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David Lundquist
Owner, Hardware Hawaii


By Susan K. Sunderland

Friends of Hardware Hawaii were worried when Home Depot came to town four years ago. Would the big-box retailer annihilate the mom-and-pop neighborhood stores? Years later, Hardware Hawaii is still going strong.

Now “no one says anything,” says owner David Lundquist.

The fears have gone away. Or have they? Who will survive in the battle of the toolbox titans?

Hardware Hawaii this month celebrates 50 years of doing business on Oahu. “We’re in it for the long haul,” says Lundquist, 54, company president and chief executive officer. “There’s a huge difference between our store and the big-box retailers. If we could find the right location, we’d move in next door to them!”

Confidence and competitive spirit that bold deserve a closer look. You mean massive inventories, pricing ploys and national branding can be outsmarted? Not entirely, Lundquist admits. These are important facets of any successful business, but the pendulum is swinging back to traditional retailing, where folksy, personalized service and community relationships are equally valued by consumers.

That bodes well for stores like Hardware Hawaii, which has built its reputation and profitability on the premise of “customer first.” When you drive onto their property, employees direct you to an empty parking space, guide you in and out of that stall, and run over with an umbrella to shelter you from rain.

Then, you might walk into the electrical department to look at floor lamps, and a store associate like Dennis Ho comes over to offer help. Without prompting, he explains the difference between halogen and standard bulb lighting. Soon you’re talking story about how long he’s worked at the store and how come he knows so much about lamps. It’s folksy, helpful, and fun. You feel so good about Ho’s service and desire to help, you want to buy the entire line of lamps.

It’s like that at Hardware Hawaii’s three retail shops at Kailua, Kaneohe and Mapunapuna. The company also has a seven-acre lumber stock yard and warehouse facility at Kapaa Quarry.

“Customer first” is the principle on which David’s parents, Dana and Mary Lundquist, founded Hardware Hawaii on June 19, 1954 at Kailua Shopping Center. His parents had moved to Honolulu in 1952 from Minnesota where they owned a hardware store.

From the beginning, the business philosophy was focused on helping people, not just selling products. It’s the difference between being a stocking expert versus a hardware expert. It was likely drawn from the Lundquist’s rustic Midwestern values that quickly transformed to Hawaii’s aloha spirit and ohana orientation.

“Business is not about making money,” Lundquist remembers his dad saying. “If you run the business right and help people, you’ll make money.”

Fifty years later and now grossing close to $40 million in annual sales, Hardware Hawaii has stood the test of time and the arrival of big-box retail rivals.

David Lundquist learned a lot from his dad, whom he considers his mentor and inspiration. As he talks about the company’s growth, there are many references to words of wisdom from the late Dana Lundquist.

For instance, Dad emphasized the importance of hiring the right people. Contrary to matching qualified skills to a job, the elder Lundquist preferred to “find the right man, hire him, then find the right job for him.” Getting good people with the right attitude was paramount, in his view. Then, the person could be trained to do a job.

“My father was a real exceptional person,” Lundquist says. “I hung to his every word, and I learned everything from him.”

That approach serves the company well, according to Lundquist and his brother Barry Lundquist, 57, who is chief operating officer. “We go out of our way to get good people here,” Lundquist states.

Among these are vice president David Purington, lumber manager Mel Shiroma, operations manager Hal Levy, marketing manager Larry Lanning, Honolulu store manager Dora Myhre and merchandise manager Corey Ann Bebb.

There are 250 employees at Hardware Hawaii. “We overstaff the stores,” Lundquist says, “and we watch the cash registers all the time. We don’t want line-ups at those cash registers. Customers shouldn’t have to wait in line. That doesn’t make for a good shopping experience.”

That speaks to the company’s mission of offering “service so friendly that every customer will thoroughly enjoy shopping with us again and again.”

There are two dimensions of Hardware Hawaii. There’s the retail operation that is part of the Ace Hardware national network, offering access to over 65,000 brand name and Ace items. Ace Hardware Corporation is a cooperative of more than 4,800 independent retail stores. If you’re looking for a certain widget or gizmo, those “helpful hardware” folks at Ace Hardware outlets, like Hardware Hawaii, are ready to assist.

Hardware Hawaii also supplies a major portion of lumber used in Hawaii. It has over 12 million board feet of lumber in stock, including acres at its Kapaa Quarry distribution center. There are 10 large Hardware Hawaii trucks making deliveries to construction sites six days a week. Lumber accounts for 60 percent of the company’s sales.

“We see the contractor’s point of view,” Lundquist says, claiming it’s a major distinction between his store and big-box retailers. “We have a general contractor’s license. At one time, my father did construction, repairing and remodeling homes, and served as president of the Windward Contractor’s Association. He personally drew up plans, did estimates, and supervised crews that remodeled and rebuilt many of the additions to Kailua’s older homes during the 1950s and 60s.”

“My dad would say - and it’s true - that wholesalers don’t make good retailers. But retailers make good wholesalers,” Lundquist recalls.

