here as opposed to an individual who is immersed in one store and they don’t get to measure that against what is taking place outside their four walls. When we step into a store, we see things a lot differently because of the perspective we have. Immediately, we can see if it needs to be improved or cleaned up.” At Germantown Hardware, this immediate list included changes to the store’s: • Inventory • Brands/assortments • Pricing • Physical layout • Personnel Project Scope at a Glance Physical Expansion • Sales Floor Square Footage (14,694 to 23,220) +58% • Sales Floor Linear Footage (1,824 to 2,608) +43% • Shop & Back Room Square Footage (4,563 to 8,386) +84% • Parking Lot / Nursery Square Footage (3,900 to 10,162) +160% • Total Space Square Footage (24,027 to 41,768) +73.84% Project Goals • Keep the store in business during construction • Implement new services areas and backroom expansion • Create Germantown Hardware Rewards loyalty program • Integrated eCommerce website and Buy Online, Pickup In Store • Enhance Small Engine Repair/Rental • Add Propane Exchange Department Linear Footage Before Remodel Linear Footage After Remodel Percentage Increase Impulse 12 84 600% Lawn & Garden 353 768 118% Seasonal 12 24 100% Outdoor Living*** 60 116 93% Fasteners 116 160 38% Electrical* 148 180 22% Plumbing* 258 312 21% Tools* 160 192 20% Household* 114 136 19% Automotive 22 24 9% Paint & Sundries** 280 304 9% Hardware 289 308 7% Featured New Product Assortments • Automotive key fob/chip keys • RV supplies • Pool supplies • Pet supplies • Birding • Vintage sodas • Outdoor pottery and statuary • Indoor plants • Outdoor patio furniture • Rental department • Benjamin Moore and Valspar paints • Bulk propane * Sliders used in this department. ** Includes ladders, not included before *** Does not include grill and patio display area
8 | Orgill Case Study YA O N R DR H E T W E N S N J E R K DA E R R C E H T IT S I E G C E T R AGRICULTURE DATE Job: Sheet Date: Scale: Drawn: REVISIONS BY F.02 Plotted On: AS NOTED DEPARTMENTAL LAYOUT GERMANTOWN HARDWARE 2083 S. GERMANTOWN ROAD GERMANTOWN, TENNESSEE 38138 GERMANTOWN HARDWARE REMODELING KENNETH R. ANDREWS ARCHITECT 144 OLD PANTHER MILL TRAIL, CLARKESVILLE, GEORGIA 30523 (706) 754-4894 KRA EMAIL: KENANDREWSARCHITECT@GMAIL.COM GERMANTOWN STATE OF TENNESSEE ARCHITECT REGISTRATION No. 106987 01/20/2021 2/2/21 2/2/21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 UP 1 2 3 4 5 6 7 8 9 10 11 12 13 14 UP F EXIT ENTRANCE PAINT ENTRANCE EXIT ENTRANCE EXIT ENTRANCE EXIT ENTRANCE EXIT ENTRANCE EXIT 6 7 8 5 2 3 4 1 LOADING DOCK FIRE SPRINKLER CONNECTION EXISTING CONCRETE RAMP TO REMAIN PAINT HOUSEWARES PLUMBING ELECTRICAL AUTOMOTIVE TOOLS HARDWARE FASTENERS HARDWARE SEASONAL IMPULSE OUTDOOR LIVING L & G L & G OPE RENTAL PATIO GRILLING CHECK OUT RETURNS & ONLINE PICK-UP SALES AREA 01 PAINT WAREHOUSE 02 RECEIVING 17 CRAFTSMAN ROOM 04 CONFERENCE ROOM 05 CORRIDOR 06 ELECTRICAL / DATA ROOM 07 MENS TOILET ROOM 08 WOMENS TOILET ROOM 09 STAIR 10 STORAGE 11 BREAKROOM 12 OFFICE 13 CORRIDOR 14 OUTDOOR POWER EQUIPMENT SHOP 15 OPE STORAGE 16 GARDEN CENTER CHECKOUT 19 GARDEN CENTER 18 STORAGE 03 1 2 3 4 90" HDTV UNDER-COUNTER BEVERAGE FRIDGE BY OWNER LEATHER CONFERENCE ROOM CHAIRS BY OWNER DISHWASHER BY OWNER COFFEE/EXPRESSO MACHINE BY OWNER GARBAGE DISPOSAL BY OWNER DOWN ORGILL CUSTOMER EXPERIENCE DOWN CONFERENCE ROOM 20 SCALE: 3/32" = 1'-0" 1 DEPATMENTAL LAYOUT PLAN SCALE: 3/16" = 1'-0" 2 MEZZANINE LEVEL YA O N R DR H E T W E N S N J E R K DA E R R C E H T IT S I E G C E T R AGRICULTURE DATE Job: Sheet Date: Scale: Drawn: REVISIONS BY SF.02 12/28/2020 Plotted On: 12/28/2020 AS NOTED NEW SQUARE FOOTAGE MAP GERMANTOWN HARDWARE 2083 S. GERMANTOWN ROAD GERMANTOWN, TENNESSEE 38138 GERMANTOWN HARDWARE REMODELING KENNETH R. ANDREWS ARCHITECT 144 OLD PANTHER MILL TRAIL, CLARKESVILLE, GEORGIA 30523 (706) 754-4894 KRA EMAIL: KENANDREWSARCHITECT@GMAIL.COM GERMANTOWN STATE OF TENNESSEE ARCHITECT REGISTRATION No. 106987 12/28/2020 10,162 sq ft 23,220 sq ft 338 sq ft 3,021 sq ft 3,693 sq ft 1,671 sq ft LOADING DOCK EXISTING CONCRETE RAMP TO REMAIN HARDWARE SALES AREA PROPOSED NEW GARDEN CENTER PROPOSED NEW CHECK OUT BLDG RECEIVING ROOM PAINT / STORAGE AREA ANCILLARY SCALE: 3/32" = 1'-0" 01 FIRST FLOOR AREA - NEW SQUARE FOOTAGE MAP YA O N R DR H E T W E N S N J E R K DA E R R C E H T IT S I E G C E T R AGRICULTURE DATE Job: Sheet Date: Scale: Drawn: REVISIONS BY SF.01 12/28/2020 Plotted On: 12/28/2020 AS NOTED EXISTING SQUARE FOOTAGE MAP GERMANTOWN HARDWARE 2083 S. GERMANTOWN ROAD GERMANTOWN, TENNESSEE 38138 GERMANTOWN HARDWARE REMODELING KENNETH R. ANDREWS ARCHITECT 144 OLD PANTHER MILL TRAIL, CLARKESVILLE, GEORGIA 30523 (706) 754-4894 KRA EMAIL: KENANDREWSARCHITECT@GMAIL.COM GERMANTOWN STATE OF TENNESSEE ARCHITECT REGISTRATION No. 106987 12/28/2020 19,257 sq ft 4,506 sq ft 6,100 sq ft 870 sq ft EXISTING HARDWARE STORE EXISTING POOL STORE EXISTING CAR WASH EXISTING SCALE: 3/32" = 1'-0" 01 FIRST FLOOR AREA - EXISTING SQUARE FOOTAGE MAP BEFORE AFTER Overall Store Footprint Departmental Layout 4,694 sq
