BURNSVILLE, Minn. -- 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, including one on Miller Trunk Highway in Hermantown, 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 smattering 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.
Privately held Northern Tool always has been disciplined about its expansion. It funds new stores through cash flow and has no 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, 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 next to replacement nozzles, wands, tips and hoses.
The stores 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, Minn. 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.
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?"