The Smithers Home Hardware store is owned and run by Theo Bandstra and his wife, Alyssa. They purchased the store from Dick and Adelaide Dykman in September 2013.
As the Bandstra’s grew business they found the store was in need of a bigger building. That new building is being built on 3rd Avenue, with the Grand Opening planned for March 1, 2019.
As I spoke with him, Theo Bandstra was eager to credit the dealer-owned co-op business model used by Home Hardware for the economic freedom he has to build his newer, bigger building.
“At the end of the day, every company hopes to be profitable. With a public company or a franchise a lot of those profits get skimmed off the top and the decision of what to do with those profits is made outside of your local community. It’s made by a group that really has more interest in growing the company, having other motives, which leaves less money for that local store to invest in themselves or to make decisions that they think would be relevant to their community,” says Bandstra.
“Ultimately the major benefit is the funds remain in the community and are spent in such a way that usually benefits the local community.”
“For example, [in our community] we are building a new store. The profits are in my company and I get to decide completely what to do with those, and what I want to do with those is invest in the store where I work every day because I see potential. If I had to release a whole bunch of those funds to some higher-corporate side, they would decide what to do with those funds, and they might say ‘Oh, we think that the growing area is southern Alberta, so we are going to pool all of your guys’ profits and we’re going to put a new store in southern Alberta.’ That might be very good for the company as a whole because maybe there is some great opportunity. But now my money went to build a store in southern Alberta, and that doesn’t help our community out at all.”
Home Hardware is a dealer-owned co-operative and has been so since the very beginning in 1964, when 122 hardware store-owners collectively purchased Hollinger Hardware Ltd. in St Jacobs, Ontario to form a dealer-owned co-operative to protect small hardware businesses, eventually becoming Home Hardware in 1967.
“Walter Hachborn, who founded Home Hardware, saw the imminent threat of the ‘big box’ stores into the Canadian landscape,” says Theo Bandstra.
“He went to a whole bunch of hardware stores in the area and basically coordinated them into a collective buying-group, and that’s how Home Hardware began.”
“So many years later, Home Hardware still maintains that all stores are independently owned. So every Home Hardware you see is owned by that local owner. Now there are some places where some people own five stores so they might not be right there, but they are all owned in their local community, and yet they all band together and purchase their product together so that they can achieve the same buying power you get with the big-box stores.”
Prior to meeting Theo Bandstra, I had mistaken believed that Home Hardware was a franchise.
Home Hardware makes no effort to hide its co-op status, but it does not put it on their signs the way Federated Co-Operatives Ltd. does with their gas-stations.
Bandstra clarified the differences between franchise and co-op business models.
“A franchise is where the company is owned corporately and each individual franchise just pays a certain percentage of all their sales, or there’s usually some formula, that just gets paid to the franchise. It doesn’t come back to [the local owner], it doesn’t pay for anything that benefits them other than maybe marketing, but usually you have to pay marketing as well,” says Bandstra.
“Whereas in a co-op, I am a part-owner of Home Hardware, each dealer is a small owner in the entire company. So we do pay some fees, but those go to run our head office, they’ll go to pay for advertising but there’s no franchise-royalty fees that get paid to someone at the top, because we are all collectively the owners of the company. So the money, if there’s any profits or revenues in Home Hardware corporate at the end of the year, that gets distributed back to all the dealers.”
Theo Bandstra should know, he has experience with the franchise model as well.
“I ran a Student Works Painting company for two years during university, and that is a franchise. So I can tell you firsthand the difference between a franchise and a co-op. When I did Student Works Painting, yes there was a significant portion of my revenue that went towards Student Works Painting and did not come back to me at all,” says Bandstra.
“There is a benefit. There is a reason. If franchises were just terrible, none of them would exist. The reason why I am still grateful to Student Works Painting is they still afforded me a system, a brand. They provided support in how to run a painting company. Franchises have their place,” says Bandstra.
But how is a co-op run? Running a single store is one thing, but who makes the bigger business decisions that affect the greater company? According to Bandstra, dealer-owned co-ops are operated by a board of directors.
“The board of directors for Home Hardware are dealers from across the country. It’s actually independent dealers that are on the board of directors for the company,” Bandstra tells me.
“You must be a store owner to serve on the board of directors. They have regions, so what they’ll do is they’ll look for nominations from each region so that way hopefully they have representation from all across the country on their board of governors. But the key thing is you have to be a store owner. So that really helps to make sure that the people that are governing the company are ones who are running stores and understand what it means and what it takes and those decisions are made to help the independent stores, rather than to help the ulterior motive of just strictly profits or just trying to grow the company at all costs. So their interests are very much the same as the interests of all the other dealers.”
As I finished my interview with Bandstra, one thing became clear. Although Bandstra credited a significant portion of his success to his ownership in a dealer-owned co-op, he believes that the majority of the credit lies somewhere else.
“The Home Hardware brand is about customer service.
It’s about friendly people helping you get your project done. And that only happens if the people you encounter in the store match that brand. And that’s one thing I’d really like to highlight is our staff. Our staff make sure that the Home Hardware brand makes sense when the customer comes into our store.”
“So I would give full credit to our staff for their excellent customer service. Obviously I am here to try and guide it and make sure we maintain that, but ultimately it is the staff on the floor everyday greeting the customer when they come in the door,
“And I think that still today is the reason we are successful. Yes there are co-ops and there are public companies and everything is getting bigger and the competitive scene is getting harder. But at the end of the day Home Hardware still remains successful because the individuals like the staff at our store are there to help you when you come in. And as long as that doesn’t go away, we’ll always be here.”