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JANUARY 2020

Vol. 46 No. 1

o s int e g r su ucts d o r gP ildin u B ey Ashl n o r e Cam

2020


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HBSDEALER HARDWARE + BUILDING SUPPLY

28 INDEPENDENT PROFILE 26 Connecticut-based Interstate + Lakeland Lumber expands into its fourth generation.

PRODUCTS 28 Outdoor living: City

gardening and other trends from the world’s largest garden fair.

MARKET INSIGHTS 24 From the cutting edge: COVER STORY Cameron Ashley is playing to win

18 With a new identity and a year of expansion under its belt, the company formerly known as Guardian surges into 2020.

FROM THE EDITOR 8 Memo from California There’s fireworks in the WCLBMDA Convention Government Affairs Report.

NEWS & ANALYSIS 9

30 An Ambassador of

Lumber: Cally Fromme, of Kodiak Building Partners, builds a strong case for the LBM industry.

32 Five tips for building a

successful succession plan.

Battling shrink at the Home Depot.

10 Hayward Lumber expands

its tool box.

11 No deal for Canfor and

Great Pacific.

14 Orgill’s new CEO shares

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Technology trends that helped make 2019 a year of disruption.

his thoughts on corporate expectations, ecommerce opportunities and why he’s excited about 2020.

15 Outdoor power goes green.

32 IN EVERY ISSUE 12 News Map 34 Quikrete Industry Dashboard

Hardware + Building Supply Dealer (ISSN 2376-5852) is published monthly, except for July/August and November/December, which are double issues, by EnsembleIQ, 8550 W. Bryn Mawr Ave., Suite 200, Chicago, IL 60631. Subscription rate: $119 per year in the United States; $139 in Canada and Mexico; $279 in all other countries (air mail only). Periodical postage paid at Chicago, IL., and additional mailing offices. POSTMASTER: Please send address changes to HBSD, Circulation Fulfillment Director, P.O. Box 3200, Northbrook, IL 60065-3200. Subscription changes also may be emailed to hbsdealer@omeda.com, or call 847-564-1468. Canada Post: Publications Mail Agreement #40612608. Canada Returns to be sent to Bleuchip International, P.O. Box 25542, London, ON N6C 6B2. For change of address, six weeks notice to Hardware+Building Supply Dealer, P.O. Box 3200, Northbrook, IL 60065-3200 is requested. Give old and new address and zip code. If possible, enclose address portion from cover on previous issue. Vol. 45, No. 3, March 2019. Copyright © 2020 by EnsembleIQ. All rights reserved.

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JANUARY 2020 HARDWARE + BUILDING SUPPLY DEALER

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YellaWood® brand pressure treated pine is sought after by all the best builders, especially those with leather tails, buck teeth and nature’s highest building standards. Our proven reputation for having high quality products drives demand for the Yella Tag. The five-star service and unrivaled support of the YellaWood® brand puts dealers in position to meet their customer’s specific needs. See how the YellaWood® brand delivers at YellaWood.com.

IF IT DOESN’T HAVE THIS YELLA TAG, YOU DON’T WANT IT.

YellaWood® brand pressure treated products are treated with preservatives (the “Preservatives”) and preservative methods, and technologies of unrelated third parties. For details regarding the Preservatives, methods, and technologies used by Great Southern Wood Preserving, Incorporated, see www.yellawood.com/preservative or write us at P.O. Box 610, Abbeville, AL 36310. Ask dealer for warranty details. For warranty or for important handling and other information concerning our products including the appropriate Safety Data Sheet (SDS), please visit us at www.yellawood.com/warranties or write us at P.O. Box 610, Abbeville, AL 36310. YellaWood® and the yellow tag are federally registered trademarks of Great Southern Wood Preserving, Incorporated. All other marks are trademarks of their respective owners and are used with their permission.


HERE’S WHAT’S ONLINE

@HBSDealer

Tweet Central

Top Women in Hardware & Building Supply HBSDealer invites nominations for these industry awards, which recognize women and their key contributions to the hardware and building supply industry. Both experienced leaders and rising stars are eligible for our 2020 awards program. The official nomination form can be found at HBSDealer.com

HBSDealer Daily Newsletter: Features Every Day The HBSDealer Daily Newsletter, the industry’s leading news source, features news, analysis, videos and commentary — plus these regular, weekly features. Sign up to receive your daily news at hbsdealer.com. Monday

Tuesday

Wednesday

Thursday

Friday

Quikrete Industry Dashboard

HBSDealer Poll Question

Principia Stat of the Week

Throwback Thursday

Eye on Retail

Take the poll. Digest the results HBSDealer.com publishes a weekly poll question on pressing industry matters, and other topics. For instance:

9%

Q

What are your thoughts on the latest tariff roll backs?

37%

Roll backs are welcome, but more are needed, 37% An all-around positive development 30%

25%

Recent agreement has no real impact 25% More tariffs are needed to protect U.S. industry 9%

Follow us @HBSDealer

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Poll questions and results appear every week at HBSDealer.com.

JANUARY 2020 HARDWARE + BUILDING SUPPLY DEALER

30%

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FROM THE EDITOR

HBSDEALER HARDWARE + BUILDING SUPPLY

Hardware + Building Supply Dealer An EnsembleIQ Publication 8550 W. Bryn Mawr Ave., Suite 200, Chicago, IL 60631 hbsdealer.com HBSDealer On The Web • HBSDealer Info Services

Wake up, California

SENIOR VICE PRESIDENT (HBSDealer, Drug Store News, Chain Store Age) John Kenlon, jkenlon@ensembleiq.com, 212-756-5238 EDITOR IN CHIEF Ken Clark kclark@ensembleiq.com, 212-756-5139

Don’t be misled by its sleepinducing title. The “2019 WCLBMDA Convention Government Affairs Report” is a document that packs a dynamite punch. It kicks off: “The 2019 California legislative session closed at midnight on Sept. 14. We can thank our stars there was an end to the madness.” And it goes on from there, chronicling just a few of the 870 bills that were signed into California law in 2019. The report takes aim at Governor Gavin Newsom and the direction of the state “at least a few notches to the left into ideological territory that his predecessors, including Jerry Brown, were not willing to explore.” Holy Ronald Reagan, gentle readers. Now does this report have your attention? It should. Consider the passage of Assembly Bill 5, which become law on Jan. 1. AB 5 affects hundreds of thousands of independent contractors in the state and attempts to define which type of employees must be placed on payrolls, and which type can remain independent contractors. “The exclusions are so badly worded as to be unclear in many instances, but many industries are expected to be upended,” according to the report. Other inflaming topics include pension debt, property tax increases, ineffective homelessness policies (see article on page 10), the California Consumer Privacy Act and — an oldie but goodie — The Private Attorneys General Act.

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LBM EDITOR Andy Carlo acarlo@ensembleiq.com, 845-891-5108 CONTRIBUTING EDITOR Ken Ryan ryankgr@aol.com, 516-567-3034 Editorial Inquiries: Direct questions to Editor in Chief Ken Clark.

