Scouting Report Nov/Dec 2012

An ALLPRO® Publication VOL. 22, ISSUE 6 NOVEMBER / DECEMBER 2012

by:Joe Poliseo and Scott Morath

Comeback Players of the Year - 2012 If you’ve read the paper lately or turned on the evening news you’ve probably seen articles and stories talking about the housing situation or jobless figures.

However, unlike the past three to four years, you may have also noticed a change in the tone of the overall narrative. Rather than the seemingly endless reports of excess housing inventories, halted commercial construction, and record high unemployment the general tone of recent reports is much more positive.

In fact it’s borderline celebratory.

“Sales of new and existing homes are climbing,” reported the September 28th issue of The Kiplinger Letter. According to Kiplinger, sales of new homes climbed 20% this year. And it’s investors that are the reason behind this increase.

Specifically, investors are taking advantage of a strong demand for renters who are now opting for homes rather than apartments. Leased homes generate a steady, fixed month after month profit with little risk.

Likewise, housing starts in many areas of the country are approaching year 2000 – 2003 levels and delinquent mortgages of 90 or more days are a third lower than they were last year. The jobless rate is also continuing its downward, albeit slow, trend with recent reports showing it at 7.8%. All things considered, the numbers are reinforcing the suspicions everyone seems to have regarding the general state of the economy and more specifically the housing market and it’s good news.

The good news isn’t just “out there” but is reflected in our own facts and figures as well. The group is showing a double digit increase versus last year through 10 months. Generally speaking, the business has been fairly steady and well represented in all areas of North America.

While there are no doubt still a few hills to climb, it seems that members are doing more than just surviving. 2012 has seen some reacquisition of past business, new growth and store openings. All of which is very refreshing to see after four to five very tough years.

2013 is also showing promise. Sales of new homes are projected to climb to 18% and housing starts to 17%. This bodes nicely for the well-positioned ALLPRO membership, which has a great foothold on residential re-paint and light industrial business. However, “caution” is still the buzz word of the day and probably will be for the foreseeable future. The fact of the matter is its going to take time for the housing market to truly stabilize.

When it does it won’t be at the [overly inflated] levels we saw in 2005. That means moving forward it behooves us to have realistic expectations and set more modest and attainable goals for both the near and long term.

From an organizational standpoint

• ALLPRO will continue to seek out new members.

• Partner with our approved suppliers to ensure group programs are competitive.

• Identify and develop services that add value to membership.

• Promote networking through the group.

In short, we look forward to the challenge of continuing to help both our members, and supplier partners meet the demands of a steadily improving economy.

So for the first time in a while…put your shades back on because the future does look a bit brighter.

And the comeback players are…the ALLPRO members!

Merchandising Paint Pads: You could be Losing Profits members. The neatness, speed and efficiency of pads as a category should be shown particularly with the trim tools and edging tools. Multiple facings should exist with one refill facing for every three product facings.

If the consumer has to search for paint pads and related accessories the retailer will lose the opportunity to realize the tremendous sales potential associated with this category. Positioning them between brushes and rollers in at least a two foot presentation is a very successful tactic.

By Bill Laramy, Warner Tool Products Paint Pads can be an excellent source of additional profit dollars for any retailer. Compared to traditional painting tools such as brushes and rollers, which require time and expertise in many applications, paint pads are easy to use, give quality results quickly, and are much more “forgiving” to the end user. It’s primarily because of these features that paint pads have built a contractor following. Conversely, on the DIY side paint pads appeal to the female shopper who, unlike their male counterpart, seeks out alternatives to the traditional brush and roller.

Let’s face it guys, we typically aren’t prone to try something new unless of course we trip over it. Still, while there is a following for paint pads there’s more to maximizing profit dollars than simply stocking them in your store.

Location The second principle merchandising element is utilization of off plan o gram locations. End cap, side kick, clip strips, power panel, and related cross merchandising locations fuel the impulse purchasing power of paint pads. Twenty five per cent of sales in addition to the plan o gram should occur in these locations.

