Colorado Hardware Merchant Says He Can Compete wit
Colorado Springs, CO, Mar. 3--Ace Hardware franchise owner Darek Barnes thinks he has found a niche where he can successfully compete with home improvement giant Home Depot Inc.
The Colorado Springs Gazette reported that Barnes plans to open one of the state's largest Ace outlets just 1.4 miles from the nearest Home Depot next month in a building abandoned more than a decade ago by another hardware retailer. But his strategy has little to do with proximity and a lot more to do with cost.
Barnes bought the former Pay N Pak store at 1225 N. Circle Drive for $1.63 million last year and will spend nearly $500,000 to remodel and get the store open. That is less than half of what he would pay for a comparable new building. or to lease prime space in a shopping center.
"We should be able to break even in the first year and be profitable in the second. Our ability to do that depends on being able to control our occupancy costs," Barnes said. "In the past when we have closed stores, it has been because of high occupancy costs."
Barnes closed two local Ace outlets in the past six years when Home Depot opened stores nearby, but he said the closings had more to do with rent increases sought by landlords than competition. He said both stores could have remained open if rents hadn't risen.
"We really target a different customer than Home Depot does. Our customer is the do-it-yourself homeowner while their primary customer is a contractor," Barnes said. "We aren't a threat to them because our store will do about 5 percent of the volume of their store."
Oak Brook, Ill.-based Ace has 97 stores in Colorado.
A different customer base means Barnes seeks locations in established neighborhoods with older homes that are more likely to require remodeling and maintenance. The Circle Drive store is surrounded by homes that are more than 30 years old.
Barnes thinks the store will succeed because it can draw from a neighborhood where many homeowners have paid off mortgages and can afford to spend on remodeling. He thinks the market is ripe for a store at that location, with the departure of two nearby competitors.
Crissey Fowler Lumber Co. left its downtown location last fall as part of an urban renewal project and Hugh M Woods, 2425 E. Platte Ave., shut down in 2001 when its parent company went bankrupt.
The store is a gamble for Barnes; his two other Springs stores in the Bon and Uintah Gardens shopping centers could fit comfortably inside the Circle Drive location with room to spare. The new Ace will be less than half the size of the nearby Home Depot store.
Barnes plans to merchandise the store to selectively compete with Home Depot. For example, he will carry a smattering of lumber but will operate a paint department with eight brands that will rival what any hardware store in the state can offer.
About two thirds of the 46,000-square-foot Circle Drive building will be used for the a sales floor while the balance will be used as an office and warehouse for all three Barnes stores. The family-owned firm, Barnes Ace Inc., runs another Ace store in Minnesota.
Barnes Ace was started by David Barnes, who owns the Bon shopping center store but plans to sell it to his son Darek next year. Darek Barnes said he wants to open another two or three stores in older Springs-area neighborhoods.
