OSH Blooms in California
The times were hard when a group of California farmers joined together in 1931 to buy farm supplies as a cooperative they called Orchard Supply. The venture shed its cooperative vestiges decades ago and has evolved, under the Orchard Supply Hardware banner, into an easy-to-shop, service-oriented alternative to big-box home improvement players. In 1996, it was purchased by Sears, Roebuck & Co. Currently, Sears Holdings is the majority owner of the company.
With stores averaging 40,000 sq. ft., Orchard Supply Hardware specializes in home repair items, hardware products, and lawn and garden supplies. Chain Store Age editor Marianne Wilson spoke with Orchard Supply’s chief marketing officer, Tom Carey, about how the company is positioned and its latest initiatives.
Orchard Supply Hardware was founded as a growers’ co-op. Does that foundation still influence the company today?
Yes, and in many ways. This is a company born from the adversity of the Great Depression, started by actual fruit growers who banded together to form a cooperative buying group. That spirit, optimism, friendship and ingenuity still is pervasive in our culture.
Additionally, the authentic nature of the founders and their focus on the quality and value of the products they bought is very much echoed today in the way we choose products, as well as the expert advice we give to our customers in all of our 88 stores.
What role does Sears Holdings play in the company?
They are, and have been, a very supportive owner. Many of their top officers sit on our internal board. The years of retail experience and advice they bring to the company are quite extensive and beneficial.
Also, the brands that we can offer our customers because of our affiliation with Sears—brands such as Craftsman and Kenmore—give us a real competitive advantage.
How is OSH positioned in the marketplace?
Orchard’s market position is to be the dominant retailer in the area of home repair and maintenance in our market. This means Orchard will be the best in depth and breath of assortment in these categories, whereas the typical big-box focus is on remodels. Also, with our literal Orchard roots, we have a very strong offering in garden and nursery.
Service is the other major delineator. We provide a higher degree of associate help and knowledge than our competitors.
How has OSH weathered the recession?
All things considered, very well. Don’t get me wrong—being a retail business based in homeownership, and in the state of California, hasn’t been a cake walk these past two years. But we were founded in the midst of the Great Depression, and that historical perspective has really helped, even when it was tough.
Beyond that, we also knew that during tough times you really learn the most about what really matters to your customer and ultimately understand your business even better. As a result we took on the challenge and increased our customer research work, we continued to open stores, and even reinvented our store look and feel in our new prototype in Santa Rosa. (See related story, page TK)
What was the thinking behind the prototype?
Even before we started on the store design plan, we spent about a year and a half developing two things. The first was an extensive customer segmentation project, and the second was a extensive look at the hard and soft attributes of our brand positioning with customers.
We used those two major pieces to set the strategy and approach to the new store prototype. Then, working with our design group partners at JGA, we produced a concept that looked at everything from layout, adjacencies and colors to flooring, graphics and display.
What do you like best about the store?
My team will tell you it is the restored 1945 truck that is prominently positioned at the front of the store. It speaks to our company history and authentic roots, as it is similar to our original delivery trucks with period correct logos on the doors.
While I do love the truck, truly my favorite part of the store is the overall impact. By impact, I mean the way all the elements come together to create the type of store I want to go shopping in. It’s warm and inviting, and has the feel of an old-time hardware store, a place where you would like to hang out. Beyond that, I feel it captures the essence of our brand—our rich history and what we want to be—to a T.
How is the store doing?
Customers love it. The feedback has been overwhelmingly positive, and we see it in how much more time customers are staying in the store and in the average sale.
Will the new design—or pieces of it—be replicated in new stores or remodels going forward?
Yes. It is our model going forward with all new stores—we’re shooting for two this year—and we are also currently looking at what elements we will use in existing remodels. That said, as in all prototypes, it will evolve as we go forward. You never fully feel that you get everything right the first time so we are always looking at the next tweaks.
Besides the new prototype, what else is new at OSH?
There is a lot going on. You really look at everything when business is tough, and our media and messaging approach has evolved considerably. We’ve greatly increased our analytics around our marketing programs, and we are constantly testing for the next big idea.
In other initiatives, we’re looking to relaunch our entire e-commerce platform this year. We’re expanding it with regard to its functionality, and also integrating it in a true multi-cross-channel way to strengthen our brand position online and in store.
You’ve been in retail marketing for some time. How has it changed over the years?
What’s changed are the tools and media that you use to reach and understand your customers. They are better and faster, allowing us to improve our effectiveness and efficiency.
At its core, however, marketing, and how you go to market, remains the same in that it is still about understanding your customer, your competition, and ultimately building a communication program that tells your customer why they should choose to shop you over the other guy. That’s the fun of retail marketing, and it certainly hasn’t changed!