Cross Merchandising ideas would include the Mini Roller and Edge Painter at the cash register. Also remember the 7” and 9” Paint Pads near exterior stains, deck finishes and floor finishes. Don’t forget about floors. Pads are an excellent applicator for floor finishes.

The key to maximizing profit dollars and even generating higher customer satisfaction from this category is to “sell” versus “offer.” One of the first things you have to do is look at the features and benefits paint pads and the family of paint pad products offers to realize the merchandising opportunities. The net result of these points to the importance of two key merchandising principles required to successfully merchandise and sell paint pads and related products.

The ALLPRO Trim Painter #500141 is a great item to merchandise next to the little packets of paint that many paint manufacturers now offer. They create an additional sale to the customer, and provide the customer with a great touch up tool, or the sample application tool needed.

Recognize The final "Top Secret" merchandising ingredient is recognition of the added sales and profit potential of this category.

Make a statement The first is to make a statement. Position the products as a category, not just a miscellaneous extension of traditional brushes and rollers. Organize the category into wall and trim tool segments. For every four feet of brushes and rollers allow at least two feet for pads and related pad products including edger’s, trim tools, and other creative problem solvers such as small trim rollers, paint guides, scrapers, etc.

Remember the female shopper is a key prospect for these items so be sure to not place them high in your plan o grams.

No one should complete a paint sale without suggesting the addition of a paint pad or pad-trimming tool as a part of the painting project. Some Retailers position these tools in a display as suggested items that the consumer needs for a painting project.

The difference between "offering" versus "SELLING" Paint Pad tools is simple.

"Offering" means hanging a few pads somewhere there is space.

"SELLING" means merchandising Paint Pads as a complete Category that makes a statement, capitalizing on the endless impulse opportunities while utilizing additional off plan o gram product locations.

Merchandising and signage should show interior and exterior applications where pads excel ie: doors, siding, corners, ceilings. Warner Tool Products does supply Paint Pad headers at no charge to ALLPRO

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outlets as well as the Fuller brand, which was purchased by the O’Brien Varnish company.

Although Roy continued to work for what was now Fuller-O’Brien Paint he also jumped on an opportunity to partner with colleague Bob Sears to purchase the assets of the Fuller Paint store in Santa Monica.

Internally, Roy was a silent partner in the operation, and while Bob was involved it was his son Wyn who initially ran the daily operation of the business. From the outside very little changed with the store, as it continued to operate as a Fuller Paint store with the primary brand of course being Fuller-O’Brien Paint.

By Scott Morath

The Second Happiest Place on Earth

It was in 1966 when Roy’s son, Larry Naylor, began working in the family business. Larry was a high school student at the time so he only worked part time and over summer break. At first it was the usual dusting, cleaning, and stocking shelves but before long he found himself getting involved in other things such as color matching and paint tinting. This was back when paint tinting was performed using a manual tinter and formula books. Color matching was done visually, and was more art than science, so perfecting the skill was accomplished through experience and by learning how different colors interact. As Larry puts it, “It was that process of color matching that really taught me to be careful.

Mistakes, big mistakes, certainly happened but you learn as you go and try not to repeat those mistakes.

That’s just one of those fundamental lessons that can be applied to business and life in general.” Larry credits Wyn for teaching him the business in those early years and really building the company’s customer service oriented culture, which is still the company’s primary focus to this day.

Storefront of Naylor Paint in Venice, CA

Almost everyone is familiar with the story of Disneyland and how the world’s most recognized amusement park came to be. An aspiring cartoonist caricatured a mouse that would later inspire an amusement park known as, “The happiest place on earth.” But do you know the story of a small company just down the street from Disneyland - a company known by those who frequent it as, “The second happiest place on earth?”

Today the company is known as Naylor Paint but in the earlier half of the 20th century it began as one of many W.P. Fuller & Co. paint stores. W.P. Fuller & Co. was a company that branded itself as an importer and wholesale dealer in paints, oils, french window glass, brushes, varnishes, turpentine, glue, gold leaf, artist’s materials, and more. By the mid ‘30s the company operated three factories and forty offices in seven states. It was the kind of company that offered quality products to consumers and a future to its employees, employees like Roy Naylor.

