OPERAIING OPPORTUNInES

Wally Lynch

Paid Associates

PO.8ox741623

Dallas, Tx.75243

Questions on spoce utilization have inspired reprinting this t'olumn .l'rom severol years ago -editor.

OST LUMBER and building nratcrial dcalcrs who havc bccn around long havc cithcr t'accd a spacc pnrblem or stxrn will. Thc dilcnrrna is gcncrally whcthcr to rclocatc or cxpand at thc prcscnt ltratitln

Just alicr thc dccision to do sonrcthing has been nrade. but bclbrc it has bccn dctcrntincd just what will bc donc. think "cubc" and "cubc utilization." A gtxxl way to do this is tt) gct out thc plat plan ofyour location now and scc how many squarc lbct arc bcing occupied. Fronr this total dcduct dccd restrictions, or othcr incunrbcranccs such as utility cascmcnL\. parking arca rcquircmcnts, construction olt scts, rail acccss. ctc.

Ftrr our purposcs hcrc. lct's say that you currently havc 87,120 uncncunlbcrcd squarc fcct This is two acrcs. Thcrc are dcalcrs and retailcrs at this time generating from $1.000.000 ttr $2,5m.(m monthly frcrm this amount of spacc opcrating within one of the diffbrcnt markcting conligurations ol'thc industry. Thc warchousc opcrator. in cssence. has built a 20' high building over the two acres. cquippcd it with l2' racks and air conditioned it.

At thc other end of the spectrum is the all. or nrcstly all. contractor oriented dealer who is turning invcntory once a month. Somewhcrc in the middlc is the 40-60 dealer with a drivc through servicing both thc professional and thc consumer. All three are capable merchants serving their different clientelc, but have a common thread in their operationcube utilization.

Let's lcxlk at such cube utilization in relation to the threc 2 acrc dealen just dcscribed. Firct, the ncw home ce nter, 2 acres times 4.5'. or 392.040 cubic feet. Second. the warehouse, 2 acres times D'. or 1,045.440 cubic feet. Third' thc contractor yard, 2 acres times 80 % in 12' racks and 20% in 4 .5' gondolas, or 914.'760 cubic tbet. Fourth. the drive through 40% contractor. 60% consumcr dealer. 2 acres times 40% in 12' racks and 60% in 4.5' gondolas, or 784.070 cubic feet.

Daily the people in this country shop ftrr groceries in stores featuring 6' and 7' gondolas. some 33Vt% to 55.5% more cube utilization than with 4.5' units. In t'act, just raising gondolas from 4.5' to 5.0' provides ll% more cube. The same grocery stores have 6' to 7' aisles, but if 4' or 5' aisles would do. the gain in cuh'r' usc is cnorntous. as it is whcn y()u can add nurrc lixturing. lt will vary all <wcr thc ltl. but a r.*asonublc rulc ol'thunrb is thal aislc arca and f'ixturc arca should bc'split 50-50, Thcrc's also sorncthing to bc said ftrr housckccping whcn it contcs to cubc usc. Thc bcst way to visualizc its intpacl is to rccall thc nressicst ckrsct you'vc cvcr sccn and thcn think of' il lustrat i<lns rtlicn shown ol' closcl organizcrs whcrc cvcrything has a placc and is in its placc. lf you arc a dclivcring dcalcr it costs you about $1.7-5 a driven nrilc to nrake deliveries. Evcry l0 nrilc out dclivcry trip costs $35 to nrakc. At thc 20 milc out point, the trip costs .f/0 to nrakc.

Gondolas and housckccping discipl inc arcn't thc only charactcrs in cubc utilization.

Tukc u Jxrlanrid picturc cach wcck lirr a month ol thc shcds in your yard. On thc back ofcach writc thc datc takcn and a cubc usc cstinlatc. Do thc sanrc il'you havc a warchousc with the racks and cstimatc thcir utilization. At thc sanrc tinrc as thcsc cvaluati0ns arc bcing nradc. look lilr opponunitics to ntovc upward or outward in thcsc arcas as on thc salcs lloor.

Rcccnt survcys havc indicatcd a willingncss on thc part of sonrc consunlcrs ttl drivc l'ront 50 and 60 milcs away to shop.

It cosls about 50c a mile to own and operate a car. It'a custonrcr cotltcs lionr l0 miles away, it costs $10 to comc and go. At -50 milcs away. it's $50. etc.

