Return of the Home Center
A force is awakened at pro dealers: embracing homeowners and the home center model.
Nearly 20 years ago, the independent home center concept began taking hits.
With the empires of Home Depot and Lowe’s opening stores at a breakneck pace, many home centers turned their focus to pro customers while avoiding direct competition with the growing threat. The independent home improvement business model known as the home center appeared endangered.
Lowe’s had hundreds of stores less than Home Depot and its own, brighter flavor of home improvement. Wall Street analysts praised Lowe’s, saying the sky was the limit for growth opportunities. In the meantime, as Home Depot opened about 200 locations per year, some accused the retail giant of cannibalizing its own sales. The independent home center philosophy seemed to be facing extinction.
But modern living — filled with constant communication and demanding schedules — can prompt the need for getting things done quickly and getting it right the first time around. The need for thorough, quality service and a wide, diverse product selection has pumped fresh blood into the home center model.
“The home center is here to stay,” said Brett Hanson, owner of Tri State Building Center in Sisseton, S.D.
At Tri State (which has been selected as one of the 50 Stihl Hardware All Stars in the class of 2018), customers can find tools, hardware, electrical supplies, housewares, paint and sundries, lawn and garden products and, yes, lumber and building supplies all beneath one roof. The business was created when Hanson saw a need in the community and opened a lumberyard in 2011. The following year, Hanson bought the local hardware business and consolidated it under one roof.
“But the little hardware part of it just kept growing. There was a need in the community,” Hanson said. Sales tripled at Tri State within a year and have grown tenfold since.
Do it Best CEO Dan Starr concurs that the home center model is making a return, among an assortment of retail models. “We see a mix across the board on how retailers choose to go to market,” he said.
Starr points to some of the changes that have occurred in recent months at the Sunroc Building Materials location in Springville, Utah, as a primary example of an LBM retailer who has made a slight shift in direction.
With 12 locations in Utah and Idaho, Sunroc Building Materials offers customers a diverse product selection with an emphasis on one-on-one service. The dealer traditionally had a pro focus, but has now gravitated toward providing a more traditional retail setting at its Springville store. There, the company has installed a Color Bar — the new Do it Best store-within-a-store paint merchandising model — and brought in 3,000 new SKUs.
Most contractor sales and deliveries have been shifted to Sunroc’s neighboring Lindon, Utah, location. “Contractors now pick up smaller, quick items here,” said Jennalee Long, assistant retail manager. And despite battling a Home Depot location just a few miles away, Long noted that Sunroc’s business model at the 2,000-sq.-ft. store caters to today’s customer.
“We offer a lot more personalized service and get to work with customers one on one,” she said. “Everyone can have the same products, but not everyone can offer one on one service.”
At Tri-State, the company prides itself on being wired-in to the latest products and trends in order to meet the needs of all customers. “We try to stay on top of what’s new by working with all of our vendors — we try to be on the front line and stay ahead of our customers when it comes to new products and technology,” Hanson said.
This year, Somerville Lumber Co. in Bridgewater, N.J., transformed into Somerville Home Center. The business also maintains deck design centers in Bridgewater and Flemington. Aside from a branding change, the new Somerville Home Center has upgraded its IT system, overhauled its social media strategy and placed a focus on becoming a one-stop shop for customers.
The company said it has maintained a position in central New Jersey by not only offering high-quality products and customer service, but also by ensuring customers can complete a wide range of home renovations. In addition to a combined 6,000-sq.-ft. comprehensive decking and outdoor living department, Somerville offers cabinets, tile floors and countertops for kitchen installations, along with faucets and plumbing fixtures for bath remodeling projects. Windows and doors are also part of the equation.
As it transforms, Somerville says its goal is, “to develop new products and services and to keep current with changing times.”
Roughly 300 miles north, serving the Cape Code region, the islands and Massachusetts’ South Shore, is Mid-Cape Home Centers. Founded in 1885, multiple generations have shopped the business.
“While the vast majority of our business is from contractor customers, we understand the importance of meeting all home improvement customer needs with our retail presence and extensive product selection,” said Jack Stevenson, president of Mid-Cape Home Centers. “We are blessed to operate in communities that deeply value the importance of buying local and supporting local businesses, and we make a strong effort to serve these communities with the unique products and services they need.”
