Two Hardware Stores Battle Over Linden Hills

Two Hardware Stores Battle Over Linden Hills

Bayers Do It Best Hardware and Settergrens Ace Hardware compete in Linden Hills—a one-hardware-store kind of neighborhood.

Bob Bayers followed his dad Max into the hardware business and worked with him for 30 years before Max passed away in 2007. He keeps a picture of him next to the cash register at the front of Bayers Do it Best Hardware in the Linden Hills neighborhood of southwest Minneapolis.

Great-Uncle Cecil Clark bought the business back in 1923 with his brother-in-law Emil Garbrecht. The structure was built in 1912 to house a neighborhood silent-movie house. There’s a reproduction of one of the movie advertisements from back then framed behind the counter. Toward the back of the store one can still see the proscenium arch.

“My great-uncle Emil was there to show me the ropes. He was doing a lot of the back-room work—fixing windows, that kind of thing,” says Bayers, who has worked at the store since the mid-1960s. (His dad began working there in the 1930s.)

In the years since, Bayers has lived and worked in Linden Hills, serving on the board of the local business association and the neighborhood council. In 2002 he organized the first 9/11 tribute concert at the nearby Lake Harriet Bandshell.

 

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Mark Settergren inside his spacious (for Linden Hills) new hardware store on 43rd Street.

In 2011, Bayers thought he had a deal worked out, a plan for retirement that would keep him living and working comfortably in the neighborhood. Jerry’s Do it Best Hardware in Edina would buy the newly vacant Linden Hills Co-op building just around the corner and hire Bayers to manage it. Bayers would sell his stock to Jerry’s and sell the tiny old hardware store. He could stay in hardware and work until he retired. For a moment things looked so good.

 

But his plans dissolved a year ago as Mark Settergren, owner of two nearby Ace hardware stores, swooped in, bought the co-op building and opened a new hardware store, more than twice as big as Bayers’. Now Settergren’s Ace Hardware sits just 30 feet away from Bob Bayers’ back door; they’re practically touching.

In an era where consultants advise competitors to collaborate and find areas of common interest, the Linden Hills hardware war is an old-fashioned cautionary tale. “Eat or be eaten” and “move forward or fall backward” may be business clichés, but as the Linden Hills story makes manifest, they contain essential kernels of truth about how quickly external factors can destabilize a seemingly secure business.

On a recent weekday morning at Bayers Hardware, customers find their goods and queue up at the cash register. “We’re still taking registrations to win a $1,000 shopping spree in the store,” Bayers tells a woman who came in to make copies. “And if you fill out two, you have a chance to win a Weber barbecue. And we now have the Pantry,” a tiny section that Bayer recently carved out featuring convenience-store grocery items. “You can get milk or something in an emergency.”

Asked about recent events, Bayers is exasperated. “Shock! Never in a million years would I have thought they would have done what they did.

“It was heartbreaking for me because one year ago it looked like my future was set: I could retire here. I just turned 60 in December; I didn’t need this.”

The tale of two hardware stores is a reminder that the world of small business, even in a neighborhood as idyllic as Linden Hills, can be a dog-eat-dog endeavor, a risky business in which service and convenience are king, and history is repaid in pennies on the dollar, if at all.

 

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A Vital Village

Wedged between Lake Harriet and Edina, Linden Hills’ bustling commercial district on West 43rd Street and Upton Avenue South is lined with thriving shops: Great Harvest Bread, the Bibelot Shop, Sebastian Joe’s Ice Cream, Clancey’s Meats and Fish, Creative Kidstuff, Dunn Bros coffee, Heart of Tibet, and Tilia restaurant. This heart of the neighborhood is almost like a small town within the city. “People often refer to it as ‘the village,’ ” says Betsy Hodges, who represents southwest Minneapolis on the City Council. “I live in the neighborhood, and off and on I say, ‘I’m going to go into town.’ ”

As small towns go, it’s richer than most. The median household earns more than $80,000 a year. There are two homeowners to every renter. Nearly 90 percent of residents are white, and most have college degrees. You get the idea—prosperous, civic-minded.

It is a population with a possessive sense of the place they live. Hodges laughs. “People are very passionate about their neighborhood in Linden Hills.”

Case in point: Mark Dwyer, a former president of the Linden Hills Business Association, proposed a five-story mixed-use building—offices, commercial space, and condos—on “Linden Corner” in the center of the commercial district, two stories higher than code allows.

Linden Hills lit up. “I got over 2,000 emails,” says Hodges. “It was more of a stir than anything has created in my six years in office, certainly than any local project. I got more emails about that than I did about the [Vikings] stadium.”