As Larry delved deeper into the business he discovered it wasn’t just a job but something he enjoyed doing. However, Roy was dad and part of being a dad is to encourage your kids to try other things, which is exactly what Roy did. Larry took his dad’s advice and after completing high school went onto college at UCLA where he earned a degree in Biology then a Masters in Systems Ecology. College was considerably cheaper in the early ‘70s, so Larry was able to pay his way with the income he earned working at the paint store. After graduating he understandably wanted to put his degree to use but an energy crisis, failed U.S. stock market, and high unemployment made jobs hard to come by.

Roy began working for W.P. Fuller & Co. in the last half of 1945 after returning home from World War II. He worked for the paint side of the operation, mostly as an outside salesman but routinely stepped in to manage company stores as needed. He worked in this capacity until sometime in the early 60’s, when the W.P. Fuller & Co. underwent a period of significant restructuring. When the dust cleared in 1962 the Fuller Paint business had been acquired by Norton Simon owned Hunt Foods. Simon purchased the Fuller Paint assets primarily for the real estate value.

He promptly began selling off the individual retail

Not finding work locally Larry decided to put his degree to use in the Peace Corps. His first assignment took him to El Salvador where he worked on a wildlife project. However, a military coup staged in 1979 quickly escalated into a bitter civil war and necessitated a hasty departure from that country.

Larry soon found himself on another project in the

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different paint lines and other product categories. As Larry puts it, “Dad was always a loyal Fuller man but as time progressed and industry consolidations began to occur we felt a need to diversify our lineup a bit to protect ourselves.” The company’s primary line is still the Devoe brand, which is a further evolution of the original Fuller-Obrien brand but they also carry Pratt & Lambert, Mythic paints, and the Sikkens line of wood finishes as part of their product offerings.

The next major milestone at Naylor Paint occurred in 1991, when Larry computerized the store’s operations. Larry recalls, “I felt we needed a better, more efficient accounting system and in the end it has helped us become a much more polished company.” It was around that time that Roy semiretired from the business and left the overall operation to Larry. Roy still kept his desk in the back office and came in from time to time. He filed papers and helped the bookkeeper but spent most of his time volunteering within the local community. He was heavily involved with the Methodist church, the YMCA, Kiwanis, and other charitable and community organizations up until his passing in 2001.

Larry is still passionate about the field of ecology and produces a calendar each year that features photographs he’s taken of different eco systems.

country of Paraguay, where he finished out his time in the Corps. Unfortunately, upon returning home in 1982 Larry discovered the prospects for a job hadn’t changed much.

What had changed was the paint store; in fact throughout the decade of the 70s the company underwent a number changes. Roy left Fuller O’Brien in 1970 to become an active principle in the store and around that time Wyn purchased Bob’s half of the business and became Roy’s partner.

However, when Larry returned in ’82 Wyn was looking to move out of the LA area to Nipomo (over a hundred miles away), so he sold his half of the business to Roy. This presented an opportunity to Larry, who stepped in to help his dad run the business.

Naylor Paint began its relationship with ALLPRO the year prior to Roy’s passing. At the time the company was part of the southern California Decorating Products Association and Larry was very active in that organization, twice serving as its president. It was through the SCDPA that he became familiar with ALLPRO and ultimately led to membership. As Larry tells it, “I jumped right into the billing and extra discounts but also began systematically bringing in the ALLPRO branded products. As an independent I like products that are not main stream - products people will seek out.

Many of the product lines we carry follow that

When asked what that period was like Larry says, “I knew the business and it really wasn’t a big business at the time, so there wasn’t a huge learning curve.

Back then we still wrote invoices by hand and the accounting was really seat-of-the-pants type accounting compared to what we do today. At that point dad was still managing the finances of the business and I focused on its day to day operation.”

(Continued on page 7)

A year later in 1986 the company underwent another significant change by purchasing a store location in nearby Venice, which is part of the larger Los Angeles community. Shortly thereafter the company purchased the property immediately next door, which gave them a total of 5,000 sq. ft. of combined showroom and warehouse space. It was with the relocation that the company also changed its name to Naylor Paint.

