Designing business: partnering with architects, particularly at the high-end custom home level, can act as a catalyst for adding supply chain value and increasing high-margin sales

Prosales, Feb, 2003 by Chris Wood

They're the "bread-and-butter" accounts for many pro dealers across the country. Offering consistently higher margins and a thirst for the value-added services that progressive dealers pride themselves on, custom home builders consistently rank as the No. 1 customer segment in the residential construction supply industry, according to the 2002 PROSALES Annual Survey of Leading Construction Suppliers. But beyond the immediate dealer/builder relationship, there's a lot more purchasing power being wielded upstream--and we're not talking about appliance-choosing homeowners.

According to residential architects, the entire custom home shopping list is often specified on a desk at the architect's firm. As a result, pro dealers who choose to network within the architectural community can quickly gain advantages in terms of high-margin product sales, access to new customers, and preference in project bidding.

"We will specify on a brand-name basis almost every element that goes into a custom home," says Cincinnati-based Jon Senhauser, Ohio Valley region director for the American Institute of Architects (AIA). "Product selection begins with concrete mixes, structural trusses, and components, and [it] continues with air filtration systems to water barriers to finish hardware."

Considering this level of involvement in the construction process, opportunities abound for dealers to develop relationships within the architectural community, points out Albuquerque, N.M.-based architect Jon Anderson. "I think some lumberyards are coming around. For example, 10 years ago the only light fixtures you'd see at a lumberyard were the cheapest, residential surface-mounted products. Now you see halo, full-line, recessed-can, and trim in stock, and a full line of low-voltage, quartz halogen fixtures. Those were things that [we] used to have to order through a lighting distributor."

Anderson says it would be a great plus if dealers stocked all of the components architects used in custom homes. Architectural hardware, including locksets and cabinet hardware, is one area where he sees room for immediate growth, as most dealers in his area only carry limited lines and finishes. Still, Anderson acknowledges that the nature of high-end custom homebuilding is special order.

"While custom home builders still shop structural lumber competitively between dealers, the entire custom home package includes many products that are not readily available and have to be special ordered from out of town," says Senhauser. This makes special order service a key area where pro dealers with deep product knowledge and manufacturer contacts can outpace other local product providers, cashing in on the higher margins of custom and semi-custom products.

Additionally, architects are turning to pro suppliers as a possible ally in streamlining relationships with builders throughout the entire construction process. "Unfortunately, there is a big gap between what the architectural community likes and specs and what the typical homebuilder

likes and specs," says Anderson. "And those builders are the customers that pro dealers really cater to because of the volume they [represent]."

According to Senhauser, pro dealers can benefit from learning to assist builders in understanding and communicating product availability and suitability upstream to the architect. "Custom builders sometimes don't have the best long-range procurement planning," Senhauser says, "And that's an area [in which] the pro dealer or lumberyard can offer value in the building process."

Nimble Networking

Senhauser points to Cincinnati-based Hyde Park Lumber as one pro dealer that has polished its partnership approach to the architectural community. "Architects have a tremendous influence on who supplies [the products]," says Hyde Park president Mike Judy. "You want to cater to them as if they are builders, but at the same time you don't try to hard sell them on anything." Judy even semi-threatens outside sales reps on architect calls, jesting that they face termination if a visit lasts for more than 20 minutes. "Give them the [product and service] info and get out of there," Judy advises. "Architects want to approach product selection on their own terms. They don't need another best friend."

But just because architects want business on their own terms does not mean that pro yards cannot facilitate that business. A case in point is Hyde Park's showroom, which eschews basic stock product selection, offering no less than 80 doors and 1,000 custom moldings for architects and their custom clients to choose from. One standout on the floor is a hand-carved Indian prayer door, a special request from an architect client that has brought viewers (and customers) from as far away as Tennessee. Additionally, Hyde Park's wood-paneled boardroom, used only twice a year by the pro dealer, is made available to builders and architects and their clients for planning and product selection meetings year-round.

For pro dealers looking to jumpstart their architect outreach, the AIA offers an Individual Allied Membership to non-architects, including pro dealers and distributors. According to AIA spokesperson Sheila Owens, "The best advice for building materials suppliers interested in using AIA to professionally network with residential architects is to go through our local chapters. The local offices are tuned in to individual members. Many have their own Web sites, sponsor local conferences and seminars, and are a great networking source for everyone in the building and construction industry." Local AIA chapters are listed by state on AIA's Web site, www.aia.org.