Everything’s Blooming—Even the Industry
by George E. Kessel Jr.
We exited the hibernation of winter and watched the crocus
sprout, trees bud, birds sing and flutter about building their nests,
the grass turn that familiar shade of green, and I watched my wife formulate
her spring “things for me to do” list. There was a feeling of happiness
in the air, and colors became bright and vibrant: hope was renewed.
Our industry has been through some difficult times perhaps an even once-in-a-generation
event. It’s time to get all that behind us and plan for the future. I’m
not talking about tomorrow’s future or next week’s future, but months
from now future. We need to plan for the future like we used to do.
I recently had a discussion with an acquaintance who is a consultant with
an engineering background. He is not part of our industry, but he quickly
understood the difficulties we are facing. After a brief discussion, he
asked, “What steps have you taken to better cope with the changes that
have occurred within your industry?” Several replies came to mind instantly,
all flippant. This is a really smart guy who would see through my rambling
instantly, so for once I said the right thing and replied, “I don’t know
Most of my frustrations with not being able to solve a problem are due
to trying to process too much information at one time. Breaking everything
down into basic components helps bring clarity. Too much data masks simple
solutions. Having spent a considerable amount of time reflecting on what
has worked in the past and what we will need to do differently in the
future, two cultural organizational changes came to mind.
First, in the past, organizational size in terms of number of locations,
geographical diversification and buying power was a huge advantage. In
my opinion, dominance in a particular marketplace in the future will have
more bearing on success. You are going to need to be the dominate player
in that market or at least a strong number-two. Manufacturers have invested
a lot of money and resources developing their own sales staff to market
product. To grow market share, they will need to look past the large national
distributor to the dominant regional distributor. It may be a slower growth
model for them, but it also comes with the rewards of diversification
and higher profit margins. A strong local distributor currently has a
more even playing field than in the past. Our planned future growth is
Going forward, in
my opinion, dominance in a particular marketplace will have more bearing
You are going to need to be the dominate player in that market or at least
a strong number-two.
Second, in distribution, three attributes can be sold: quality
product, service and price. Profitable selling allows us to offer the
customer two of the three attributes. We have a tendency to define the
type of distributor we want to be and then market ourselves accordingly.
We sometimes limit our customer search to the type of distributor in which
we define ourselves. For instance, quality product and good service or
low price product and good service. Service never can be sacrificed. We
are looking for that niche market.
We need to have all three attributes available, then decide which to offer
to each customer on an individual basis. Why? The size of pie consisting
of housing starts has shrunk considerably. To maximize sales opportunities,
product offering will have to be expanded.
All products are not equal, and all customers are different. We need to
do a better job of matching customer needs with product and service offering
to those customers. Most of us have capital restraints so we have to choose
expanded product offerings wisely. We also may have to sacrifice some
inventory depth to help free up capital for expansion. One thing we cannot
sacrifice, however, is service. We also must be mindful that service is
an attribute we have available to sell, not give away. If all customers
get the same level of service, then either the services are being sold
too cheap or they aren’t worth what is being charged.
George E. Kessel Jr. is president of Morgan-Wightman Supply Co.,
and also serves on the Association of Millwork Distributors Executive
Committee as treasurer. His opinions are solely his own and do not necessarily
reflect those of this magazine.
© Copyright 2010 Key Communications Inc. All rights reserved.
No reproduction of any type without expressed written permission.