Parker Lumber on expansion prowl - Brief Article

Home Channel News, Feb 5, 2001

Texas dealer relies on technology to manage growth fueled by rebates from buying group

BEAUMONT, TEXAS -- As dealers go, Scott Parker may be more prepared than most for any downturn in business. Seven of his 10 stores are located in southeast Texas, where the New Economy never really grabbed hold. Unemployment is double the state average, and prosperity, for many people, means buying a doublewide trailer.

"It's been this way ever since I can remember," said Parker, the 44-year-old president of Parker Do it Best Lumber. "But it's taught us how to survive, and also how to grow in a stagnant market."

Parker has expanded his father's business from one store to 10, and recession or no recession, he plans to add more units. Parker's grandfather, who sold wood salvaged from dismantled oil derricks, started the company in 1930. During the 1960s, the family converted its Port Arthur, Texas salvage yard to a retail lumber operation, which Parker joined full-time in 1979. Fresh out of college with a degree in finance, this third-generation upstart had big plans.

But it wasn't until 1988 that Parker started building a retail chain that would eventually become one of Do it Best's most productive members. Parker Lumber ordered $31.2 million of inventory from the buying group in 2000, placing it second among dealer-members in overall purchases. Parker also was the recipient of the co-op's highest rebate last year: $928,022. (Parker refuses to disclose his company's annual revenue, yet his ordering would indicate that it could exceed $100 million.)

As it has in the past, that rebate money will go towards store expansion. But back in 1988, all Parker had in terms of capital was $1,000. He used that, along with some financing, to open his own store.

"I found a lumberyard for sale in Silsbee, about 33 miles north of Port Arthur," he recalled. "But my father wasn't interested in expanding the business. So I went to a [local] bank and borrowed the money." For the next two years, Scott worked in his father's store every morning and drove out to his own lumberyard after lunch for another 12-hour shift.

During the 1990s, Parker continued to accumulate retail units in the non-metro markets of southeast Texas. Staying away from the metro markets, though, has not exempted Parker Lumber from bigbox competition; rural Texans are known for their willingness to drive long distances. And there's plenty of regional competition, including McCoy's Building Supply Centers, Sutherland Lumber and various independents.

The retailer's customer base is split, roughly, into 60 percent homeowners and 40 percent contractors. "When you're in small markets like us, you have to do it all," Parker said. "You can't just devote yourself to DIYers or custom or tract builders." On the builder end, Parker described his business strategy as "hit and run": he competes with pro yards by picking and choosing customers, he said. He also prides himself on understanding the local population and their needs. Quirky plumbing products like the "Texas gascock valve" must be on hand, along with a good assortment of fencing products for ranchers and farmers.

Parker also credits his survival to technology, one of his operational devotions. "We grew our business with computers, so we didn't have to implement them backwards," he said. "One of the ways we manage the cost of doing business is an utter, complete focus on the integration of technology." An Electronic Data Interchange plan is underway, and he has been able to set up purchasing programs with single-relationship suppliers. His inventory replenishment system is automatic, with built-in safety stocking on some items. Do it Best helps Parker run annual market analyses on his stores.

Choice markets

Information technology is one of Parker's few overhead indulgences. He doesn't believe in big back offices or staff. The same applies to inventory storage. One of his newest stores, a 12,000-square-foot unit in Fredericksburg, Texas, is about to turn its entire stock and receiving area into retail space.

Fredericksburg, a quaint German-American settlement located an hour north of San Antonio, is a demographic departure for Parker Lumber. Tourists come here to shop for antiques, stroll down the historic main street and spend weekends in bed-and-breakfast inns. Parker bought the Fredericksburg store, with lumberyards in Marble Falls and Shiner, from Building Materials Holding Corp. in late 1999. All three locations are in the Austin-San Antonio corridor, an increasingly popular area for upper-income professionals fleeing city life. Retirees are also moving here from all over the country.

"I've been wanting to get into this market for years," said Parker, who's about to purchase another store in this area. Although Parker has built two stores from the ground up, he prefers to acquire an existing hardware store or lumberyard and typically examines several years of sales performance before making a decision. He also takes a close look at the store's existing staff. "I've bought some losers, and they've been very painful and costly to convert," he admitted, tracing most problems back to "the legacy of bad management."