Orgill Case Study | 9 Attacking the Inventory “The first thing we knew we would need to address when we had control of the store was the inventory level,” Sieggreen says. “There were a lot of out-of-stocks, incomplete assortments, overstock and all kinds of issues. Because there were so many holes, it was nearly impossible for anyone to come in and buy what they needed for a complete project. So, inventory was first on our list.” The store’s previous management had focused on replenishing stock primarily in the fastest-moving items, but this philosophy would leave the store over-inventoried in some areas and result in glaring holes in others. “There were a lot of holes at this store,” White says. “Because we see a lot of assortments and a lot of traffic at our other stores, we can kind of just stand there and look at what’s on the shelves and see what’s missing. So our first step was to walk the whole store and fill in those holes with what was missing. Pretty simply, our first order of business was to get products on the shelves.” Prior to the acquisition, Germantown Hardware had a strong reputation for lawn and garden, grilling, outdoor power equipment and paint, but as a result of their focus on these categories, they had allowed their presence in other core categories slip, according to Helms. “First thing, after generally doing a cleaning and organization of the store, was to look at these core categories where they had sort of lost focus,” he says. “In a lot of ways, these categories, like builders hardware, plumbing and electrical, were low-hanging fruit for improvement.” So when it came to the immediate improvement plan, reordering and eliminating the out-of-stocks in core categories was quickly accomplished by the Orgill teams working in tandem to identify gaps and get orders placed. Next up was identifying the actual assortment gaps that existed across many categories at Germantown Hardware. Before - Germantown Hardware Exterior After - Germantown Hardware Exterior
10 | Orgill Case Study Focus on Assortments After identifying and plugging holes in the existing inventory and product lines, the teams focused on immediate improvement and expanded their view to look at product availability at the assortment and category level. Once again, the team turned to the wealth of Orgill resources at their disposal for identifying what needed to be done to get Germantown Hardware back on track. “The store had some good building blocks, but there were still major opportunities that were being missed in almost every area,” Helms says. “There were incomplete assortments, lines they didn’t carry, unproductive products and also a need to switch vendors in some areas.” The first step to build a stronger offering at the assortment and category levels was for the team to identify gaps in current assortments, find suppliers where needed, convert vendors where needed and understand what product mix would best suit the needs of the customer base in Germantown. Thankfully, the team had a number of tools at their disposal. “We wanted to look at the core hardware categories we mentioned earlier, but we also wanted to look at just about every area of the store where we could make quick improvements,” Helms says. “We used a lot of our experience from Home Hardware (another CNRG brand) because there are some similarities in the overall makeup between the two brands. We knew what assortments and product mix worked for Home Hardware. Not only were we able to draw from these insights, but we also utilized information from other CNRG brands like Outdoor Supply Hardware, Town & Country Hardware and others.” Taking cues from other similar CNRG operations, the planning team also worked closely with Patrick Pinkston, who had served as Germantown Hardware's Orgill sales representative for years. In this role, Pinkston was keenly familiar with the operation and the market and was able to provide a high level of insight into the planning and design process. "A big part of the role of Orgill's sales team is to become a business consultant to the customers they serve," Walker says. "In this case, Patrick had a long history with this operation as well as the customers it served. His legacy Before - Entrance After - Entrance
