HBSD_0121 by ensembleiq

JANUARY 2021 Vol. 47 No. 1

DISTRIBUTION NATION: Driving through adversity

HBSDEALER HARDWARE + BUILDING SUPPLY

18 Cover Story: Distribution Nation Overcoming the challenges of a pandemic, distributors deliver with perseverance and flexibility

21 U.S. Lumber’s Mid-State move

16 Independent Profile

Zeskind’s meets the millwork needs of Baltimore and D.C.

MARKET INSIGHTS 22 Investing in eCommerce Success – highlights from a

discussion on competition, growth and strategic vision

28 Shakeup in the MRO channel 31 LBM Confidential: Buyers sellers

and the making of a good match

32 Top Women in Hardware

& Building Supply: ‘The Shecession’

PRODUCTS 26 OPE (outdoor power equipment) FROM THE EDITOR

Addressing retail bypass

springs eternal, plus highlights of the Lawnual Report 2020

27 Got MRO? New products in the maintenance space

30 Plumbing News NEWS & ANALYSIS 10 New beginnings for Shop-Vac 12 A record-breaking EPA penalty 14 Single-family starts’

impressive trajectory

14 An interior products division

sold to private equity

IN EVERY ISSUE 10 Product Knowledge 12 News Map 14 Stat of the Month 33 People in the News 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 in the United States: $110 one year; $200 two year; $14 single issue copy; Canada and Mexico: $130 one year; $235 two year; $16 single issue copy; Foreign: $150 one year; $285 two year; $16 single issue copy; in all other countries (air mail only). Digital Subscription: $75 one year; $140 two year. Periodical postage paid at Chicago, IL., and additional mailing offices. POSTMASTER: Please send address changes to HBSD, Circulation Fulfillment Director, 8550 W. Bryn Mawr Ave., Suite 200, Chicago, IL 60631. Copyright © 2021 by EnsembleIQ. All rights reserved.

JANUARY 2021 HARDWARE + BUILDING SUPPLY DEALER

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HERE’S WHAT’S ONLINE

See more and share more when you follow us on Facebook.

The Webcast library Visit HBSDealer.com/webinars to watch a replay from the HBSDealer webcast library. Multiple topics range from “Investing in eCommerce Success” to “Builders Services” to “Top Women in Hardware & Building Supply.”

Replay the Top Women in Hardware & Building Supply virtual event! Three days of enlightened discussion with industry leaders are digitally stored at HBSDealer.com/webinars.

Watch ‘Ken’s New Jersey Garage’ for a variety of cool product demonstrations at HBSDealer.com.

HBSDealer Daily Newsletter: plus, the Saturday Edition The HBSDealer Daily Newsletter, the industry’s leading news source, now has a companion: “The Saturday Edition” — with the top stories and top insights you might have missed. Sign up to receive your daily news at HBSDealer.com. Monday

Tuesday

Wednesday

Thursday

Friday

Quikrete Industry Dashboard

HBSDealer Poll Question

Stat of the Week

Throwback Thursday

Eye on Retail

The polls are open. Your voice is wanted. HBSDealer publishes weekly poll questions on pressing industry matters, and other topics. For instance:

17%

No change

60%

Strengthened

What has happened to the “shop local” movement during the pandemic?

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

23%

Weakened Source: HBSDealer Survey

JANUARY 2021 HARDWARE + BUILDING SUPPLY DEALER

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FROM THE EDITOR

HBSDEALER HARDWARE + BUILDING SUPPLY

Tapping the brakes on bypass

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 SENIOR VICE PRESIDENT (HBSDealer, Drug Store News, Chain Store Age) John Kenlon, jkenlon@ensembleiq.com, 212-756-5238

The Scotts Subscription Lawn Program checks all the boxes when it comes to polished and modern marketing prowess. It begins with an interactive and visually intuitive questionnaire identifying the homeowner’s goals and routines, the condition of his lawn, his type of grass and the tools in his shed. After a few seconds and a few clicks, a customized lawn plan is created for all four seasons. And the packages come right to your door. It’s pandemic proof. It’s beautiful. There’s only one thing missing from the program: the retailer.

What’s missing from this subscription program?

In a recent HBSDealer.com poll question, just under 80% of respondents described retail bypass or direct-to-consumer product sales as “a growing challenge.” At Killingworth (Conn.) True Value, Tom Cost, Jr., added some color to those numbers. Cost said he considered bringing into his store Dyson vacuum cleaners – and provide servicing for them. (“If my guys can fix a lawn tractor, then I’m pretty sure they can fix a vacuum,” he said.) Cost performed some simple online research at Dyson.com and found

Ken Clark Editor in Chief

his same prospective model for sale at the same price and with free shipping. “And here’s the kicker: if you buy from Dyson.com and you register the product warranty, they send you a $75 value accessory kit.” His pushback to Dyson in an effort to get the same deal for his brick and mortar customers was unsuccessful. “So, I would be competing at a deficit on a deal that I can’t match.” Scotts hasn’t responded to an invitation to comment. But Greg Lutchko of True Position Tools, maker of the Original Cabinet Hardware Jig, told HBSDealer “We have a multi-channel distribution, which includes our own site, Amazon and local dealers. which is standard practice these days and doesn’t get any pushback.” But retailers are concerned. During a recent HBSDealer webcast (see article on page 22), a viewer raised the question: how do you react when a manufacturer sells direct to consumer? Scott Pesavento of Hemlock Hardware in Fairfield, Conn., offered an answer: “Our approach is to partner with them and piggyback on the revenue that they’re spending on marketing and getting that product out in front of the customers digitally – and offer it locally. It’s creating a more efficient way to sell.” If you have an approach, share it with us at news@hbsdealer.com. HBSD

JANUARY 2021 HARDWARE + BUILDING SUPPLY DEALER

EDITOR IN CHIEF Ken Clark kclark@ensembleiq.com, 212-756-5139 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. ADVERTISING SALES

Midwest & Southeastern States SENIOR REGIONAL MANAGER Amy Platter Grant agrant@ensembleiq.com, 773-294-8598 Northeast and Great Lakes States REGIONAL MANAGER Greg Cole gcole@ensembleiq.com, 317-775-2206 AUDIENCE

LIST RENTAL MeritDirect Marie Briganti 914-309-3378 SUBSCRIBER SERVICES/CUSTOMER CARE TOLL-FREE: 1-877-687-7321 FAX: 1-888-520-3608 contact@hbsdealer.com PRODUCTION/ART

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 APRIL 13-16, WASHINGTON D.C. WWW.PRODEALER.COM IN PARTNERSHIP WITH THE NLBMDA, WWW.DEALER.ORG CONTACT: AMY PLATTER GRANT agrant@ensembleiq.com, PDIS DIRECTOR OF SPONSORSHIPS PERMISSIONS: NO PART OF THIS PUBLICATION MAY BE REPRODUCED OR TRANSMITTED IN ANY FORM OR BY ANY MEANS, ELECTRONIC OR MECHANICAL, INCLUDING PHOTOCOPY, RECORDING, OR INFORMATION STORAGE AND RETRIEVAL SYSTEM, WITHOUT PERMISSION IN WRITING FROM THE PUBLISHER. FOR REPRINTS, PERMISSIONS AND LICENSING, PLEASE CONTACT WRIGHT’S MEDIA AT ENSEMBLEIQ@WRIGHTSMEDIA.COM OR (877) 652-5295.

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 SENIOR VICE PRESIDENT, CONTENT Joe Territo

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NEWS + ANALYSIS

New beginning for Shop-Vac GreatStarTools USA brings the brand back to Williamsport. When Shop-Vac abruptly pulled the plug on its operations back in September, the reasons were unclear. Some combination of increased competition, consumer habits and Chinese tariffs in varying degrees contributed to the closing. But the power of the Shop-Vac brand as a wet/dry vacuum leader was never in doubt. And the brand found a new home under GreatStar Tools USA, a subsidiary of Hangzhou GreatStar Industrial. GreatStar acquired substantially all of the assets of ShopVac Corporation in late December. The iconic American brand joins Arrow Fastener, Pony Jorgensen, Goldblatt, and Prime-Line Products in the GreatStar family. Following the acquisition, GreatStar says it plans to use a mix of both Asian and US-based manufacturing. The company will retain manufacturing in its Williamsport, Pa., factory, and will also prioritize restoring Shop-Vac’s distribution in the US, including bigbox retailers, major home centers and hardware stores. Gary DuBoff, group president of Saddle Brook, N.J.-based GreatStar Tools USA, said he was thrilled to add the brand to the portfolio while bringing jobs and manufacturing to the U.S. “Shop-Vac products are ‘must-have’ items for many retailers and consumers in North America and around the world,” he said. “And we look forward to restoring this brand’s loyal following and distribution.” GreatStar also pointed to the addition of core competencies that Shop-Vac brings in the areas of manufacturing and operations, including expertise in injection molding; tool and die making; and electrical, industrial and polymer engineering capabilities.