At the recent ProDealer Industry Summit, the editor left, with Augie Venezia, of Fairfax (Calif.) Lumber & Hardware.

This last piece of legislation actually deputizes private citizens to pursue civil penalties for violations hidden from inspectors — think pay stub formatting errors. The upshot is a “very big business for legalized extortionist attorneys.” For this report (you can read it in its entirety at HBSDealer.com) we have Augie Venezia to thank. He’s the owner of Fairfax Lumber & Hardware, and the government affairs chair for the West Coast Lumber & Building Material Association. Augie sightings are common at Ace conventions, ProDealer Industry Summits and NLBMDA Legislative Conferences. He’s a passionate advocate of this industry, a patient explainer of business threats and an admirable leader in crusades to bring common sense to the statehouse, or wherever. “When I was growing up, California was the Golden State where everyone wanted to live,” the report concludes. “But now, California gets its golden color not for being the land of opportunity, but because its goose is almost cooked.” HBSD

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VICE PRESIDENT, PRODUCTION Derek Estey destey@ensembleiq.com, 877-687-7321 DIRECTOR OF PRODUCTION Michael Kimpton mkimpton@ensembleiq.com, 647-557-5075 CREATIVE DIRECTOR Colette Magliaro cmagliaro@ensembleiq.com ART DIRECTOR Bill Antkowiak bantkowiak@ensembleiq.com PRODEALER INDUSTRY SUMMIT OCT. 8TH TO 10TH, COLORADO SPRINGS, COLO. WWW.PRODEALER.COM IN PARTNERSHIP WITH THE NLBMDA, WWW.DEALER.ORG CONTACT: AMY PLATTER GRANT agrant@ensembleiq.com, PDIS DIRECTOR OF SPONSORSHIPS PUBLISHER OF HARDWARE + BUILDING SUPPLY DEALER, DRUG STORE NEWS, CHAIN STORE AGE. CIRCULATION LIST MANAGER: ELIZABETH JACKSON, MERITDIRECT (847) 492-1350 X318. PERMISSIONS: MATERIALS IN THIS PUBLICATION MAY NOT BE REPRODUCED WITHOUT WRITTEN PERMISSION. TO ORDER REPRINTS CALL PARS INTERNATIONAL AT (212) 221-9595, EXT. 435, OR EMAIL LF-REPRINTS@PARSINTL.COM. CONTACT COPYRIGHT CLEARANCE CENTER, 222 ROSEWOOD DRIVE, DANVERS, MA 01923, (978) 646-2600 OR (855) 239-3415, OR ON THE WEB AT COPYRIGHT.COM FOR IMMEDIATE AUTHORIZATION TO PHOTOCOPY FROM HARDWARE + BUILDING SUPPLY DEALER (ISSN 2376-5852).

Corporate Officers CHIEF EXECUTIVE OFFICER Jennifer Litterick CHIEF FINANCIAL OFFICER Jane Volland CHIEF INNOVATION OFFICER Tanner Van Dusen CHIEF HUMAN RESOURCES OFFICER Ann Jadown EXECUTIVE VICE PRESIDENT, EVENTS & CONFERENCES Ed Several

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Ken Clark Editor in Chief

JANUARY 2020 HARDWARE + BUILDING SUPPLY DEALER

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NEWS + ANALYSIS

Home Depot battles shrink It’s easier than ever to shop 24 hours a day, seven days a week. It’s also easier to steal 24 hours a day, seven days a week. That’s one of the reasons why the dark topics of theft and organized crime — even the opioid crisis — intruded on The Home Depot’s Investor and Analyst Conference in Atlanta last month. Continued pressure from shrink, primarily driven by product theft, was described as “the most significant impact to our margin outlook,” by Home Depot Executive VP and CFO Richard McPhail. “We have tested approaches to mitigate this loss while minimizing the impact on our customers shopping experience, and are now rolling out new solutions more broadly,” McPhail said. “While we are implementing these changes, we think it’s prudent to anticipate continued pressure in 2020.” The company says it is taking a bite out of crime in a number of ways. Not only by securing high value items, but by putting technology to work in new ways. Anne-Marie Campbell, Executive VP

Anne-Marie Campbell, Executive VP of U.S. Stores.

of U.S. Stores, said several pilots have been initiated, including some that involve POS activation. She explained: “you buy a power tool, and the only [way] that the power tool can work is if it goes through the POS.” “We expect to see shrink abate not only in 2020, but beyond,” she said.

CEO Craig Menear added that shrink continued to be problematic as 2019 played out, despite the steps taken by the company. Organized retail crime has expanded rapidly, he said, and it has more ways to convert stolen goods into cash than ever. “We have a hypothesis that this ties to the opioid crisis,” he said. “But we’re not positive about that.” He said that Home Depot is working “hand-in-hand” with law enforcement, and is seeing “significant busts” involving “millions and millions of dollars of multiple retailers’ goods.” That should come as no surprise to the National Retail Federation, which published results of its annual National Retail Security Survey in June. “We are seeing dramatic changes in the risks faced by retailers, and loss prevention practices and priorities are evolving to meet those challenges,” NRF Vice President for Loss Prevention Bob Moraca said. “As criminals find new ways to steal, loss prevention teams are finding new ways to stop them. Increasingly, this is a battle focused on technology.” Theft, fraud and losses from other retail shrink totaled $50.6 billion in 2018, up from $46.8 billion in the prior year.

Stat of the Month: Forecast edition At the recent NAR Real Estate Forecast Summit, the consensus forecast from “14 economic and housing market experts” anticipates the following numbers for 2020 and 2021:

Metric

2019*

GDP growth Unemployment rate Average mortgage rate Housing starts (total) Home price increase

2020 F

2021 F

2.1% 2.0% 1.9% 3.6% 3.7% 3.9% 3.7% 3.8% 4.0% 1.31M 1.31M 1.37M 5.0% 3.6% 3.5%

*Advance figures Source: National Association of Realtors

HBSDealer.com

HARDWARE + BUILDING SUPPLY DEALER JANUARY 2020

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NEWS + ANALYSIS

Dealer and retailer tie the knot in California In a move you don’t see every day, a pro dealer has acquired a tool retailer. Hayward Lumber, the Salinas, Calif., pro dealer has acquired the Buena Tool Company in Santa Barbara. Buena Tool Company sells dozens of major brands of power tools and power equipment, including heavyweights such as Bosch, DeWalt, Honda, Makita, and Milwaukee Tool among others. Founded in 1975, the business is also an authorized repair center for several major brands. Hayward Lumber, celebrating its 100th Anniversary this year, has also been part of the Santa Barbara community since purchasing County Lumber in 2000. In fact, Hayward and Buena Tool are neighbors on Laguna Street in Santa Barbara. “We’re excited to have Buena Tool and their employees be part of the

Hayward Lumber family. Our company has grown up on the Central Coast and we are proud to be a part of its history,” said Bill Hayward, CEO and chief

innovation officer at Hayward Lumber. Buena Tool has a dedicated staff that takes care of its customers, Hayward Lumber said in a statement announcing the acquisition. The pro dealer also said that customer satisfaction is Hayward’s number one priority. “My great grandfather understood customer service. He said to treat your customers right and they will always come back,” the CEO said. Buena Tool and Hayward have planned a grand opening celebration with an open house event for the first part of 2020. The event will include national brand vendors. Terms of the acquisition were not disclosed. Hayward Lumber operates seven lumber yards in California along with six design centers, a truss plant and its fast floor systems facility.

