Aubuchon Hardware, a chain of 105 stores in New England and Upstate New York, has no intention of competing against home improvement giants like The Home Depot Inc. and Lowe’s Cos. Inc. But the regional chain does have big ambitions and building out a new digital platform aimed at serving its loyal, local customers is a major part of its strategy.
William E. Aubuchon IV, president and CEO, Aubuchon Hardware
One indicator of its ambition is the chain’s URL: HardwareStore.com. President and CEO William E. Aubuchon IV, whose great-grandfather founded Aubuchon Hardware in 1908, sees an opportunity ahead to buy some of the 20,000 independent hardware stores operating in the United States, many of whose aging owners don’t have children clamoring to take over the family business.
“There are other really strong independent hardware store brands in the country,” Aubuchon says. “There’s nothing stopping us from acquiring them in the future.”
But before he goes on a shopping spree, Aubuchon wants to create an array of digital services that will make hardware shopping more convenient for his existing customers, along with the ecommerce and in-store infrastructure needed to support those services. Once that infrastructure is in place, he foresees acquiring other hardware stores and chains that will offer similar omnichannel services under their own brands, but with HardwareStore.com as their online base.
Aubuchon is somewhere in the middle of the process of creating the digital foundation he wants, a process that began in 2016 with a reexamination of the company’s ecommerce strategy.
The retailer had been selling online since 1999, including selling on Amazon.com. But Aubuchon decided there was little future in seeking to sell to online shoppers all over the country, a strategy that would put him in direct competition with the likes of Amazon.com Inc., Home Depot and Lowe’s. Those three companies are, respectively, Nos. 1, 7 and 22 in the Internet Retailer 2019 Top 1000 ranking of North America’s leading online retailers. Aubuchon is not ranked.
Aubuchon’s annual sales are around $180 million. “That’s the size of three or four Home Depot stores,” Aubuchon says. “I’m very, very aware of our scale disadvantage. That requires us to be purposeful and thoughtful about what we do and don’t do.”
By contrast, Home Depot generated $108.2 billion in revenue in its most recent fiscal year, including more than $8.5 billion online, whereas Aubuchon generates less than $2 million online. Home Depot stores average 105,000 square feet versus 10,000 square feet for a typical Aubuchon Hardware location.
Aubuchon focuses on local shoppers
Rather than trying to compete online with giants like Home Depot, Aubuchon decided three years ago to refocus on using its website to better serve consumers who live near its 105 stores. Aubuchon notes those stores have a loyal customer base, with 70% of store transactions coming from shoppers who belong to the Aubuchon rewards program.
“We’re your neighborhood hardware store, and we’re trying to win on convenience and service,” Aubuchon says. “Our vision with this digital experience is the enhancement of convenience. Being able to see exactly what’s in store and the quantity is something relatively new. And we’re now also showing the location of items within the store, the aisle, bay and slot.”
With that strategy in mind, Aubuchon decided that the company’s ecommerce site would stop shipping products all over the country and instead, at least initially, only allow consumers to order from its website for pickup in store. To make that a convenient option, the company had to take several steps to show each website visitor the merchandise available in the store nearest to that shopper.
Today, when a shopper visits HardwareStore.com, he sees only merchandise available in the nearest Aubuchon store—based on the location of the consumer’s IP address. The site also shows where in the store the item is located.
Once a consumer places an order, the store notifies him when it’s ready for pickup. On average, it takes an Aubuchon store 18 minutes to notify the shopper that her order is ready, and the CEO would like to get that down to five minutes.
Real-time inventory
Aubuchon says it took a lot of work to provide real-time inventory updates on what’s available in each of its 105 stores, which don’t all carry the same merchandise. That includes keeping track of what’s sold through the stores’ point-of-sale systems. In addition, the retailer revised the inventory-counting process, sending each store a customized list of items to count that emphasizes the items that sell best from that location. That ensures the online inventory is most likely to be accurate for the most popular items for each store.
As evidence the system is working, Aubuchon notes that the cancellation rate of online orders is less than 2%. While some of those orders are canceled because the item displayed as available on the website was not in stock at the store, Aubuchon notes that customers cancel for other reasons. That suggests the website’s inventory accuracy is above 98%.