Orgill Case Study | 11 knowledge was instrumental in helping us get the planning right." Using the product mix insights gained from working with these other brands and pulling the ideas best suited for the Germantown customer base gave the team a basic plan for the assortments they would be able to add and where they could fill category holes. Along with the insights from other CNRG brands, the team also turned to other Orgill resources, such as the Hardware 101 program, to fill additional assortment voids. Hardware 101 is an Orgill program that helps retailers ensure they are stocking core products within assortments that are required for consumers to consider their stores a “viable option” in a particular category. Orgill has developed these Hardware 101 assortment standards across every Orgill product category to ensure that, whatever categories a retailer might offer, Orgill can provide insights into the minimal assortments required. By using the team’s experience with assortment planning, taking a careful look at the current product offering and implementing insights and intelligence from other CNRG brands, along with Hardware 101, within the first month after acquiring the business, the team had made significant strides in improving the offering. “We immediately started seeing the impact on the sales side,” Helms says. “We could see that customers were buying items the store just didn’t have before, and not only was this creating an immediate sales lift, but by adding complete assortments with complementary vendors and products, we were also able to make an immediate impact on margin.” Hardware 101: How ItWorks The Hardware 101 process starts by Orgill taking a closer look at a retailer’s current assortments and examining their order history. Orgill also considers the operation’s primary store type: • Hardware store • Home center • Pro-focused store • Farm & ranch This helps provide a framework for Orgill to tailor the Hardware 101 reports. However, even this information can be adjusted based on specific market preferences. Orgill then generates two key reports to help identify potential gaps in a product offering. Report 1—Filling the Gaps The first report identifies any SKUs that may be missing from a current warehouse assortment. This detailed report will highlight any brand preferences a retailer may have within their current buying patterns in order to offer product suggestions that meet the specific market’s needs. This report can also be generated as a pre-populated spreadsheet to make it easier for retailers to fill any gaps in their current assortment. Report 2—Finding Opportunities The second report generated through the Hardware 101 program moves from the item level to the category level. This report helps by examining what Hardware 101 categories might be missing from overall store offerings. This data is based on the types of categories being offered by other retailers that fit an operation’s store type. Like the first report, this second categorylevel report can also be generated as a spreadsheet to help ensure the ordering process is quick and easy. Before - Pruning Tools After - Pruning Tools
12 | Orgill Case Study Pricing Adjustments While the store’s inventory and assortments offered room for immediate improvement, there were also immediate opportunities to adjust pricing to levels appropriate for the market and the level of competition. However, the team realized that pricing adjustments would have to be measured and introduced in a way that wouldn’t overwhelm the staff at Germantown Hardware or cause alarm among the store’s customers. “We knew as we were changing out some vendors and implementing new assortments that pricing changes would come along with the implementation,” Helms says. “But when we looked at the store’s existing pricing, we also saw that nothing had really been adjusted in years, so we knew, like the inventory, this was an immediate opportunity for us.” The Germantown Hardware transition team decided to implement price changes on a rolling basis, so instead of simply repricing all inventory on the shelves, updated pricing would be implemented as new merchandise or assortments were being brought in. This new pricing would be based on data from both CNRG and Orgill. CNRG uses a sophisticated variable pricing methodology, based on Orgill’s Market Driven Pricing model. This model utilizes real-world market data to set prices based on a range of variables, including product sales velocity, competitive position, whether items are blind or highly price sensitive. Typically, stores implementing a variable pricing model, like the one used at CNRG brands, see their margins increase while also being able to establish a more price-competitive position within their market. And, by implementing the price changes on a rolling basis as new assortments were implemented and set, neither Germantown Hardware’s customers or staff would be overwhelmed with price changes. “By doing all the updates as rolling changes, customers would be less likely to notice any changes,” Helms adds. “There were some areas where we did have to make immediate changes just so we wouldn’t be upside down, or where we might have been leaving way too much margin on the table, and we made these. We just wanted to get to a point where we stabilized ourselves on pricing and then could continue to make changes throughout the remodel and reset.” Before - Fasteners After - Fasteners
