Hardware

SIC 5072

Companies in this industry

Industry report:

This industry comprises establishments primarily engaged in the wholesale distribution of general hardware items and cutlery. Products include bolts, nuts, washers, rivets, screws, brads, locks (and related materials), and hand tools (including power hand tools). Establishments primarily engaged in the wholesale distribution of nails, non-insulated wire, and screening are included in SIC 5051: Metals Service Centers and Offices.

As part of the larger hardware, plumbing, and heating equipment and supplies market, wholesalers' annual sales increased to $96 billion in 2010, up from $81.5 billion in 2007 and $77.5 billion in 2004. A decrease, however, occurred in the larger sector's employment figures, dropping from 234,000 in 2004 to 219,380 in 2010. The U.S. Bureau of Labor projected an additional 4.5 percent drop in employment from 2008 to 2018. An estimated 6,575 establishments were engaged in the wholesale distribution of hardware in 2009, according to the U.S. Census Bureau. Together these firms employed 81,548 people earning a total payroll of almost $4 billion. A majority of the establishments were small, with about 63 percent employing fewer than 20 workers.

During the 1990s, the hardware industry began to change. The combined effects of consolidation and the growth of the "do-it-yourself" (DIY) industry squashed the small, independent hardware stores, the industry's traditional customers, and simultaneously expanded the dominance of the large, warehouse-style retailers, such as The Home Depot, which made purchases directly from manufacturers. By 2011 Atlanta, Georgia-based Home Depot had a chain of 2,250 stores in operation generating annual sales of $67.9 billion and offering more than 40,000 products. Meanwhile, Lowe's, of Mooresville, North Carolina, followed the lead of Home Depot and, after it acquired Eagle Hardware's 36-store chain in 1999, the company rapidly expanded from its base of 484 stores to approximately 1,700 stores in 2011 with annual sales of $48.8 billion and more than 40,000 products.

Although the industry suffered from the economic recession at the end of the first decade of the 2000s and resulting decrease in construction, by the early 2010s it was starting to recover. Nevertheless, the number of hardware wholesalers continued to dwindle. According to a 2011 IBISWorld report, "Under such depressed demand from construction, coupled with growing levels of wholesale bypass, revenue has declined at such a rate that wholesalers and their establishments are closing." However, according to the report, "Industry performance should improve in the coming years as downstream industries, such as the housing market and aircraft builders, recover."

Leading the industry of full-line hardware distributors in the early 2010s was Ace Hardware Corp., based in Oak Brook, Illinois, with $3.5 billion in 2011 sales and about 4,500 employees. As a dealer-owned cooperative, Ace supplied products to more than 4,440 stores through its 15 distribution centers. Another leader was Do It Best Corporation of Fort Wayne, Indiana. Do It Best was founded in 1945 as Hardware Wholesalers Inc. but changed its name after the acquisition of Our Own Hardware in 1998. In 1999 Do It Best Corp. beat both Home Depot and Lowe's to Internet prominence and became the largest hardware store on the Internet. By 2011 the firm had 4,000 member-owned stores in 50 countries, most of which were in the United States. Annual sales in 2011 exceeded $2.3 billion. Chicago-based True Value Co. of Chicago had 2011 sales of $1.8 billion and served some 5,000 retail stores. Formerly known as TruServ Corporation, True Value was the result of a 1997 merger between two successful companies: Cotter & Company and ServiStar Coast to Coast.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

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