Below the top 100, the battle is still intense

Home Channel News, May 24, 1999

Developing niches, focusing on pros and avoiding confrontation with big-boxes give more companies a competitive edge

Market presence and buying power continue to send more business to the industry's top 100 dealers. Those companies below the top 100, though, manage to hold onto their share of the market, mostly by developing niches, focusing on professional customers and avoiding direct confrontation with big-box stores.

For example, the five-unit Wilson Brothers, based in Fredericksburg, Va., managed to post a 12.5 percent sales gain, to $63 million, in 1998 by focusing primarily on its pro customers, which account for the lion's share of its business annually.

Wayne Story, the company's president, attributed the good year to groundwork laid three years earlier, when the company had sales of $27 million. In 1995, Wilson Bros., which ranked 106th last year in sales, opened a unit in Manassas, Va., about 35 miles from its headquarters, and acquired Smoot Lumber in Alexandria, Va., across the river from Washington, D.C. Wilson Bros. has its own window manufacturing shop, a stair shop and countertop manufacturing (both solid-surface and laminate), and an outside sales force to bring them to contractors.

This, in addition to what Story calls a concentration on the basics, helped the company grow in 1998.

"If we make the builder successful, he'll make us successful," Story said.

While it took Wilson Bros. about three years to double its sales as a result of expansion, Crosslin Supply, a six-unit Pro dealer headquartered in Eagleville, Tenn., saw sales increase by two-thirds in the first year after it acquired two-unit Nashville Lumber at the end of 1997. (Those units continue to operate under the Nashville Lumber name.) Crosslin, which ranked number 137 last year, saw its sales jump to $50 million in 1998 from $30 million the previous year. Ninety-percent of its revenue is generated from pros.

Aside from the acquisition, though, Crosslin did not do anything special, said Frank Crosslin, its president. "We'll just keep doing what we've always done," he said. He projected a sales increase of about 3 to 4 percent in 1999.

In addition to expansion, some dealers counted on a well-located store to boost sales.

Elliott Hardware, a four-unit dealer headquartered in Elm Grove, Wis., gets about 80 percent of its sales from DIYers. One of its stores -- in Greenfield, Wis. -- was not profitable, however. The average household income in that community is $35,000, according to Dana Marcelini, the company's controller. Elliott Hardware closed that store and opened a similar-sized unit in the community of Pewaukee, where the average household income is $65,000.

That difference accounted for the company's 8.3 percent growth, or $26 million, in 1998, when Elliott Hardware ranked 310th on the Top 500 chart.

A new location to better service existing customers also helped Warren Lumber and Millwork in Washington, N.J. The four-unit pro dealer, which gets most of its sales from pros, saw its sales jump 31.5 percent last year to $55.9 million. The company opened a store in Allentown, Pa., across the river from its New Jersey operation, said Nancy Pershyn, the company's controller. That, she said, made it easier for customers to do business with "that New Jersey company" they'd been shopping at all along.

Pershyn also credits a strong outside sales force -- "They're our marketing," she said -- and an aggressive corporate staff of three vps: Michael Ewing, Kevin Kuchova and Bruce Stout. Warren Lumber and Millwork ranked 120nd last year.

But Pershyn also cited another factor outside Warren Lumber's control that contributed to its health: "The economy has a lot to do with [our growth]" she said. "Everything was just right."

She, along with other retailers, hope that everything remains "just right" again this year.

       ANALYSIS: SALES GROWTH LEADERS AMONG COMPANIES RANKED 101-500
                        Strong economy boosts sales

    TOP                                   SALES
    500                              (millions)
   rank                                    1998  1997 % change
 1  186 Kuiken Bros.                      $40.0 $23.0    73.9%
 2  137 Crosslin Supply                    50.0  30.0    66.7
 3  465 Groom & Son's True Value           18.0  11.5    56.5
 4  418 Home Lumber & Supply               20.0  13.0    53.8
 5  446 Deerfield Builders Supply          19.0  12.7    49.6
 6  278 Humphrey's Building Supplies       28.0  20.0    40.0
 7  274 True Value Center                  28.7  21.0    36.7
 8  257 Herrington's                       30.0  22.0    36.4
 9  484 Ray Mart                           17.5  13.0    34.6
10  419 Phillips Lumber                    20.0  15.0    33.3
11  466 Ashby Lumber                       18.0  13.5    33.3
12  145 Rowley Building Products           49.0  37.0    32.4
13  120 Warren Lumber & Millwork           55.9  42.5    31.5
14  500 Hill's Ace Hardware                17.0  13.0    30.8
15  164 Cape Cod Lumber                    44.7  35.0    27.7
16  204 JT's Lumber                        37.0  29.0    27.6
17  265 Clintonville Lumber                29.0  23.0    26.1
18  187 Dykes Lumber                       40.0  32.0    25.0
19  218 Kleet Lumber                       35.0  28.0    25.0
20  219 Building Center                    35.0  28.0    25.0


Busy pros in New Jersey accounted for 83 percent of the sales at Kuiken
Bros., which also added two stores last year.

                   Growth gets harder as market shrinks
              (Annual retail sales growth for Nos. 101 to 500)

94 16.12%
95 -8.62%
96  5.19%
97  5.89%
98  4.95%


Smaller dealers are finding it difficult to keep out of the line of
fire of big chains that are expanding into secondary markets.