The tax on lumber
“Against a loud voice from the lumber industry, the governor just signed legislation to enact an additional 1% sales tax on lumber sold in California at retail starting Jan. 1. Without California going strong, the rest of the nation will never recover. Don’t forget we’ve also got cap and trade, the low carbon fuel standard, a vehicle mileage tax called smart growth, storm water runoff regulations and a new paint recycling fee starting Oct. 19 yet to contend with.
“FYI, the California legislature passed and the governor signed public employee pension reform legislation recently. It was obviously watered down, very weak and is nothing more than lip service because if it was truly monumental, there would have been public employee union outcry the likes of which we saw in Wisconsin last year. We didn’t even hear a whimper. It is currently estimated that between unfunded public employee pension liabilities and state bonds we owe approximately $750 billion!”
— Augie Venezia
Fairfax Lumber & Hardware
Job facts versus job fiction
Several readers responded to an article that appeared on homechannelnews.com under the headline: “Unemployment rate declines to 8.1%.”
“The unemployment rate improved because more people stopped looking for work. It’s a misleading and misguided statistic.”
— Jimmy Bolton
Coastal Building Sales
“Your article states that unemployment improved in August, when in fact 96,000 jobs were added and 368,000 people stopped looking for work or their unemployment benefits expired. Seems if you are going to report numbers you would give both sides of the story. This is misleading when [only]part of the facts are presented.”
— Dillard Jones
“While the unemployment rate appears to have gone down, the country saw 360,000 people drop out of the labor force, which affects the unemployment calculation and why it looks like it went down. The actual percentage of people now considered part of the labor force compared with the total population is at its lowest level in a generation. Additionally, with only 96,000 jobs created last month, it is nothing to write home about and way below what is needed to significantly impact the economy via disposable/discretionary income that drives retail sales (excluding food and fuel).”
— Pkrupa on Homechannelnews.com
The Fed responds
“It’s wonderful that the Fed thinks it can fix housing and then the economy. It can’t. All it has done is ensure a new housing bubble that will once again pin the losses on the taxpayer.”
— Jim Taft
“Why should my tax money help the people who bought houses that they could not afford? Being in the building industry myself, I have had to change my lifestyle. I have seen many material supply houses close their doors and have not seen government help them out. If government wants to boost the economy, why not give the money to taxpayers who are paying their bills and taxes? These people would in return buy products and services, which would put people back to work. We can give companies all kinds of money to bail them out, but if the general public does not have money to buy goods and services, then there is no reason for companies to make products. It is simple economics: When people have money, they will support the economy.”
Mortgage interest tax deductions and the housing recovery
“Eliminating the mortgage tax deduction is just another way of implementing a tax ‘increase’ that would impact the middle class. The tax deduction gives additional incentive to owning a home. High-income taxpayers who invest in commercial real estate would just find ways to fund their home purchase by borrowing additional funds on a commercial mortgage to still get the deduction. It is time our policy makers looked at throwing out the tax code and go to a graduated flat tax so that ‘everybody’ pays a fair share.”
— Lonnie Reichstein
Central Valley Builders Supply
“If this deduction were phased out now, you would put housing in another tailspin! The value of your property would also take another downward correction. Ninety billion is nothing compared with the waste spent by the government.”
— Duane Kuzak
Making history, learning from it
On page 134 In the Aug. 13, 1984, issue of National Home Center News, Duncan Building Material Warehouse in New Tazewell, Tenn., is shown in all its rugged glory.
It might not look like much. But the photo is attached to an article in which the store’s owner describes the enterprise as the home center industry’s very first warehouse store. It was opened in 1974, beating Home Depot to the punch by a full five years.
Here’s a question: Doesn’t this groundbreaking story deserve a more prominent placement than page 134?
One would think so. But the amazing thing is that the 1980s were so full of groundbreaking stories that editors had little problem filling 133 pages with copy that sings to this day.