Homelessness intrudes on business In a heartfelt Facebook post from Workman’s Ace Hardware of Riverside, Calif., the family owners announced plans to close the store indefinitely. Among other challenges, Ted and Pam Workman pointed to a nightmare scenario of homelessness — a growing problem in California, and many other places — intruding on the operation of the business. Here is an excerpt from the post: “Homeless, vagrants, transients, whatever they are, we’re just another nail in the coffin. People don’t want to shop in what they deem as a unsafe

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A societal problem is on the rise.

area. I tried very hard to clean it up as best for could, but more just kept showing up. I stopped allowing them

JANUARY 2020 HARDWARE + BUILDING SUPPLY DEALER

in the store, and got a bad rap. We were 1,000% Ace Helpful and got blamed for not allowing them to shop. Turn your back and there went another pair of gloves, a lighter, batteries, you name it. The trash they left behind daily, the needles, the urination and feces, kicking in my windows for no apparent reason, blocking my back entrance, being topless around the store, and much more, all added to the difficulty of owning a business. The police tried to help, the shopping center tried as well, but there is no solution.”

HBSDealer.com


No deal for Canfor and Great Pacific Canfor Corporation and Great Pacific Capital Corp. mutually announced that they have terminated an acquisition agreement. The plan called for Great Pacific Capital, a subsidiary of Great Pacific, to acquire the remaining 49% of Canfor that it does not already own. Great Pacific is owned by Canadian billionaire Jim Pattison. Under terms of the agreement, Great capital would have purchased the remaining shares of Canfor in a deal worth about 1 billion Canadian dollars (US$760 million) and then take the Vancouver, British Columbia-based lumber and pulp producer private. Canfor is traded on the Toronto Stock Exchange. But a vote by Canfor shareholders cast by proxy resulted in only 45% approving the arrangement. According to Canfor, the “majority of the minority” was not met and a vote of 50% was needed.

News Map: Openings, Closings & Acquisitions Illustration of retailers and dealers in various stages of coming and going. For more retail news, visit HBSDealer.com OPENING

utah

Provo

Installed Building Products IBP acquired Premier Building Services, which installs insulation and garage doors primarily for residential customers. “Utah is an attractive housing market and I am excited to grow IBP’s presence within the state,” said IBP CEO Jeff Edwards.

CLOSING

ACQUISITION

massachusetts

Lenox

Carr Hardware The 11,000-square-foot store marks the fifth Carr store in the Berkshires and the eighth in New England overall. President Bart Raser said the store “features a customer shopping experience specially designed for the Lenox community,” serving contractors, homeowners resorts and other businesses. Carr will celebrate a grand opening in Lenox in May.

texas

Edna

Alamo Lumber The San Antonio based home center moved into a building formerly occupied by a Walmart here about 100 miles south of Houston. The news made the front page of the New York Times in an article under the headline: “The Town that Lost its Walmart.”

HBSDealer.com

west virginia

South Charleston

Spring Hill Hardware After 71 years, Spring Hill Hardware store in South Charleston closed at the end of 2019. The family-owned neighborhood mainstay opened in 1948. Owner Randy Francis told WCHS TV that a successor for the business could not be found as he entered retirement.

HARDWARE + BUILDING SUPPLY DEALER JANUARY 2020

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NEWS + ANALYSIS

A CEO’s playbook: more synergy, more growth By Ken Clark teams more formally integrated and sharing opportunities — that will strengthen Orgill and our customers overall.

Moore, center, expects Orgill’s growth to continue.

At Memphis, Tenn.-based distributor Orgill Inc., some things will remain the same with Boyden Moore at the helm. Some things will change. Moore, president of Orgill since January 2019, replaced Ron Beal as CEO on Jan 1. Beal led the company for 15 years and will remain Orgill’s chairman of the board. Chief among those things that Moore intends to continue is the distributor’s emphasis on growth. “We’ve been the fastest growing distributor for over 20 years,” Moore told HBSDealer. “And I can tell you I’m expected to keep that going.” Moore has a track record of growth. He was the retail innovator behind CNRG, which came into existence in 2011 under Orgill’s Tyndale Advisors

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group which he led. The collection of retail brands has grown from one brand to 16, including Alabama-based Marvin’s, where Moore was president and CEO prior to 2011. Moore spoke with HBSDealer just before officially taking the reins as CEO. Here’s the edited report: HBSDealer: You’ve said that some things will stay the same. What will change? Moore: There are few things. One is tightening the integration of the way that Tyndale Advisors and CNRG work with Orgill in the service of our overall mission to help our customers be successful. That kind of synergy has been increasing over the years. Our customers have found ways to help each other. But getting these

JANUARY 2020 HARDWARE + BUILDING SUPPLY DEALER

HBSDealer: Can you give an example? Moore: For instance, CNRG has 16 different brands across many different geographies. So you have a rich retail laboratory for our buyers to use to improve the programs that we have for all of our dealers. When they are evaluating vendors or programs, our buyers inside of distribution haven’t been aware of all the information and tools available to them when it comes to learning from CNRG. We want to be more intentional about giving them access to that data and leveraging that information. HBSDealer: One of the big challenges facing the independent is online competition — specifically Amazon. What do your customers expect from Orgill in this arena? Moore: A couple years ago at CNRG, we got together to talk about how we could solve this for the independent dealer and avoid duplicating and wasting our efforts. We studied Home Depot, Lowe’s and Tractor Supply and they all have a high frequency of buy-online, pick-up-in-store. And we saw the big opportunity for the independent dealer as having a shoppable website that allows you to express your full brand. And I think it’s important to define success with e-commerce. To me, it’s not where the sale is reported or what percentage is driven by e-commerce.

HBSDealer.com


Success is focused on: “is it building business?” HBSDealer: What will your solution look like? Moore: One part of the solution is an industry PIM — product information management system. Everyone would share in that data pool. And local pricing and local inventory integrated with the local POS vendors are also part of it. And then another big component is custom promotions and custom policies. So it needs to be customizable, but easy to roll out. We get an opportunity to test that, develop it and refine it in a very transparent way. And then our customers can plug into it in a very affordable way. We think this is an important part of our business going forward. And we feel a responsibility to solve this for the independent channel. HBSDealer: What makes Orgill management excited about 2020? Moore: At this time last year, a lot of people were wondering about when the recession would hit in 2019 or 2020. You don’t hear as much of that anymore. I think the economy will drive growth, and the weather has a good chance to drive a little growth — especially since the first half of 2019 was the wettest first half in the last 145 years. Home Depot and Lowe’s are expected to do better in 2020, and we expect that growth in the independent channel as well. Also, we just launched a new relationship with Scotts Miracle-Gro that we’re very excited about. HBSDealer: You’re replacing Ron Beal. Can you tell us what it’s been like working with him? Moore: It’s been great working with Ron. He’s the reason I’m here. My first conversation about Tyndale Advisors and CNRG was with Ron. He’s been a big advocate of that entire strategy and how it could make a positive impact on all of Orgill’s dealers. He’s had a lot of success here, and he’s been a huge mentor to me and many others here.