Surprisingly, she says, supporters were nearly as numerous and just as vocal as opponents. Where opponents, including Hodges, saw a development too massive to fit the neighborhood aesthetic, proponents saw an opportunity to add vitality to the business district. And neither side was shy about voicing its opinion. Says Hodges: “Welcome to Linden Hills.”

A new hardware store edging into the business district didn’t cause as much commotion, Hodges says. For one thing, it was a commercial use in a commercial district. Second, what really worried people was not competition, but the prospect of a major building in “town” sitting vacant. “Every time I would go to the co-op in its new location, every time I would walk into Clancey’s Meats, or every time I would walk into Wild Rumpus [bookstore], the question from neighbors as well as business owners was always, ‘What’s going in at the co-op?’ ”

But Mark Settergren’s new hardware store did confuse loyalties. Bob Bayers has been a part of the community for decades. Even a year later, says Hodges, “I alternate between them. That has been my solution.”

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Bob Bayers, holding a photo of his father Max, deep in the recesses of Bayers’ Do it Best Hardware on Upton Avenue South in Linden Hills.

 

The Bidding War That Wasn't

The story began in September 2010, when the Linden Hills Co-op vacated the building on West 43rd it had rented from David Luger for bigger digs at 3815 Sunnyside Avenue, closer to France Avenue and Edina.

That left Luger with an empty supermarket-style building in the heart of a pedestrian village. He offered it for rent. He considered splitting it into multiple units. Soon it became apparent selling was the best option. He fielded 13 inquiries, including three from hardware stores, which led to two offers.

First was Frattallone’s Ace Hardware, which owns 18 stores in the Twin Cities. As he talked to them, Luger realized what works in the neighborhood hardware business these days: a combination of Home Depot variety with neighborhood service. “I think that’s why we’re seeing success with these larger hardware stores in the neighborhoods,” says Luger. “It appears that that sweet spot for a hardware store in today’s market is around 10,000 to 14,000 square feet, ideally.”

Bayers’ store is less than 4,000 square feet. “That [size] hardware store can’t serve the public anymore,” says Luger. “In fact, Settergren’s had a huge customer base in Linden Hills [with its store at Penn Avenue and West 54th Street] because they have a larger hardware store about 10 blocks from Bob. Bob was just too small.”

Another suitor, Jerry’s Do it Best Hardware in Edina, had worked out the deal with Bayers to manage a new store. But the offer was fraught with what Luger calls “inconsistencies.” Come back with a cleaner proposal, he told them. But he didn’t hear a word for two weeks.

0812-CapTools_pic3.jpgIn the meantime, Mark Settergren came in with a “very straightforward” offer. “They were serious about it,” says Luger. Settergren paid Luger $1.5 million and closed on the building June 22, 2011.

Bayers says he had been approached by Frattalone’s, who asked if he would be interested in a buyout and working for them. But Bayers decided to try to strike a deal with Jerry’s Do it Best instead. “It would have been a natural fit,” says Bayers. “That’s the main reason it was looking so good a year ago for me.” It’s a decision he would regret, because Jerry’s balked at Luger’s asking price. Meanwhile, Settergren swooped in and bought the building.

“It’s clearly a good fit,” says Luger. “I have to say that I hear 100 percent positive support for it. We all feel kind of bad [about Bayers]. But you know, life goes on. I felt bad that the co-op went. A lot of people did. Life changes. You don’t always know how it’s going to change. You either grow with it and go with it, or you stagnate and die, I guess.”

At least one local businessperson seems to agree. “This is a capitalist society, so we use our dollars to vote and we go to the place that we feel benefits ourselves,” says Becky Hanson, president of the Linden Hills Business Association. “But as far as two businesses going side by side that are competitors, I don’t think that is unusual in this marketplace. I assume that Mark was doing for his business what he felt was necessary for his business. Otherwise, why would he pay that much money for a building?”

Besides, Settergren’s arrival allayed fears of a gaping commercial hole in the area. “We had the loss of a flagship business,” she says. “The building remained vacant for about a year. That definitely had an effect on everybody. And then once the space got filled, we got a couple of destination restaurants, like Tilia and Naviya’s [Thai Brasserie] and the new Harriet [Brasserie]. I would assume 2012 compared with 2011 will be trending up. I feel good about it. I think it’s been long enough that the tension isn’t there anymore.”

She acknowledges that Bayers might still feel tense, however. “I would think so. He was obviously hurt by it,” she says. “That’s the way it goes in business. Bookstores right now have to compete with the Kindle—you know what I mean? You have to reinvent what you do or you’re not going to have a place in the marketplace. That’s the way it is.”

