(Editor's note: This story is drawn from a Nov. 16 BUSINESS JOURNAL conference

that focused on how Friedman's Home Improvement positioned itself to successfully

compete with national retailers. The conference included Friedman's President

Bill Friedman; Friedman's CFO David Proctor; Jim Andersen, Friedman's board

member and partner at Andersen & Co. CPAs; Richard Abbey of the law firm

of Abbey, Weitzenberg, Warren & Emery; and Barrie Graham, chief executive

officer of Exchange Bank, all Santa Rosa companies.)

NORTH BAY ? If you've lived in the North Bay long, you probably still call

it Friedman Bros. Hardware. But the independent, family-owned Friedman's

Home Improvement, as it has been renamed, has survived increasing competition

from big box hardware stores by refusing to live in the past.

Instead, the company, poised to make its fourth generational transfer when

son Barry Friedman someday takes over from current President Bill Friedman,

has transformed from the inside out, adopting proven business practices of

larger corporations while maintaining the heart of the Friedman family's

first hardware store back in 1946.

Bill Friedman's father and uncle Benny and the late Joe Friedman opened the

first Friedman Bros. in Petaluma in 1946 and were "committed to hard work,

always treating the customer with respect and doing business ethically,"

values their successors have long sought to maintain.

The original Santa Rosa store opened in 1970 and grew to become the largest

single hardware store in the country when it was expanded to 100,000 square

feet in the days before Home Depot and Lowe's reached national dominance.

Friedman Bros. was passed onto now president and CEO Bill Friedman and his

uncle Harry Friedman in the 1980s. Bill bought out Harry's shares in the

company in 1999 ? transfer number three ? after opening the second and third

Friedman Bros. stores in Sonoma and Ukiah.

When Bill Friedman took over as sole owner, it became apparent that Friedman's

had outgrown its existing business practices ? there was inconsistency among

the three stores, employees weren't clear on procedures and some management

changes needed to be made.

But Bill Friedman felt there was one thing missing that was most important.

"It became apparent to me that we needed to rebuild the company from the

inside out, but first we needed to put heart back in the company," Mr. Friedman

said. "Without heart, our company would not survive."

Competition

For the last seven years, Friedman's has embarked on a broad overhaul that

has led to a new brand identity, store renovations, focused employee training,

management changes, new comprehensive operating procedures and a host of

other improvements.

The company believes the changes will allow it to continue to compete with

the larger chains surrounding the homegrown store, even though another independently

owned hardware store sold to a national chain this year.

Home Depot purchased Yardbirds, the Petaluma-born hardware store with 10

locations, last year after 30 years of independent ownership. Home Depot

already has locations less than two miles south of Friedman's Santa Rosa

location and 10 miles north in Windsor.

With Yardbirds' purchase, the nation's largest retailer could have four more

stores potentially surrounding Friedman's. The nation's second-largest hardware

retailer, Lowe's Home Improvement, has a location 3.5 miles to the south

of Friedman's in Cotati and has proposed another store a couple miles north.

Friedman's said competition is inevitable, and what it has to do is use its

small size to its advantage.

"We wanted to be a smaller PT boat among larger aircraft carriers," Bill

Friedman said. "We wanted to make smart, quick moves around our competition."

The jumping off point

In 1999, Bill Friedman assembled the executive team that would bring the

company to its next level.

Included were Vice President of Merchandising and Marketing Tony Corsburg,

who has 30 years with the company; Vice President of Contractor Sales Bobby

Senften, a 37-year Friedman's veteran; and Vice President and Chief Financial

Officer David Proctor, who has directed accounting for the past 21 years.

As a jumping off point, Friedman's solicited market research in 2000 that

helped it define its customer, improve product selection and discover its

customers' values.

"We received that information which not only told us how the market viewed

us, but how they viewed us measured against our national competition," Mr.

Proctor said.

With the market research results, the company was able to define its core

values, including respecting the customer, the employees and the vendors.

Friedman's knew it had to compete on price with the larger big box retailers