HBSDealer.com

From the mall to the farm Tractor Supply Company has named Macy’s President Hal Lawton as the farm and ranch retailer’s next president and CEO. Lawton will succeed current Tractor Supply CEO Greg Sandfort, who previously announced that he plans to retire. The new CEO will officially take the wheel at Tractor Supply on Jan. 13. “I am extremely excited and honored to join Tractor Supply as I have long admired the company for its strong brand and focus on serving the ‘Out Here lifestyle’,” Lawton said. “Greg and the team have built a tremendous company culture, and I look forward to an exciting future and continuing to drive growth and shareholder value.” Sandfort, 64, will remain with the company through Feb. 29, 2020, and then serve as an advisor until Aug. 31.  He will serve out his term on the board of directors until May 7.

Hal Lawton named new CEO for Tractor Supply Comany.

Good for the yard, and the earth The Home Depot has named Chervon’s EGO brand of outdoor power equipment products as its 2019 Environmental Partner of the Year. The award was given to Chevron EGO for pioneering the development of a lithium battery that makes lawn care more convenient and environmentally responsible, the retailer said. The 56V ARC Lithium battery replaces heavy carbon-emitting combustible engines and is used across the EGO line of cordless outdoor power equipment. This includes blowers, mowers, chain saws, and hedge trimmers. The Home Depot also said that EGO helps

prevent 17 million gallons of gas spilled annually by Americans filling lawn equipment. The 56-volt Lithium-ion cordless, self-propelled mower.

HARDWARE + BUILDING SUPPLY DEALER JANUARY 2020

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Mike Kimball, CEO - Ian Williams, COO Fresno Ag Hardware, Fresno, California


“Our philosophy as a company is to always be an asset to our community. That means it’s up to us to make sure we’re working with suppliers that best serves our customer’s and client’s needs. Midwest Fastener continues to exceed expectations by providing an amazing product selection, competitive pricing and quality customer service that you can’t find anywhere else.” – Mike Kimball, CEO


COVER FEATURE

Cameron Ashley Building Products surges into 2020. By Andy Carlo

2019 was all business for Cameron Ashley Building Products as the distributor introduced a new identity and rapidly expanded. Now with a year under its belt as Cameron Ashley — and no longer Guardian Building Products — the Greenville, S.C.-based LBM distributor has its sights set on additional expansion and improvement. “When we acquired the business (Guardian Building Products), we agreed to change the name. But, even if we were not required to do so, we would have moved quickly to make the change,” Donny DeMarie, CEO and president of Cameron Ashley, told HBSDealer. DeMarie describes the former Guardian Building Products as “a corporate orphan, from a strategy that had long since run its course.” Guardian was originally associated with being a manufacturer of fiberglass building insulation but sold its fiberglass plants to Knauf Insulation in 2013. And in 2000, when Guardian purchased Cameron Ashley, the latter was one of the nation’s largest distributors of building products. “The team identified much more closely with Cameron Ashley. Changing our

Cameron Ashley CEO Donny DeMarie (center) and Regional Vice President Tom Gaffey (second from right), with the team at the company’s Belcamp, Md. location just outside of Baltimore.

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JANUARY 2020 HARDWARE + BUILDING SUPPLY DEALER

HBSDealer.com


name back to Cameron Ashley was consistent with our strategy and vision. Cameron Ashley was a powerhouse in building products, and we are excited to carry on that legacy,” DeMarie explains. Fast forward to 2020 and Cameron Ashley is a growth-oriented business focused on taking market share in existing markets, entering new markets through greenfield locations, and pursuing acquisitions. Shortly after it the name change last January, the company acquired Warrior Building Products — a distributor serving the St. Louis market. “We believe in competing every day and playing to win. Every time we take

HBSDealer.com

Along with expansion, 2019 brought a new logo and new equipment to Cameron Ashley.

the field, we expect to win,” DeMarie says, noting that acquisitions add new markets, new product lines, and create leverage in existing markets.

In fact, the motto “Play to Win” can be found emblazoned across a wall at the company’s headquarters. Cameron Ashley ended 2019 with 35 distribution centers in 20 states and a total storage footprint of over 4.2 million square feet. This includes openings across the country: Georgia, Nevada, North Carolina, Ohio, Phoenix, Pennsylvania, Oklahoma, South Carolina, and Texas. The company says 26 of those centers are strategically located within 150 miles of the 25 largest metropolitan statistical areas in the nation. Cameron Ashley serves about 5,000 customers in the lumber and building materials industry.

HARDWARE + BUILDING SUPPLY DEALER JANUARY 2020

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Cameron Ashley 2019: Where did the time go?

COVER FEATURE New year, new growth As 2019 brought Cameron Ashley into new markets, including Phoenix and Las Vegas, the distributor is poised for more growth in 2020. “Regarding our plan for 2020, we expect to grow our market share of existing markets, complete several transactions, and expand into new markets and products through greenfield locations and acquisitions,” DeMarie says. “We have spent the last 20 months building a strong deal pipeline, and we are excited for all the 2020 opportunities.” Last year’s expansion plans allowed the company to expand West and serve new markets, including California, metro Las Vegas, and the greater Phoenix area. DeMarie doesn’t view the moves as driving the company westward. Rather, he views the openings as the company putting a focus on entering the “best new markets.” “Since we are highly concentrated in the East, there are more opportunities in the West. However, we are looking at all opportunities, and our two most recent “We have locations in Tulsa, combined Okla. and Harrisburg,

Cameron Ashley Building Products burst into 2019 with a frenzy of activity. And as the year progressed, the company didn’t seem to slow down. Here are some of the highlights for the Greenville, S.C.-based LBM distribution company.

Expansion efforts in 2019 included a new location in North Las Vegas.

Pa. are examples of following the best opportunity regardless of where it is located,” DeMarie explained. Updating and upgrading its technology to better serve customers while creating strategic differentiation from its competitors is part of the Cameron Ashley package as well. Cameron Ashley rolled out a new transportation management system in 2019, which assisted the distributor in implementing its new Fast Delivery system. The company says the Fast Delivery system is committed to delivering products to customers either on a same-day or next-day basis. Scott Siebeneck of Cam Building Supply in Leipsic, Ohio recently ran into an obstacle when the specific shingles he needed were not in stock. “Cameron Ashely worked within their distribution network to get me the color and type that I needed in the timeframe significant I needed the product,” input from our Siebeneck says. “This was above and beyond anything I customers and would have expected. They’ve incorporated been a great distributor partner best in class for us this year.” design from After working throughout other industries 2019 to understand how to create a to create the best online experience possible for truly unique its customers, Cameron distribution Ashley will introduce a new experience.” ecommerce platform in 2020. —Donny DeMarie, “We have combined President and CEO significant input from our customers and incorporated best in class design from other industries to create a truly unique distribution experience,” DeMarie says.

