Virgin on Business: Selling a Legacy

Will new ownership change McLendon Hardware?
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It wasn’t another episode of “we’re losing all the old stuff that made this place different and special” that prompted public consternation when Renton-based, family-owned retailer McLendon Hardware agreed to be acquired. McLendon Hardware has a 90-year legacy in the region, but it’s also very much a story of the moment. The company survived and grew — to seven stores — while enduring the onslaught of online retailing and incursions of big-box stores, some of which didn’t make it (remember Builder’s Square and HomeBase?).

The McLendon recipe combined huge selection and a level of service and advice that accommodated both experienced do-it-yourselfers and those who barely knew which end of the hammer to hold. The result was a playground for DIYers, a cadre of loyal customers and a local chain that more than held its own against larger national competitors, specifically Lowe’s and Home Depot.

Now the company will be part of Memphis-based Central Network Retail Group (CNRG), owner of 14 regional hardware brands, including Parkrose, which has four locations in the Portland-Vancouver area.

The current generation of McLendons running the company says, “Continued if not aggressive growth is essential. CNRG has the financial strength to sustain and expand our business in the Puget Sound Region and beyond.” McLendon will continue to operate under its own name, with family members and current managers still at the helm and with its retailing culture and philosophy firmly in place.

Reassuring words notwithstanding, loyal customers have some cause for worry, given how difficult it is to preserve a corporate culture, much less its identity, post acquisition.

They have one example just in the local hardware-retailing scene. Eagle Hardware & Garden (founded by a former executive of another regional chain, Pay ’n Pak) built giant stores that lived up to the company’s marketing mantra: “more of everything.” It was acquired and quickly subsumed by Lowe’s in the late 1990s.

Another example of the perils of acquisition and aggressive growth exists in the form of Haggen, the Bellingham-based grocery chain a private-equity firm bought with designs of building a West Coast presence almost overnight by taking over stores divested in the Albertsons-Safeway combination. The deal collapsed messily and quickly, and while Haggen survives as a unit of Albertsons, its name is now a shining example of what not to do.

Mergers and acquisitions are a fact of business life for companies big or small, public or private. Deals get done because the acquirer wants more market share, a new territory, to diversify or to get hands on a promising technology. Sellers sell to cash in on their hard work and investment, or to retire or for estate planning. 

In most cases, the acquisition’s identity or culture don’t last long after the deal. No matter how well run the company being bought, the acquirer wants to put its own stamp on operations (or just carve out enough costs to cover debt expense). No one should get too attached to a bank or an airline, given how frequently brands in those sectors disappear.

But on occasion, an acquirer will at least make a show of preserving what made the company it bought attractive in the first place. Kroger picked up Fred Meyer and its subsidiary QFC in 1998, prompting speculation that the latter would be rebranded. Whether those are the same stores they were pre-deal is a subjective matter, but the names on both remain.

In the case of McLendon, loyal customers will be watching for any sign of slippage from the attributes that made them loyal in the first place — and they likely won’t be shy about reminding the new owners, “Why did you buy it if you weren’t going to keep it the way it was?” 

Monthly columnist BILL VIRGIN is the founder and owner of Northwest Newsletter Group, which publishes Washington Manufacturing Alert and Pacific Northwest Rail News.

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