Orgill Case Study | 13 Physical Adjustments When it came to making physical adjustments, after the initial acquisition there was a long list of tasks on the list. While most would eventually be completed as the entire store was remodeled, expanded and retrofitted, some of the most immediate physical changes fell under the area of general housekeeping. “I don’t know how else to say it, but the store had a number of opportunities for improvement,” Sieggreen says. “In this first phase after the acquisition, we didn’t necessarily go in there to tackle the major moves and renovations. We knew that would happen in the coming months, but from a physical standpoint, we just needed to do some basic maintenance.” For starters, this meant repairing fixtures, filling displays, making sure endcaps and products were appropriately signed and priced—and even getting back to a regular cleaning schedule was high on the list. “It was kind of like triage,” Holmes says. “In the immediate plan, there were the physical things that just had to be done right away, and there were the other items that needed to be done but didn’t require the same kind of urgency. And at Germantown, a lot of it just boiled down to good old-fashioned maintenance. It just needed a good top-tobottom cleaning and tidying up. It wasn’t just the retail areas, either—the bathrooms, the backroom, storage and everything needed to be cleaned and organized.” To accomplish some of these immediate improvements to the physical space, the transition team brought in additional help. “When it came to cleaning and stocking and so on, we wanted the impact on the store’s shoppers to be minimal,” Sieggreen says. “We didn’t want to pull employees away from helping customers to focus on the cleaning and organization, and all those other things that had to be done, so we brought in additional help for these functions.” Interior Construction Signage Used During Construction Exterior Construction
14 | Orgill Case Study Building a New Culture Along with the physical changes taking place immediately after the acquisition of Germantown Hardware, the transition team quickly realized changes were also needed to ensure the employees at Germantown Hardware were meeting customers’ expectations and needs. Because Germantown Hardware had the opportunity to present itself to the community as a premium source for home improvement serving an upscale clientele, the transition team wanted to make sure customer service was positioned front and center for all employees. “Whenever there is a business transition or change of ownership, you have to look at the culture in the company and make sure that the employee culture reflects the values the organization holds and the brand proposition they put forward,” Helms says. “At Germantown Hardware, this needed to be all about creating a great shopping experience for the customers and being highly service-centric.” To create this focus, the team brought in a new store manager, Chris Clark. Together with other Germantown Hardware team members, he began focusing on rebuilding the employee culture around service. Beyond service, however, the store also began taking operational cues from other CNRG operations to implement regular schedules for things like inventory management, processing price changes, operational disciplines and even tasks such as cleaning schedules. “We wanted to create the systems an operation of this size and scale needs, to not only ensure tasks are done in a timely and efficient manner, but we also wanted to ensure the employees understood why these tasks were important and the role the tasks and the entire employee team plays in creating a superior experience for the customers,” Holmes says. With a plan for quickly turning Germantown Hardware around and setting the stage for the longer-term changes that were coming in the months ahead, Sieggreen says the business was well positioned to move forward. “In some ways, our first order of business was to right the ship to make sure it didn’t keep taking on water while we were moving forward with the bigger plans we had for the business,” he says. “This team did a great job doing exactly that. They got it through that in-between period. Plus, when we started making even these basic changes, we knew right away the customers were responding.” According to Helms, this wasn’t just a feeling. The customer response was tangible. “The feedback we received almost as soon as we started changing things—adding assortments, beefing up the staff and focusing on customer service, from the vendor community, from the employees and, most importantly, from the customers—was overwhelmingly positive,” he says.