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JANUARY 2020 HARDWARE + BUILDING SUPPLY DEALER

JANUARY Guardian Building Products announces it is changing its name to Cameron Ashley Building Products, including a new logo and website. The company acquires Warrior

Building Products, a distributor serving the St. Louis market. New distribution centers are

opened in Rocky Mount, N.C. and Cleveland, Ohio. FEBRUARY Cameron Ashley opens a new distribution center in Columbia, S.C. APRIL The company enters into a new $100 million asset-backed credit facility and promises expansion. JUNE Cameron Ashley opens a distribution center in Phoenix, serving Tucson, Prescott and Flagstaff, Ariz. The company follows the move

with another new center in North Las Vegas, Nev. JULY Company opens a new Houston, Texas distribution center, replacing an older facility. AUGUST A new distribution center is opened near Harrisburg, Pa., which will serve Maryland, New Jersey, New York, and Pennsylvania. DECEMBER Cameron Ashley relocates its Atlanta distribution facility to Kennesaw, Ga. The company opens a new distribution

center in Broken Arrow, Okla., serving the greater Tulsa market.

HBSDealer.com


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Cameron Ashley’s team in Albuquerque, N.M. are part of the company’s western distribution arm.

COVER FEATURE “Our ecommerce initiative will be more than online ordering, it will be a full customer portal.” The new portal will allow customers to place orders, check open account balances, and check the status of pending orders. Cameron Ashley also offers its Plus Points loyalty program. During the winter buying season, the Plus Points program has been providing Cameron Ashley’s Customers with an additional incentive to earn even more points, which can then be turned into merchandise, gifts or trips to their Dealer Show. “At Cameron Ashley, we are using technology to provide you with what you need, when you need it, ordered any way you like while adding to your Plus Point balance,” DeMarie says.

A Customer Experience department has also been put into place, which is designed to give Cameron Ashley’s customers “a seat at the table,” according to DeMarie. “Traveling to Customers, we have implemented a robust capability to do in-store merchandising. We also assist with aisle resets and refresh. We have developed marketing and display material. We track your success, and we have found our sales have

Showtime for Cameron Ashley By Andy Carlo Cameron Ashley Building Products bills its 2020 Dealer Show as “a spectacular four-day event that combines world class entertainment, thought-provoking educational sessions and unlimited networking opportunities.” Slated for Jan. 9-12 at the Orlando World Center Marriott, the setting of the show has been chosen to provide Cameron Ashley’s customers with a much needed break from the winter weather. The event marks one of the largest gatherings of independent lumber dealers in the industry. More than 300 independent lumber yards are expected to be represented by attendees at the show in addition to 90 exhibitors. Cameron Ashley says it expects to host more than 1,500 guests in total. Incorporated into the agenda is a one-day buying event where attendee-only specials

22

Buying opportunities, entertainment and education are all part of the mix at Cameron Ashley’s annual Dealer Show.

are the best deals of the year. According to CEO Donny DeMarie, the 2020 Dealer Show is part of the overall “Cameron Ashley experience.” “It’s part of our differentiation,” he says. “We build strong relationships, we provide great local service, and we dig deep to offer our customers the best deals of the year.” Keynote speakers at the show include

JANUARY 2020 HARDWARE + BUILDING SUPPLY DEALER

increased north of 35% through enhanced instore merchandising and displays,” DeMarie says. “Our Customer Experience department can schedule product knowledge trainings, fulfill literature requests, and help our customers sell to their customers.” For DeMarie and the team at Cameron Ashley, the company’s approach to customers compounded with its strategic growth are examples of how the distributor is winning while separating itself from the competition. “We talk internally about ‘the Cameron Ashley Experience’ and how we are disrupting traditional distribution,” DeMarie says.

Lt. Col. Dan “Noonan” Rooney, a USAF fighter pilot with 3 combat tours in Iraq, a PGA Golf Professional, and the founder of Folds of Honor. Legendary sports broadcaster and ESPN college basketball personality Dick Vitale is also a keynote speaker this year. In additional to a full lineup of education events, Cameron Ashley has also planned plenty of off-site activities including a Disney Keys to the Kingdom Tour, a Seaworld VIP Tour, a visit to the Kennedy Space Center that includes lunch with an astronaut, and a tour of several local breweries, among other options. A Universal CityWalk Block Party and trip to Universal’s Islands of Adventure is also planned. “It is the industry’s can’t-miss event, with attendance up over 25% from last year,” said DeMarie. “All the key customers and vendors are in one place. We all measure results on a return-on-investment basis, and we want our customers enjoying themselves at the show but leaving knowing how much money they saved.”

HBSDealer.com


MARKET INSIGHTS

From the cutting edge

Mobile devices are playing new roles in home improvement.

These technology trends helped make 2019 a year of disruption. By Dan Berthiaume

T

he past 12 months seemed to go by in a blur, yet there was plenty of time for important and disruptive trends to emerge in the world of retail technology. Here are three trends from 2019 poised to continue disrupting retail in 2020 and beyond.

Amazon looks to conquer delivery in the air and on the ground.

Delivery — minus the driver Retailers piloted a wide assortment of automated delivery vehicles throughout the year. In January, Amazon introduced a public test of Scout, a six-wheeled, automated robot which makes deliveries while traveling sidewalks at a walking pace. Other self-navigating delivery robot pilots launched this year included a device called the FedEx SameDay bot that FedEx rolled out with Walmart and Target, as well as an autonomous delivery device called Serve that Postmates tested in Los Angeles.