Shop-Vac is back, or soon will be, in Williamsport, Pa.

“Shop-Vac represents an important addition to GreatStar’s global product portfolio. The brand’s strong market position, combined with GreatStar’s manufacturing expertise, innovation pipeline, investment capabilities and global reach, will deliver more products, more innovation and more value to our customers around the world,” added DuBoff. Headquartered in Williamsport, Pa., Shop-Vac is synonymous with the wet/dry vacuum category. With manufacturing in the US, China and Vietnam and worldwide distribution, Shop-Vac was a pioneer in the heavy-duty vacuum system category, serving workshops, garages, factories and other demanding applications. Before closing its doors in September 2020, Shop-Vac enjoyed a 55-year run. Hangzhou GreatStar Industrial Co., Ltd., one of the largest hand tool manufacturers in Asia, specializes in designing and manufacturing highquality products for DIY, professional and industrial markets globally.

JANUARY 2021 HARDWARE + BUILDING SUPPLY DEALER

Product Knowledge Product: The GTC400C 12V Max Connected Thermal Camera Manufacturer: Bosch Power Tools of Mount Prospect, Ill. Knowledge: The GTC400C’s 3.5-inch, 19,200-pixel color display measures heat to an accuracy of ±4° Farenheit and covers a range from 14° to 752°. It captures images at 160x120 resolution and and has built-in memory for 600 pictures. With controls that are ergonomic, simple and intuitive, the thermal camera, (with an integrated visual camera) is the first rollout of Bosch’s new detection product lineup — detecting things such as wiring or drafts. MSRP: $1,199 includes a 12V battery, charger, USB cable and carrying pouch. Fun fact: Bosch is part of a group working with NASA to bring intelligent navigation and wireless charging capabilities to small robots so they can move around the surface of the moon.

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NEWS + ANALYSIS

EPA rule leads to a record-breaking penalty The Home Depot will pay more than $20 million to three states—Utah, Massachusetts and Rhode Island— in a proposed settlement of alleged violations of the EPA’s Lead Renovation, Repair and Painting (RRP) Rule for renovations performed by Home Depot’s hired contractors. The U.S. Environmental Protection Agency (EPA) and the Department of Justice described the deal as the the highest civil penalty obtained to date for a settlement under the Toxic Substances Conrol Act. Home Depot will also implement a program to ensure that the firms it hires to perform work are certified to use leadsafe work practices to avoid spreading

lead dust and paint chips. The EPA said it discovered the alleged violations when investigating five customer complaints about Home Depot renovations involving contracted firms. The Lead, Renovation, Repair and Painting (RRP Rule) has long been of interest to the National Lumber and Building Material Dealers Association. The NLBMDA is supportive of the RRP Rule’s intention of protecting pregnant women and children under six from lead exposure and the original rule’s language. However, NLBMDA has for years expressed concerns to EPA about the removal of the opt-out provision in 2010 for those who do not have a

Part of the settlement calls for Home Depot to ensure its contractors are certified and trained to use lead-safe work practices at the job site.

pregnant woman or child in the home as well as the lack of a commercially available compliant lead test kit. The association’s national policy agenda supports restoring the optout clause to the rule. It also calls on the EPA to renew its efforts to identify a practical lead paint test kit – and to suspend enforcement of RRP for renovations that do not have a pregnant woman or child in the home until a test kit meeting positive and negative response criteria is recognized.

News map: Westlake Ace Hardware edition Based in Lenexa, Kan., Westlake Ace Hardware has been around for 115 years. The company became a wholly owned subsidiary of Ace Hardware Corp. in 2012, and has since accelerated its growth to 140 stores in 12 states. Here’s the latest movement of the largest Ace dealer. OPENING

CLOSING

ACQUISITION

nebraska

Lincoln

In December, Westlake said it will acquire four additional Q.P. Ace Hardware stores in Lincoln, Neb. and convert them to the Westlake banner (while keeping the staff). Two other Q.P. Ace stores were acquired in 2017. Westlake has 13 Nebraska stores.

california

Livermore

In a former Orchard Supply Hardware location, Westlake Ace plans to open its 11th Ace branded store in California in March. All eleven of the California locations are former OSH stores previously operated by Lowe’s, which closed all of its 99 OSH stores in 2018.

JANUARY 2021 HARDWARE + BUILDING SUPPLY DEALER

kansas city

Missouri

Westlake signed a lease to open a new store at 104 West 63rd St. in Kansas City — in the heart of the historic Brookside neighborhood in the former site of a Tuesday Morning store. Expected to open by early 2021, the store will be the 22nd in the Kansas City metro area.

north carolina

Chapel Hill

Westlake Ace owns and operates 10 Ace locations in North Carolina — located in Cary, Raleigh, and The Outer Banks. An 11th Carolina store is expected to open in mid March. The new Ace store, located in the Chatham Crossing Shopping Center, will measure 16,880 sq. ft.

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Solving Big Problems, Inspiring Bold Ideas EnsembleIQ is a premier business intelligence resource that believes in Solving Big Problems and Inspiring Bold Ideas. Our brands work in harmony to inform, connect, and provide predictive analysis for retailers, consumer goods manufacturers, technology vendors, marketing agencies and service providers. EnsembleIQâ&#x20AC;&#x2122;s integrated suite of solutionsbased, total-market resources give you all the tools you need to achieve a strategic market advantage, giving you the insights, positioning, focus, and access, along with a team of dedicated strategic consultants to help you bring it all to life.

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NEWS + ANALYSIS STAT OF THE MONTH

A singularly interesting SAAR When something happens that hasn’t happened in 13 years, then that’s news. Case in point: single-family housing starts hit a seasonally adjusted annual rate of 1,186,000 in November. That mark hasn’t been matched since April of 2007, when 1-fam starts, the bread-and-butter of LBM dealers, were at 1,197. Said NAHB chief economist Robert Dietz: “The growth for single-family construction was a true bright spot amid economic challenges in 2020, with single-family starts up 10% year-to-date and posting the best year since the Great Recession.” Still, the NAHB points to a growing backlog of housing construction projects.

Single-family Starts April 2007 to Nov. 2020, SAAR, in thousands 1,197 in 04/07

1,186 in 11/20

1,200

1,000

800 679 in 04/20

600

400

200

10/08 05/10 12/11 07/13 02/15 09/16 04/18 11/19

Source: Commerce Department

Beacon selling interior products business Another big deal for American Securities. Beacon is selling its interior products business to affiliates of American Securities LLC, a private equity firm, in an $850 deal. The sale includes 81 branch locations, which distribute wallboard, acoustical ceilings, steel framing and insulation to both residential and commercial contractors. This is the second major deal for American Securities in as many months. In November, American Securities acquired Foundation Building Materials. That deal includes 170 branches. American Securities said that it now intends to combine the acquired Beacon branches with Foundation Building Materials. Based in Herndon, Va., Beacon operated more than 500 locations in the United States and Canada prior to the

sale of its interior products business. The transaction is expected to close in the second quarter of 2021. Beacon said it will use the after-tax proceeds of approximately $750 million to reduce debt and strengthen its balance sheet. The deal marks “an important strategic decision for Beacon,” said Julian Francis, Beacon president and CEO “After undertaking a thorough analysis, we determined that a divestiture of interior products is in the best interests of our shareholders, as well as our interiors customers and associates.” Francis said the move will accelerate Beacon’s efforts to not only improve its balance sheet but provide flexibility to pursue strategic growth. “The interior products divestiture will allow us to focus entirely on driving growth and profitability

JANUARY 2021 HARDWARE + BUILDING SUPPLY DEALER

Beacon unloaded 81 branch locations in an $850 million deal.

in our core exteriors business.” During fiscal 2020, interior products generated $1.03 billion in net sales, but a net loss of $11 million, and adjusted EBITDA of $73 million. American Securities likes what it sees in the combination of its two recent acquisitions. Said Kevin Penn, managing director: “The combined company’s expanded geographic presence across the U.S. and Canada will enhance its partnership with customers, vendors, and team members.”

