BURNSVILLE, Minn. (AP) There is a particular breed of man who awaits the arrival of the Northern Tool + Equipment catalog the way children anticipate the coming of Santa Claus. The 530-page booklet is a handyman's dream, with enough tractors, saws and power tools to build log homes from scratch and convert pastures to farmland. With a print run of 80 million copies a year, Northern Tool's dozen or so catalogs have a wider readership than most best-selling novels. ("The Da Vinci Code" has 60.5 million copies in print.)
But the legendary catalog is no longer the primary engine driving growth at Northern Tool. This year, for the first time in its 26-year history, sales at Northern Tool's brick-and-mortar stores will equal or outstrip those from its catalogs, as the Burnsville-based company accelerates the pace of store openings.
Northern Tool, long known as a catalog retailer with a spattering of stores in the Upper Midwest and Southeast, this year will expand aggressively in a swath of heartland states, including Illinois, Missouri, Oklahoma and Kansas.
By 2015, the company will have as many as 150 stores nationwide, up from 61 today. The percentage of sales coming from retail stores is likely to rise to 65 percent from 55 percent over the same period.
However, the company's brick-and-mortar push takes it into an already-crowded field at a time when a nationwide housing slump is eating into hardware sales. Its stores, truncated versions of the catalog without all the heavy equipment, are smaller than big-boxers Home Depot and Lowe's and larger than the typical neighborhood hardware store.
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There are other risks. The retail landscape is littered with successful catalog retailers that overextended by opening too many stores too quickly, compromising their brand identity and eating into their profits. J. Crew, J. Jill, Lands' End and Williams-Sonoma are among the prominent catalogers that have performed erratically since embarking on store expansions.
"When (catalog) retailers expand, they usually start with the best of intentions," said Love Goel, chairman and CEO of Growth Ventures, a private equity firm in Minneapolis that is considering an investment in Northern Tool. "But as they get bigger, they get overconfident. They start taking risks with locations. They start growing for the sake of growth, and the lack of discipline comes back to haunt them."
Still, privately held Northern Tool has always been disciplined about its expansion. It funds new stores through cash flow and doesn't have any long-term debt, said founder and CEO Don Kotula. "You want some growth because people like to work for a growing company, but I'm not going to leverage the company to expand."
Northern Tool is counting on retail stores to offset its slowing catalog business. It already blankets rural areas with its catalog. In Montana, for instance, fully one-third of adult men receive the Northern Tool catalog at least once a year. And there are only so many people who will order hydraulic equipment and other heavy-duty tools from a catalog, no matter how attractive they appear on its glossy pages.
About 98 percent of its catalog customers are men, so the company designed its stores according to the old dictum, "Women shop, but men buy." Near the front entrance are wire cages full of basic tools such as hammers, furniture dollies and mover's blankets. The company also organizes all its accessories for heavy equipment within a few feet of the key item. For instance, at the Burnsville store, the pressure washers are right next to replacement nozzles, wands, tips and hoses.
"A woman is willing to shop at least 10 different areas in the same store to find that perfect sweater," said Roger Bunn, vice president of retail. "We're mindful that the typical man comes in our stores knowing exactly what he's after. He won't browse until he satisfies his first needs. ... Our stores are designed to be efficient, so he doesn't have to wander the entire store to find a hammer."
The stores, primarily in suburbs and small towns, are designed to appeal to men's sense of humor. Posters line the store with sayings like, "Dirty fingernails don't make you a man. Missing fingernails, now that makes you a man," or "Elbow grease will never come in a bottle."
Much of Northern Tool's testosterone-driven approach comes directly from founder Kotula, a 61-year-old former tractor salesman for Caterpillar. Kotula is the son of a scrap-yard dealer from Hibbing who got started in 1980 by selling log-splitters and related parts through his garage in Eagan. Kotula advertised the equipment in Popular Mechanics and other men's magazines, and by 1981 he opened his first store in Burnsville. By 1983, he owned a 65,000-square-foot warehouse and was making $40 million to $50 million in annual sales.
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Initially, the company was called Northern Hydraulics. "I liked the name because it sounded tough," Kotula said. "And I put 'Northern' in the name because people used to think that things made from the North are better. I'm not knocking Greece or anything, but what would you think if you saw that something was made in Greece?"
As it opens stores, the company has also launched an aggressive and unorthodox advertising campaign aimed at, of course, men.
In one recent television commercial, a large man is trying to cut a concrete block with a small saw, while wearing a ballerina tutu. His buddies are laughing at him. "Don't want to be laughed at?" the voiceover asks. "Then use the appropriate tool." The man obliterates the concrete block with a massive concrete cutter, and his buddies nod in approval.
Peter Webster, 42, a metalworker for a roofing company, likes the simplicity, and the fact that Northern Tool hasn't catered to women by offering home decor, paint and appliances. The Burnsville resident estimates that he's spent $3,000 to $5,000 on toolboxes alone at Northern Tool stores.
"At Menards or Home Depot, most of the people are with kids, and they keep bumping you with their shopping carts," he said. "Here, I can run in, get a tape measure and get out without any lines or hassle. The store is oriented for the working man."
