Ways to compete with warehouse retailers and big chains

AS Home Depot and other national flumber/home center chains continue to build market share and expand acfoss the country, local and regional redwood reailers are searching for ways to compete effectively. Thriving local merchants ftom around the United States say the key to srrccess is to stick to your specialties and what you do best.

"All you have to do is walk into one of those huge stores and it's obvious that you won't be able to match the sheer size of their selection," says Herb Donaldson, Mead Clark Lumber, Santa Rosa Ca. "So small retailers have to emphasize the things that they can do better,like providing personal service and responding quickly to the particulr needs of their cuslomefs."

Wallace Poole, Poole Lumber, Covington, Ia., agrees. He notes rhet the large chains generally don't have the comprehensive selection of lumber that contractors and do-it-yourselfen both want.

"You can go into a chein outlet and find a tremendous amount of woo4" he says, "but you won't find all thre lengths, all the patterns and all the grades that we carry. A lnowledgeable customer wants a selection. At a chairu he may have no choice.

"It's almost a contradiction rhat a big home center would have less to choose from, but they carry so m4ny different kinds of items rhat Oey sacrihce depth in some areas - like lumber. Our size lets us focus on those product areas that we know are important to our cuslomers."

For instance, Donaldson knows that his customers - primarily contractors - are only interested in high quality, high end tools. "Professionals want a choice like anyone else," he explains. "But they don't need to see 30 different circular saws. There are six or seven in the right performance/price range and those are the ones we car4/."

The idea, says Donaldson, is to make smaller size a strength. "Don't try to beat Home Depot at its own game," he warns. "Being small means being flexible. Don't try to offer a bigger product mix; offer a better, more effective selection that reflects what you know about your

customefs."

Knowing y<xr custflners is clearly rule number one for Doaldson and Poole and it can pay off in berer service. Where large chains can seem impersonal, Pnkiag customers feel like a number, smaller merchants have the opportunity o personalize the sales proc€ss.

'Service is the great differentiator for local r€tailers," says Crene Dolan, P.E. Dolan Lumber, Concord, Ca. *\[s meke a point of keeping all our floor personnel up to date on new products and we specialize in large projects for the do-it-yourself crowd. It's rare to find an employee at a chain outlet who can even help you cr€ate a complete materials list for a deck addition. We can organi2s ths entire project from start to finish. Customers really value that kind of assistanoe."

Dolan also offers on-site estimating and has added onveniences to his stor€, such as a complete door shop. And ever since Home Depot entered his market, he has opened every day at 6 a-m. "If someme needs to start a projed early in the morning," he says, "we want O make sure they have a choice of retniler."

Service is also crucial for contractor customers. Bill Miller, Alpine Lumber, Denver, Co., remembers a

Story at a Glance

Retailers from around the country sham technhues tor competing with large chains and warehouse stores good selections tallored to customer mlr and ercellent service make small a strength ... pensonal touch pays off.

longtime contractor client who decided to try a national chain.

'He ordered 92 ll4-nch studs for delivery on Tuesday morning and he received 96 one-inch studs on Wednesday afternoon," he recalls. "The people in the chain's lumber yard simply didn't rcalize that the contractor didn't want to cut to fit at the job site or that deliveries are scheduled very precisely for a reason. It's the kind of experience that really differentiates the value small retailers can provide."

Commitment to customer service is a clear competitive advantage for local merchants, but it isn't easy to use as a selling point

"Anyone can say in an advertisement that they are service oriented, but you really need to experience it to believe it," explains Craig Triebwasser, Valley Redwood, Sacramento, C-a. "That's why we do a lot of interactive marketing - in-store serninars, trade shows, etc. There's no way we can afford to match a big chain's advertising budget, so we do only a modest amount of advertising and focus on face-to-face selling. Ifs more time consuming, but it really underscores our sEengths."

L0NG aisles and gigantic seleclions of m erch and ise will f rustrale many customsrs. Smaller slores can caler lo lhese shoppers ano wtn th€ir loyalty and business with personal seruice and help in selecling lhe besl products for lheir home improvemenl projecls and €pars.

Some smaller reCailers, however, believe even limited advertising can have a substantial impact. Gene Dolan confronted a national competitor head-on with an advertisement showing a caftoon figure struggling to push a small shopping cart loaded with spilling lumber and other items. "Home Depot probably didn't even notice it," he says with a grin, "but I've had new customers come in and tell me I hit the nail on the head."

Such confidence is apparently well founded. Dolan and his fellow merchants have discovered that there is a profitable market niche for local retailers.

"The secret is to think small," says Herb Donaldson. "The personal touch pays off. It's how most of us built our businesses, and it's how most of us will continue to succeed, even against these large competitors."

16 Step Check List For Streamlining Operations And Maximizing Profits

George Kellett, George Kellett & Sons, Inc., New Orleans, La., shared the following information at a "Dealers Helping Dealers To Win!" seminar. Many practices successful at his company apply to any retailer wanting to streamline operations and maximize profits. Check your operation against the following lisl

(1) We evaluated each employee's job performance, replaced two office people with an outside salesman, reduced the number of yardworkers and drivens, keeping workers willing to double as drivers. Dropping from 23 to 15, we found less govemment regulation with fewer than 20 employees.

(2) We monitored sales and profitability of product lines. Sand, gravel, cement, mortar, plaster and lime were least profitable and most costly to deliver. We dropped these to concentate on lumber, plywood and sidings.

(3) We monitored sales and profits from 7 a.m. to noon on Saturdays and found many customers preferred to get materials on Friday afternoon for Saturday use. We now close on Saturday, saving overtime hours.

(4) We improved storage facilities and paved traffic areas to reduce labor needed to store and assemble orders.

(5) We cut fuel and maintenance costs by replacing gasoline powered equipment with diesel power and setting up a servicing program.

(O We assigned equipment to spe. cific drivers, tracked and monitored repairs.

(7) We i.rrproved yard security by reducing five yard entrances to one for customers and outgoing deliveries and one for incoming deliveries. We improved our alarm system.

(8) We instituted office improvements, added a floor safe. which stopped burglaries, a computer system, which improved shipping, billing, record keeping and credit policies.

(9) We set a goal of paying all vendors within their terms and taking advantage of all discounts.

(f0) We made sure there were no prepayment penalties on our debt and made payments every two weeks, paying more than the amount due.

(ll) We compiled a policies and prccedures manual outlining operation guidelines and gave it to employees.

(12) We limited our yellow pages advertising. One line listings save about $700 per month over half page advertising.

(13) We studied insurance coverage and found it beneficial to self insure ourselves as much as possible. Deductibles are at the maximum and trucks carry only liability and uninsured motorists coverage. savings compensate for any losses paid.

(f4) We instituted a bonus program for all employees (o share a portion of the profits each quarter. With everyone in essence adopting the company as their own, results are amazing.

(15) We subscribed to market pricing reports and contractor reports to keep up with changes and hends in the market and records of permits issued. This gave us better inventory conhol.

(16) We now view ourselves to be in the business of selling service. Along with our products, we sell prompt, accurate delivery, accurate billing, prompt servicing of claims and try to keep our sales representatives as infomred as possible.