Pro-grade tools give local dealers an edge

Southern California independents are finding success selling top of the line merchandise

Tool Depot is tucked away on a back street in San Diego, its outside is painted an ugly yellow, and the inside looks like a big garage. But the specialty retailer's customers don't care much about decor: they come here to find top-of-the-line tool storage boxes, drum sanders and adjustable wrenches the size of a man s leg.

Although it's not a huge market, pro-oriented tools has enough room for independent retailers like Tool Depot. In business since 1983, the two-store operation sold $3.5 million of tools and accessories last year and should break the $4 million mark in 2000. Next month, Tool Depot will open a third location near the Mexican border to better serve residents of Tijuana.

San Diego also supports the southernmost location of Junior's Tools, a retailer of pro tools with 12 units in Southern California, Arizona and Nevada. Junior's Tools was purchased last January by Orco Construction Supply, a privately held Western distributor with 22 branches of its own.

Tool Depot, the smaller of the two specialty retailers, was founded by an airline pilot and sold in 1997 to John Christianson, a retired economics professor. Christianson oversees the back office while his general manager, Bob Welte, runs the 10,000-square-foot retail space. Interviewed at their San Diego store, the two men talked about the advantages of serving a small but clearly defined market.

"We know 80 percent of the people who come in here," declared Welte. Most are light-to-medium contractors, maintenance staff, wood-workers and boat owners from a nearby marina. Customers are willing to drive a few extra miles to get a special tool or accessory that's unavailable at the local big box or lumberyard. Although Tool Depot carries many of the same lines as the warehouse retailers, their breadth of inventory sets them apart. As a rule, they carry the top tier of price points.

Welte pointed to a $200 Occidental leather tool bag as an example. "We could carry less expensive stuff," he said. "But then customers bring it back when problems develop. They expect higher quality from us."

Catering to familiar customers also allows Welte a certain autonomy in its loss-prevention tactics. Cameras and sales clerks keep an eye on the merchandise, but when shoppers act suspicious, he feels no qualms about showing them the door. "Yesterday I had to ask a couple to leave," he recounted. "I told them I didn't have time to watch them."

Tool Depot has a full-time employee who does tool repair, which draws a number of customers -- and produces sales. "When they come in to drop off the [broken] tool; lots of times they'll buy something else," said Christianson. "Then, when they come back to pick it up, they buy another thing."

Tool Depot will fix most manufacturers' tools, except for those made by Hilti and Craftsman. "The parts are too hard to get," Welte explained. "But," he added, "we'll 11 do it for our really good customers."

With a background in tool repair himself, Welte can usually figure out the elusive tools that customers come in and describe. If the store doesn't already have it, a special order generally takes two days. "We don't have to go through 10 people and a purchasing system," Welte said.

Tool Depot processes 15 to 30 requests a day, selling $40,000 to $50,000 a month in special orders alone.

Tool Depot's second location, in the northern coastal town of Encinitas, is a smaller store (2,085 square feet) that just started opening on Sundays from 10 a.m. to 2 p.m. According to Christian son, the expanded hours started when one of his employees needed extra work. "Last Sunday we did $1,200 [in sales]," he said. "Of course, we've had one or two negative Sundays because of returns."

The big experiment for Tool Depot will be the opening of its third store in Chula Vista, a largely Hispanic community of 172,000 people several miles north of the border. Most of the employees in the Chula Vista store will speak Spanish, said Christianson who already sells a good volume of tools to the cabinet, furniture and marble shops in Mexico. Mexico's maquiladoras, foreign-owned factories that produce products for export in the United Sates, also send customers to Tool Depot, and Mexican retailers come in regularly to buy inventory -- in cash -- for their own stores. "They don't have access to the same distribution as we do," Christianson explained, adding, "I give them a swinging deal."

Tool Depot's closest competition is a Home Depot and a Dixieline Lumber, both within a mile of his Sports Arena-area store. But the true rival is Junior's Tools, a 20-minute drive but close in terms of merchandise. Although Junior's sells mostly to construction trades, its customers include woodworkers and serious DIYers.

Most of Junior's units are in Los Angeles and Orange counties, but San Diego has one, and branch manager Steve Harber thinks it's the best-looking store in the chain. The store does have a distinctive interior: high ceilings, natural light, and white walls emblazoned with manufacturers' logos in tall red letters; the overall effect makes the 8,000-square-foot building look three times as big. Power tools hang from pegboards around most of the perimeter, with hand tools and accessories filling the neat center aisles. A tool repair department and service window are located in the back.