IN DEPTH: Pro dealers stay nimble
As the housing downturn continues to rumble across the land, Do it Best has a bird’s eye view of how the building slump has changed the landscape, market by market and member by member.
As the only co-op with a large LBM dealer base, the Fort Wayne, Ind.-based company has also had to adapt to lower sales of lumber and building materials. Dealers are keeping less stock on hand due to costs and decreased demand.
“The inventory has been chewed through pretty well,” observed Quent Ondricek, VP lumber and building materials. “The credit contraction has also slowed things down.” Many home centers have downsized their staff and reduced their operations. “They made the changes they needed to do and the restructuring [necessary> to get ready for the recovery, Ondricek said. “Like one member told me the other day, `We’re in the black, but it isn’t fun.’ ”
Retrenching is always hard work, but Do it Best members are learning how to refocus their business and take advantage of opportunities they may have otherwise missed. Small investments of time or energy can turn into incremental sales, and taken together, these successes can keep a business afloat. Do it Best is tweaking its own program to help cover the field for its LBM players, who need a fleet-of-foot supplier that can react to market changes. It’s a partnership that has to work on many different levels, given the diversity of Do it Best’s members and the various ways they’re dealing with the recession.
Burns Do it Centers, Texline, N.M.
James Burns owns four stores in a rural region where Texas, Oklahoma and New Mexico all come together. One of those units, in Texline, Texas, serves a town with a population of 500 people. The store is small -- approximately 3,000 sq. ft. -- but an entire reset this summer has increased his sales by 10%. Amazing what some new shelving, professional merchandising and 1,500 additional SKUs will do.
Burns gives much of the credit to Manny Garcia, his regional development specialist from Do it Best. Garcia looked at Burns’s existing inventory, much of it inherited from previous owners, and saw that a number of items weren’t moving. But Do it Best’s planograms wouldn’t really work for the Texline store, Garcia said. “He didn’t need 50% of the product in the planograms,” Garcia said. “We had to custom tailor the program to fit his needs.”
The two men went through the store’s assortment, department by department, to identify the top-selling items. Burns kept those products, added another 15,000 SKUs, and ordered some extra fixtures, hooks and wire bins. Following Garcia’s recommendation, he hired a husband-and-wife team to fit in all the new merchandise. They spent a week completing the project.
“We’re in a very big trade area,” said Burns. “People will drive in here from 80 miles.” By the same token, Burns can lose a sale to the nearest Lowe’s, located 130 miles away in Amarillo.
But the reset has enabled customers to see merchandise they might have otherwise overlooked. Burns recently sold a shop vac to a local customer who had been considering the same purchase at Lowe’s. But the Lowe’s store wouldn’t let him test the machine, according to Burns. The customer came back to Burns Do it Center, where an electrical outlet awaited him.
“We’re choosing not to participate in the recession,” jokes Burns. But he sounds serious about his next project: a remodel of Burns Lumber and Hardware, a pro yard on Route 66 in Tucumcari, N.M. “We’ve got the plans on the drawing board,” he said.
Paradise Home Centers, Union, S.C
It’s been a year since Dan Berry, a fourth-generation owner, remodeled his 50,000-sq.-ft. home center to make it friendlier to homeowners. The Do it Best dealer still caters to contractors and commercial customers -- they account for half his business -- but he’s managed to make up for lost sales in the pro sector. In fact, transactions are up 12% since the grand re-opening of the store on Labor Day weekend of 2008.
“People have money to spend, but they’re spending it on smaller stuff,” said Berry. “If you manage your overhead and your expenses, and you figure out where the sweet spots are, you’ll be OK.”
Berry and his staff, who get together for brainstorming sessions once a month, find the sweet spots through trial and error. After putting in Do it Best’s flooring program, Berry discovered that his customers were willing to pay 99 cents to $1.50 per foot for laminates. But once he hit the $2.00 price point, sales dropped off. So Berry expanded his selection in the more popular price range.
Same with soft drinks. The two-liter bottles of soda didn’t sell, Berry said. But chilled cans of caffeinated beverages did. Adding hunting, fishing and camping gear also boosted transactions. So did a station for paying local utility bills and shipping U.P.S. packages.
All of these ideas came after the store remodel and reset, an undertaking that also involved a Do it Best customer survey and market site analysis. “When you remodel your store with your buying group, it gives you a great opportunity to ride the wave and look at everything from uniforms to letterhead to services. It’s a good times to make changes.”
Grogan Building Supply, Houston
Summer was kind of slow at Grogan, a Do it Best store serving the Houston Heights neighborhood, so Lanna von Baden did a little social networking while she was on the clock. No chance of her getting in trouble, since she owns the business with her husband Greg. And von Baden spent most of her time setting up a Facebook page for the fourth-generation lumberyard.
“We sell a lot of windows and doors to remodelers, so we put a sign up next to the register that said, `Come join us on Facebook,’ ” said von Baden, who posted photos of employees, new products, customers’ projects, local events and the occasional doughnut-eating contractor.
The response from the pro community has been tepid. “Contractors don’t seem to be on the Facebook bandwagon yet,” observed von Baden. But architects and homeowners interested in historic renovations -- a sizeable percentage of Grogan’s customers -- have come out of the beaded woodwork. The store’s Facebook page has become a forum for everything from birthday greetings and charitable fundraisers to debates on the proper shade of blue for porch ceilings in Houston Heights (Safe choices are robin’s egg, blue hydrangea, and Haint blue by Benjamin Moore.)
Do it Best Corp. has its own Facebook page, and it offers seminars at its markets for members interested in social network marketing, Von Baden figured it out on her own, however. She said she’s still experimenting.
“It seems like the more personal we get, the more responses we get,” von Baden said. “We’ve only been doing it for two months, and I figure it’s kept our name out there all that time. We’re always pushing [the community> to buy local, and this keeps us connected.”
Knudson Lumber, Ellensburg, Wash.
Sales manager Kari Shelley can’t really explain why Knudson Lumber won a 2008 award from Do it Best for single-store lumber purchases. “Some of the biggest builders in our area have gone out of business,” Shelley said. And while custom home builders are keeping busy, this is not where Microsoft millionaires build their mansions. In fact, the median household income in Ellensburg is significantly below the state average.
“We just keep plugging along,” Shelley said. Do it Best helps them stay competitive on pricing, she added, and this may explain why builders keep coming back. “People don’t think they’re getting gouged when they buy from us. Our customers know we’re giving them a fair price, and they’re not going to have to throw three-fourths of the [lumber> away. We’re giving them a product they can use.”