It was the Golden Age of home center retailing. It was also a high-stakes battle for sales, traffic, profit and business survival.
What forces shaped the landscape and determine the winners and losers? And what are the lessons learned for today’s home improvement business?
These are questions that will be addressed during an upcoming presentation at the Home Improvement Research Institute’s (HIRI’s) Fall Conference in Chicago Oct. 17. One of the day’s presentations, “Lesson’s Learned from the Revolution,” will be delivered by an actual editor of Home Channel News.
Let’s face it. Duncan never had a chance to grow into a dominant player. But many others could have. In fact, they fully expected to. Builders Square was backed by big money from Kmart Corp. Wickes once had not one, but two separate business units in the top 10 list — at the same time (Wickes and Wickes Lumber). At the top of the scoreboard during much of the Golden Age was Payless Cashways, a fierce competitor and a highly respected operator.
And then there’s Scotty’s. In a 1985 article, CEO James Sweet candidly described the impact of the revolution.
“When we were hit with the competition from the warehouse stores, we really didn’t know what to do,” he said. “At first, we were going around putting out fires. It took us a couple of years before we decided what to do.”
Scotty’s came up with a plan — including their version of what was an industry-wide mania: build a “store of the future.” For a while, Scotty’s was racing with the big boys. It even had its own racecar in the late 1980s, car No. 16. But in 2005, the company fell apart.
Home Channel News asked executives who lived through the period why some succeeded and others failed. The answers are as different as the companies themselves, but they include: passion, focus, execution, timing and, of course, bankroll.
One can add to that list: a little bit of luck.
The HIRI Fall Conference will be loaded with powerhouse presentations with observations from Wall Street to Main Street and a lineup of six research-oriented presenters. Visit HIRI.org for more information. And if you have a lesson from the Golden Age of retailing, by all means, let us know.
Roark acquires home improvement installers
A nationwide network of home improvement installers has been acquired by Roark Capital Group, a private equity firm that owns some of the best-known restaurant franchises in the nation. Roark’s plans for The Home Service Store (HSS), which already provides installation services for Lumber Liquidators, Costco and BJ’s Wholesale Club, are equally ambitious; the Atlanta-based investment firm has put Robert Sheft, who helped develop Home Depot’s first foray into installed sales, in charge of its expansion plans.
Sheft now serves as group managing director at Roark, a position he has held since 2007. But in 1998, Sheft was CEO of RMA Home Services, a replacement windows and siding business that Home Depot hired to conduct a pilot with seven stores in North Carolina. Eventually the windows and siding installation became a nationwide program, and Home Depot bought the business from Sheft in 2003.
Sheft’s background in home improvement services will be instrumental in casting a wider net for HSS, which contracts primarily with national retailers. Relying on a network of independent contractors, it coordinates installation jobs for its partners with a system that calculates pricing, processes payments and manages the service. In some cases, HSS generates leads and sales. The Kennesaw, Ga.-based company, which facilitated more than 39,000 jobs in 2011, handles flooring installations for Lumber Liquidators, as well as other home improvement products for Costco.com and BJ’s, including flooring, windows, siding and insulation.
“We’re more than network aggregators,” said Sheft, who believes that the current model, with some tweaking, can be used “across multiple channels.” One example might be a financial services firm that wants to offer home installation in tandem with some of its other products — or, perhaps, a manufacturer.
“We’re developing some front-end software that will put more discipline into the sales process,” Sheft explained. The HSS — which is retaining its original management team, led by Mark Ilderton — hopes to build on its national footprint. “We are offering a very attractive way to reach the customer,” said Sheft, who will serve as executive chairman.
Roark Capital owns approximately 21 franchise/multi-unit brands across 50 states, including Arby’s, Batteries Plus, Carvel Ice Cream, Cinnabon, Corner Bakery, Fast Signs, Il Fornaio and Schlotzsky’s. The firm has more than $2.7 billion of equity capital under management.