Aubuchon cites the example of a customer coming into a store recently and asking for an item he had seen on the website. A store associate said he didn’t think the store had it, but the customer said the website said it was in the store’s backroom. That’s where the associate found it. “That’s an example of a transaction that didn’t go through the online shopping cart but is a web-influenced sale,” Aubuchon says.
Online shoppers spend more in stores
In the past year, Aubuchon has stepped up marketing its ecommerce site to members of its loyalty program, and that’s driven more sales. Aubuchon says online sales are up 130% in dollars and 87% in the number of transactions from a year ago.
Orders placed online average more than $50, well above the $25 in-store average for members of Aubuchon’s loyalty program and $19 for other shoppers. What’s more, consumers who buy online spend, on average, an additional $26 in the store when they come to pick up their order.
Online sales still represent less than 1% of Aubuchon’s total revenue. “However, the purpose of this isn’t just to purchase online, it is to influence these customers to shop more with us because we’re giving them more information.”
Technology and marketing strategy
To make this work, Aubuchon made the move to a new ecommerce platform based on Magento 2 software, the paid version of Magento, formerly known as Enterprise Edition. Atlanta-based digital agency FortyFour implemented the new technology. Aubuchon initially implemented Magento 2.1, is now on Magento 2.2 and is moving to 2.3, the latest version.
Adam Roe, managing partner of FortyFour, says Magento 2 offered the flexibility to meet Aubuchon’s specific needs, such as being able to show the inventory available in each of the retailer’s 105 stores and to update that inventory every few minutes based on offline and online sales. He says retailers spend a little more when using Magento 2 “but they’re gaining a much higher degree of flexibility than other platforms provide.”
Magento, now owned by Adobe Inc., says the price of Magento 2 is customized based on a retailer’s needs and that there is no fixed minimum price. Published reports put the entry-level price for Magento 2.2 at about $22,000 a year.
In addition to investing in new ecommerce technology, Aubuchon also has shifted its focus to digital marketing, which now accounts for 80% of marketing spend versus 10% a few years ago, Aubuchon says. The money for digital programs has come from reducing print advertising, including eliminating the weekly store flyer.
To measure the impact of its digital ads, Aubuchon is participating in a Google program that measures the number of store visits driven by ads on Google properties such as Google.com and YouTube. “The amount of influence that our web presence is having shocked us,” Aubuchon says. He says it appears more than 10% of the chain’s sales are influenced by ads on Google.
Aubuchon himself appeared in six-second ads that appeared in front of YouTube videos this past spring when the consumer viewing the video was located within six miles of an Aubuchon store. Google reported those ads drove more than 148,000 visits to Aubuchon stores from March through June, which is peak season in the hardware industry as many consumers plant their gardens and get moving on other home-improvement projects. Web visits from YouTube ads topped 78,000 just in May, when the retailer upped its ad budget.
(Google says it estimates the impact of ads on store visits by collecting such data as location history and Google Maps use from consumers who opt in to reveal their location, then comparing that data with information about ad views and clicks. Google says it verifies results through shopper surveys.)
The conversion rate on the YouTube ads is in the range of 3-4%, Aubuchon says, counting both store and web sales, and he’s seen the impact personally as many people have stopped him on the street to say they saw him on YouTube. Roe of FortyFour says the return on ad spend has been $15 in revenue, including in-store and online, for every $1 spent.
New features coming to HardwareStore.com
Aubuchon has plans to expand ecommerce in several ways. In the works is enabling one Aubuchon store to ship products ordered online to another store, which will allow the retailer to show its entire inventory to visitors to HardwareStore.com. Future plans include offering curbside pickup and eventually delivery of online orders to homes using Aubuchon’s own vehicles.
Roe says FortyFour is developing one new feature designed to make it easier to select paint online, including consumers receiving samples of colors they’re considering. He says Aubuchon also aims to make it easier to replace a barbecue grill’s propane tank: The consumer will be able to pay for the new tank online, then text his nearby store when he’s arrived to fill up the replacement canister.
“Their vision is what’s most innovative,” Roe says. “It’s about how to enhance that total experience.”
Aubuchon says adding digital capabilities will be critical to the retailer’s future success. “Five years from now, 10 years from now, it will be essential to have that digital maturity in your company,” he says. “That’s what we’re trying to develop now with all these investments.”
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