Orgill Case Study | 15 “In some ways, our first order of business was to right the ship to make sure it didn’t keep taking on water while we were moving forward with the bigger plans we had for the business.” John Sieggreen, CNRG President and Executive Vice President of Retail at Orgill
16 | Orgill Case Study Extreme Planning Phase 03 EXTREME PLANNING PHASE Any project the scope of what Orgill, Central Network Retail Group (CNRG) and Tyndale Advisors were facing with Germantown Hardware requires a detailed plan to ensure the execution and outcome meet expectations. It was also clear from early on with the Germantown Hardware project that different teams from within Orgill, CNRG and Tyndale Advisors would need to bring their resources to bear for the development, implementation and execution of this plan. This “extreme planning phase” for what Germantown Hardware could become was nearly a six-month process and involved dozens of individuals from across all of these organizations. The development of this plan shines a spotlight not only on the detailed nature of the efforts involved in making Germantown Hardware a success, but also the broad range of unique insights available through the diverse team members at these organizations. Germantown Hardware During Construction
Orgill Case Study | 17 “I think you could almost do an entire case study just on the planning and cooperation between organizations and departments as it relates to this project,” says Phillip Walker, president of Tyndale Advisors. “We knew that what we wanted to achieve would require regular interaction, communication and input from a wide range of our resources, and being able to do this was a critical function for us.” Building the Team For even the most progressive independent retail operations, there is a limit to the internal resources they have available to them. This fact underscores the need to tap into the knowledge, insight and expertise a company like Orgill has at its disposal. Not only does the Orgill team offer a range of pricing, merchandising, store planning, marketing and IT experts, but through its subsidiaries like CNRG and Tyndale Advisors, Orgill has access to an even broader range of experts in areas like supply chain, retail services, store management, marketing and branding. When it came to acquiring Germantown Hardware and utilizing the store as a living laboratory, all of these assets would help shape the direction of the project and help build the plan for strategy execution. The first step in creating the detailed strategy outline for the future of Germantown Hardware meant determining exactly what resources would need to be brought together. This team would need to include experts within: With the areas of expertise identified and team members for strategic planning in place, the stage was set for building what would become a multiphase approach to turning Germantown Hardware into a successful retail laboratory, showplace and testing site that could help benefit all of Orgill’s retail customers. Bringing the Team Together While the strategic planning team didn’t officially hold its first meeting until October 2020, the Orgill team had already started gathering information about how they might be able to update Germantown Hardware even before the acquisition was completed in June. “Germantown Hardware, when it was owned by the Wagner family, was a customer of ours,” Walker says. “Before the acquisition, they had come to us for help and a plan to make the store more profitable. They eventually decided to sell the business, but because they had been a customer and we were helping them try to develop a plan, we already had some insights into the kinds of things we thought were possible with the store and location.” After the acquisition was finalized, however, it was time to start turning some of these concepts into reality. The transition team wasted little time bringing all of its resources together. “We knew that, first and foremost, it was going to take ongoing communication between all of these teams to keep this plan on track,” Walker says. “So once we had the teams and their representatives defined, we set up schedules for regular meetings. There were people who would get together outside of those meetings to keep things moving forward, but we wanted to be able to have regular touch points with everyone on the team.” From a practical standpoint, Walker and Jason Burdick from Tyndale Advisors served as project managers. Other teams from across CNRG, Tyndale Advisors and Orgill filled other roles during the process, including: • Construction and renovation oversight, permitting and government liaison – To ensure the construction progressed on schedule and nothing fell through the cracks, this team focused on making sure the architect’s plans reflected the desired outcome, handled permitting and approvals with the community, managed construction, etc. • Retail services – This team looked at the types of services the store offered, where there were service gaps and opportunities. They also examined the store layout and design to provide input on best practices for everything from adjacencies to overall layout. • Project management • Supply chain • Retail services • Technology • Merchandising • Branding • Customer loyalty • Marketing • Store design • Store services • Retail management • Pricing
