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When Harry’s Ace Hardware on Magazine Street announced in December it was closing, there was much nostalgic lamenting about the death of the traditional Main Street shop.
At the time, the owners cited rising costs, competition from online and big box home-improvement retailers, and the effect of storms like Hurricane Ida for making the business untenable after four generations of continuous operation.
But on the other side of town, the new owner of Bassil’s Ace Hardware in Metairie was counting the receipts from a bumper first quarter in business. Matt Skaer, 40, had bought the store from its longtime owner three weeks before Ida hit. With no retail experience, the former oilfield engineer had little idea of what to expect.
“I had barely gotten my feet wet,” said Skaer. “We were running the store off a generator and when people found out we were open we had them lined up around the corner, sweating in the 100 degree heat waiting for propane.”
Ace Hardware’s corporate office in Chicago had sent a response team to the area immediately after the storm and Skaer said they asked if they could put in an order on his behalf.
“I said, ‘yeah, you guys know better than I do’ and they ended up ordering about $100,000 worth of stuff — the normal order is about $10,000,” Skaer said. He ended up selling scores of products needed for home repair jobs and more.
“Contractors would come in and buy up all our tarps. People would load whole pallets of water on their trucks,” he said.
A contrarian bet
Skaer’s trial by fire helped validate his bet against trends that seemed to foretell the death of local retailers. In addition to Harry’s Ace, the owner of Neeb’s Hardware, which had served Gretna for more than a century, said in April that it was shutting down as well.
Locally-owned hardware stores have held up better than other types of Main Street retailers in recent years, but costs are nevertheless increasing and competition from the big home improvement stores remains fierce.
The recovery from Ida no doubt offered Skaer a quick sales boost. But it also seemed to signal there was still demand for traditional stores with personal service and eclectic wares.
Skaer thinks a big reason for recent retail closures has more to do with real estate: stores like Harry’s Ace in expensive parts of town like Magazine Street might be getting priced out of their neighborhoods.
Leaving the oil industry
Skaer’s arrival in the hardware business followed nearly two decades in the oil industry. He was fed up with the lack of job security in the sector, which lost another 7,500 jobs in Louisiana during the pandemic on top of the 20,000 that disappeared during the oil price slump earlier in the decade.
“I was in the oil field for 18 years and I’d been trying to figure out how to get out because it’s dying here and I’m tired of jumping around,” he said.
The choice of which small business to move into was fairly obvious because Skaer’s mother, Bonnie Boettner, already had built up her own small empire of Ace Hardware stores in the greater New Orleans area. She now owns three with her business partner.
Like her son, Boettner, 66, sought a career change after spending more than 20 years as a labor and delivery nurse at the Lakeview Regional Medical Center in Covington.
Ace Hardware, which has been around since 1924, projects a folksy image as though you might find Sam Drucker from Green Acres behind the store counter. But it is a retailing behemoth. Last month, it reported record sales in the first three months of the year of $2.2 billion and income of nearly $120 million. That was on top of record sales and income growth last year.
The Ace model is unusual in the franchise and brand-licensing world. It has individual store owners like a traditional franchise, but those owners are also shareholders in the corporation and get paid annual dividends.
Keith Miller, who runs a franchisee advocacy group and owns multiple franchise stores, said the models that work are those where the interests of owners and head office are aligned.
“It’s like any business relationship, where people feel like they’re part of the decision-making process you have better outcomes,” said Miller. “But it tends to be the opposite in most franchises, where head office dictates a one-size-fits-all approach.”
A different kind of model
Ace has centralized buyers and regional warehouses, such as the one in Loxley, Alabama, that covers the greater New Orleans area. But the strategy relies on local knowledge. The products they buy are targeted at the specific demands and tastes at each store.
Boettner said her three stores serve very different markets. In the 10,000-square-foot store in Mandeville, for example, people come in with pictures in Ziploc bags asking for advice about home repair jobs. At her 15,000-square-foot Jeanfreau’s Ace Hardware in Belle Chasse, it’s largely a fishing crowd, including many of the area’s commercial fishermen looking for boat parts and other supplies.
After Harry’s demise, there are still three Ace Hardware stores in Orleans Parish, including Mary’s Ace Hardware on North Rampart Street on the edge of the French Quarter. The chain has three locations in Baton Rouge, two in Slidell and one store in Lafayette, Zachary, Gonzales, Covington, Chalmette, Destrehan, LaPlace, Des Allemands, Donaldsonville, Plaquemine, Scott, Amite and Arnaudville.
Boettner said it’s hard to imagine how stores survive if they have to pay downtown rents.
“The business plan really doesn’t work anymore unless you own the property,” she said.
All about the real estate
That means considerable upfront capital. Skaer needed $1 million to buy both the store and the adjacent property, which came with a small office building, so he could have access to the parking lot there and have space to expand. He needed a further $350,000 to buy the business.
Boettner said that even 12 years ago when she was scouting for her first site, she couldn’t find anything suitable in Orleans Parish. She said a family friend also blanked recently when looking for a potential site for a new Ace Hardware in or close to the city.
“He looked at Metairie Road, Uptown, the west bank and Algiers and couldn’t find anything to purchase and the rents were just absurd,” she said. He’s opening in Hammond on the north shore instead.
Richard Weber, a commercial real estate broker at Corporate Realty, said the most sought after commercial corridors, including parts of Veterans Memorial Boulevard in Metairie, increasingly can only be afforded by big national players who can commit to long leases and big rents.
“Landlords are looking at that national credit to give them that security,” he said. “Plus, you’ve always had that supply issue so it’s going to keep pushing the rents up, including into these good little pockets of dense residential” like Transcontinental Drive.
In response to rising rents, especially along Veterans, Jefferson Parish last year created the Town Center Mixed Use District, and eased zoning restrictions along a portion of David Drive in order to encourage more neighborhood businesses, according to Bessie Martin, director of planning for Jefferson Parish.
For Skaer, the next objective is to double floor space by expanding upward into the floor the previous owner used for storage. He’s aiming to double sales to $2 million annually, selling more Green Egg grills and other hot items and eliminating products that were gathering dust.
Eventually, he plans to merge with his mother’s stores, which already have sales of $14 million a year.
Weber, the real estate broker, said: “Nobody wants to go to Lowe’s to get three screws and a staple gun. Ace’s have always done well when they position themselves within their neighborhoods and the longevity of their ownerships shows that. Sometimes it just takes a fresh pair of eyes.”