The relocation was actually part of a larger shift in the company’s business strategy. In addition to relocating and rebranding itself Larry began adding

Taking care of business at Naylor Paint

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ALLPRO® Company Profiles ALLPRO has had the good fortune to add the highest quality companies in the industry to the group. We are pleased to profile some of our newest member companies.

ABBOTT PAINT & CARPET

DRIVE IN PAINT MART

• • • • • • • • • • •

Founded: 1943 Location: St. Paul, MN Telephone: (651)698-5518 Web site address: www.abbottpaint.com Founder: Mike Abbott Current President: Kevin Abbott ALLPRO Contacts: Jeff Zinnell and Dave Abbott 3 Stores # Full-Time Employees: 37 Wholesale/Commercial/Contractor: 40%, Retail/DIY: 60% Abbott Paint & Carpet is a wholesale & retail supplier of paint supplies, carpet and window treatments. Quality products and professional advice are the main reasons for the continued success of our company. We supply products for everyone from large universities to the neighbor next door.

• The company was started by Mike Abbott in 1943 and has continually grown and now has three locations and is operated by Mike’s four sons. Today, Abbott’s employs over 30 full time workers.

• • • • • • • • • • •

•

Founded: 1957 Location: Dorchester, MA Telephone: (617) 436-1268 Web site address: www.driveinpaintmart.com Founders: Louis & Eva Solomon Current President: George Solomon ALLPRO Contacts: George Solomon, David Solomon and Jason Solomon 2 Stores # Full-Time Employees: 16 Wholesale/Commercial/Contractor: 65%, Retail/DIY: 35% For over 50 years & now it’s 3rd generation owners, Drive in Paint, has tried to provide to its customers the products they want at prices they can afford. Our service & knowledge is second to none.

Drive In Paint was founded in 1957 by Louis & Eva Solomon at current location in Dorchester. In 1971 George Solomon became full time and is now president. He along with his two sons, Jason & David, has added a 2nd location in South Boston.

RING’S END LUMBER INC.

DICK’S COLOR CENTER • • • • • •

• • • • • • • • • • •

Founded: 1944 Location: Milwaukie, OR Telephone: (503) 654-1600 Web site address: www.bjkboss@comcast.net Founder: Casey Young Current President: Lou Boss ALLPRO Contact: Lou Boss 2 Stores # Full-Time Employees: 9 Wholesale/Commercial/Contractor: 40%, Retail/DIY: 60% Dick’s Color Center is all about customer service. If not then shop at the box stores. The right product for the right job is what people want.

• Dick’s Color Center was a small mom and pop paint store in 1980 and grew to a full service decorating center, carpet, vinyl and all related products store.

• Company Slogan: Always give the right information to the customer.

• • • •

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Founded: 1902 Location: Darien, CT Telephone: (203) 656-7515 Web site address: www.ringsend.com Current President: David Campbell ALLPRO Contacts: Elliot Greenberg, Michele Hadad and Kevin Schilling 8 Stores # Full-Time Employees: 400 Wholesale/Commercial/Contractor: 70%, Retail/DIY: 30% Ring’s End Lumber is a privately held lumber and building materials company with eight retail stores. We are one of the largest independent dealers on the East Coast and the largest in Connecticut. Ring’s End is a one-stop source for lumber, millwork and building materials, architectural hardware, kitchen and bath cabinetry and counters, paint and painting supplies, hardware and tools. We are known for our quality and depth of inventory and the expert technical support and excellent service provided by staff, Ring’s End meets the needs of large home builders, small home remodeling contractors and do-it-yourself retail consumers.

Member Happenings Congratulations to Perspectives Inc. who was recently featured in the Dealer Feature of the August issue of The Paint & Decorating Retailer magazine. The article provided a brief history of the company and also highlighted Perspectives’ success with their window covering department. According to Perspectives’ owner Jason Taylor, “While our business overall dropped during the first part of the recession, our window treatment (dept.) has been the leader in sales growth over the past two years.” He also credits the excellence of his staff and their meticulous attention to detail for much of the company’s growth. Perspectives have been an ALLPRO member since 1986.