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Mega-merger complete Builders FirstSource and BMC Stock Holdings have completed their all-stock super LBM merger. The combination of the two pro dealer heavyweights creates a building materials and services provider with annual sales of approximately $11.7 billion with 550 distribution and manufacturing facilities in over 40 states. This includes 44 of the top 50 metro markets in the country. Terms of the deal called for BMC shareholders to receive a fixed exchange ratio of 1.3125 shares of Builders FirstSource common stock for each share of BMC common stock held immediately prior to the effective time of the merger. The pre-closing Builders FirstSource shares remain outstanding and currently represent approximately 57% of the combined company’s shares outstanding. The combined company will operate under the name Builders FirstSource, Inc., and shares will continue to trade on the NASDAQ under the symbol “BLDR”. As a result of the completion of the merger, the common stock of BMC has been delisted for trading on the NASDAQ. This move places Builders FirstSource as the second-largest building materials distributor behind only ABC Supply, the Beloit, Wis.based roofing and building products distributor with approximately 800 locations coast-to-coast. “We are extremely excited to move forward as one company that is even better positioned to offer enhanced value for shareholders, customers, and team members,” said Chad Crow, CEO of Builders FirstSource. “Uniting our complementary assets and leveraging our combined geographic presence provides us with an expanded base to deliver our best-in-class solutions as the residential recovery continues.” “Looking ahead, I am confident that Dave Flitman will do an outstanding

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job leading our combined company to build upon our proven track record of innovation, financial discipline, and superior execution,” Crow added. Flitman, previously the CEO of BMC, will become the next CEO of the combined company beginning April 1 with Crow retiring on that date. Last month, the new company outlined its complete executive team moving forward. “The completion of this merger represents a transformational milestone for our customers and an

exceptional platform to accelerate the growth of our value-added solutions,” Flitman said. “During the past several months, we have made significant strides in laying the foundation for successful integration. Our combined leadership team will blend the best of both of these great companies and do an excellent job of leading our approximately 26,000 team members.” Builders FirstSouce will continue to maintain its Dallas, Texas headquarters along with corporate offices in Raleigh, N.C.

Envision acquires Fairway Envision Building Products announced that it has acquired Fairway Architectural Railing Solutions. Based in Mount Joy, Pa., Fairway produces railing solutions including vinyl, steel, and cellular PVC products. Fairway’s existing management team will remain in place and its current product offering will continue to be offered under the Fairway brand, with Fairway also having the ability to provide its customers access to Envision composite decking. Envision will likewise be able to offer its customers access to the suite of Fairway railing products. Financial terms of the deal were not disclosed. The expanded product offerings provided through the acquisition include comprehensive railing solutions in vinyl, aluminum, steel, composite, and cellular PVC along

Fairway Architectural Railing Solutions has a new owner.

with unique composite decking products from Envision’s budgetfriendly Ridge Premium to its luxury Distinction line of decking. Based in Lamar, Mo., Envision’s products include the Distinction, Inspiration, Expression, Ridge Premium, and EverGrain lines of composite decking, along with TAM-RAIL railing.

HARDWARE + BUILDING SUPPLY DEALER JANUARY 2021

INDEPENDENT PROFILE

Zeskind’s meets the millwork needs of Baltimore and D.C. By Andy Carlo

B 16

altimore City, Md.-based Zeskind’s Hardware & MIllwork continues to thrive with an emphasis on millwork and a variety of approaches at its four Maryland locations. In Baltimore City, Zeskind’s has a retail store that caters to neighborhood homeowner traffic, as well as building professionals, contractors, maintenance workers, and investors. Across the street at its millwork showroom and manufacturing facility, Zeskind’s caters exclusively to contractors and the occasional DIY sale.

Expansion moves at Zeskind’s Hardare & Millwork will allow its team to serve even more customers in Baltimore and beyond.

JANUARY 2021 HARDWARE + BUILDING SUPPLY DEALER

A door, window and millwork showroom in Arnold, Md. exclusively serves homeowners who are trying to make decisions for renovation and new construction projects. Zeskind’s newest location in Landover, Md. caters to a huge volume of walk-in business from pros. This past October, Zeskind’s acquired Lamar and Wallace Inc. Prior to the acquisition, Zeskind’s had about 20,000 total square feet of retail and warehouse space. The new acquisition brings an additional 75,000 square feet. The dealer is currently in the process of opening a retail store inside the existing Landover facility that will launch in the next few months. The company hopes that this will expand on walk-in residential customer business and drive more homeowners to visit the newest Zeskind’s showroom.

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Doors, windows and millwork are key products in Zeskind’s sales mix.

Overall, pro customers account for as much as 90% of the company’s business. Within the pro category, sales are a nice mix and measure about 50% remodeler sales and 50% residential construction. “The complexity of measuring and installing doors, windows, trim carpentry and millwork, in general, makes it hard for these items to be a DIY project,” says Rick Miller, owner and president of Zeskind’s. “When dealing with the envelope of your home, you need someone who has the experience to ensure a successful installation. Also, the detail required for most trim carpentry and kitchen installation typically is not something we find DIY’ers willing to tackle.” The dealer specializes in supplying historic materials for tax credit projects and can duplicate materials in its custom shop. Zeskind’s also hangs interior and exterior doors in-house while its custom shop pro-

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“We have a lot of plans for 2021 and I think we will continue to see more growth in the residential remodeling and new construction sector due to people staying home and wanting to continue to upgrade their houses.” —Rick Miller, owner and president

duces doors, windows, and trim. Miller notes that the company does not sell “sticks and sheets” including lumber packages, drywall or vinyl siding. “We only sell millwork, including doors, windows, trim, cabinetry, stairs, and custom items,” he says. Zeskind’s market includes Washington DC, Baltimore and Annapolis, along with a 40-mile radius around each of those cities. “We have a very high per-capita income due to our proximity to DC and the fact that our service area includes so much waterfront property in the surrounding counties,” Miller says.”So our contractor customers who cater to these residential areas typically have a substantial budget for their remodeling project or new construction.” That said, Zeskind’s is also very good at covering lowpriced remodeling projects in Baltimore City for rental units and mid-sized multifamily jobs. Because of the number of historic neighborhoods in and around Washington, D.C. and Baltimore, a substantial part of its business comes from supplying these types of projects. Looking ahead, Zeskind’s is in the process of ramping up its service program and custom shop for 2021, in addition to adding a retail hardware presence in Landover, Md. “We have a lot of plans for 2021 and I think we will continue to see more growth in the residential remodeling and new construction sector due to people staying home and wanting to continue to upgrade their houses,” Miller says. Zeskind’s hangs interior and exterior doors while its custom shop produces doors, millwork and trim.

HARDWARE + BUILDING SUPPLY DEALER JANUARY 2021

COVER FEATURE

NOTES FROM THE DISTRIBUTION NATION Overcoming the challenges of a pandemic, distributors deliver with perseverance and flexibility. By Andy Carlo

ith building supplies and hardware dealers designated as essential retail during the early stages of the COVID-19 pandemic, maintaining a steady supply chain became an integral component to keeping businesses running. The essential designation allowed segments of the economy to surge, including residential construction and home improvement, as other industries suffered during lockdown conditions. Surviving and thriving during the pandemic was not without transformation and flexibility from distributors, however. During the past year, distributors turned to technology, safety, and increased manpower to keep the supply chain moving. According to Weyerhaeuser, 2020 forced the forest products

JANUARY 2021 HARDWARE + BUILDING SUPPLY DEALER

and building products distributor to change its routines while inspiring new innovations. That includes a greater embrace of technology so team members and customers could stay connected and keep moving business forward. “2020 really showed us and our whole industry that you can still be successful during great uncertainty,” says Amy Warren, director of business and sales development at Weyerhaeuser Distribution. As COVID-19 hit, Weyerhaeuser moved its teams to work-from-home status in under five days. Because of the IT infrastructure the company had already invested in, the transition felt mostly seamless for customers. “We continually listen to our customers and connect with our supply partners, then evaluate what we can do to best support their unique needs,” Warren said. “Working in collaboration with our supply chain logistics team, we were able to secure transportation capacity and quickly adjust plans given the market dynamics. Our builder and dealer customers rely on us to be the experts and support their specialty building product needs, so we are always open to doing whatever we can to strengthening our partnerships and service offerings when the right opportunity is presented” At the same time, maintaining safety throughout the supply chain was pivotal in 2020. “Our number one priority was to ensure we kept our employees, customers, and suppliers safe,” says Donnie DeMarie, president and CEO of Cameron Ashley Building Products. “We were successful in limiting business interruption while not compromising on safety.” Cameron Ashley also embraced technology, enabling its employees to work from home and complete projects remotely. The Greer, S.C.based building products distributor, with more than 40 distribution locations in 20 states, utilized Zoom and Microsoft Teams to engage employees, customers, and suppliers. The company’s transportation management system also saw heavy work while routing truckings and powering Cameron Ashley’s same-day/next-day service model, DeMarie said. The past year saw Cameron Ashely launch a best-in-class B2B e-commerce platform as

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well. “Our team worked with our customers to make sure our platform included what they value as well as being extremely simple to use,” DeMarie explains. “It has the look and feel of a consumer site with full account management tools and visibility.” At Emery Jensen, investments in technology were a critical complement to additional investments made in people. Technology allowed the distributor to help keep employees safe, increase their productivity while providing retailers with access to all levels of the Emery Jensen organization. This includes products, promotions, and programs that would enhance the profitability of retailers’ business. Emery Jensen made sure that it remained in front of its customers from a product and communication standpoint to ensure that the distributor was doing everything it could to help its customers’ businesses. “This was critical considering the burden placed on our retailers and employees due to COVID-19, which created an unprecedented demand for product,” says Alison Dowell, president and general manager for Emery Jensen.

