SIC 5072
HARDWARE

This industry comprises establishments primarily engaged in the wholesale distribution of general hardware items and cutlery. Products include bolts, nuts, washers, rivets, screws, brads, locks (and related materials), and hand tools (including power hand tools). Establishments primarily engaged in the wholesale distribution of nails, non-insulated wire, and screening, however, are included in SIC 5051: Metals Service Centers and Offices.

NAICS Code(s)

421710 (Hardware Wholesalers)

In 2001, there were an estimated 9,387 establishments engaged in the wholesale distribution of hardware, a dramatic increase from 1996's total of 8,000. In 2001, hardware wholesalers employed more than 122,386 people and posted an annual payroll in excess of $5 million. By 2003, wholesale sales reached more than $23 million, with the top four co-op companies claiming almost 50 percent of that total. Cotter & Company (True Value) had $2 million in sales, ACE Hardware generated $3 million, ServiStar claimed $2 million, and Do It Best Corp. (formerly Hardware Wholesalers Inc.) had $2.3 million.

General hardware establishments represented the largest segment of the industry. They numbered 3,298 establishments, and their combined sales totaled $14.4

billion. Hand tools totaled 613 establishments, and $1.01 billion in sales. Miscellaneous fasteners totaled 680 establishments, and their combined sales totaled about $1.02 billion. The 713 builders' hardware establishments had combined sales of $2.03 billion. States with the highest market presence were California, Texas, New York, and Florida.

During the 1990s, the hardware industry began to change. The combined effects of consolidation and the growth of the "Do-It-Yourself" (DIY) industry squashed the small, independent hardware stores, the industry's traditional customers, and simultaneously expanded the dominance of the large, warehouse-style retailers, such as Home Depot, which made purchases directly from manufacturers. In 1999, Home Depot expected to at least double its chain of 800 stores by 2003. Lowe's followed the lead of Home Depot and, after it acquired Eagle Hardware's 36-store chain in 1999, the company planned to add between 80 and 85 stores to its base of 484. Home Depot and Lowe's were expected to generate sales of more than $50 billion the same year, which was 25 percent of the DIY market.

In early 1997, the DIY industry had a value of $140 billion. The top 100 retailers held about one-half of the market share. One response to this challenge was the 1997 merger of Cotter & Company with ServiStar Coast to Coast Corporation. This venture helped its members by reducing costs and improving efficiency, and it was expected to benefit customers in terms of lower prices. The new company, TruServ Corporation, had annual sales of more than $3 billion and employed almost 6,000.

Cotter & Company was the largest full-line hardware distributor in the United States, as measured by sales volume. Cotter, a privately held dealer cooperative with headquarters in Chicago, Illinois, operated 15 distribution centers and employed more than 4,000 people. The company supplied nearly 6,000 True Value members across the United States and in 50 countries.

Another industry leader was Do it Best Corp., formerly Hardware Wholesalers Inc., which acquired Our Own Hardware. Hardware Wholesalers had 1997 sales around $1 billion and employed more than 1,000. In 1999, Do It Best Corporation beat both Home Depot and Lowe's to Web prominence and became the largest hardware store on the Internet, with more than 70,000 items for sale.

ACE Hardware Corporation, based in Oak Brook, Illinois was second in sales volume. ACE, another dealerowned cooperative, supplied products to more than 5,000 stores through its 18 distribution centers. In 2002, the company reported sales of $3 million, and employed more than 5,268 people.

Further Reading

D&B Sales & Marketing Solutions, 2003. Available from http://www.zapdata.com .

Hoover&requo;s Company Profiles, April 2004. Available from http://www.hoovers.com .

U.S. Census Bureau. Statistics of U.S. Businesses 2001. Available from http://www..census.gov/epcd/susb/2001/US421420.HTM .

Ward's Business Directory of U.S. Private and Public Companies 2000. Farmington Hills, MI: Gale Group, 2000.