Houseware/hardware hybrids find niche in Austin, Texas, Market - Brief Article

Home Channel News, Feb 5, 2001

Two retailers offer everything from fasteners to stemware under one roof

AUSTIN, TEXAS -- Selling expensive housewares, gift items and gourmet food is an attractive notion to many hardware dealers. They like the high margins, female customers and eclat typically associated with these categories. Two Austin-area retailers have incorporated these products into a hybrid format that is neither hardware fish nor housewares fowl, but something in between.

The larger of the two, Breed & Co., offers an extensive selection of crystal stemware, flatware and china that has developed into a substantial bridal registry business. Soaps, lotions, candles and decor items are displayed in open glass cases or on white melamine and beechwood shelves.

The cooking section offers the All-Clad, Chantal, Calphalon and Scanpan lines of pots and pans, along with cookbooks and specialty kitchen gadgets. There's a candy counter, a coffee bar, a tea section and packaged foods that include pomegranate black pepper glaze and champignon mushroom soup fromage. Cooking classes are given at one of the store's two locations.

Breed & Co. started as a hardware business serving the University of Texas campus in downtown Austin. "My dad bought an existing hardware store in 1970, and my mom got involved by buying a little bit of housewares to put in the comer," said Greg Breed, who runs the operation with his brother Jeff. The family added a garden center to the original store and kept expanding as surrounding property became available.

"Our philosophy is to listen to the customers, because they'll tell you where you need to go," Breed said. The bridal registry, which averages 120 couples at any given time, was the result of a customer request. The crystal, linens and place settings naturally followed. But Breed & Co. has maintained a full hardlines assortment, which takes up 60 percent of its 12,000 feet of selling space. The hardware section carries plumbing, electricals, hand and power tools, paint, convenience lumber and a molding assortment. There's even a display of Bosch industrial router bits.

Contractors drop into Breed & Co.'s newest location, on Bee Cave Road in suburban Austin, to pick up hard-to-find fasteners and electrical switches -- a hardware specialty carried by both stores. They walk past the silk flowers, the gourmet gift baskets and several female sales clerks, and they head directly for the back of the store, where the male employees are more typically found. "Our [pro] niche is the fill-in items," Breed said. "Contractors don't want to run across town to Home Depot when they run out of something."

The Bee Cave store, located on Austin's border in the town of Westlake, Texas, opened in August 1995. Many local residents, who include actress Sandra Bullock and Michael Dell of Dell Computers, can afford the $743 robot lawn mower on display next to the cashier; the store has sold three of them. The merchandise mix leans toward home and garden here, with only 4,500 square feet (out of 12,000) devoted to hardware. Together, the company's two retail units are generating $11 million in sales annually. But the Bee Caves location, which sits on an Austin growth corridor, is seeing 15 percent to 20 percent increases every year, according to Breed.

Growing market

Texas' population grew by 3.9 million in the last decade, which led to the state gaining two seats in Congress. Demographers say that urban crowding and high housing costs in many parts of the country have driven Americans into the heart of Texas, where the climate is relatively mild and the cost of living more reasonable. Cultural meccas such as Austin and San Antonio are particularly desirable places to live.

Susan and Richard Santamaria, who had worked in Chicago as an investment counselor and a bond salesman, retired to a town outside of Austin in 1998 and opened a hardware store there. Catering to customers like themselves, they installed a coffee bar and a big housewares and giftware section in the front of their 11,000-square-foot store. Other products include table-top linens, dinnerware, specialty baking mixes, coffee-table books, baby gifts, dolls and toys.

The Santamarias called their store "Ace in the hills," deliberately omitting the word "hardware," according to Richard Santamaria. "People come in to buy a can of spray paint, and they'll say, 'I thought you were a regular Ace hardware store.' Then they go over and spend $100 to $200 on other [non-hardware] things," he said. "We're the best kept secret in Dripping Springs."

Dripping Springs is a 30-minute drive from Austin, close enough for a commute but far enough to offer better schools and cheaper property. "People come here for the country atmosphere," observed Santamaria, whose store stocks animal feed and deer blocks. About 50 percent of its selling space is devoted to hard-lines, and local construction activity brings contractors into his store daily. "Every morning you see the same guys coming in for a bag of cement and a cup of coffee," Santamaria said.