Hardware Hawaii is not a typical store in that regard. “Very few hardware stores carry the depth and breadth of inventory we have,” Lundquist says. “We have a real sophisticated inventory. There are seven buyers in the machines department alone. Walk through our store, and you’ll see a huge difference.”

When it comes to ordering and stocking merchandise, Hardware Hawaii claims it was “decades ahead of everybody else by joining co-ops (like True Value in 1977 and Ace Hardware in 2001) and bringing in merchandise by containers from the Mainland.”

This accounts for the extensive merchandise at its stores that covers hardware, hand and power tools, plumbing equipment, electrical supplies and appliances, paint and home décor, lawn and garden supplies, lumber, and building materials. It also has a J.C. Penney’s catalog order counter for the ladies.

Move over, handyman. It’s becoming a handyma’am world, according to Lundquist. Women are playing an increasing important role in purchasing materials for and executing do-it-yourself (DIY) projects. It’s been estimated that women drive 75 percent of the home improvement purchases in a household. That’s substantial, considering the industry is now a $185 billion business nationwide, up from $135 billion just 10 years ago.

From power tools to dry tile grout, ladies are buying more items in hardware stores today than ever before. According to the National Retail Hardware Association, other demand drivers are:

• Increasing importance of décor, furnishings and designs of homes as an expression of individuality.

• Increase in do-it-yourself participation due to fewer professional tradesmen and progressive interest in quality power tools.

• Increasing demand for environmentally-friendly, ergonomically designed and energy-saving equipment.

• Changes in home decoration and design due to reduction in average size of dwelling and limited storage space.

• Greater media promotion of home improvement as a functional and leisure activity.

Following those trends, the core customers at Hardware Hawaii are do-it-yourselfers and small-to-medium size contractors.

“Spending on a home is good investment,” Lundquist says. For that reason, “the home improvement business is generally resistant to downturns in the economy.”

For example, during the oil embargo in 1973, Hardware Hawaii actually experienced a period of growth, according to Lundquist. During the concrete strike, it had a record month, including lumber sales.

But wrestling with competition from big-box retailers is something many local small and medium-sized firms have had to face recently. Lundquist is passionate and often “outspoken” on this subject, because he does not feel government provides a level playing field for all businesses. He cites federal tax loopholes and special treatment by municipal government to larger, Mainland enterprises entering new markets, such as Hawaii.

Further, Lundquist decries the myth that big-box category retailers lower prices. “Fact is these companies aggressively drive prices higher,” Lundquist says. “Their price guarantees (to meet or beat competitor’s advertised price) has a chilling effect on competition. Mass advertising has everyone convinced they’re getting the lowest price. They’re basically telling competitors if you dare undercut our price, we’re going to punish you. The result is they have aggressively brought up prices.”

Despite that “chilling” competition and price war, Hardware Hawaii is “doing fine. We love the competition,” Lundquist says. “Small business will flourish,” he adds, “and if we were on a level playing field, there would be 50 hardware stores on Oahu owned by local people with competitive prices.”

“We have this business culture in the country right now that believes huge giants are the way to go. In the long run, that will change,” Lundquist predicts.

Hardware Hawaii remains a neighborhood hardware store where customers are greeted by name, with a smile and can-count-on old-fashioned, helpful service. That supposedly won’t change no matter how much Hardware Hawaii grows.

That philosophy also has garnered it many awards, including “Hawaii’s Outstanding Business” by the Better Business Bureau, Oahu Retailer of the Year by the Retail Merchants Association, Hawaii Entrepreneur of the Year, State Retailer of the Year and finalist for Best Business in Hawaii.

It’s likely that what it’s been doing for the past 50 years will continue for another 50 years and beyond, Lundquist promises.

National studies state home improvement has evolved from a primarily functional to a discretionary leisure activity. Lundquist says his wife, Ely, can attest to that. She is one of his biggest customers and is more of a handyman in the house than he is.

When not ordering lumber from the mills or administering the business, Lundquist relaxes with his 10-year-old daughter Kaimana, with whom he enjoys shooting basketballs and practicing archery in the backyard. He is also “addicted to the treadmill and weight machines in my garage.” Books (large collection of non-fiction and historical fiction), banjo and guitar-playing, hiking, mountain-biking and kayaking are his other interests. Community involvement, such as Habitat for Humanity and St. John Lutheran Church in Kailua, occupies his time as well.

Lundquist, a Punahou graduate (1968) and former ILH and state wrestling champion, competes rigorously in the business arena. But he does so with an air of confidence because of the family legacy that guides the company culture and decision-making. The more things have changed in the home improvement and contracting businesses, the more things have stayed the same at Hardware Hawaii.

Success is firmly rooted in accommodating customers’ needs and exceeding their expectations. Mom and Dad have seemingly taught David and Barry Lundquist well, and the brothers have carried on their tradition with good faith and consistency.

In doing so, they have perpetuated the belief that the real “tools of the trade” are intangible, like the aloha spirit between employees and customers. An observer says it’s not “hardware, but software” (the heart) that sets this business apart from competitors.

 

06.04.04


Posted: June 4, 2004 @ 4:44 PM HST


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