In May, PROSALES' Web site reported that The Home Depot Supply bought Cox Lumber in Florida. In case you missed it, or the subsequent articles relating to that purchase, Cox Lumber is a 31-unit pro chain serving more than 80 percent of Florida.
We've known for years that organizations like Orange Crush have had their eyes on the pro side of our industry. They've just about exhausted all possible locations for traditional retail box stores and have to move somewhere to continue their organizational growth. And the pro market is just too tempting to pass up.
Need you worry? Maybe not worry as much as develop an increased awareness of your current position. We recognize that our core customer isn't inclined to shop at a traditional box store—they're too cumbersome, have poor selection, are absent of service, etc.—but what about a pro store owned by a box? There's nothing really different from the company that's been doing business there all along. The sign may change, the color of the employees' shirts may change, but the core competency of the original business most likely stays in place to continue to serve existing customers.
What does change is the financial picture backing the business. An international organization like we're discussing can and will bring to bear its considerable presence on various supply chain issues. The box can buy better, demand lower prices and more attractive terms, and, in short, give salespeople a lower cost structure to offer their customers.
But really, it's the same old story. Somebody has a lower price, anybody got an aspirin? How many times have you faced a low-price bidder in the past several months? (How about in the past 30 minutes?)
With various economists predicting a downturn in the housing market (if it hasn't already happened in your market by the time you read this), we're already going to be in a defensive mode relative to protecting our businesses. But I would submit that if you are waiting until now to get aggressive and protect your business, you're about a year or more behind the power curve. It may already be too late.
Cruel statement? Probably. But it's true. We've known this was coming (the box intrusion on our business, market downturn, and increased competition) and have been aware of the possible ramifications for years, but in my experience many dealers have chosen to ignore the signs and have continued to do business the way they always have—taking everything one day at a time.
Not everyone, though. Many also have become very aggressive and proactive, focusing on core strategies for strengthening existing business relationships, improving margin management and cost control to prepare for the future. These organizations will be fine.
If you consider yourself to be in the first, unprepared group, take action now. Don't wait any longer to take steps to combat big box incursion and market instability before it's even more too late than it is now. Otherwise, you and others like you may become fodder for the merger-and-acquisition monster.
I'll leave you with the example of the ostrich—the common picture of it having its head buried in the ground. Well, if you keep your head buried in the sand, a very sensitive part of your anatomy is exposed to the world.