24

Self-driving autos, trucks and vans were also all the rage in delivery during 2019. Pilots using self-driving vehicles from a slew of manufacturers, ranging from start-ups to “Big Three” automakers, sprang up at retailers and delivery providers including Walmart, Kroger, UPS, Stop & Shop, DoorDash, and H-E-B. In October, Walgreens made a big splash by partnering with Google and FedEx Express in the first-ever “store to door” pilot of drone-based deliveries in Virginia. The year also saw Amazon unveil a new drone model it plans to use for Prime Air deliveries in 30 minutes or less. Other big-name retailers that publicly explored the potential of autonomous drones as delivery devices included Walmart and CVS (in partnership with UPS). Social Retail 2019 was also a year where social media became more of a transactional platform. Instagram led the way by rolling out direct online shopping features such as Instagram@shop, an assortment of shoppable products curated by a team of Instagram editors. In addition, Instagram enabled a small group of celebrity “creators” to tag products in their posts, making the products instantly shoppable, and piloted a new instant product launch notification service. Pinterest also introduced several new social shopping features in 2019, including personalized shopping hubs at the top of users’ home feeds, an updated shopping section that enables

JANUARY 2020 HARDWARE + BUILDING SUPPLY DEALER

users to browse entire product catalogs from companies and click directly to the checkout page on the retailer’s site, and a new dedicated section from retailers beneath product pins. Furniture virtually comes to life Furniture has traditionally been a tough sell online. However, several retailers attempted to provide digital shoppers with a realistic view of furniture products, including how they would look in the customer’s own personal space, using augmented reality (AR) and virtual reality (AR) technology. La-Z-Boy launched a 360-degree product viewer with 3D product configurator, enabling consumers to virtually customize and explore products with 360-degree product spins, as well as 3D room planner solutions for customers, associates, and designers. Bob’s Discount Furniture and Amazon also introduced VR-based 3D online room planning tools. Meanwhile, Ikea rolled out a new AR app that enables users to enter the dimensions of rooms in their homes, and then place realistic digital images of home furnishings into virtual representations of those rooms. Customers can directly purchase items after viewing them from the app. For more technology trends and news, visit HBSDealer.com. Dan Berthiaume is the technology editor of Chain Store Age, a sister publication of HBSDealer.

HBSDealer.com


INDEPENDENT PROFILE

Interstate + Lakeland Lumber builds for the future A seven-unit Connecticut-based dealer expands into its fourth generation By Andy Carlo

F

or Interstate + Lakeland Lumber, 2019 proved to be an exciting year. The Connecticut-based pro dealer expanded into Westport, Conn. with a key acquisition that strengthened its foundation in the market. After renovations, the dealer officially opened the former Torno Lumber and Hardware site under the Interstate + Lakeland Lumber banner in December. Plans call for the lumberyard portion of the Westport location to be completely up to speed in early 2020. Meanwhile, by late 2020, a neighboring space will be converted into the dealer’s second full-scale design center — a multi-story facility dedicated to the latest and greatest LBM products. “The acquisition in Westport was all about our future,” said Sheldon “Shelly” Kahan, president and CEO of Interstate + Lakeland Lumber. “We pride ourselves on the exemplary products and services we offer builders in Fairfield County, and being in Westport lets us serve those needs better than ever before. It will also be an incredible opportunity to provide service to the homeowners of Fairfield County.” This year marks Interstate + Lakeland Lumber’s 98th year in business. In Greenwich, Conn. — the company’s headquarters — the dealer continues to operate out of the same facility Leon Kahan opened back in 1922. “We’ve been a part of Fairfield County

26

Top left: Brian Kurtz, Shelly Kahan, and Ben Kahan represent the 3rd and 4th generation of Interstate + Lakeland. Above: A craftsmen in the Bethel, Conn., millwork shop. Left: The new location in Westport, Conn.

for nearly a century, and we knock on wood that we’ll be here for another century to come. We know what a special, beautiful place this community is, and we take our responsibility to it very seriously,” Shelly Kahan says. While the new design center is among the dealer’s short term goals, its long-term goals include establishing the next generation of Interstate + Lakeland. While Shelly Kahan represents the 3rd generation of the company, Senior Marketing Manager Ben Kahan, salesman Brian Kurtz, and Operations Manager Jason Kirsch represent the 4th generation of the family at the business. “We’re excited to be continuing the family legacy and keep growing the business. Between that and putting together the next class of executive leadership, we hope to give Interstate

JANUARY 2020 HARDWARE + BUILDING SUPPLY DEALER

+ Lakeland the foundation to keep thriving into future generations,” Ben Kahan told HBSDealer. Interstate + Lakeland Lumber describes itself as a “full-service lumberyard.” In addition to lumber offerings, the dealer also sells windows, doors, roofing, siding, trim, decking and moulding. Architectural hardware is another dynamic category for the business; its Greenwich showroom features strong displays from luxury brands like Omnia, Emtek, Baldwin and more. In total, Interstate + Lakeland operates seven facilities including Greenwich, Stamford, Westport, Newtown, and Bethel, Conn. along with sites in Shrub Oak and Port Chester, N.Y. The company employs about 140 people full time. The dealer’s custom millwork shop in Bethel is a particular source of pride for Interstate + Lakeland. While most of its products come from trusted vendors, Interstate + Lakeland’s millwork and

HBSDealer.com


mouldings are all made in-house. “We’re so excited about everything our Bethel Millwork shop produces. We’ve really ramped up the personnel at that facility to keep producing more millwork and moulding at an even greater quality: curved radius work, custom entryways, and mouldings to fit any architectural style,” Shelly says. “Their work needs to be seen to be believed.” “I’m constantly in awe of what the craftsmen there are able to create. If a builder can dream of it, our craftsmen can build it. It really is just incredible work,” Ben says. The dealer serves a lucrative Northeast market known to many as the “Gold Coast.” In addition to Fairfield County, Interstate + Lakeland has a strong reach into Westchester County in New York, in addition to New York City. Interstate + Lakeland’s flagship Greenwich location actually sits right on the border of

HBSDealer.com

Fairfield and Westchester counties. “And all in all, these are fantastic communities that are wonderful places to raise families,” Shelly notes. “The towns are beautiful and lively, there are incredible schools (both public and private) for kids, and the Long Island Sound shoreline that runs through both counties gives them a beach-like atmosphere that you can’t find elsewhere.” Other recent moves by the dealer include efforts to make its locations more efficient. Centralized roles were created at each location for dispatch, shipping, and receiving on commodity items and custom millwork. Other recent changes include the implementation of the K8 business management system from Kerridge Commercial Systems. This new system is being viewed as a tool for optimizing efficiency. The system is

expected to assist in strengthening distribution, tracking orders, and billing, among other functions. “It’s been a big initiative for us to switch over to K8, but the positive impact it will have on our operations will be tremendous,” Shelly says. He also sees a major advantage in the form of Interstate’s sales team, which has built business in plenty of projects in New York City, including a new building for the Parsons School of Design on Governors Island. “Whether it’s in passion or expertise, our sales staff is downright unparalleled,” Shelly says, noting that the sales team at Interstate + Lakeland brings decades of experience to the dealer. The team features product specialists who can match a project with the perfect window, millwork and architectural hardware, as well as industry experts who know all the ins-and-outs of the market.

