As market turns, a ‘big’ threat emerges
Does the independent lumberyard compete with the big-box national retailer? The answer might surprise you.
It surprised Jim Robisch, senior partner at The Farnsworth Group. His recent presentation during the LMC convention was titled “The Future Threat of Big Box Home Centers in the Pro Market,” and it spelled out the case that Lowe’s, Home Depot and Menards are not to be underestimated as LBM competition.
“Big boxes are becoming more relevant,” Robisch told HCN. “Not as the initial provider for the framing package, but for just about everything else. All of a sudden, they’re on the list of places where builders say they buy.”
Based on Farnsworth research of pro purchasing habits, Robisch said he is seeing diminished market demand for some of the traditional strengths of the independent channel. Until very recently, lumberyard dealers would hang their hat on customer service and quality products. But those are declining as important selection criteria for today’s builders and remodelers.
Meanwhile, the criteria of low price, convenient location and product availability are generally growing, and that recent shift plays into the hands of the big box, Robisch said.
What happened? Several things all at once. The housing downturn forced many dealers to cut heavily, lowering inventory levels and staff, he said. A dearth of starts forced many builders to take on remodeling jobs. The nature of their work led them to the big box, while in some markets, independents closed. The influence of the big-box home center gained traction with the pro market as this was happening.
Combined with all the above is a new landscape where dealer loyalty isn’t nearly what it used to be. “Competitive cross shopping is probably two times what it was before 2008,” Robisch said.
For the independent pro dealer, it adds up to a growing competitive threat. But there is a response to big-box encroachment. The Farnsworth presentation offered strategies that minimize the competitive impact of the big box. Successful dealers focus on existing customers, increasing their average ticket, while pursuing profitable new customers.
Farnsworth research also recommended:
- Consider restructuring the sales team for the tech-savvy future generation of builders, for whom site visits are low value, but strong inside sales support are high value.
- In the product assortment arena, maintain in-stock positions at all times with signature products.
- Experiment with nontraditional merchandise, such as apparel.
Also understand that where big boxes are weak, that’s where the independent is strong. “Independent lumber and building supply dealers continue to maintain a differentiating advantage perception in areas of service, quality and business partnership that can still be leveraged if enhanced and refocused to today’s contractor needs,” Robisch said.
— Ken Clark
Thanks, but no tanks
Building code requirements limiting energy and water use and government initiatives encouraging conservation are becoming increasingly important as population growth and electrical consumption increase demand on water and energy supplies.
An on-demand tankless water heater can help.
In years past, most tankless heaters sold here were electric point-of-use units with limited capacity, relegating them to consumer niche markets, such as in-home apartments and vacation homes with low hot water demand. The development of more efficient natural or propane-fired units and the introduction of high-capacity, whole-house gas-condensing units have made tankless a viable alternative.
Tankless units account for 5% to 8% of all water heaters sold. Gas-condensing units — which increase efficiency by using exhaust heat to warm water — account for almost a quarter of the 400,000 tankless units sold in the United States, said Trey Hoffmann, global product manager of Rinnai America in Peachtree City, Ga. The units initially cost more, he added, but their greater efficiency results in lower utility bills.
Milwaukee-based A. O. Smith recently introduced a "hybrid" unit that combines the best features of tankless and conventional technologies to create a new category of water heating. It uses a secondary heat exchanger to route heated exhaust gases back through a "buffer" water tank to extract additional heat. While the hybrid enlarges the unit’s installation footprint, the company said it increases the unit’s efficiency.
Good news for the category is that the federal energy tax credit program was extended through Dec. 31, 2013, allowing buyers to claim up to $300 for high-efficiency water heating equipment, including tankless units with an Energy Factor of 0.82 or better. Moreover, many local and state utilities offer rebates for homeowners who purchase these appliances.
This story appeared in the digital pages of HCN sister publication Residential Building Products and Technology.
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Whirlpool showcases ‘Ice’ sculptures
The spending news from the National Kitchen and Bath Association (NKBA) could have been better, but it could have been worse.
The NKBA Design Trends Survey, which asked designers for the total average cost of the kitchens they design, slipped in the 2013 survey to $47,308. That’s down from 2012, but is well ahead of 2010 and 2011 (See chart).
One of the design nuggets from the NKBA survey of kitchen designers shows a "transitional" design — defined as "a seamless blend of traditional and contemporary" — has surpassed "traditional" as the preferred design for the first time in the association’s history.
Whirlpool says it’s firmly on top of that design trend with its Ice Collection.
Available in White Ice or Black Ice, both contemporary finishes are accented with stainless steel handles that reach for a sophisticated design for ranges, refrigerators and dishwashers. Other features include:
- Ice Collection ranges feature temperature management systems that cook food uniformly and with less energy.
- Ovens with a true convection system roasts up to 30% faster (versus a conventional oven roasting a 12-lb. to 14-lb. turkey).
- Counter-depth refrigerators with MicroEdge shelves provide 25% more shelf space (compared with Whirlpool refrigerators without MicroEdge shelves).
- Ovens feature EasyView extra-large window and AquaLift Self-Clean Technology.
- Dishwashers feature Sensor Cycle and PowerScour Option.
- Ranges feature the AccuBake temperature management system, TimeSavor true convection cooking system and Flex Power Burner.
- Refrigerators are Energy Star-qualified and feature MicroEdge spill control shelves.