Menards puts big money into even bigger stores

  • Article by: THOMAS LEE , Star Tribune
  • Updated: January 28, 2012 - 3:00 PM

The Wisconsin-based home improvement chain with a hometown feel is using savvy marketing, eclectic merchandise and discount prices to gain on Lowe's and Home Depot.

hide

At the Menards in Eden Prairie, assistant general manager Joe Petrich got on the escalator to the second floor. This store features the largest interior retail space in the United States

Photo: Richard Tsong-Taatarii, Star Tribune

CameraStar Tribune photo galleries

Cameraview larger

With its homespun persona and catchy jingle, Menard Inc. over the years has successfully fended off challenges from national big-box competitors like Lowe's and Home Depot.

So much so, that the Wisconsin-based home improvement retailer, known for its "Save Big Money at Menards" tune, is now building its own big boxes. And by big, we mean big.

Last year, Menards debuted the conversion of its Eden Prairie location into a 235,000-square-foot, two-floor behemoth that makes a Costco or Wal-Mart Supercenter look modest by comparison. The company, which operates 37 stores in Minnesota, is also supersizing its original 128,000-square-foot Golden Valley location to 250,000 square feet, modeled after a similar two-level store in St. Paul. The Golden Valley store will reopen this spring.

The retailer also paid $5 million for a 2.2-acre lot next to its Richfield store, which it will begin tearing down in a few months. The company now boasts 262 stores in 13 states, mostly in the Midwest.

Menards has accomplished several contradictory feats: It builds stores of enormous size at a time when retailers are downsizing, while also maintaining its reputation as a salt-of-the-earth, family-owned business. The retailer has somehow merged intimacy and big box into the same sentence, retail observers say.

Target and Best Buy may be based in Minnesota, but Menards has seemingly done a better job ingratiating itself with the community, said Burt Flickinger III, managing director of Strategic Resource Group, a consulting firm in New York.

"Menards enjoys the hometown advantage wherever it goes," Flickinger said.

The company did not release financial data and declined to make any executives available for interviews. But experts suspect Menards is gaining market share against Lowe's and Home Depot, by far the industry leaders with 40 percent of the $300 billion home improvement market.

"Menards is giving Lowe's fits," Flickinger said.

The Midwest advantage

In a response to a list of e-mailed questions, spokesman Jeff Abbott said Menards' familiarity with Midwest customers and the region's often punishing weather gives it important advantages over Lowe's and Home Depot.

"We believe, since we live here in the Midwest while our competitors headquarters are in the sunny South, that we understand the rigors of the Midwest climate a bit better," Abbott wrote. "The company's success can be seen in ... the way guests are always treated like family in a hometown hardware store atmosphere."

Founded in 1958 by John Menard Jr., the company has long operated from its own playbook. The family is intensely private, rarely speaking to the news media. Instead, the retailer floods its market with advertising, including its low-budget television and radio commercials featuring that ubiquitous jingle.

"They can make different choices that shareholders [of public companies] wouldn't approve of ... [and don't] necessarily make sense" to other retailers, said Minneapolis-based retail consultant Flora Delaney.

For example, Menards shut down its Eden Prairie store for a year while it converted the building to its current size. Hard to imagine another retailer willing to sacrifice 12 months' worth of sales in this weak economy. Menards also stocks its stores with an odd mix of merchandise, including cereals, stuffed animals, artwork and tampons.

The eclectic merchandise "makes Menards more of a destination stop," said Joe Petrich, assistant general manager of the Eden Prairie store.

The converted 200,000-square-foot-plus stores allow Menards to add even more products and services to its already bulging portfolio, including garden centers, lumber yards, and large, attractive furniture displays.

"People have to look, touch and see things," Petrich said. "We get them with the wow factor."

The company drives a lot of repeat business through its rebate program, Delaney, the retail consultant, said. Instead of offering cash, Menards provides customers with in-store credit, guaranteeing return visits and additional spending, she said.

Menards pays close attention to its finances. The company is known as a shrewd operator, able to extract efficiencies and savings at every level of business.

For instance, it is especially tough on its suppliers, insisting that they hold down prices, Delaney said.

Passion for race cars

John Menard's only real indulgence, observers say, is his passion for race car driving. Menards Racing sponsors three drivers, including Paul Menard, John's son, who competes in NASCAR's top Sprint Cup series and the second-tier Nationwide Series.

"The Menard family has held strong roots in racing for many, many years," spokesman Abbott wrote. "There are millions of race fans throughout the Midwest who are very connected to the sport of racing. Racing gives us another marketing avenue to connect with our guests and helps build our brand throughout all of our markets."

Despite Menards' success, it's not clear whether the company will do as well outside the Midwest as it creeps farther away from its home territory with stores planned for Kentucky and Virginia later this year.

Still, the highly fragmented home improvement market is up for grabs, said Robin Diedrich, a retail analyst with Edward Jones Investments outside of St. Louis.

"I hear a lot of good things about [Menards] stores," Diedrich said. "As they continue to grow, they could be more of a serious threat" to Lowe's and Home Depot.

Thomas Lee • 612-673-4113

  • related content

  • At the Menards in Eden Prairie, Janet Frahm looked around the grocery...

  • MENARD INC.

    Founded: 1958 Headquarters: Eau Claire, Wis. President: John Menard Jr. Total stores: 262 Minnesota stores: 37
  • get related content delivered to your inbox

  • manage my email subscriptions

ADVERTISEMENT

Connect with twitterConnect with facebookConnect with Google+Connect with PinterestConnect with PinterestConnect with RssfeedConnect with email newsletters

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

 
Close