18 | Orgill Case Study • Merchandising and inventory – This team worked through the store’s current inventory and product mix to determine where there were holes and opportunities to expand product offerings. They also evaluated brands and worked through inventory optimization and SKU rationalization. • Marketing – This team evaluated the Germantown Hardware brand position, determined marketing strategies and advertising tactics and focused on customer loyalty and retention. • Technology – This team evaluated technology needs for the location, examined POS capabilities and updates and transitioned any database information from legacy systems. • Supply chain – This team coordinated relationships with vendors and suppliers and worked together with the merchandising and inventory teams to ensure Germantown Hardware could meet the needs of its customers. • Business advisory and analytics – This team both provided oversight for any business issues, due diligence, legal issues, etc. but also worked to provide the analytical information the entire team needed to make informed decisions. “We also knew these different disciplines had the ability to call in other people from throughout the organization as needed throughout the process,” Walker says. “Everyone had their areas of expertise, but that didn’t mean that when one team finished their main area of planning they would just pass the baton to the next team and say ‘good luck.’ Everyone was in this from beginning to end.” Working the Plan After several initial meetings and input from the various teams, a plan, timeline and areas of responsibility were clearly defined. While a project of this size and scope might seem daunting to an individual retailer, the Orgill team leads were confident in their ability to execute. “We communicate a lot,” says Chris Freader, Orgill senior vice president of retail services. “This was the first time we worked on a project together for Germantown Hardware, but elements of this team work together regularly on other projects, so we are accustomed to the process. It’s a very collaborative environment. We might be talking about something product specific, but anyone can weigh in with their thoughts, and that’s what makes the entire project better.” Because the different representatives and teams working on the strategic planning for Germantown Hardware all brought a wealth of experience to the effort, they were also able to manage the inevitable twists and turns that occur in an effort of this magnitude. One of the early “curveballs” the planning team had to face came when the scope of the acquisition changed multiple times. The original plan for Germantown Hardware had CNRG acquiring the existing hardware store footprint, which had about 14,000 square feet of salesfloor space. However, shortly after signing off on that acquisition, the former owners offered up additional space in the same shopping complex. “When this became available, it changed our plans in a variety of ways,” Walker says. “We knew we wanted as much square footage as we could get, so we just had to adjust on the fly.” Then, shortly after understanding they would have access to additional square footage, the owner came back and offered up even more space—the entirety of the shopping complex. “This required us to go back and adjust again,” Walker says. Making these kinds of changes on the fly, while not ideal, were also not out of the ordinary for the planning team. “We specialize in pivoting,” Freader says. “That’s the nature of a lot of the projects we work on, and again, while an individual retailer might only work on a project like this once or twice in their entire careers, our team handles these kinds of projects all the time. It’s hard to faze us.” Orgill Team Meets in Germantown Hardware's Eagle's Nest
Orgill Case Study | 19 “Everyone had their areas of expertise, but that didn’t mean that when one team finished their main area of planning they would just pass the baton to the next team and say ‘good luck.’ Everyone was in this from beginning to end.” PhillipWalker, President of Tyndale Advisors Building on Success Throughout any remodeling or renovation project, the physical changes being made to a location create challenges as well as opportunities. From securing permits and approvals from local agencies, to designing the changes that will be made to facilitating the oversight of the construction process, there are a lot of details to be managed. This was certainly the case at Germantown Hardware, where the planning for the scope of the project changed completely on more than one occasion. At first, the project was going to be focused on just retrofitting the existing store on its existing footprint. As the project progressed however, the Orgill, CNRG and Tyndale team were able to secure additional space previously occupied in the strip mall by another business. This required the construction and design plans to change on the fly. Then, a short time later, the team found out they could access even more space in the property (essentially the entire strip center) resulting in another round of changes. Changes on the property itself were also major, including: retrofitting an area that once served as a drive-through carwash, adding entrances, building a mezzanine level and completely reworking the salesfloor. Throughout this entire process, the Orgill, CNRG and Tyndale team were able to leverage their range of insights and experience to streamline the steps of the renovation. “We have a great deal of experience on our team that covers a wide range of the skills needed to facilitate this kind of project, from securing the proper permits and approvals to overseeing design and construction,” Walker says. “While most retailers might undertake a project like this once or twice, our team is involved in this scope of project on a regular basis.” This project oversight and management is another example of how Orgill, CNRG and Tyndale bring their insights and experience to bear helping other retailers complete their projects successfully.