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Distributors, including Weyerhaeuser Distribution, ramped up technology and safety efforts in 2020.

During the pandemic, Emery Jensen invested heavily in people, product, and process, according to Dowell. “We continued to hire new people, brought in more inventory than ever before and added efficiencies to processes in receiving and delivery to ensure the best possible on-time delivery and fill rates to our customers.” A division of Ace Hardware Corp., Emery Jensen operates 17 distribution centers across the country while handling more than 90,000 regionally relevant and localized SKUs. The distributor serves the needs of hardware and paint stores, lumberyards, lawn and garden retailers, and grocery stores. Near-term goals for Emery Jensen include more investments in people, products, more accountability with vendors, more communication with customers, and distribution center expansions to serve a growing customer base, Dowell says. “Our mission is to keep our customers in stock,” she adds. Technology was also a critical part of Weyerhaeuser’s success in 2020. The Seattlebased company is always looking to develop or add new tools that could support its teams, Warren says. And in 2020, many of those tools involved helping its people stay connected to customers in a remote environment, and making sure it was able to maintain the same level of service without the normal level of direct contact. “Anything we can do to help our customers be safer and more efficient helps us and very much aligns with our core values and key behaviors,” Warren says. “We originally thought that a COVID-related temporary pause on construction would mean our customers would have more time for remote product knowledge sessions and strategic sessions, but that never materialized. We have, however, easily shifted to virtual sessions to close new programs, solve field

HARDWARE + BUILDING SUPPLY DEALER JANUARY 2021

COVER FEATURE issues, and process warranty claims.” Dealers and distributors alike have been stretched on many levels in the past year; and those challenges will not suddenly disappear in the new year. From record-high lumber and OSB prices, to unprecedented demand of wood products in every category, to shortages of lumber products, distributors and dealers faced hurdles through 2020. “As inventories in the channel may remain tight, we anticipate dealers will continue to lean on Weyerhaeuser Distribution as their partner in success,” Warren says. Reflecting on the past year, DeMarie says Cameron Ashley embraced digital tools and learned to collaborate virtually. “We learned the phone is our friend, and we can be effective working remotely,” he says. “We learned that some travel can be avoided, and demand can be created through virtual shows and training.” Additionally, Cameron Ashley paid increased attention to customer feedback, and the company believes it is a more effective partner

While Cameron Ashley made safety a priority in 2020, labor costs and finding qualified workers might be a challenge in 2021.

JANUARY 2021 HARDWARE + BUILDING SUPPLY DEALER

as a result. The distributor aligned its product demand more closely with manufacturers and partners creating efficiencies on both sides. “We learned that a big corporate center might not be necessary, and that all corporate functions were effective working from home on a short-term basis,” says DeMarie, noting that Cameron Ashley opened six new locations in the past year. Looking forward, DeMarie says Cameron Ashley sees multiple challenges in the new year. The CEO points to labor and transportation costs escalating while qualified applicants are difficult to find. Although supply shortages could continue in 2021, DeMarie says that Cameron Ashley expects the first half of 2021 to be robust. “We expect prices to continue to escalate with availability being as important as price,” he says. “We also expect a strong second half driven by low interest rates.” The industry learned in 2020 that some of the biggest challenges can emerge from thin air. There are no certainties. But with the changes implemented across supply lines last year, it’s certain that many distributors are better prepared for 2021 then they were for 2020.

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DISTRIBUTION

Equity firm acquires Specialty Building Products The deal includes U.S. Lumber, Mid-State Lumber, Alexandria Moulding and Midwest Lumber.

pecialty Building Products, LLC has signed an agreement to sell majority ownership of the company to The Jordan Company (TJC). TJC is a New York-based middlemarket private equity firm and is acquiring a major stake of SBP from funds affiliated with Madison Dearborn Partners (MDP), based in Chicago. SBP’s senior management team, including President and CEO Jeff McLendon, will maintain a significant equity stake in SBP and continue to lead the company through its next phase of growth. Terms of the transaction were not disclosed. SBP’s operating brands include U.S. Lumber, Alexandria Moulding, Midwest Lumber, and Mid-State Lumber. The move arrived just weeks after U.S. Lumber announced in early December that it was acquiring MidState Lumber, the regional wholesaler of building products based in Branchburg, N.J. The acquisition of Specialty Building Products is expected to close in the first quarter of 2021. “At the heart of our business is a commitment to delivering best-in-class specialty building products and service to our customers,” McLendon said. “We have had a terrific partnership with MDP and are excited to have found an equally strong new partner in TJC, who is aligned with our vision and committed to helping us pursue our next chapter of customer-focused growth.” Specialty Building Products and U.S. Lumber, based in Atlanta, did

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Just weeks after acquiring Mid-State Lumber in Branchburg, N.J., U.S. Lumber and its parent company Specialty Building Products were purchased by The Jordan Company.

not disclose terms of its acquisition of Mid-State Lumber. That transaction combines two LBM distribution industry powerhouses with an expanded offering of products and services for dealers across New Jersey, Maryland, Pennsylvania, New York, and New England. “Mid-State Lumber is a terrific addition to U.S. Lumber,” McLendon said. “It is the leading specialty products distributor in its markets, with a loyal following of customers built over multiple generations of family ownership.” Mid-State Lumber’s ownership group includes Ken Bernstein, David

Bernstein and Gary Bernstein. “The Bernstein family, and all of their employees, have built a fantastic business and we are thrilled that they will be joining the U.S. Lumber family,” McLendon said. “Together we will continue to deliver reliable products and first-class service for customers and suppliers in their markets and across our entire footprint.” Mid-State Lumber will continue to operate under its existing brand and with its current leadership. Prior to the acquisition of Mid-State Lumber, U.S. Lumber’s Northeast roster included locations in Kingston, Pa., Warwick, N.Y., and Marlborough, Mass. Overall, the company will now operate 10 branches up and down the East Coast. U.S. Lumber serves 21 states.

HARDWARE + BUILDING SUPPLY DEALER JANUARY 2021

ROUNDTABLE

Investing in eCommerce success A roundtable discussion. By Ken Clark

he times are changing. So, what are retailers doing to put themselves at an advantage in expanding their marketing, improving their convenience, and profitably delivering service to their customers? Those questions and more were tackled during the recent HBSDealer webcast, titled “eCommerce: Investing in Success.” Sponsored by Epicor, the webcast featured the insights of an experienced panel:

Gary Hoffmann, VP of retail operations for R.P. Lumber Company, with 71 locations based in Edwardsville, Ill. Jim Robisch, Senior partner, The Farnsworth Group; with offices in Denver and Indianapolis. Scott Pesavento, owner of Hemlock Hardware in Fairfield, Conn.

The conversation was influenced by stats freshly released by Home Depot, Lowe’s and Ace Hardware that reported triple digit gains in eCommerce sales, or in the case of Home Depot “sales leveraged by a digital platform.” Here are edited highlights of the panel discussion.

