Tuesday, April 28, 2009

Chain of building supply stores set to add two area locations

Chain of building supply stores set to add two area locations
Fastenal plans to open 15 stores this year in northern California, Nevada
Sacramento Business Journal - by Kelly Johnson Staff writer

Dennis McCoy | Sacramento Business Journal
Fastenal district manager Jon Schultz, oversees nine stores in the region, as well as locations in Lodi and at Beale Air Force Base. He’s pictured at the store on Florin Perkins Road in Sacramento with general manager Jason Igarta, left, and Adam Brescia, who handles outside sales.

A national chain that sells construction and industrial supplies is continuing to add stores in the region at its pre-recession pace — growing market share while the competition holds relatively steady.

Fastenal Co., which has more than 2,300 stores companywide, is opening two stores in the region during the next two months. The company (Nasdaq: FAST) is set to begin operating May 1 in Elk Grove at 9849 Bendel Place, and June 1 in El Dorado Hills at 4669 Golden Foothills Parkway.

This year, Fastenal wants to add 15 stores between the California-Oregon border and Bakersfield and over to northern Nevada, said Jon Schultz, district manager. Schultz oversees nine stores in the four-county area plus one store apiece in Lodi and at Beale Air Force Base.

Fastenal, which sells mostly to business customers, set up shop in Dixon earlier this month and will open in Williams, an hour north on Interstate 5, on May 1.

Fastenal normally adds two stores per year in the four-county Sacramento area, and this year is no different, Schultz said. The stores each will employ about four people. His per-store sales averaged $73,000 last month. Opening a new store requires about $200,000 worth of inventory.

Stores in his territory aren’t growing revenue as fast as they used to — sales grew by 20 percent last year — but his area was still up 5 percent last month compared to a year ago. As of March, he had 923 active customers, 14 percent more than in January 2008. Schultz’s customer base has grown even though some clients have gone out of business or merged.

“The economy’s opening doors for us that have been previously shut,” Schultz said.

He’s picking up new customers that are attracted to Fastenal for the cost savings that a big chain can provide, he said. Some customers like the convenience of Fastenal’s multiple locations, while others appreciate Fastenal staff coming out and maintaining inventory levels for them.

Fastenal also has started pitching a new vending machine program. Tools and safety equipment are dispensed from a machine at customers’ locations. Instead of some coins for a soda or candy bar, users plug in a payroll code or scan a badge to pull out a tool or safety device. With such a system, employers can better track their equipment, Schultz said.

Ninety-seven percent of Fastenal’s business comes from companies, and weekend warriors who need specialty supplies make up the rest, he said. About half of the company’s business is sales of nuts, bolts, screws and the like. It also sells everything from cordless drills and spray paint to welding wire and janitorial supplies.

Fastenal believes in continuing to grow its locations despite the recession. The company is “just sticking to that model — getting closer to our customers so we can take care of them,” Schultz said.

That’s why he’s considering expanding to Grass Valley next year and midtown Sacramento in 2011, Shultz said. Fastenal also can open and manage on-site stores for customers, like it did when Cache Creek Casino Resort was being constructed.

A competitor, Lord & Sons Inc., a San Jose-based supplier of fasteners and construction products, has one location in Sacramento.

“We’re holding our own in Sacramento right now,” said Robert Bullock, chief executive officer of Lord & Sons.

Lord & Sons and a sister company, Landmann Wire Rope Products Inc., both are looking at expanding by entering new territories and through acquisition, but not in Sacramento, he said. He wasn’t surprised that Fastenal is making a move to pick up market share during the recession.

Things are slower than normal at Rainbow Fasteners in Sacramento, said Kathy Rivers, one of the owners. The company hasn’t replaced a couple people who have retired, and now employs 10.

Of Fastenal, she said, “I would have expected them to slow it down a little.” But then again, it is that company’s model to add locations, she said.

Meanwhile, ORCO Construction Supply, another player in the crowded market, has shrunk. The Livermore-based company announced in February that it would consolidate seven branches into other nearby locations, including one in Sacramento.

Fastenal Co.
Business: Sells industrial and construction supplies
Ticker: Nasdaq: FAST
Headquarters: Winona, Minn.
Founded: 1967
Stores: 2,337
Typical store size in California: 3,500 to 5,000 square feet
Sales per store per month: $70,200
Distribution centers: 14, including one in Modesto
Web: fastenal.com

kjohnson@bizjournals.com | 916-558-7860