Growth-minded Handy Hardware invests in distribution center

In its 2008 fall market, regional hardware co-op Handy Hardware gave out 110 one-ounce gold coins to lucky retail attendees. Since then, the price of gold has risen dramatically, from about $750 an ounce to more than $900.

As nice as that gain turned out, the company is looking for even bigger returns through an investment in infrastructure—a multi-million dollar distribution center in Mississippi.

The Houston-based co-op describes itself as a high-growth story, even in tough times. The company points to a 9% sales gain in fiscal 2008, which saw sales grow to $255 million. Increases are continuing year to date in 2009, and February 2009 was the company’s second best sales month ever, said Mickey Schulte, VP marketing and purchasing.

The company revamped its housewares section and benefited from its traditionally strong lawn-and-garden business, but the real secret was simply selling more to existing customers and adding new customers, said Schulte.

The company grew its membership by about 100 in 2008 and has about 1,235 on its rolls today.

“Our programs stacked up well against the competition,” said Schulte.

The company is looking to get another boost with the opening of its new distribution center in Meridian, Miss., expected to measure in at about 500,000 sq. ft.

“We looked real hard at a couple of states to get the best mix of infrastructure support from the state and local governments,” he said.

Mississippi Governor Haley Barbour was on hand for the initial press conference in Meridian, along with Handy Hardware president Tina Kirbie. Located near the intersection of Interstates 20 and 59, the new facility will duplicate the SKU mix in the co-op’s Houston center and will include upgrades in conveyor technology and radio frequency tracking systems. Shipments are expected to commence from Meridian in 2010.

“It’s a state-of-the-art facility, and it will allow us to continue our growth in Tennessee, Alabama and Georgia,” Schulte said.

Even in the face of a recession, Schulte likes the timing of the development for a couple of reasons. First, if the market does recover in 2010 as many have predicted, the facility will open at a time of pent-up demand. Second, the current environment is a buyer’s market. “It’s a great time to build,” he explained. “We were getting aggressive bids from builders.”

There’s a third reason why Schulte is optimistic about the investment.

“When everybody is zigging, you need to zag,” he said.

Handy Hardware is making other moves in 2009. Schulte described outdoor furniture as a new area of focus. Also, the paint category is already very strong in 2009. The company’s largest paint vendor, Valspar, is up 110% in sales through Handy, year to date.

“In today’s economy, people are fixing what they already have, instead of building something new,” he added.