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On the big-idea of eCommerce: Scott Pesavento: eCommerce for us has not been a new strategy. We’ve had our eCommerce program in place for quite a number of years. And when we built our eCommerce program, we knew we wanted a few things. We knew we needed it to be dynamic, we knew it needed to look good and have the polish that’s going to draw that customer in. And we knew it had to have capability of interacting with social media. All that said, our strategy can be described simply as an extension to our brick-and-mortar strategy. And what I mean by that is, we have full capacity to sell everything that we have in our store. In fact, if you go on our website right now, you can buy every product in our store with live inventory feeds and live pricing. However, the strategy of the site was to build an extension of our strategic brick and mortar model, which was based on premium nationally

recognized enthusiast brands. We thought that if we can create these pillars with these nationally recognized brands, that we could draw the costumers in and then they could shop more of their needs while they’re buying their brands. So the focus for us became wants over needs. And that correlates very well in the eCommerce world If you were to drop into HemlockHardware.com right now, what you’re going to see on our landing page is what we want to be known for and recognized for the most — And that’s our brands. You’re going to see our Yeti, you’re going

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“One thing that I don’t think has changed is that the customer wants that high level of independent service. They still want that personal connection. And they certainly want to be advised. They want to have that, included in our online experience.” — Gary Hoffmann

to see our Big Green Egg. You’re going to see our Traeger right on the front page. All of those product lines are available to be purchased on our website. You have your choice, curbside pick up and you get your choice the same day delivery. But more importantly, the reason for that was customer behavior. We knew that our customer customers are not lying in bed at night

hardware store or lumber yard or home center. They want that Home Depot experience, some expect the Amazon experience. And so the question is: how do we deliver that as an independent business? And we’re very independent. We have limited resources. So making the most of those resources is so very important to us. But, the one thing that I don’t think has changed is that

searching for things they need like light bulbs, hammers and screws. They’re searching for things that they want. So we had to make sure that they had their wants, first and foremost, on the front of our landing page. And with that comes the abilituy to purchase all of the skus in the store.

the customer wants that high level of independent service. They still want that personal connection. And they certainly want to be advised. They want to have that, included in our online experience. We’re not a huge company, we’re not publicly traded, so we try to include high level of service in our interaction with our customers. And also, they want to support the local independent, too. So we’re seeing an increase in buy online, pickup in store, or buy online, deliver to me. Those kinds of things have been big parts of our business and will continue moving forward.

Gary Hoffmann: I think the common theme for us online is that it’s really an extension of our store. People’s perceptions and expectations of retail are changing, and the bar has been raised from what maybe they had thought about their local

HARDWARE + BUILDING SUPPLY DEALER JANUARY 2021

ROUNDTABLE Jim Robisch: I’d like to add a term to the discussion: “Urgency.” There are businesses that started down this path of eCommerce a couple of years ago. And boy were they lucky. because when this thing hit, a lot of people were caught short. And I think people are always saying, “Well, why is Depot spending billions of dollars investing in the supply chain to support their eCommerce?” And we saw an answer in the numbers that came out recently. The answer is: it works. And I think the other thing is some people have been talking about the idea that it’s a trend. But, eCommerce is not a short-term trend. it’s here to stay, and that’s not going to change. You’re talking about a fundamental change in the way both our contractors, as well as our consumers shop for home improvement and building supply products.

On marketing strategy: Jim Robisch: It would appear that most companies now realize they have to take eCommerce seriously. Instead of saying, “Well, maybe we could have this,” Now it’s seen as an absolute necessity. So they’re going to have to invest not just dollars, but also human capital and to make sure that it’s functional. And we’re seeing that happen. The other thing I think is that you’re going to see a new and increased investment in the digital marketing side of it. We have trained most of our customer groups to go their phone and get all the information they want or need. There are some markets where people still expect to get a circular in the mail, but we’re seeing marketing going further in the digital direction.

Scott Pesavento: Our marketing strategy changed from print, radio, and so forth to a strictly digital and conversion-based approach. So we’re no longer impressionbased marketing, we’re completely conversion-based marketing, That could be a social media post that

a customer clicks on the product and buys it right there. Or it could be an e-mail, again where you click on the product. So that’s been our eCommerce marketing strategy. That’s what we’ve been building and it just feels like we had some luck this year with that and accelerated adoption.

“With Covid-19, it has just accelerated all those behaviors that we’ve seen trending over the years. It kind of put gasoline on that fire.” — Scott Pesavento

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On competing with the biggest eCommerce players: Scott Pesavento: I look at Home Depot and Lowe’s, and even the Amazon.com, and I think they kind of blazed the trail for us, right? They established their consumer behavior and they figured out what works and what doesn’t work. On our side of the fence, we have to strategically find what they’re not doing, and fill those voids. And that’s where our eCommerce strategy comes in. Our home page shows nationally recognized brands, and we can’t get undercut by Home Depot or anyone else. We can deliver them same day, unlike the larger retailers. So you have to create a uniqueness and a compelling reason to be shopped. And we get be more efficient — we can move quicker — than the bigger national chain.

Jim Robisch: I want to give a shout out to the wholesaler distribution community, because they really stepped up. They made some investments for the people who couldn’t afford a billion dollars on their local independent store’s eCommerce platform. Now, are they all of these systems perfect? Nothing’s perfect. But they were able at least to get them in the game. Of course, when things settle down, there’ll be all the criticism of what’s wrong with them, because that’s just the nature of the independent, right? But the good independent dealers, if they’re not already engaged in improving their platforms, they’re getting into it, and they’re getting into it fast. And I think it goes back to all of a sudden come last April,

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“Instead of saying, ‘Well, maybe we could have this,’ now it’s seen as an absolute necessity. So they’re going to have to invest not just dollars, but also human capital and to make sure that it’s functional. And we’re seeing that happen.” — Jim Robisch

there was this urgency along with their entrepreneurialism and the efficiencies and what you speak of that came into play. Keep in my mind, our industry is not one to move forward at warp speed. We’re a little bit resistant to change as I seen over the years.

On the future: Gary Hoffmann: I think we’re going to continue doing a lot of things we’re doing right now. That means embracing technology, trying to be agile and flexible and learning from what we’ve done in the past. We want to continue to get better at all of that. We’ve just brought a staff development and training manager here at R.P. Lumber. And that’s a role that we haven’t had recently. So we think that’s important. We intend to improve the entire journey of placing an order to picking it up and improving all that.

And then also continuing to update our website and continue to remain relevant. So for us, it’s a lot of the basics that we’re just going to try and get better at that.

Scott Pesavento: Digitally, we have to continue to improve on what we built. While most importantly staying ahead of the customer expectation really. As we discussed before, it seems in the ECommerce world, everything is the race to now, right? Two day shipping, one day shipping next same day shipping, one hour, so on and so forth. So all focus here at Hemlock in 2021 is exploring more and investing in more last mile services. For independents, I think that’s the direction of eCommerce. It’s keeping up with those customer expectations.

The full webcast can be accessed online at HBSDealer.com/webinars

HARDWARE + BUILDING SUPPLY DEALER JANUARY 2021

OPE PRODUCTS

OPE Springs Eternal Innovations in outdoor power equipment ride out the pandemic.

recent annual report on the consumer attitudes toward their lawns — the Lawnual Report 2020 from Cub Cadet — found that Rock ‘n Roll was the most common music to accompany the act of mowing the lawn (14.2%) Second place was heavy metal (8.6%.) The report also discovered favorite postmowing drinks (water, 30%; followed by domestic beer, 19%.) Cub Cadet’s brand manager Siana Calanni explained that every little bit of data helps when it comes to supporting the channel. “The data we uncovered gave us a peek at the mowers behind the mowers,” she said. “The Lawnual puts a fun spin on understanding these mowing habits.” Perhaps most pertinent, the company quantified what we all think we know about Americans and their lawns. Some 3,300 people were surveyed for the first ever Lawnual, and nearly half (48%) say they like mowing their lawn. Of those, 24% say they “love to mow.” (Only 7% say they “hate it.”) Somewhat surprisingly, millennials love mowing their lawn more than any other generation, with 51.7% taking great pride in lawncare and 74.6% keeping their lawns at the optimal length. The lawn and garden and great outdoors have all received extra care and nourishment during the bulk of 2020. Some of the newest products that homeowners can embrace to improve their outdoors share traits such as innovation, eco-friendliness, run time and — of course — power.