Although products vary across Mid-Cape’s six retail locations — including two kitchen design showrooms — Stevenson said “summer traffic constraints make it even more critical to offer the right DIY products at the right locations.”
For example, at its Wellfleet store, Mid-Cape serves many hardware and paint customers; and in other locations, it serves DIYers looking for windows, doors, flooring, cabinets, countertops and more.
“With multiple locations, showrooms and a diverse portfolio of products and services, we pride ourselves on having high-quality, industry-experienced representatives,” Stevenson said. “Hang around long enough and you’ll hear our customers talking about how their dads and their granddads shopped here, and when you ask what keeps them coming back, the answer is simple: It’s the high-quality products, the people and the Mid-Cape experience.”
Back in South Dakota, Hanson said Tri State’s ability to meet the requirements of so many customers is the key.
“That’s our challenge,” he said. “Trying to have every product our customer wants.”
More than 90% of the time, Tri State gets it right, Hanson said. That includes sporting goods, too.
Poll Question: The price game
Every product has a price. And every price has a sensitivity.
Some customers demand lower prices. Some dealers recommend lower lifetime cost of ownership. Some manufacturers publish price increases. Everyone is sensitive to price, and in different ways — and in different channels.
This week’s HBSDealer poll questions looks into the evolution of price sensitivity in a growing housing market and a price-obsessed digital economy.
Specifically: here’s the question: How would you describe your customers’ price-sensitivity in today’s market?
- Increasing: Price is everything, especially in the age of Amazon.
- Holding steady: It’s always been important. Still is.
- Decreasing. More customers seem to appreciate value over price.
The poll is open, look to the right of the screen to cast your vote (or scroll down your handheld device.) Or, let us know your thoughts on price sensitivity here.
Drexel Building Supply has big plans
A new facility is expected to create more than 113 jobs over the next three years.
Drexel Building Supply, the Wisconsin-based pro dealer, plans to construct a new $2.1 facility in Columbus.
The project is expected to create 113 jobs over the next three years, the company said in statement issued through the office of Wisconsin Gov. Scott Walker.
“In addition to the good-paying jobs created by this project, this expansion allows Drexel Building Supply to take advantage of a growing market and position itself for future growth,” Walker said Walker. “This investment is the latest example of the many companies choosing to establish or expand operations in Wisconsin because of our strong business climate and dedicated workforce.”
With headquarters in Campbellsport, Drexell operates 7 locations in the state including 2 design centers and has about 250 full-time employees.
“Building a new home or tackling a remodeling project is an important time. It is Drexel’s mission to supply happiness throughout each project making it a unique, enjoyable and exciting experience for our clients,” said Joel Fleischman, owner and president of Drexel Building Supply. “Our mission goes beyond our store’s walls. We want to impact our clients, our team and our community in positive and amazing ways daily.”
To support the expansion plans, the Wisconsin Economic Development Corporation (WEDC) has authorized up to $450,000 in state income tax credits over the next three years. The actual amount of tax credits Drexel will receive is contingent upon the number of jobs created and the amount of capital investment made during that time.
Drexel Building Supply started as Campbellsport Building Supply in 1985 when Albert Fleischman purchased a lumberyard from Brittingham & Hixton Lumber Co. Initially the company focused its business on contractor sales and over the years the company increased its presence in Wisconsin by purchasing other building material and design companies. In 2012, the company was rebranded as Drexel Building Supply.
In addition to the 113 jobs expected to be created by Drexel Building Supply, an economic modeling study estimates the project could indirectly generate 44 additional jobs in the region. Those 157 new jobs are expected to generate more than $1.6 million in state income tax revenue over a five-year period.
The project is also being supported by a $185,000 Transportation Economic Assistance (TEA) grant that the Wisconsin Department of Transportation’s (WisDOT) awarded to the City of Columbus in April. That grant is being used to support the extension of Hall Road and improvements to Wisconsin Highway 16. The Hall Road extension will serve the new Drexel.
Earlier this year, Drexel opened its latest location in Columbus.