The Paint Center of Abilene, Texas was also in the news recently for their “They Charged Him WHAT?” social media campaign. The PaintDealer.com reported on the company’s efforts to dispel the perception by customers that shopping at the local Lowe’s or Home Depot was cheaper. Each post on the company’s Facebook page compares like items across stores and highlights its lower cost at the Paint Center. When asked how they’re able to do it, Chris Cummings attributed it to the savings they are able to take advantage of as a member of ALLPRO. Thanks Chris and keep up the good work!

Additionally, ALLPRO members Masterwork Paint, Lynch Paint Centers, and Ring’s End were asked by Paint & Decorating Retailer what is needed to serve the professional contractor in today’s market. Masterwork focuses on building long-term relationships, Lynch Paint Centers on offering a larger supply of product and materials not found in a typical paint store and Ring’s End on partnering with contractors to provide continuing education on emerging trends. Just goes to show you there’s no single formula for success.

We’d also like to say congratulations to Teknicolors Paint, who was voted Detroit’s Best Independent Hardware Store for Summer 2012. The “Vote 4 the Best” contest was held by the ClickOnDetroit.com website and winners were selected based on user votes in each business category. What did Teknicolors win? The best prize of all – bragging rights!

Lastly, we’d like to congratulate Shelbyville Paint & Wallcovering and Standard Paint & Flooring. Both recently opened new stores – Shelbyville Paint’s second location and Standard Paint & Flooring’s sixth. It’s great to see ALLPRO members continue to set themselves apart as industry leaders and continue to grow in their respective markets.

Supplier Happenings Congratulations to supplier partner Purdy who was recognized during the 20th annual Businesses for an Environmentally Sustainable Tomorrow (Best) Awards ceremony in Portland, OR. Purdy was awarded the Best Practices award in the large companies’ category for “Sustainability at Work,” a program of the City of Portland Bureau of Planning and Sustainability. The award recognized Purdy’s Portland facility for its environmentally friendly practices and its zero-waste-to-landfill facility. Amazingly, the facility has not had a trash pickup since 2009.

IMPORTANT DATES TO REMEMBER …

ALLPRO 2013 Spring Show & Sales Meeting JW Marriott Starr Pass Resort & Spa Tucson, AZ, Mar 20 – 24, 2013

ALLPRO 2014 Fall Stockholder’s Meeting Westin Diplomat Resort & Spa Miami, FL, Oct 16 – 19, 2014

ALLPRO 2013 Fall Stockholder’s Meeting Westin Hilton Head Island Resort & Spa Hilton Head Island, SC, Oct 24 – 27, 2013

ALLPRO 2015 Spring Show & Sales Meeting Rosen Shingle Creek Orlando, FL, Mar 18 – 22, 2015

ALLPRO 2014 Spring Show & Sales Meeting JW Marriott Desert Ridge Phoenix, AZ, Mar 19 – 23, 2014

ALLPRO 2016 Spring Show & Sales Meeting JW Marriott Desert Springs Resort & Spa Palm Desert, CA, Mar 16 – 20, 2016

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2012 and have even had to hire one full time and two part time employees this year. Even still, I’m not looking to expand the business beyond what it is today. Reason being, I’m a very hands-on boss and prefer to be closely in touch with whatever is going on in the store and I don’t think I could ever open another location for that reason. I also really like where we are as a company and don’t feel compelled to make any major changes in the way we do business right now. That’s not to say we won’t take advantage of opportunities that may be around the next corner, we certainly will. I just don’t feel a need to make changes for the sake of making changes.

Our location and product mix work well for us but I have to give the lion’s share of the credit to my staff.

Albert Goelz, George Valdez, Mike Frazier, Tom Walters, Gia Fox, Armando Armenta and Miguel Santana are the real key to Naylor Paint’s success and I certainly appreciate every one of them.” He adds, “We have a great mix right now and I’m content with where we are and what we have going for us right now.”

A short lull at an otherwise busy paint counter

approach and the ALLPRO branded items go along with that as well. Many of our customers have taken to it and today I carry about 20 different lines of the ALLPRO branded sundries. They work very well for us.”

