Cranking in phenomenal 2003 gross sales of $2.732 billion from 222 locations, Raleigh, N.C.–based Stock Building Supply once again lays claim to the title of largest pro dealer in the country. According to company president and CEO Fenton Hord, this year Stock is actually tracking above the $3 billion milestone on a rolling 12-month basis, and remains committed to a compounded annual sales increase of 10 percent from an even split of both organic and acquisitive growth. By focusing approximately two-thirds of its business on the single-family custom home builder, Stock has thus far debunked the popular thinking that every large, national pro dealer is simply following production builders around the country. As big builder activity increases, however, Stock is embracing the importance of either developing or acquiring the manufacturing and installation capabilities to service their needs. Here, Hord shares his thoughts on scale, acquisition, and the future of the value-added business model:
The challenges of managing a large-scale operation and still remaining flexible in service-driven markets: "Probably the biggest challenge in our business is having the right number of good people to steer the ship each and every day and also be prepared for a larger ship in the future. We've really picked up our manager training activities. … We're trying to develop people at all levels so that we will have the right skill sets to run this thing."
Mid-market pro dealers and their value proposition in merger and acquisition scenarios: "Our strategy is to provide the full breadth and depth of products and services to the marketplace for contractors. … We see local and regional players doing much of the same thing. It makes them more attractive to us because they have those services that we would want to have anyway."
The longevity of the value-added business model: "Oh yeah, I really do [think it is here to stay], and we are doing more of it ourselves. We're not doing it on the framing side say to the extent that someone like BMHC is, but we're getting there, and we're being required or requested to install just about every product we sell. … In order to deal with the big production builders, you are going to have to provide those services."
Balancing the needs of national production and local custom builders: "Our view is you need to take care of both. In a big market like Atlanta for instance, we just reorganized where we have two branches that are exclusive to large builders while two other branches are exclusive to custom builders. All of our branches act and perform like a local business. The biggest challenge that we face is having all "A" players in all of our spots in all of our locations. With as many places as we have now, trying to keep the cadre of good people in place is a challenge."
The opportunities that size and scale afford Stock: "When we started out with seven stores and $100 million in sales it was a vision really to be the best at what we were doing. The fact that we became big along the way is sort of a by-product, but one that does give us certain advantages in the marketplace that hopefully we take over to our customers, [including] the ability to have the geographic diversity that we have and the ability to leverage our scale. All of those put us in what we think is a premier position with a number of the builders and contractors that are national or multi-regional."