Retailers use iust-in'time delivery to make millwork sales pay off

Regional Window Market

The National Wood Window and Door Association confirms a shift toward highly styled aesthetically pleasing wood windows and doors in the West. lt has traditionally been a strong metal window and exterior market. But growth for wood windows and doors in the area is now expected in the high-end repair/remodeling and new custom home segments, particularly in homes that sell for $200,000 or more.

On the move in all sections of the country, wood window and door sales are targeted to upscale, higher-priced homes and those being upgraded. Other window framing materials continue to be used for lower-priced, tract homes in some regions.

"We're seeing a nationwide trend in the 'buy-it-yoursell rather than the do-it-yourself market," says John W. Shoemaker, executive vice president, National Wood Window & Door Association. Consequently, many retailers are constructing in-store wood window and door display areas to help boost their bottom line.

"We foresee creativity and many line extensions in wood window and doors in the 1990s as homeowners want to make individual statements with their homes," says Shoemaker. According to NWWDA, three trends are driving the wood window and door market today: aesthetics, energy-efficiency and low maintenance. "Wood and clad-wood windows and doors provide all three requirements beautifully," Shoemaker adds.

; UST-IN-TIME delivery of readtf ily available lumber products such as millwork and moulding by the bundle or the piece allows retailers to run lean, mean and more profitably. Faster inventory turns lower buying costs and free up cash for investment in profitable activities.

Two sales distribution centers that specialize in giving retailers this type of help are found in Atlanta, Ga., and Orange, Ca. Part ofSequoia Supply's 33 operations in 30 states, they work on the theory that customer and product orientation varies from market to market because it is based on each market's home building economy.

It is generally understood that when times are good, or when a strong building economy exists, the wholesale distributor is the retailers' resource for quick deliveries of unusual patterns, uncommon sku's and products in temporary high demand. When times are slow, the retailers benefit from the wholesaler carrying the burden of acquisition and inventory. "Right now, Atlanta is in a slower building economy, and retailers are turning to us more," says John Planer, general manager of Sequoia Supply's Atlanta branch.

On the other side of the country, Orange County rarely has a slow cycle. "Orange County is an incredible growth market for lumber and building supply retailers," says Harry Davidson, Orange manager. "Our retailers can sell more than they can physically move."

Both centers see windows, and especially the window and door package in the West, as a rapidly expanding market segment. "ln Atlanta, wood windows are the windows of choice," Planer says. "We carry over

300 window parts including sash, frames and components so that we can quickly assemble the windows our customers need."

Sequoia Supply distributes products mostly in what Planer refers to as the "trim package" with such manufactured items as mouldings, attic stairway units, wood window parts, sidings and paneling.

"We sell more double-hung wood windows than any other window because, after all, operating a wood window is like closing the door of an expensive car. Wood windows sound better, look better and operate better," Planer explains.

Story at a Glance

Ways retailers can utilizewhole salers to keep millwork inventory low, profit high...keep customer demands in balance with inventory consistency.

Skyrocketing real estate prices in California have also affected the remodeling/repair market. People are trying to increase the value of their existing homes, according to Davidson.

"People will spend a lot of money to make a personal statement," he says. As a result, Davidson says that the window and door package is a hot seller, growing faster than any other building component in the area.

North

According to Nicholas R. Kent, executive vice president,

American

Wholesale

Lumber Association, the variation in the building economies which characterize Sequoia Supply's bi-coastal distribution centers are fairly characteristic of the wholesale lumber industry. "But the flexible nature of wholesalers allows them to adapt to the changing needs of home center retailers and industrial buyers. Lumber wholesalers are in business to build the retailers' business in good times and slow times," he says.

Planer adds: "As a lumber and building supply specialty distributor, we have the flexibility to work with retailers through all market cycles. Back when interest rates were low and we were experiencing doubledigit inflation, having excess inventories worked in the retailers' favor. But now, with substantially higher interest rates and relatively low inflation, excess inventories can be viewed as a drain on cash flow."

Kent illustrates the point: "As most retailers know, 200/o of their sku's generate about 8006 of their sales and gross profits. Admittedly, buying bulk for cost savings on these items may be the best use of cash resources. But cash traps usually occur with the remaining 80% of the sku's which produce the bottom 20oh of sales and gross profits. The dollars spent for these lesser volume items often exceed 50% of inventory dollars invested during part or all of the year."

In Orange, retailers are constrain- ed by the extremely high real estate costs which affect their ability to profitably maintain space for inventory, making storage an even greater burden. Working off Sequoia's inventory. Orange retailers can receive orders within 72 hours and offer much broader product lines.

"Although we can sit down and show a retailer on paper how we save the burden of inventory and improve cash flow, the retailer usually has already done this," says Planer.

Sequoia Supply also supports retail sales by providing merchandising aids and conducting product knowledge training classes. How to tell the difference between a single- and a double-hung window, how to stack doors, and how different stains affect lumber products are among the subjects covered.

"We have found that retail sales people are more confident about selling after one of our training programs," says Richard D. Passaglia, vice president of marketing, Sequoia Supply. "And when sales people are confident, it is reflected in their sales performance."