Where then does the title of “Second Happiest Place on Earth” come in? Well, Larry confesses that the folks at Naylor came up with it as a tongue in cheek crack on the amusement park’s slogan. The thinking was when you do what you love and you love working with the staff and customers at Naylor Paint, where else can you be but the happiest place on earth? Unfortunately, that term had already been trademarked, so they went with the next best option, which would make Naylor Paint (you guessed it) the second happiest place on earth. Oddly enough, over the years it caught on and has become Naylor Paint’s slogan. About that Larry adds, “What can I say, it was a tongue in cheek crack but we’re a tongue in cheek store.”

Larry goes on to say, “We have always had an eye open to different opportunities. Admittedly, we tend to fall into those opportunities more than we seek them out but we’re no less quick to take advantage of them. Over the years, as we brought on new staff, some of those guys had contacts that led to other opportunities for us. In 2005 for instance, I hired a former store owner who worked closely with the movie studios. That led to an opportunity to begin servicing the studio business.”

Larry admits the studio business is quite a bit different than the normal paint store business. As he puts it, “Movie studios are very high operational tempo businesses, so whatever they need, chances are they needed it ten minutes ago. That operational tempo has led us to stock a lot of little niche products like hair dye and nicotine spray cans – items you would never find in another paint store. It also forces us to be creative and a lot of the time we’ll even trade with competitors if need be. Still, it has been very good for us, so good that we have two fulltime and one part time driver just for the studio business.

It’s a challenge Naylor has been happy to meet.”

Although Larry continues to keep an eye out for opportunities and new ways to service his customers he’s not looking to expand beyond their current location. As he says, “There have been challenges over the past few years but the local economy seems to finally be climbing out of the recession. I’m surprised and very pleased with how we’ve done in

Happy customers are satisfied customers at Naylor Paint

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What’ya Know, Branding on Facebook Actually Works At least according to a ComScore research study commissioned by Facebook. The study released in June set out to determine whether or not customer exposure to content that a brand’s fans might see resulted in more purchases. The results of the study showed that it in fact does, just not in the way one might think. Specifically, ComScore used an experimental group that had been exposed to Facebook content from Starbucks and Target and a control group that had not. Over a four week period 2.12% and 3.9% of the experimental group made an in-store purchase. This was compared to the control group, of which only 1.54% and 3.3% respectively made an in-store purchase. Those numbers may seem marginal but statistically speaking it showed a 38% increase in purchases when exposed to Facebook content over a period of time.

Indicating Facebook content/ads work more like traditional TV advertising (branding) in that it increasingly influences purchases over a period of time. For that reason ComScore cautioned against using click-through rates or direct sales to measure ad effectiveness on Facebook. In short, Facebook is less a tool to drive direct sales and more a tool for branding, which does influence sales over the long term.

More Research on Facebook Market research firm Lab 42 decided to conduct its own research on Facebook by polling 1,000 social media users on how they felt about brands on the site. They came up with some interesting statistics: 87% of people like brands on Facebook and 69% have liked a brand because a friend did; 82% felt Facebook was a good place to interact with brands and 35% felt brands listened to them more on Facebook; and 50% felt the brand’s Facebook page was more useful than its website (wow!). The top 3 ways consumers interact with brands on Facebook are: 1. Print off coupons, 2. Like/comment on a brand’s page, and 3. Learn about new products. Furthermore, a full 73% of people have unliked a brand because: 1. A brand posted too frequently (told ya so), 2. Just stopped liking the brand, and 3. Had a bad customer experience. Lastly, as a result of liking a brand on Facebook 77% of users said they have saved money due to downloading coupons. Who are these social media users you wonder? Well, according to Facebook demographics 25% are 25 and under, 25% between the age of 26 – 34, and 50% over the age of 34. Generally speaking, the age breakdown of Facebook users mirrors the larger population of the U.S.

Editor/Production Scott Morath

Proofers Ann Spire Julia Thomas Pat Brulfer Matt Spire Katrena Rudd

Contributing Writers Scott Morath, Joe Poliseo - ALLPRO Warner Mfg.

ALLPRO® President Travis Detter

Exec. Vice President Joe Poliseo

SUGGESTIONS WELCOME Your suggestions, ideas, articles and comments are encouraged.

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