A Touchdown for Hardware Rentals

Sept. 1, 2011
Rental departments in hardware stores have come a long way from their tentative beginnings.

Back in the 1990s, when some hardware stores began dabbling in rental, a lot of people on the strictly rental side took positions ranging from dismissal to fear. Between these end zones, at about the 20-yard line, an attitude approaching contempt began to form among many of the rental purists, who were concerned that half-baked dabblers would give the “real” rental business a bad name through limited inventory and inferior service.

Then, starting at about the 30-yard line, there was growing suspicion that they might actually be something to worry about: they were making headway in what a lot of rent-to-rent people considered to be a finite market. (That wasn't so, but opinion often trumps reality.)

There was another camp that looked at the matter with cautious optimism: maybe the extra exposure would help, not hurt. Hardware stores were everywhere — they had a much bigger presence in the general-public market, so maybe their entry into rental would introduce more people to the rental option and tap that huge potential for all players in the game. As the saying goes, a rising tide floats all boats.

It was estimated that maybe 50 percent of the general public had never rented (actually that estimate was probably low); meanwhile, in France rental saturation was around 60 percent, in the United Kingdom 75 percent and in Japan as high as 90 percent. So, the good news was plenty of upside potential in the market.

This glass-half-full camp discounted the fear that hardware stores would give rental a black eye. They figured that once people were introduced to rental, they would gravitate to the full-service, rental-only stores, especially if the hardware stores' limited inventories and experience fell short.

Then too there were some traditional rental operators who had tried to add hardware as a sideline and found themselves in the School of Hard Knocks. It seemed like the playing field was tilted: rental was a pretty good fit for a hardware store, but when they tried to graft hardware onto their rental business, there were flags on the play.

Well, a lot's happened since those bewildering 1990s. Rental departments in hardware stores are now common, and many are excellent — no longer the half-baked dabblers that many suspected when the movement began. Go into the really good ones nowadays and the general renter, DIYer or small contractor can find just about anything, and the people behind the counter know what they're doing. The gawky kid who looked dumbstruck when you asked for a cut-off saw is gone.

Sure, a large contractor is not going to stop by for a 100-foot aerial lift, but the extra jumping jack or breaker, no problem. And it's not going to be some tiny consumer-grade weakling, either — it's going to be the rental-tough, top-of-the-line, brand-name gorilla. The really good hardware-rental operations outgrew that entry-level, make-do kind of thinking long ago. And today the best are doing great.

Let's talk to one of them. Bob Votroubek, president of Handy True Value Hardware in Rock Island, Ill., says that as the business got rolling, the biggest surprise was the growth rate. “It's been fantastic. The rental business has grown faster than hardware. Of course, when you start small, the gains are dramatic by comparison, but through the slow economy we noticed that the rental business stayed pretty much the same, but the hardware business went down.”

Although the True Value chain got into rental more than 20 years ago, Votroubek didn't jump in until 2000 when a rental store in the neighborhood moved out and opened the door. “We wouldn't have done it otherwise,” he says.

“But it fits great with hardware. If you opened a hardware store and sold only nails, your business would be very limited. You add bolts and you add business, and so on. Well, with rental you add two more reasons to visit the store: to rent something and then return it. It gives you exposure for the rest of your business.”

Back to that matter of public exposure and market development. Many, in fact I'll say most, general rental stores these days look great and are in good locations. But hardware stores? All of them.

It wasn't always so. When I was a kid, growing up in a small town in the Midwest, hardware stores were locally owned independents, often on a side street on the periphery of the commercial district, dimly lit, and their stock was jumbled around here and there, or cubbyholed away on dusty shelves reached by a rolling ladder. It wasn't tidy, it wasn't pretty, but somewhere in that mess you could be sure the hardware guy had what you came for, and he could answer any question.

“We have a licensed electrician,” says Votroubek. “One of our guys is the building inspector in Wolcott, Iowa. Our people are experienced in many things. The guys behind the counter have probably roofed houses and installed laminate floors — they can answer any question that comes in.”

These days, the mess is gone, the lights are bright, and the experienced hardware guy can still answer the questions, but now he has a bigger answer barrel to draw from. And as for the rental stores, they too have cleaned up, brightened up, and put themselves in the public eye.

There's no question that the hardware stores have an advantage in their corporate affiliations. True Value, for instance, has “Rental University” in Cary, Ill., which provides training and also will send somebody out to do a local marketing study, check the viability of the location for a rental store and recommend the opening stock. But then it's still up to the wits and will of the local operator.

“We learned by doing U-Haul first, and that taught us a lot,” says Votroubek. “We were also keeping a paper by the phone to track rental requests — that really worked well. We still use a lost-rental sheet and build inventory on that information.”

It's working: all along, the growth has been organic, driven mostly by positive customer experiences and responsive additions of inventory. The only real advertising Handy has done is just a rental insert three or four times a year in the regular True Value mailer.

Now, what about that tilted field that stymied the rental people when they tried hardware, while the hardware store could go into rental without a penalty? Well, as it turns out, it may be a blessing not to weigh down a rental store with all of the complications associated with retail hardware: high capital demands, thin margins, local advertising costs, all the employee training required to cover such a vast range of inventory, and the inventory management that such a volume-driven business demands. It's a whole different game.

So I've concluded that the hardware rental initiative has turned out well for the rental industry as a whole. I think we've seen hardware and rent-to-rent develop a symbiotic relationship that has produced most of the positives that the rental optimists predicted and few of the negatives that pessimists feared. The market wasn't finite; there really was upside potential. Many people had never entered a rental store, and now they have.

And if that rental store is bright, tidy, well-situated, well-served by knowledgeable floor people and well-stocked with well-maintained, high-quality inventory, and it happens to be inside a hardware store, is that bad? The rental industry as a whole is the beneficiary of the hardware store's investment; exposure, awareness and positive experience grow a market.

Then it's simply up to good old competition to put the score on the board.

Brian Alm worked in the rental and construction industries for 30 years, including 17 years with Deere & Co., primarily as a manager of corporate communications, and 10 years as editor of Rental Management magazine.