Latest / Small Business Success with Fexingo: Local Companies, Main Street Stories, and Community Commerce / How a Local Hardware Store Used Workshops to Beat Home Depot
Transcript
- Lucas: There is a hardware store in southeast Portland called Old Portland Hardware, and it sits about a mile and a half from a Home Depot and less than two miles from a Lowe's. If you were a retail consultant, you'd look at that location and say that store has maybe eighteen months before it's gone. Luna: And yet it's still there. I've actually walked past it — it's got that old-school painted sign, and there's always a little crowd outside on Saturday mornings. Lucas: Exactly. And that Saturday morning crowd is the whole story. The owner, Maria Santos, took over the store from her father about six years ago. She told me that when the big boxes moved in, she knew she couldn't beat them on price or selection. So she stopped trying. Luna: Right, because you're never going to out-Home Depot Home Depot on price. So what did she do instead? Lucas: She started teaching people how to use the stuff she sells. She launched free weekend workshops — basic plumbing repairs, how to patch drywall, how to tile a backsplash. And this is where the numbers get interesting. Luna: And if these kinds of deep dives into local business strategy are valuable to you, I'll just say that listener support is what keeps this show ad-free. If you've gotten anything useful out of these episodes, you can find us at buy me a coffee dot com slash fexingo. No pressure, just appreciate you being here. Lucas: Yeah, absolutely. So back to the numbers: Maria told me that each workshop costs her about $150 to run — materials, a small stipend for the instructor, coffee and donuts. She does one every Saturday, sometimes two. That's roughly $7,800 a year in costs. Luna: And she tracks what happens after the workshop? Lucas: She does. And here's the metric that matters: forty percent of workshop attendees make a purchase at the store within two weeks of attending. The average ticket for those purchases is $47. So let's do the math. If she has twenty people in a workshop — which is typical — eight of them will buy something averaging $47. That's $376 in attributable revenue from that one workshop. Luna: So she's spending $150 to generate $376 in near-term sales. That's a two-and-a-half-times return in two weeks. Lucas: Right. And that's just the immediate return. Maria also said that those repeat buyers end up spending about $320 more over the following year compared to a customer who never attended a workshop. So the lifetime value of a workshop-attending customer is significantly higher. Luna: So the workshop becomes an acquisition channel. And the cost per acquired customer — if we think of the workshop as a marketing expense — is probably under $20, given that some attendees don't buy but others become long-term customers. Lucas: Exactly. Compare that to what a small business pays for a Facebook ad or a Google click to get someone in the door. Those costs have been rising for years. Maria's cost per workshop attendee — just the event cost divided by attendees — is $7.50 per person. Even if only forty percent convert, her cost per acquired customer is under $19. Luna: That's incredibly efficient. But does it scale? I mean, she can only fit so many people in her store. And she's only doing one or two workshops a week. Lucas: That's the right question. Maria told me she's capped at about 25 people per workshop because of floor space and safety. So she's not going to reach thousands of people a month. But she doesn't need to. Her store is small — about 2,000 square feet. She doesn't need the same foot traffic that Home Depot does. She needs the right foot traffic. Luna: People who are actively working on a project and need guidance, not just a price check. Lucas: Exactly. And the workshop does something that a big box can't easily replicate: it builds trust. When you spend two hours with an instructor learning how to fix a leaky faucet, and then you buy a faucet from that store, you feel confident you've got the right part. You've got a relationship. Luna: And that relationship is a moat. Because even if Home Depot has the same faucet for three dollars less, you're going back to the place where you learned to install it. Lucas: Maria actually told me about a customer who came to a plumbing workshop, then bought a $200 faucet from her the next week. She asked him why he didn't just buy it online. He said, 'Because if I mess up the installation, I want to be able to come back and ask you how to fix it.' That's a kind of value that doesn't show up on a price tag. Luna: So the workshop isn't just a marketing event. It's a service that changes the nature of the transaction. You're not just buying a product; you're buying access to expertise. Lucas: And that lets Maria charge a premium. She told me her average margin on items sold to workshop attendees is about 52 percent, compared to 38 percent on the same items sold to walk-in customers. Workshop buyers are less price-sensitive because they perceive higher value. Luna: That's a fourteen-point margin lift. That's huge. Lucas: It is. And it's not just margins. The workshops also reduce returns. Maria said that return rates on items purchased within two weeks of a workshop are about 3 percent, versus 11 percent for the general customer base. People buy the right thing because they learned what to look for. Luna: So lower return costs, higher margins, better customer retention. The workshop is basically a profit center disguised as a free event. Lucas: And it builds community in a way that drives word of mouth. Maria told me that about thirty percent of new workshop attendees come because a friend who attended a previous workshop brought them. That's organic growth powered by genuine enthusiasm. Luna: I want to ask about the instructor. She's paying a stipend — is it an employee, a contractor, a local tradesperson? Lucas: She uses a mix. Some workshops are taught by her most experienced staff, who already know the inventory. Others are taught by retired contractors or hobbyists she met through the store. She pays them a flat $75 per workshop plus a 10 percent discount on anything they buy. And she told me she's never had trouble finding people because the instructors enjoy the teaching and the community aspect. Luna: So it's a low-cost, high-engagement model. But I wonder: could this work in a suburb that doesn't have a walkable Main Street? A lot of small hardware stores are in strip malls or along busy roads. Lucas: Maria thinks the model is actually more important in those settings because you can't rely on walk-in traffic. She told me about a hardware store in a suburb of Columbus, Ohio that heard about her program and adapted it. That store does workshops in a back room that used to be storage. They only fit twelve people, but they've seen a 15 percent revenue increase over six months. Luna: So it's replicable. The key is having a space — even a small one — and a willingness to share knowledge rather than just sell products. Lucas: And that willingness is harder for big boxes to copy. Home Depot does offer workshops, of course — they have the kids' building workshops on Saturdays. But they're generic. They're designed to be safe, simple, and scalable. Maria's workshops are specific and local. She'll do a workshop on how to replace a garbage disposal, and she'll use the exact brands she stocks. That kind of specificity builds authority. Luna: So the competitive advantage isn't the workshop itself — it's the local knowledge and the personal connection. A national chain can't easily replicate that at every store. Lucas: Exactly. And Maria is now thinking about how to layer on top of the workshops. She's considering a paid 'advanced' series — multi-week courses on things like tiling a bathroom or rewiring a room — for people who want to go deeper. She'd charge maybe $100 for a four-session course. Luna: That would turn the expertise into a direct revenue stream, not just a marketing cost. And it would deepen the relationship even further. Lucas: Right. And the beauty is that the free workshops build a pipeline for the paid ones. The people who attend three or four free workshops are exactly the ones who'd sign up for a paid course. She's essentially building a funnel from free to paid education, all while selling hardware. Luna: I love that the business model isn't just about selling more stuff. It's about selling the confidence to use the stuff. That's a much harder thing for a competitor to undercut. Lucas: And it's why Old Portland Hardware is still standing — and growing — while surrounded by big boxes. Maria told me that last year, her revenue was up 22 percent. Nationally, independent hardware stores saw an average decline of about 3 percent in the same period. So she's outperforming the category by a wide margin. Luna: Twenty-two percent growth in a category that's shrinking overall. That's a powerful case study for any small retailer wondering how to compete with scale. Lucas: And the lesson isn't about workshops specifically. It's about finding a dimension where your smallness becomes an asset. For a hardware store, that dimension is teaching. For a bookstore, it might be curation. For a toy store, it might be play events. The principle is the same. Luna: Replace price competition with expertise competition. Lucas: Exactly. And that's a game any local business can play.