York, Pa.-based Wolf — formerly known as Wolf Distributing Co. — has been through more than its fair share of game-changing transformations since Adam Wolf founded the company in 1843. One of the biggest was the brainchild of Adam’s son, who literally bet the house — and the canal-and-barge-centric business — on the future of what was then a newfangled communication system called the railroad.
The company’s current chairman and CEO, Tom Wolf, lives in the same house his great-great-grandfather built by the tracks (in a town called Mount Wolf). But that doesn’t mean Wolf is set in tradition. The head of the $200 million company is spearheading its latest transformation — from a two-step distribution model to something he calls “a breed apart.”
In his “New Declaration for Independents,” Wolf wrote that the two-step model served Wolf well over the years, but it forced them to serve two masters: manufacturers and dealers. The new Wolf serves only one, he said: the dealer.
Home Channel News talked to Wolf about the company’s new strategy.
Home Channel News: Is there a recognized term for your new business model? Can we call it a “modified two-stepper?”
Tom Wolf: We’re referring to ourselves as more of a sourcing company.
HCN: Can you elaborate on that?
Wolf: The contrast we draw is between a two-step distribution model where you take products that are manufactured by a branded company and then go to the dealer market and sell those same products to those customers. And the issue there really is that you have two sets of customers. We want to be in a position to cater unambiguously to our dealer customers. So if they say they need this and we agree with that need, then we can go out and source that from a company that’s willing to make it. We’re big enough to be able to interest manufacturers to do that. So we want to take that unique size capability — the capability that comes because of our size — and translate that into a real responsiveness to the needs of our dealer customers.
HCN: How radical is this approach?
Wolf: The model has been around a long time; it just hasn’t been — at least I haven’t seen it — within our industry. If you look at basically what Dell Computers does, Dell doesn’t really manufacture, they source things from all over the world. I think some of the big retail firms [like] Costco obviously [do] that. So, we’re basically taking our scale, our size, and translating that into an ability to source products that we see that our customers actually want.
HCN: Is this going to require a change in the skill set of your people top to bottom?
Wolf: We’ve added people. And we will accent probably different skill sets. We actually have been doing private label for some time now. We have a private label in hardware. We do private labeling of vanity tops. We’ve done that for maybe 10 years now. We have a private-label kitchen cabinet that we’ve been selling for a couple of years, the Europa line. So we already have the capacity to do that, and we’re going to do more of it. The extent that we do more of it would probably [involve] reorienting some of our staff to do that rather than simply purchase material that’s out there on the market.
HCN: What’s your biggest product category?
Wolf: Kitchen cabinets.
HCN: Do you see that changing?
Wolf: I would think we might see in the next year or two a slight increase in building product sales. But it will probably be fairly equal.
HCN: You’re eyeing the Midwest for expansion. What are the challenges there to overcome?
Wolf: Well, the first barrier for a traditional two-step distributor to move is: Your vendor may or may not be interested in giving you that territory. They have other relationships, so one of the things with going with our own products is it frees us to make our own decisions on expansion. So if we’re beyond the constraint of our vendors’ inclinations on that, then we’re left with the relationships that are already in place. Are the products that we’re selling competitive and relevant to the market? How fast can we find good employees and good facilities? That kind of thing. But that’s something that I think would be a lot easier than trying to convince a recalcitrant vendor to give us a new territory.
HCN: It’s difficult to make changes to any business. What’s the secret?
Wolf: The reason we’ve lasted 167 years is because we’ve made changes, and I think this is along those lines. A lot of times people say “167 years — you obviously [have done] things the same way for all that time.” Well, actually, the reason we’ve been around that long is because every once in a while we’ve blown up the model and reoriented ourselves, and that’s what we’re doing here.