The first hardware warehouse I remember was Hechingers in Harrisburg PA. Hechinger’s was the second stock I owned and it was a disaster. I lost most of my investment, but I gained significant knowledge about what qualities I should seek in the companies I wanted to own. More importantly I learned what kind of companies to avoid. But, that’s a whole another story.
This story began in the early 1990's and Home Depot (HD) was just starting to grow. The plus with Hechingers was that they had lots of merchandise, but the downside was the store was staffed by high school kids who knew next to nothing about homes and construction. Those kids were anxious to help, but most often didn't know very much at all.
HD and Lowes started to move it. I had just purchased my first home and was raring to work on it. Since there was little, if any help, at Hechingers, I tried Home Depot who had just built their first store in Harrisburg.
Like most new homeowners, I didn't know how much work buying an older house was (late 1950's construction). One of my first tasks was replacing every single window in the house. Home Depot had people who were working part time that did this type of work full time. Therefore, they provided guidance to me to do the 20 plus windows. It was a success!
Next, I did my electrical box. HD had an electrician working in the electrical department. They also had a linesman from the local utility who explained how to work with the local utility as I was installing the electrical breaker box. Those guys were a god send. The local inspector said my work was better than most contractors.
Next, I refinished the unfinished basement with studs, drywall, electricity, flooring and a full bathroom. Again, HD had a knowledgeable plumber and someone in lumber who guided me.
We painted every room in the house after removing old fashioned wall paper (hard to remove!) from the plaster walls. This required lots of plaster repairs. Once again, HD had knowledgeable professionals to help.
I did just about everything to that house, including a 30 by 50 paver deck out back. HD was instrumental in that process.
Roll the clock 30 years, the industry is dominated by HD and Lowes. They have pushed out most of the small operation hardware stores and lumber yards. HD is now primarily focused on contractors, so if you get there after early weekday mornings, there is no help! On Saturdays, they staff their stores way less than they should and, god forbid, if you go there during the evening, there is NO HELP whatsoever.
I’ve been in HD all over the East Coast helping friends and family. It is ALWAYS the same. No help and if there is help, they know next to nothing. This is the beginning of the end for HD.
HD is now laser focused on their bottom line (P&L). Servicing the customer is a secondary thought. What a way to destroy customer relationships for an organization that was doing it very well.
If you go to HD, it is best to find those one or two employees with lots of gray hair and multiple HD badges. Now HD wants us to get their app so we can self-serve ourselves (no knowledge included!). I can’t tell you how frustrating it is to see HD cut their personal costs at my expense by wasting my time looking for stuff.
How HD is managing their operations now tells you a lot about the quality of their executive management now. And, when investing, management is the “special sauce”. To HD, I can only flip them the bird!
While financials are important to a company’s success, letting the financial people run the entire show is a disaster in the making and I am a financial guy. Did you ever hear the fable about cutting the neck of the golden goose to get the golden eggs? Well, it ends with the goose dying!
Be smart, be well-read, be aware and be successful.
