Jensen Distribution Services, the big Spokane-based hardware distributor, suffered a huge blow about eight years ago when Ernst Home Center Inc., a Seattle-based retail chain with more than 50 stores, ceased operating. Ernst had accounted for more than 40 percent of Jensens revenues.


Ernsts liquidation left Mike Jensen, Jensens CEO, with the tough decision of whether to reduce the size of the Spokane operation sharply or to continue to spend aggressively with the hope of attracting enough new customers to replace the lost cash flow.


He chose the latter path, and Doug Miller, now the companys president and chief operating officer, says, It was the right decision because it worked.


Since 1997, Jensen Distributions sales have been growing at an average annual rate of almost 10 percent, which Miller says is about double the industry average.


Well be over $100 million this year, he says, adding that he expects 2005 to be the largest year weve had in the history of the company.


Jensen Distribution currently employs slightly over 200 people, which is down a bit from the days before Ernsts collapse, due partly to improved operational efficiencies, but Miller says he expects that number to grow as the companys order volume rises. The company currently serves about 2,000 hardware dealersup about 500 from the mid-1990sin 10 states.


Our customer base is more diversified now than before. We kind of like having our sales base spread out more equally than it used to be, Miller says.


Jensen Distribution also has expanded its geographical reach, focusing particularly on California, where the company believes there is strong potential for additional sales growth, Miller says.


It stopped operating its own delivery truck fleet in 1998, turning that task over to contract haulers, he says, adding that the change has been terrific. Its one of the smartest things we ever did.


Spokane is a good back-haul area, meaning there are more trucks bringing goods than taking them out, Miller says. That makes rates for shipping from here economical because trucking companies are eager to fill up trailers for return trips after emptying them here, he says.


Jensen Distributions main offices are located in two older buildings at 314-324 W. Riverside in downtown Spokane. However, the company shuttles most of its goods through a giant, 420,000-square-foot warehouse located southeast of the Interstate 90-Medical Lake interchange on the West Plains.


It added about 135,000 square feet of space to the warehouse in a $4 million project completed about a year ago, but Miller says, We wish we would have made it bigger. Its probably going to last us only a couple of more years at our current growth rate.


The warehouse is located on a 50-acre site and is designed to allow for further expansion, he says.


Jensen Distribution stocks more than 50,000 items there, including housewares; hand and power tools; lawn and garden products; sporting goods; paint and painting sundries; and plumbing, electrical, automotive, building, and farm supplies. That item count is up about 7,000 from eight or nine years ago.


As our sales grow, our item count grows, Miller says. We consider ourself a distributor of almost anything our customer wants to buy from us, even now including cosmetics, he says, adding, Its not just hammers and nails anymore.


Jensen Distribution serves two main customer groups. One consists of independent hardware stores, lumber yards, and home centers. The other includes regional and national chains, such as Fred Meyer Stores Inc., Bartel Drugs, Orchard Supply Hardware, and City Mill in Hawaii. Our smallest account has two stores; our largest has 85, Miller says.


The latter group accounts for about 60 percent of Jensen Distributions business, and the former group about 40 percent, he says. Both segments are growing at a nice, low double-digit rate, he says.


In addition to supplying its customers with goods to sell, Jensen Distribution assists them in areas such as advertising and promotion, data processing, store planning, and market research.


They buy from us because were flexible, providing the custom mix of products they want rather than trying to foist particular products on them, Miller says. Also, Jensen Distribution offers an order-turnaround time of as little as five days, a good on-time delivery record, and a very low error rate, he asserts.


Still, our No. 1 goal is to help our customers to compete, such as by helping them establish the best retail pricing and product assortments to compete effectively with big-box stores in their particular markets, he says.


Long history


The company was founded in Sprague, Wash., in 1883 by O.C. Jensen and a partner, Henry Brooks, under the name of Jensen Brooks & Co., and operated initially as a small retailer. Brooks later sold his interest to a man named Charles King, and the company operated under the name of Jensen King & Co. through 1895.


In 1896, after a fire destroyed most of the town of Sprague, the company moved to Spokane and merged with Wolverton-Byrd Co., becoming Jensen-King-Byrd Co. J. Scott Jensen and Alvin Jensen, sons of the founder, bought out King in 1925, and the business was renamed Jensen-Byrd Co. By the mid-1930s, the Jensen family also had bought out most of the Byrd familys interest in the company.


The company began moving into wholesaling after World War I. In 1958, it bought the Spokane branch of Marshall Wells Co., a wholesale distributor, and got out of retailing entirely.


The companys most noteworthy expansion over the last couple of decades came in 1981, when it bought Seattle-based Pacific Marine Schwabacher Co., which added six states to its service area.


The company became Jensen Distribution Services in 1995 to reflect its current ownership and operations.


Were still a family-owned company. Thats one of the most important things, Miller says.


Mike Jensen, great-great grandson of co-founder O.C. Jensen, now is chairman and CEO of the company, he says. Jensens son, Christopher, is business-development manager for the company in California, and Dave Morse, a cousin of Mikes, heads the companys purchasing department.


Miller, who was named president of Jensen Distribution in 2000, has been with the company for 37 years, having started in the warehouse at age 19.


Miller says his involvement in the industry dates back to age 8, when he helped out at Peters Hardware Co. in the Spokane Valley, sacking one- and five-pound bags of nails and plaster of Paris and fixing broken windows and screens for 25 cents. Peters Hardware today is one of Jensen Distributions customers.


Miller says his father worked for Peters Hardware owner Wilbur Peters at the Valley store, and bought the Peters Hardware store in Lincoln Heights on Spokanes South Hill in about 1975, renaming it Millers Hardware. He says that store, still located at 2908 E. 29th, now is owned by his uncle and aunt, Bob and Clara Miller.


Over the next five years, overall hardware industry revenues are expected to grow at a rate of slightly over 5 percent a year, and Miller says, Our goal here is to at least double that. That means we need to pick up new customers, which we are doing.


While acknowledging that economic factors could alter those growth projections, he says, Our business is probably not as affected by the economy and interest rates as other businesses would be. Nobody is recession-proof, but the hardware business is pretty stable.


Probably the biggest obstacle Jensen Distribution faces is becoming a more familiar name to prospective customers outside the Northwest, and it is stepping up its marketing efforts to achieve that level of familiarity, he says.


Such challenges aside, Miller says the outlook for the company is bright.


Were very optimistic, he says.