Worx Electric Pressure Washer WORX has introduced two electric pressure washers to its lineup of green outdoor power equipment. The WORX 13 Amp, 1600 PSI Electric Pressure Washer (shown here) with rolling cart and the compact, portable WORX 13 Amp 1500 PSI Pressure Washer are designed to help homeowners quickly and thoroughly clean cars, trucks, vans and RVs, as well as decks, patios, driveways, garage floors, siding, windows, and more. The WORX pressure washer is rated at 1600 psi using 1.3 gallonsper-minute. The 13 Amp, 1600 PSI Electric Pressure Washer with rolling cart is designed with the user’s convenience foremost in mind, WORX said. Worx.com

Makita LXT System Makita U.S.A., is making a bold claim to having the world’s largest professional cordless outdoor power equipment system. The expanding range of Makita cordless lawn mowers, trimmers, blowers, and chain saws is meeting growing demand as users seek alternatives to traditional gas-powered equipment, the manufacturer said. “We are seeing more and more demand for cordless outdoor power equipment from all users, from pro landscapers to homeowners,” said Romique Talton, senior product manager, Makita U.S.A. “The Makita LXT System delivers maximum performance with battery-powered lawn mowers, trimmers, blowers and chain saws, so users get all they need for efficient landscaping and clean-ups.” Makitatools.com

STIHL KMA 135 R KombiMotor The number one selling brand of gasoline-powered handheld outdoor power equipment in America for 11 years running is also making strong advances in the battery-powered arena. Case in point: the new STIHL 135 Professional Battery Series. A powerful, versatile battery-powered multi-task tool, the KMA 135 R KombiMotor features performance comparable to STIHL gas-powered units with the same attachment compatibility. Fourteen different attachments empower professional landscape crews to efficiently take on a wide range of landscaping tasks on the jobsite, with zero exhaust emissions and low noise. Stihlusa.com

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Toro 22” Recycler mower Both gas-powered and 60V Flex-Force battery-powered models of the Toro Recycler line have been enhanced with performance-driven features. Aran Brosnan, senior marketing manager at Toro, describes innovation as a selling point. “Part of that innovation includes new features, such as the Vortex Technology on the enhanced Recycler mowers, which increases airflow to supercharge grass cutting,” he said. Vortex Technology is powered by an intake system that fuels the cutting chamber with additional airflow. The air infusion is designed to whirl grass clippings around the cutting chamber at a faster rate, either shredding them into ultra-fine clippings or shooting them into the newlydesigned Super Bagger with increased velocity. Toro.com Cub Cadet XT1 LT42E electric riding mower with IntelliPower Cub Cadet describes its IntelliPower as an engine technology that delivers consistent performance for users who might be challenged to cut through thick, heavy grass (or plow through wet, heavy snow.) IntelliPower technology digitally monitors and maintains engine speed, which gives operators up to 20% more available power that can be felt and heard, the company says. “The ability to incorporate IntelliPower into our residential machines is an exciting advancement that will improve the overall user experience in challenging mowing and snow blowing conditions,” said Guy Rodgers, director of engineering, Cub Cadet. It provides consistent blade speed and a clump-free “Signature Cut” while still providing power for superior mulching and bagging performance. This feature also means additional power for mowing uphill. Cubcadet.com EGO Power+ Hedge Trimmer Here’s another bold claim: The world’s first cordless hedge trimmer with a 1” cut capacity. The EGO Power+ Hedge Trimmer has a high-efficiency brushless motor which allows for longer run times and lighter weight. The 24” dual action brings hardened steel blades for precise, clean cuts. The trimmer is also equipped with fully serviceable blades to make sharpening quick and easy. Delivering 3,000 strokes per minute to get the tough jobs done faster. Compatible with all EGO Power+ ARC Lithium™ batteries (available separately). Electric brake stops blade action quickly for improved control. Egopowerplus.com

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Yardmax Power wheelbarrow The Yardmax YD4103 is a heavy-duty, all-wheel drive, powered ‘barrow that brings a compact, simple to operate, and durable product to bear upon the biggest hauling projects. The wheelbarrow is powered by a Briggs & Stratton CR950 208cc engine for moving up to 660 pounds of material with three forward speeds, plus reverse. With the gas shock dump assist, users can dump their payload with a single hand. Easy to load, simple to maneuver in tight spaces — zero turn radius — it offers optimal handling and stability across uneven ground. Yardmax.com

Earthquake cultivator “Groundbreaking power equipment,” is the clever slogan for the Earthquake brand of cultivators, tillers, earth augers and other OPE. The Earthquake MC440 4-cycle cultivator is a powerful and lightweight solution to maintaining the garden. Designed with stand-up starting, (no bending over) this largestin-class 40cc Viper 4-Cycle engine requires no mixing of oil and fuel. It also produces less noise, and lower emissions. A variable speed control provides versatility when cultivating different soil types. The MC440 also features block-style air filter to keep damaging dirt outside your engine and in the garden. Getearthquake.com

HARDWARE + BUILDING SUPPLY DEALER JANUARY 2021

MARKET INSIGHTS

Shakeup in the MRO channel

hen Home Depot bought HD Supply, executives in Atlanta explained the $8 billion deal as a huge opportunity in a highly fragmented $55 billion MRO marketplace — that’s Maintenance, Repair and Operations. That sentiment coming out of Atlanta echoed what independent hardware dealers have been hearing from their wholesale distributors for years. Initiatives and brands such as “The Supply Place” at Ace Hardware Corp.; or Do it Best Corp’s “InCom” program — short for Industrial Commercial — act as spring boards to the massive and often tangential business beyond the homeowner or building contractor. MRO conjures big ticket transactions such as buckets and mops for hospitals, cleaners and trash cans for apartment buildings and hotels, and tubs of paint for multi-family housing. There’s more to it, of course. And there’s even more — in excess of $500 billion, by some estimates — to the broader categories of commercial or industrial sales that include factories and public works. Too Fast Supply, an InCom member, operates four locations in Nebraska.

Home Depot closed its $8 billion purchase of HD Supply in December, a move to reach the “highly valuded” MRO customer, says CEO Craig Menear.

HD Supply, the Atlanta-based MRO giant, posted sales of $6.146 billion in its most recent annual report, for the year ended Feb. 2. The company’s holdings include 40 distribution centers nationwide and a dedicated fleet of more than 700 delivery trucks serving the multifamily, hospitality and healthcare sectors, among others. HD Supply’s connection to The Home Depot goes well beyond the “H.D.” initials. It’s been 13 years since Home Depot, under then CEO Frank Blake, sold HD Supply to a group of private equity firms. The CEO of HD Supply is Joe DeAngelo, who served as executive vice president and COO of the Home Depot from January through August of 2007. Note: HD Supply today is not the same business that Home Depot owned in 2007. HD Supply had sold off its White Cap division, its heavy duty construction supply arm to private equity not long ago, making for a more complementary merger. “The MRO customer is highly valued by The Home Depot, and this acquisition will position the

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company to accelerate sales growth by better serving both existing and new customers in a highly fragmented $55 billion marketplace,” said Home Depot CEO Craig Menear. News of the deal encroached into the Lowe’s earnings call one day later. Referring to Home Depot’s agreement to acquire HD Supply, an analyst asked Lowe’s CEO Marvin Ellison if the “news in the MRO space” changes anything about Lowe’s investments. “It does not,” answered Ellison. “When we look at our investment thesis and we evaluate where we can gain the greatest return, it is in our core business.” He defined the core as the company’s omni-channel combination of brick-and-mortar stores, its dot-com platform, its supply chain and “all the other operational components that tie that together.” “We feel like we’re in a good position and we’re going to continue to make those investments,” Ellison added. “And over time that thesis may change but in the short term and near term, we’re just laser focused on our core business.” Lowe’s will continue to aggressively court the MRO customer through its Lowe’s Pro MSH — Maintenance

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Got MRO? Supply Headquarters. The model has the ability to scale, he says, within the current pro strategy. Lowe’s Pro MSH is selfdescribed as a one-stop shop for maintenance and renovation supplies for the multifamily housing and hospitality industries. It offers same-day delivery in 23 national markets. A survey of HBSDealer readers found a plurality say their MRO business has been unchanged in recent months. Those who describe MRO as growing (36%) outnumber those who described MRO as declining (6%). One of those independents who see strength in industrial and commercial sales is Roger Kontor, owner of Too Fast Supply, with four locations in Nebraska. Specializing in commercial contractors and industrial customers, Too Fast Supply is one of the 220 pure InCom members of Do it Best Corp. Another 325 Do it Best dealers combine traditional retail with InCom programs. “Our big advantage is knowing our customer, taking care of our customers and building a relationship with them,” said Kontor. One of the trends that he sees is the growth of eCommerce in the space, and demand for increased speed of delivery. Those ideas are in alignment with those at InCom headquarters in Fort Wayne, where Jared Hufford is director of Do it Best’s InCom Distributor Supply. InCom he said, has been a strong area of growth for the co-op since its roll out in the 1990s, both for retailers who can bolt on a new category, or pure play industrial commercial providers. Despite the HD Supply-Home Depot deal, there’s a lot of opportunity and no single entity — including Fastenal, Grainger (including its Zoro eCommerce division) and HD Supply — have the market anywhere near cornered. For Do it Best, it’s a

