Inside Orchard Supply’s neighborhood store

San Jose, California-based Orchard Supply Hardware believes strongly that there is an underserved middle ground in the home improvement industry between the convenient neighborhood hardware store and the big box.

The company is backing up this belief with an investment in the Orchard Supply “neighborhood” format -- roughly 36,000 sq. ft. of selling space, plus nurseries of another 8,000 sq. ft. But more than just an innovative real estate play, the company’s new stores set a tone -- one that is described internally as “affordable upscale.”

At the end of 2014, 38% of the company’s store base had been converted to the new format. By the end of 2015, it is expected that 65% of the stores will be upgraded.

That will be a big moment, according to Bob Tellier, who was named president of the 74-store chain, a stand-alone division of Lowe’s.

"At the end of the year, we will have turned the tide, with the majority of our stores using the new and consistent format,” he said.

Overall, the company’s goals are to hit 100 stores and $1 billion in sales by the end of 2017.

For its ambition and its attention to detail, the company will accept the 2015 Retailer of the Year award during the National Hardware Show May 5 in Las Vegas.