Thc wholc point of ntcntioning such numbcrs is that what may be gained through relocati()n may hc lost in cust()mcr participation and profitabilily. Ytru must be prepared to rctain your customer base from the ncw location or sutler thc costs of rcbuilding it anew.

Dcnrographics havc long played a major role in site selections by retailers but. short of this. draw a circle with a 30 milc radius on a map around your current location. Then cxamine what is within thc arca. lf it's all concrete. ncw construction will be rninimal and sluggish. Do thc sante for any ncw or proposed sites. Thcn work your currcnt customcr base into thc picture. Will they pay $50 to trade with you? Can you aftbrd to pay fiO for each delivcry'l Arc you likcly to grow or lose ground where you are currently lcrcated even if you have cnough cubc'l colft0 ro Ailanta, Ga., April 27-28, Joe Samulln and Blll Fishman wlth a workshop for home improvement retailers. Stressing slors managoment and aggressive marksting, the ssminar will be at the Embassy Suites. Fishman, a columnisl lor hllthl Pnirch 0l3rrl and a home center consultanl, and Samulin, also a home center consultant, have presented the program in Chicago and Southern California and will take it to Vancouver, 8.C., in May.

These few simplc checks and evaluations by lnanagcmcnt will vcry often indicate that the needed space/nrarketing relationship is best achicved right whcre they are. Ifyou can increase housekeeping discipline and cube utilization. you'rc better offto re-do than to move if the customer base is indicating continued viability.

Unusual Texae Mlll Whlstle

When the 50 year old steam whistle at Dean Lumber Co. blew itself apart, company founder John Ed Dean had no idea its replacement would involve a Canadian sawmill and a Tennessee show boat.

Five times a day, the new whistle signals 125 employees in the Dean sawmilland pressure treating plant at Cilmer. Tx. The 200 lb. cast bronze whistle, which incorporates three brass bells and is the second of its type ever made, plays the second inversion of the A-flat maior chord: E- flat, A-flat and natural middle C.

The first triplex whistle for a show boat at Opryland in Nashville was built to duplicate the remembered sounds of a whistle at the long closed Chemanus sawmill on Vancouver lsland, B,C. When general manager Steve Dean heard the story, he ordered a similar unit to be operated by steam from the company's power plant.

Al'e llllhrort! ilovos Phnt

Al's Millworks has moved from Seabrook, Tx., to larger quarters in neighboring Kemah, Tx. (Metropolitan Houston).

The move will provide more room for manufacturing the company's millwork products including wooden louver vents. There are'no changes in personnel, according to Cunner Calindo, a partner in the business.

Naghville D-l-Y Sales Boom

The housing market may be sluggish in the middle Tennessee area around Nashville, but do-it-yourself home improvement sales are booming.

Sales increased29oh in 1989 from 1988, according to F.W. Dodge. "The rise in do-it-yourself sales began about l0 years ago and now it is on the threshold of really getting big," said Ed Williams, manager of

Bulldlng Productr Dlgrtt

the Nashville Home Depot.

He gives credit for the increase to the Baby Boom generation born between 1945 and 1960. "They are approaching middle age and most are well established in their careers." he said. "This means they have more time to concentrate on other things and we're finding that many like the idea of trying something they've never tried before."

The increase in do-it-yourself is not limited to men. "l've noticed more and more women taking on projects themselves," explains Bob Rushing, Lowe's manager in Nashville.

More how-to books and videos make it easier for both men and women to complete do-it-yourself projects, retailers report. They are capitalizing on this and working hard to entice female customers.

"That's why all these warehouses have cleaned themselves up," Rushing said. "They've redecorated, improved their lighting and offered things like shopping carts to attract female patrons."

Patios and decks are the No. I doit-yourself project in the Nashville area. "Treated yellow pine is the hottest item on the market today," Rushing said. "l've seen a 200h increase in yellow pine sales between 1988 and 1989. There was a time not too long ago that you could find yellow pine only at the bigger retailers, but it has become so popular today that even the mom and PoP type stores are carrying it."

Kitchen cabinets and light fixtures are popular, too. "We used to carry about 60 different types of light fixtures," Rushing said. "Now we carry about 100 because the do-ityourself people like variety."

Retailers On Conservation

Retailers for Renewable Resources is a nationwide program designed to support ongoing efforts to develop public support for policies which permit the continued wise use and management of our private and public forests.

Recognizing that the lumber and building material retailers are committed to the stewardship of our nation's forest resources, the program has been approved by the National Lumber and Building Material Dealers Association.