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Among the recent products in the maintenance space:

Roger Kontor, owner of Too Fast Supply: “Our big advantage is knowing oour customer.”

business that regularly sees doubledigit growth year over year, he said. Pandemic-response spending produced a surge in 2020, and not just through N95 masks and other PPE. InCom dealers worked with businesses to help them stay open, he said. “All of a sudden people were making plexiglass shields, for instance,” Hufford said “Marking up the floor with tape every six feet in places, or cleaning counters down every ten minutes. “Businesses said, ‘Hey I need to stay open, and here’s what the local government says we need to do. Can you help me?’ Whatever it was, we saw our members step in and provide solutions.” The competitive landscape is changing beyond mergers of large competitors. “The biggest competitor that everyone faces equally right now is eCommerce related,” Hufford said. “It’s your Amazon. Business, it’s your Zoro.com. They may not know their customer’s business, but — boy — it’s easy to hop on one of those sites and buy that product you need.” That disruption hasn’t deterred successful independents, he said. Unlike a retail model, which generally pulls customers in, the successful InCom member reaches out into the customers’ locations, driving solutions to them. “If you’re waiting for your customer to come to you, you’re missing it,” he said. “The goal is to be in front of your customer, bringing them solutions and new products. That’s where our members are successful.”

Zep Antibacterial Disinfectant with Lemon The maintenance, cleaning and sanitizing solutions provider Zep says the U. S. Environmental Protection Agency confirmed acceptance of three Zep cleaning and disinfecting products to protect against SARS-CoV-2, the virus that causes COVID-19. Here’s one of them. Eco Spec Under the Benjamin Moore Facility Maintenance Portfolio, Eco Spec WB Silver combines the superior performance of Eco Spec WB with the benefits of pure micronized elemental silver and other EPA-approved antimicrobial agents that fight the growth of mold, mildew and bacterial odors on painted surfaces. Trex Signature Railing Suitable for interior or exterior applications, Trex Signature from Trex Commercial Products is made with premiumgrade aluminum for superior strength and durability. Preassembled panels are available in a variety of stock lengths to accommodate any commercial project and have been proved in field testing to reduce assembly time by up to 50%.

HARDWARE + BUILDING SUPPLY DEALER JANUARY 2021

PLUMBING NEWS

Delta adds Krauss to the family Delta Faucet Company, a division of Masco Corporation and one of the leading U.S. manufacturers of residential and commercial faucets, has signed an agreement for Masco to acquire the assets of Kraus. Based in Port Washington, N.Y. Kraus is, an online plumbing fixture company focused on delivering modern, high-quality sinks, faucets, and related products. The transaction is expected to close no later than the first quarter of 2021, subject to customary closing conditions and regulatory review. Kraus will operate as an affiliate of Delta Faucet Company.

The financial terms of the acquisition were not disclosed. “We are excited to add the Kraus team and their capabilities to the organization,” said Ken Roberts, president of Delta Faucet Company. “Kraus’ complementary products, primarily kitchen and lavatory sinks, as well as accessories, and its robust online presence, will strengthen our market-leading offerings, and drive further growth.” Kraus was founded in 2007 and employs approximately 100 people worldwide. Pending the closing of this transaction, the Kraus leadership

New auger from General Pipe

auger’s other components. The optional down head follows bowl contours — and springs through sharply angled passages while protecting inner walls from chipping or breaking. Also available is the optional Closet Auger Bag. General’s

For stoppages just beyond the bowl, General Pipe Cleaners introduced the innovative Teletube heavy-duty closet auger. The key to its innovation: there’s no need to pull the bowl. The Teletube carries three extra feet of Flexicore cable telescoped inside the guide tube. Plumbers or DIYers simply push the button for extra cable length when it’s needed. Flexicore comprises two layers of tempered spring steel coiled tightly over a core of 49-strand wire rope — for proven resistance to kinking. The product is guaranteed against breakage for a full year — including damage to the cable, as well as to the closet

Teletube adds extra feet of cable.

The undermount kitchen sink is one of the specialties at Kraus.

team will report to Jill Ehnes, vice president of e-commerce, Delta Faucet Company. “We see in Kraus the same highperforming culture we embrace at Delta Faucet Company,” said Ehnes. “We also share a common desire to create great experiences for the consumer. We’re excited to welcome the team to our organization.” Headquartered in Indianapolis, Ind., Delta Faucet manufactures Delta, Brizo, and Peerless branded products. convenient carrying case puts an end to dragging dripping closet augers though homes, hospitals, and offices. Three vent holes let the auger dry between tasks. And thick shoulder strap keeps hands free to carry other tools.

Oatey expands in Mexico Cleveland-based Oatey Co., a plumbing industry supplier since 1916, announced the acquisition of Contact Industries, S.A. de C.V., based in Guadalajara, Mexico. Contact is described as a leading manufacturer and distributor of products serving the plumbing markets in Mexico. Contact Industries was founded over 25 years ago and manufactures an extensive line of products that are sold under the “Contact” brand name throughout Mexico to the plumbing and retail channels. Product categories include solvent cements, solder and flux, and other plumbing chemicals and accessories. “The Contact brand is highly respected and a great addition to

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Oatey’s market leading family of brands,” said Oatey CEO Neal Restivo. “We are excited about this transaction as it significantly enhances our ability to serve customers in the Mexican and Latin American markets.” Financial terms of the deal were not disclosed.

Oatey makes a variety of PVC cement

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MARKET INSIGHTS

LBM Confidential Buyers, sellers and the makings of a good match.

f a lumberyard owner has a bitter taste in the mouth of the seller, decided to sell, the next perhaps for years to come. question shouldn’t be: “How Remember also that your desired do I find a buyer?” The next price may be an emotional one, and question should be: “Of the buyers out your buyer isn’t buying based upon there, which is the right one for me?” your needs. They’re buying based on Having assisted in nearly 100 their needs. transactions, my first and constant Every deal is different, but lets look concern is confidentiality. Rumors of a sale at a couple of examples. make employees, customers, and even Yard A started its drywall vendors nervous. Remember, even if you distributorship 10 years ago and it’s find the right buyer, there’s no guarantee grown into a profitable business. Lots the deal will succeed. This makes of employees have come and gone, confidentiality even more important. and the decision is made to sell. The Rumor of a sale can be bad, but news owner’s goal from day one was simply of a failed sale can be a disaster. to make money. Then it’s a simple Pick a buyer you can trust to maintain choice: You go with the buyer who strict confidentiality throughout the entire pays the most money. transaction. Even with the right buyer at Other considerations still remain: the table, the deal will take time. My How long does the new owner quickest deal took four months. want you to stay around? Will My longest took 19 years. you sign an employment an will Maintain confidentiality until agreement? Do you want g r o M e Larry ate in th the deal looks certain and cashed out? Are you particip ance & LBM Finent Week key employees need to be willing to finance part of pm Develo vent, which informed. the purchase price? Are e l 25 virtua ff Jan. Price, price and price. you willing to enter into an kicks o We’ve all heard that old earn out agreement? saying: “Everything’s for sale This is a case in which at the right price.” But the truth working with an intermediary or is that most things are for sale at the consultant proves valuable. wrong price. You may have picked They have likely dealt with most the perfect buyer, but if you have an if not all the major buyers in your unrealistic price, then you’re probably industry. And while they shouldn’t wasting your time. Agree on a ballpark reveal confidential details of past price and terms before you spend a lot transaction, than can share with you of time and money on due diligence. which buyers pay the most, how good I’ve found that the right buyer they are with confidentiality, and how won’t make a low-ball offer. Even if smooth their transactions go. they are a perfect match regarding HBSDealer and other industry corporate structure and philosophy, publications are excellent sources leaving money on the table will leave to find the names of companies a bitter taste. involved in acquisitions. Don’t The right buyer is the buyer willing hesitate to contact the owner and to pay the right price, and this buyer find out how they feel about the new knows that the wrong price will leave buyer. Should you decide to go

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with their buyer, chances are your transaction will be a mirror of their transaction. Now let’s look at Yard B. It’s been around for 75 years and there’s a picture of the founder hanging behind the owner’s desk. Many of the employees have worked in this iconic community-centric business for years and have become part of the owner’s family. Price may not be the owner’s top consideration. Picking a buyer who will protect the employees and grow the company might be as important here as the sales price. A few years ago I completed a transaction in Texas in which there were three buyers. All were strong companies, good operators, and cash buyers. After spending considerable time getting to know each of the buyers the seller actually went with the lowest offer. Not much lower, but lower. Why take less money? All the reasons above, plus: the buyer chosen was the one that agreed not to interfere with the day-today operations, make no personnel changes without the seller’s permission, and invest money in needed capital improvements. Often times your best buyer is your best competitor. But tread lightly. Confidentiality can be extremely difficult in these cases. This buyer knows your market, your vendors, and probably many of your customers and employees. If they acquire your business then they eliminate a competitor. They avoid the costs and risks associated with a startup. But if the deal doesn’t go through, they know even more about you.