HARDWARE + BUILDING SUPPLY DEALER JANUARY 2020

27


NEW PRODUCTS

Outdoor living, with European flair From spoga+gafa, here are some trends that could light the way to sales in 2020. By HBSDealer Staff

C

ity gardening, or the concept of creating green spaces in tight, urban areas, was a big deal during spoga+gafa 2019. But there was a lot more to plant and contemplate at the event with the funny name and the impressive status as world’s largest garden fair. Spoga+gafa — the German phrase for sports/leisure and garden — attracted more than 2,200 vendors to Cologne, Germany in September. City gardening was described as a global mega trend by the Koelnmesse events team, the fair’s organizers. “Today, the garden takes on the task of being a place to wind down and relax more than ever,” explained Stefan Lohrberg, director of spoga+gafa. “It gives people the feeling of security and is thus gaining a totally new significance.” Compact flower beds, vertical plant walls or mini greenhouses were among the stars of the show for their ability to transform balconies and other small areas into small kitchen gardens. In addition to city gardening, spoga+gafa organizers highlighted the following trends on display in Cologne: As people are looking for small

escapes from everyday life, the outdoor living industry is supplying

28

flexible, relaxing furniture. Modular sets and fast-drying materials are in demand, according to spoga+gafa organizers; Optimized comfort — ergonomic,

comprehendible and easy-tooperate design is gaining in significance;

Less is more: simplicity and

reduction in materials are bringing a “new purism in outdoor design,” say organizers. Natural wood frame outdoor furniture is part of this trend:

Systematic irrigation. Systems

designed to irrigate automatically and efficiently are coming under increased focus; and

Diversity in grilling. Smoking,

curing and baking are gaining wider appeal, and new high temperature models are bringing new flavors to the backyard. Versatile accessories are also gaining interest — LED grill lights; and integrated sound systems.

More than 40,000 visitors from 124 countries attended spoga+gafa 2019. In 2020, organizers have already identified another central theme: “sustainable gardens.”

JANUARY 2020 HARDWARE + BUILDING SUPPLY DEALER

HBSDealer.com


01

01: The city gardening theme was well illustrated in the Gardena booth.

04

02: The mixture of patterns and colors is another trend of outdoor living on view at the Holland-based Ter Steege booth. 03: The Yard Force robotic lawn mower can be programmed for just about any sized lawn. 04: At the Heissner booth, smart lighting gives character to a backyard fountain project. 05: Hammocks from Descotis, an Austrian company that promotes the “art of indolence.�

05

06: Putting the sport into spoga+gafa, Lali Industries of Pakiston showed off a colorful collection of game balls for the beach, or anywhere.

Photography by Koelnmesse

02

03

HBSDealer.com

06

HARDWARE + BUILDING SUPPLY DEALER JANUARY 2020

29


MARKET INSIGHTS

Ambassadors of lumber Building on the reputation of a vibrant industry.

Kodiak’s Cally Fromme.

Ssshhhhh … It’s a secret. The hardware and building materials industry is the greatest industry to enjoy a fulfilling career. Why is it such a well-kept secret, you ask? The answer is: I don’t know. No one knows. At any seminar or conference that you attend, you will hear some variation of the

30

By Cally Fromme

Editor’s Note: Cally Fromme, VP of communication and culture for Kodiak Building Partners, has been providing leadership in the LBM industry for at least the past decade. In 2011, when she was president and CEO of Victoria, Texas-based Zarsky Lumber, the family business, she took on the role of chair of the National Lumber and Building Material Dealers Association. As chair, Fromme tackled legislative and regulatory issues, and encouraged participation — and action — from dealers coast to coast. With Kodiak Building Partners’ acquisition of Zarsky in 2015, Fromme took on new responsibities and senior management positions at the acquisition-oriented, Denver-based company. There’s been no evidence of her passion for the industry subsiding. When HBSDealer approached Fromme about the idea of a Top Women program for the hardware and building supply industry, she rightly stressed the importance of inclusion for all professionals — men and women. At Kodiak, she continues the role of industry ambassador and encourages professionals to join this rewarding industry. And with typical enthusiasm, she volunteered to share her thoughts — in black and white — on recruiting and developing talent. Here is that essay. theme, “We just aren’t sexy….” Well, to those naysayers: speak for yourself. At Kodiak Building Partners, we think that we are plenty sexy. Eyes are rolling at our HQ in Highlands Ranch, Colorado, but bear with me. What makes someone attractive?

JANUARY 2020 HARDWARE + BUILDING SUPPLY DEALER

Smarts? Check! Energy? Yep! Passion? Got it! Experience? Years! Sense of humor? Oh yeah! Generous? You bet! Confidence? Duh. We’ve got it going on! To spill the beans and get the word out, we actively recruited “post millennials” to come and intern for us,

HBSDealer.com


during the summer. Obviously, these young adults would benefit, and so would Kodiak, but the big picture benefit is exposing this generation to our world. All kidding aside, the building materials industry truly is a great place to settle in. When you think about all the facets of our businesses, we are an interesting and vibrant industry that can satisfy a multitude of interests. Just a few examples:

Accounting Finance Safety/Risk Management Marketing Human Resources IT Marketing Supply Chain Logistics/Transportation Forestry Environmental Science M&A

Kodiak started its internship program in the summer of 2018. We found it to be valuable for all involved parties and strove to make it better organized and more robust, with intentions to keep improving, year after year. Our leadership fully supported the initiative, and mentors were prepared to take on the responsibility of guiding interns for a couple of summer months. Because our corporate headquarters and several of our companies are located in the Denver area, we reached out to four nearby universities to learn about their job fairs, pools of candidates, and internship expectations. Through their processes, we found five excellent students. We also were fortunate to have one of last year’s interns return for another round. Investment banking, business management, construction management, mathematics, and

HBSDealer.com

Eye-opening experiences: Kodiak’s interns looked down several career paths in the LBM industry.

accounting were their fields of study. Prior to this summer, most had very little exposure, if any, to the building material industry. They were a well-rounded group of typical 20-somethings with hobbies that included, piano, hiking, ice hockey, basketball, comic books, and video games. We found the interns to be bright, hardworking, focused, and eager to learn. The stereotypes about this age group just didn’t pan out, and hopefully, any misconceptions that they had about us were overcome, as well. One of our interns told us, in his exit interview, that he was very impressed with the efficiencies of some of our manufacturing facilities and that the technology utilized was more sophisticated than he expected. Benjamin, our intern, shared that young adults would be excited to understand that many operations in our field are cutting edge and open to incorporating more efficient mechanization and procedures. He told us that this was a facet of our industry that should be promoted, to help pique the interest of job candidates. He also felt like other young job seekers would feel at home in such a familial atmosphere. It was encouraging to him that he had access to the CFO, comptroller, and the VP of finance, telling us that such entrée might not be typical in all industries. He felt supported and encouraged. Benjamin and the other interns enjoyed an

environment that allowed them to comfortably ask questions, learn, and gain constructive feedback. The interns were constantly engaged and exposed to a variety of career paths, and their eyes were opened to the fact that challenging and varied vocations were available in our sector. Granted, no one ever said that we were “sexy”, but that was surely an oversight. They did tell us, though, that they had told their friends about the building material industry and roused some interest and enthusiasm. In the exit interviews, we were happy to learn that the chief complaint was that the program was too short. We can fix that! Kodiak Building Partners’ culture facilitates and encourages service to its communities and industry. By hiring, mentoring, educating, and developing local students, we are doing both. We encourage other companies to do the same, no matter their size. Cally Fromme is VP of communication and culture. Visit Kodiakbp.com for more information.