Everything’s Sunny In Linden Hills

Settergren had heard about the empty co-op building for sale when one of his customers told him two other hardware stores had bids on the building. “We have a whole bunch of people who are living in Linden Hills that shop our store on Penn and have been after us for 15 years to come down here and open up a Settergren Hardware,” Mark Settergren says. The big thing, too, is that we did not want to lose [those customers] to another store because Frattallone or somebody else would have moved in here with a great big hardware store, giving these people what they’ve been looking for.”

After gutting the old co-op, installing new flooring, shelving, and lighting, Settergren opened his Linden Hills location in October. It’s his third Ace hardware in south Minneapolis, each barely more than a mile apart. “I’m the fourth generation,” he says. “My father is still working. My kids are working.” Settergren gives the impression of a man with a plan. “Every morning’s busy!” he says.

On a sunny summer morning, the rakes, wheelbarrows, and inflatable swimming pools are on display outside the store. An Hourcar Prius is parked in the lot next to the store, recharging and available to rent. People pass by, and Settergren calls to many by name.

“I can say right now that our business is awesome. We’ve had so many people thanking us that we’re here,” Settergren says. “Our business here is above what we thought it was going to be,” though he declines to offer any figures. According to Ace, its average store is 9,300 square feet—about the size of Settergren’s in Linden Hills—and averages about $2 million in annual revenue.

He wants to re-create the atmosphere that’s worked so well for him. When he ran Settergren Hardware and Variety with his father at the other locations, they sold toys, toiletries, sewing supplies, even greeting cards. “I love having the whole family and the kids come in. I have something for the kids, the mom, and the dad. Live bait—that’s been awesome. It’s just some of that fun stuff that we’ve been able to do that makes it that small-town hardware feel.”

Settergren erected a book-exchange box by his parking lot. On Fridays and Saturdays, a mini-doughnut stand appears. On Sunday, Settergren and Tilia down the street sponsor a neighborhood farmers’ market. “It’s going to be great for the community,” says Settergren.

Was it an obstacle that Bayers Hardware store already operated on the adjacent block?

“We tried to make that right,” Settergren says. “We offered a buyout. Didn’t go too well; he wanted us to hire him, and we just didn’t have a spot for him. We offered to buy out merchandise, pay his rent for two months, hire his two employees, let him clean it out, and try to do something else with the building. That’s what our goal was. Morally we feel comfortable with our decision. We were family friends for years.”

The Garden Gloves Come Off

It’s not clear whether that friendship has survived. “When the building became available, I thought, I’m turning 60 and I don’t have a million and a half dollars to invest,” says Bayers. When he sat down with Settergren to discuss some kind of buyout, “I was insulted. They wanted to give me a pittance from what little they would buy from me.”

Bayers’ take on Settergren’s arrival is blunt and unambiguous. “They are taking from me. They are trying to put me out of business. And I’ve had to go back and make arrangements, finance-wise, to keep this boat floating. You know, my family said it would not be right for me to roll over at this point. My dad didn’t raise me that way.” Bayers leads a tour of his hardware store, a warren of rooms large and small, with a dark basement excavated long ago beneath the existing building.

“We decided we had to have something to attract new customers, or to continue to keep our customers. We opened this former storage area and converted it into sales.” He outfitted the space with used fixtures and shelves. He speaks with pride, but to an outside observer, the expansions look like small pockets of subterranean space with a bit of merchandise.

He opened the Pantry a month after Settergren’s moved in, hoping to attract customers who missed the convenience of a neighborhood grocery. He polled his Linden Hills customers and found they wanted not only eggs, but cage-free eggs, so he stocks those as well. And “the best cheese curds in town.” Perhaps the biggest hit has been Real Soda, 60 flavors in glass bottles that Bayers sells in four-packs for the price of three.

“We’re having a great time of it,” he says. “That’s been a great boost to business.” But in Bayers’ view, the success of the Pantry doesn’t solve the basic dilemma. “Unfortunately, right now we’re taking business from each other. He says his business this year is down from previous years, due to a combination of competition from Settergren’s and the after-effects of a disastrous winter (for lawn and garden stores) in which no snow fell. “I don’t think in the long run there’s enough business to support two hardware stores, going forward, for the next decade.”

What’s the future if there’s not enough business to sustain two stores?

“I guess the future is what the neighborhood, the people that we support perceive as where they want to shop—whether they want to shop with the guy who has been there, serving the community, served on the business association, served on the neighborhood council.”

Then a customer clutching a few items steps to the cash register. Bayers rings up her purchase and bags the goods.

“Do you need help carrying that to your car?” he asks. “By the way, we’re still taking registrations for a $1,000 shopping giveaway. It’s a well-known fact that if you don’t register, you can’t win.”

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