Larry Morgan has more than 25 years of experience advising building and construction industry clients on mergers and acquisitions. Visit Larrymorgan.net.

HARDWARE + BUILDING SUPPLY DEALER JANUARY 2021

The Shecession: Where we are and where we must go By Sarah Alter

It’s officially been christened — 2020 was the year of the “Shecession.” COVID-19 has upended lives around the world, but the evidence continues to show the economic downturn has disproportionately affected women. As children are forced to stay home from school and loved ones are in need of care, women, are leaving or considering leaving the workforce at an alarming rate. According to the study, Women in the Workplace, one in four women are thinking about reducing their job responsibilities or quitting work altogether. What does that look like in numbers? In September, as the second wave of the pandemic intensified, 1.1 million workers left the workforce, and a shocking 865,000 of those were women. That’s 79%. The Shecession for women of color These numbers grow bleaker when looking at the impact of the recession on women of color. In October, the unemployment rate for Black women older than 20 was 9.3%. Compared to the unemployment rate of white women that month (5.4%), which was actually lower than that of white men (6.2%), the Shecession is clearly hitting women of color hardest. According to a National Women’s Law Center report released in October, “More than half of Latinas (57.1%) and Black, non-Hispanic women (53.6%) reported a loss of income since March, compared to 41% of white, non-Hispanic men and 40.4% of white, non-Hispanic Women.” What can we do? Some aspects of the current situation feel out of our control — but while we may not be able to help develop a vaccine, we can push for key changes that will better support women during this incredibly difficult time. We must do better for women in 2021 to help them stay in the workforce, and to help women who have left it to come back.

Employers must support their employees with work policies that allow them to keep their careers while caring for their children. That doesn’t just mean more flexibility in setting work hours, or kindness and compassion when the kids show up on Zoom, though those changes are important. It means concrete policy change for the long haul. According to the Women in the Workplace study, “Less than a third of companies have adjusted their performance review criteria to account for the challenges created by the pandemic, and only about half have updated employees on their plans for performance reviews or their productivity expectations during COVID-19.” Expecting employees to turn optimal productivity in this impossible year is a losing game for both employers and employees. Whether they are caring for children, caring for loved ones, or simply caring for themselves, an undue burden has shifted to

JANUARY 2021 HARDWARE + BUILDING SUPPLY DEALER

women during the pandemic. More pressure and more stress forces women out of the workforce, leaving businesses short on skilled workers — and working women out of a job. Systemwide change The answer is systemic, too. We need to ensure this kind of disproportionate disenfranchising of women never happens again. That means, at the most basic level, working toward a more equitable society where men and women share equal responsibilities and expectations for housework and childcare. But that also means more opportunities for women in fields where remote work is not an impossibility. The lower the pay for a job, the more overrepresented women are as employees. Closing this gap is key to closing the wage gap for all women, and that work must continue against the setbacks that will surely come out of this tragic time. Investing in diversity and inclusion within organizations is one step in the right direction. Supporting women-led businesses, supporting the leadership development of women throughout their career journeys, and ensuring your organization is following D&I best practices will all help move the needle. If the Shecession is to be combated, and we are not to lose years of hard-fought, precious progress for women’s equality, we must be intentional. We must look very carefully at the decisions we make over the next year, and we must commit to supporting women — or risk losing them. Sarah Alter is president and CEO of the Network of Executive Women, a learning and leadership community representing more than 13,000 members in 22 regional groups in the United States and Canada. Learn more at newonline.org.

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PEOPLE IN THE NEWS Tractor Supply Company has named Noni Ellison as its new senior vice president, general counsel, and corporate secretary. Ellison joins the company’s executive committee and will report directly to Tractor Supply President and CEO Hal Lawton. In addition to managing the legal department, Ellison will also Ellison lead the company’s risk management, government relations, licensing, and quality assurance/ customs compliance, as well as Tractor Supply’s environmental, social, and governance efforts.

eliminating redundancies, the company said. Kaufman will lead all regional sales managers who will in turn oversee representatives from both Palmer-Donavin’s building materials and doors businesses. The Columbus, Ohio-based company has also appointed Robert Hudgins as its new vice president of finance.

Do it Best Corp. added Russ Kathrein to its LBM team. The former head of Alexander Lumber has become an LBM business development manager for the home improvement co-op, effective immediately. In this position, Kathrein will work to grow sales and market share for the company’s LBM Kathrein division, as well as develop new and existing LBM relationships with member-owners. Kathrein brings to Do it Best more than 30 years of experience in the forest products industry, leading truss plants, door shops, and pro dealer operations.

BlueLinx Holdings Inc. promoted two of its leading general managers to the role of regional vice president. Matt Lyle, most recently the general manager of the Gulfport, Miss. and Lyle Zarick Monroe, La. branches, will be leading the building products distributor’s Central Region. George Zarick, most recently the general manager of the Denville, N.J. and Frederick, Md. branches, will be leading the East Region.

Alexander Lumber has extended Bill Cummings’ tenure as CEO of the company. Cummings was named interim CEO when Russ Kathrein stepped down from the position in July 2020. Alexander Lumber said that Cummings will maintain that role through 2021. A member of the Alexander family and a long-time board Cummings member, Cummings has led a strategic assessment of the company over the past six months. Based in Aurora, Ill., Alexander Lumber operates a dozen locations including two truss plants, across Illinois, southeast Wisconsin, and eastern Iowa. The company serves home builders and remodelers.

Kaufman

Hudgins

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Palmer-Donavin has named Matt Kaufman as its new vice president of sales. In the new year, the company will implement a plan to internally restructure from divisional to a more functional organization, HARDWARE + BUILDING SUPPLY DEALER JANUARY 2021

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.: 1,547,000

NAICS 44413

(sales in $ billions)

1600

1500

2.67

1400

38.9

38.1

1300

(sales in $ billions)

36.0

33.7

30.9

2.34

2.61

2.55 2.36

2.14

30.7

1200

1100

1000

900

800

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

SEPTEMBER 2019

SOURCE: COMMERCE DEPARTMENT

Single-family starts

OCTOBER

NOVEMBER

AUGUST 2019

2020

SEPTEMBER

OCTOBER

2020

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

(in thousands, SAAR) Nov.: 1,186,000 1200

HBSDealer Stock Roundup

1150 1100

the percent-change performance of stocks based on Jan. 7 prices

1050 1000

950 900 850 800

ANNUAL CHANGE

700

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

Existing-home sales (in millions, SAAR) Nov.: 6,690,000 7

BLDR

TSCO

750

650

BECN

50 40

SHW

LOW

30 HD 20

6.5 6

SWK

DJI

5.5

0 -5

4.5

MONTHLY CHANGE

4 3.5

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 (LOWEâ&#x20AC;&#x2122;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)

8.0

10.0

4.0

Current Prior month

120

Prior year

16.0

6.7%

18.0

December 0.0

$2.50 $2.00

14.0

6.0

2.0

100

12.0

20.0

88.6

$2.30

December

Jan. 7

140

JANUARY 2021 HARDWARE + BUILDING SUPPLY DEALER

$1.50

$3.00

SOURCES: LABOR DEPARTMENT, THE CONFERENCE BOARD, AAA

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FEBRUARY 23 - 26, 2021 Join us for the Emery Jensen Edge, our semi-annual trade show featuring top vendors, great promotions, and pricing to drive your profitability. Attend our 4-day virtual event February 23-26 and gain an edge over your competition! Not just a buying event, but a complete digital experience:

Broadest assortment in the industry Massive savings on our biggest promotions of the year Vendor demonstrations on the newest products in the market To learn more about the Emery Jensen Edge and to register, visit emeryjensendisribution.com/edge