20 | Orgill Case Study Getting the Assortment Mix Right 04 GETTING THE ASSORTMENT MIX RIGHT As part of the planning process, one of the earliest areas the Orgill team, made up of employees from Orgill and its subsidiaries, Central Network Retail Group (CNRG) and Tyndale Advisors, identified as an opportunity for improvement was to review and adjust Germantown Hardware’s merchandising strategies. Over time, the store had not addressed its product mix. The former owners were content to focus their sales efforts on the product categories where they did particularly well: lawn and garden, paint, outdoor power equipment and grilling. This strategy, however, left a variety of customer needs unmet. The store, in its legacy state, made it difficult for customers to find the products they needed to complete a project. This also meant the store was leaving potential sales on the table and forcing customers to go elsewhere for their basic hardware needs.
Orgill Case Study | 21 While the Orgill transition team addressed some of these “assortment gaps” in their immediate improvement plan for the store, there was a much broader plan for adding to Germantown Hardware’s selection. Also, because the team was able to more than double the amount of floor space available, the team was also able to do a complete review of other underserved categories. Setting Goals The primary goal for the review of the overall product offering at Germantown Hardware was to build a hardware store that would better meet the needs of the community by offering complete assortments across all of the core hardware categories. In addition to offering a more complete presentation for Germantown customers, the planning team saw a broad range of opportunities for enhancing sales by offering more complete product assortments, transitioning to preferred vendors and mixing in private-label products where they made sense. “We were really starting from ground zero, so we knew there was a lot we were going to be able to do,” says Jason Burdick, operational project manager for Tyndale Advisors. While the team addressed some of the inventory holes and shortages of product on the shelves immediately after the acquisition was complete, a deeper dive into the store’s assortments and category presentations was needed to realize the bigger opportunities for the location. The team also wanted to capitalize and expand on the product categories where Germantown Hardware already had a solid reputation: outdoor power equipment, lawn and garden, outdoor living and paint. “We knew where their strong suits were, so in areas like lawn and garden and outdoor living, we just wanted to find ways to add to those areas,” Burdick says. “We also wanted the rest of the departments to be complete to a point that a customer could get everything they needed across the categories, not just those few where they were dominant.” The Process One of the first things the assortment planning team did to develop a plan of where Germantown Hardware could go was to turn to some of the insights they had gleaned from other brands within the CNRG family. After all, CNRG and its multiple brands and formats serve as a living laboratory for Orgill to test retail concepts and refine programs for all of the distributor’s customers. In the case of Germantown Hardware, the assortment team relied heavily on the merchandise mix from a handful of other CNRG operations, primarily Outdoor Supply Hardware (OSH) in Northern California and Town & Country Hardware in North Carolina. The markets served and value propositions of these brands aligned with the vision the Orgill team had for Germantown Hardware, according to Phillip Helms, former CNRG/Home Hardware Centers senior vice president of merchandising services. The product selection at Germantown Hardware was originally very, very fragmented. Even in areas where there was a lot of product, it wasn’t merchandised in full assortments, says Mike Pierre, pricing and merchandising analyst at Tyndale Advisors. “This left a lot of holes in their offerings. So we started by trying to fill those holes, and what we did was look at how we built assortments for Outdoor Supply Hardware. We started from the ground up,” says Pierre. “We looked assortment by assortment at the planograms we used at OSH. Then we looked at the other CNRG brands and kind of picked and chose the best of the best for what we thought would work for the Germantown market.” The Orgill team took these assortments as a baseline and then examined them at an item-by-item level to see if there were any additional holes they felt needed to be filled. “We did use a lot of our OSH assortments as a starting point, but then we also looked at some of our core convenient hardware brands under CNRG, such as Town and Country, to get a good representation of what else was out there that would be a good fit,” says Bryan Goldsworth, merchandising analyst at Tyndale Advisors. The store, in its legacy state, made it difficult for customers to find the products they needed to complete a project. This also meant the store was leaving potential sales on the table.
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