Breaking glass ceilings, coast to coast HBSDealer kicked off its Top Women in Hardware & Building Supply project in the December print edition. Find out more at HBSDealer. com. And mark your calendar for Nov. 4-5 in downtown Chicago for a special all-industry awards ceremony and career building event.

HARDWARE + BUILDING SUPPLY DEALER JANUARY 2020

31


MARKET INSIGHTS

Five Tips for Building a Successful Succession Plan

By Sam Brownell

A

s a business owner, have you identified the end goals of all your hours of hard work? Many business owners are so consumed with daily operational challenges that planning for a smooth ownership transition is often the last item on a never ending “to-do� list, if it has been considered at all. Building a successful succession plan requires you to begin preparing years in advance of the actual transition so that you can build and protect family wealth and cement your place in the community. As a first step, we suggest finding an expert who can help you build a succession plan that addresses these five critical areas.

1

Identify a list of future owners now. It can be difficult to pinpoint the specific person who is the right choice to carry on your legacy. We suggest you start with your closest relationships (e.g., children working in the business), then move to key, non-family employees and finally to third-party buyers. Developing a diverse list of potential future owners gives you the

32

time to discuss ownership transfer with them, observe how they handle management responsibility and develop an appropriate timeline for transitioning operational leadership and company ownership.

2

Know the value of your company and create a plan to maximize that value. Most business owners do not have a clear idea of what their business is worth or how their business compares to their competitors, which makes it difficult to improve profitability, a key step to increasing your sales price. Therefore, we suggest you get an independent valuation of your business1, so you know your current worth and you can identify areas where you can improve profitability. We also recommend contacting your trade association (e.g., NRHA) to see if they publish industry studies on profitability and compensation so you can benchmark

A rule of thumb to estimate the value of your business is to multiply your Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) by a sales multiple between 2 and 5, with the actual number depending on factors such as profitability and location.

JANUARY 2020 HARDWARE + BUILDING SUPPLY DEALER

your business. Ultimately, your business is valued based on the productivity of your assets and net income produced; it is not a function of the number of years you have been running the business.

3

Build wealth outside of your business. As a business owner, you focus on reinvesting cash flow into your business. However, we suggest you also have a plan to grow your retirement account, grow a family liquidity fund and use any real estate holdings for income. By not tying your wealth solely to the sale of your business, you will have more options for creating a successful succession plan. One asset that can be particularly useful in a succession plan is ownership of the real estate where you operate. We suggest holding this real estate in a legal entity that is separate from your business. This separation allows you to retain the real estate asset after the business is sold so you can continue to collect rental income.

4

Solidify your estate planning so your family and community legacy can continue. Chances are that as you have built your business you have also built a solid net worth foundation for your family and become an important part of your local community. In order to make sure that your legacy outlives you we suggest that you work closely with an estate attorney who can put the appropriate legal structures in place so your family and your community are in good hands long after you have stopped running your business.

HBSDealer.com


As a starting point, we suggest you update your will and put in place trust documents. We also recommend drafting a solid buy-sell agreement that can be signed as soon as an ownership transition takes place. The buy-sell agreement protects your business and family in case an owner becomes disabled, gets divorced or dies unexpectedly.

5

Plan ahead for the tax and cash flow consequences of your sale. We would all love to sell our business for a price that will support us and our family but if we do not account for taxes, we are providing an avoidable windfall to Uncle Sam. The key to a successful sale is not to receive the highest price but to receive the highest after-tax price. We suggest that you find an advisor that can help coordinate the tax, financial and legal

HBSDealer.com

pieces of your succession plan so that you are properly rewarded for your years of hard work. In our experience, a payout structure that compensates an outgoing owner as a board member or senior advisor can be very effective. This strategy can reduce the tax liability to the outgoing owner and increase cash flow to the new owner so they can continue to operate the business profitably. You know your business so well that the thought of change can be a difficult

proposition. However, if you give yourself a runway of at least 2-3 years and you surround yourself with the right team of advisors, you can create a winning scenario for the three most important parties — yourself, the buyer(s) and your customers.

Sam Brownell is managing director of Stratus Wealth Advisors, providing goals-based succession planning services to help business owners realize the value of their life’s work. Email sbrownell@stratuswealthadvisors.com.

HARDWARE + BUILDING SUPPLY DEALER JANUARY 2020

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Residential Construction/Sales

Monthly Retail Sales, not adjusted

13 months of housing starts and existing-home sales

home centers and pro dealers (NAICS 444) and hardware stores (NAICS 44413)

Total starts

NAICS 444

(in thousands, SAAR) Nov.: 1,365,000 1400

40

1300

30

NAICS 44413

(sales in $ billions)

(sales in $ billions)

3

33.3

33.1

33.0

30.1

33.3

30.6

2.31

2

2.37

2.32 2.12

2.4

2.18

20

1200

1 10

1100

1000

0

N D J F M A M J J A S O N

2018

SOURCE: COMMERCE DEPARTMENT

0

AUGUST SEPTEMBER OCTOBER

AUGUST SEPTEMBER OCTOBER 2018

2019

2019

SOURCE: MONTHLY RETAIL TRADE REPORT FROM THE U.S. CENSUS BUREAU

Single-family starts (in thousands, SAAR) Nov.: 938,000 1000

HBSDealer Stock Roundup

950

the percent-change performance of stocks based on Jan. 2 prices 150

900

850

120

BLDR

750

ANNUAL CHANGE

800

N D J F M A M J J A S O N SOURCE: COMMERCE DEPARTMENT

Existing-home sales (in millions, SAAR) Nov.: 5,350,000 5.6

90

BMC

60 SHW HD

TSCO 5.4

LOW

WY

30

SWK DE

DJI

0 BECN

5.2

-30 -4

-2

0

2

4

6

8

10

12

5

MONTHLY CHANGE 4.8

BECN (BEACON); BLDR (BUILDERS FIRSTSOURCE); BMCH (BMC STOCK HOLDINGS); DE (DEERE & CO.);

N D J F M A M J J A S O N

HD (HOME DEPOT); LOW (LOWE’S); SHW (SHERWIN-WILLIAMS); SWK (STANLEY); TSCO (TRACTOR SUPPLY);

SOURCE: NATIONAL ASSOCIATION OF REALTORS

WY (WEYERHAEUSER); DJIA (DOW JONES INDUSTRIAL AVERAGE)

Consumer Watch Unemployment rate

Consumer confidence

Gas prices

for the entire United States

indexed to a value of 100 in 1985

average price per gallon (regular)

5.0 4.5

100

5.5

$2.50

Current

$2.00 80

6.0

Prior month

120

Prior year

4.0

3.5% 3.5

34

November

6.5 60

126.5

$2.59

December

January 2

140

JANUARY 2020 HARDWARE + BUILDING SUPPLY DEALER

$1.50

$3.00

SOURCES: LABOR DEPARTMENT, THE CONFERENCE BOARD, AAA

HBSDealer.com


Profile for ensembleiq

HBSD - Jan 2020  

HBSD - Jan 2020