By Mark Seavy

With the combining of True Value and Do It Best, independent hardware retailers have strengthened their hand in competing with big box retailers.

And while much is still to be determined—the combined organization of 5,000 dealers and 8,000 stores is scheduled to meet in Orlando, FL this weekend—the merger gained high marks from suppliers at the National Hardware Show in Las Vegas, NV this week.

Do It Best’s $153-million acquisition of True Value salvaged a group of 4,100 stores that fell into bankruptcy last fall (following Acon Investments pulling out six years after buying a 70% stake in the chain). And while the companies will operate separately for the time being, the goal is to combine buying organizations within a “few years,” said Alison Flatjord, VP of Marketing and eCommerce at Do It Best.

True Value will gain greater access to lumber and building supplies as well as Milwaukee power tools, Diablo brand circular saws, and other products, Flatjord said. True Value (EZ Care paint and Green Thumb Garden) and Do It Best (Best Paint and Gardening) will also retain their private labels for the time being. Do It Best ($4.6 billion in annual sales) and True Value ($1.5 billion) will have $6.1 billion in combined revenue.

“We get to maintain our independence while working with a partner committed to our success,” said Lee Kuenning, Chairman of True Value’s cooperative board and operator of four stores in Western Ohio. “We get to maintain our independence while working with a partner committed to our success. We get to return to a co-op, one that is financially strong, truly cares, and is here to hear our thoughts and our opinions.”

Yet, despite the transaction, it’s possible there still could be “blood in the water” given that other cooperatives may seek to bring True Value into their fold, said Ken Osberg, Chief Marketing Officer at The Fountainhead Group, which sells garden sprayers under the licensed Scotts and Roundup brands.

Indeed, Ace has converted 1,718 dealers to its network since 1998, 918 of whom were former True Value operators. As Baby Boomers retire, consolidation continues and new store openings slow. In fact, the number of stores in the industry is forecast to decline 5-6% during the next five years, according to Hardware Retailing Magazine.

To some extent, there is a sense of history repeating itself. Thousands of stores have opened and closed in recent years in a pattern that is reminiscent of one from a decade ago, said Craig Webb, President of Webb Analytics.

“Being in the construction supplies business is like being on a paddle board in that any movement you have and progress you make is going to have to be through your own efforts because there are no waves or tailwinds and, consequently, you are going to have challenges moving forward,” Webb said.

Those challenges come after a year in which hardware sales declined 4.5%, according to the North American Hardware and Paint Association (NHPA). While sales are projected to rise 2.1% this year, that is far from the 30% gain registered between 2019 and 2022.

The key will be for independent operators to add merchandise that caters to the local market, industry executives said. Dubuque, IA-based Steve’s Ace Hardware, for example, carries baby accessories due to a lack of them in the local market. And Ace Hardware in the Washington, D.C. area added higher-end pottery priced up to $250 to cater to a more upscale clientele, said Gina Schaefer, who recently retired after operating 13 stores in the Baltimore, MD and Washington, D.C. markets.

“I would think, as an independent, I want there to be a lot of competition and it not just be a world of big boxes,” Schaefer said. “I am glad that Do It Best and True Value have this relationship because then maybe local communities have a better option.”