Dirk Koopman might have been born with sawdust in his veins, but now he also has paint on his hands. In January, the third-generation owner of Koopman Lumber expanded from three lumberyards and a distribution center by buying a new venture: the former Gerry’s Paintland in Milford, Mass. By mid-July, he planned to double up by acquiring Westboro Paint & Decorating Center in Westborough, Mass., 15 miles away.
“We think it’s a good niche for what we do, as we’re in the hardware and the lumber business as well,” Koopman says. “It’s like the lumber business: There’s no printing press in the back room with money spewing out. You’ve got to wake up every day and work at it. But between our expertise with outside sales and customer service, [paint is] something we can sell.”
Other dealers nationwide may not be making investments as big as Koopman or Ring’s End Lumber nearby in Connecticut, where six of its 13 stores specialize in paint alone and the other seven have paint sections. But some dealers are finding that diving deeper into paint can be a good way to boost business, particularly if you already have extensive retail sales and store locations convenient to DIYers and paint contractors.
Americans slapped roughly 651.6 million gallons of paint, varnish, and lacquer onto homes and businesses in 2010, the Commerce Department estimates. Those “architectural coatings,” as they’re known, were worth nearly $8.8 billion. So it’s a huge business, but LBM dealers historically have held only a pint-sized share of the market; the American Coatings Association combines dealers with hardware stores in its analyses, and even together they account for just 7% of all sales. (Stores owned by paint companies figure in half of all sales, big boxes account for another 34%, and independent paint specialty stores sell the rest.)
Within the LBM market, dealers’ love of paint varies sharply by store type. The 2009 Cost of Doing Business Survey of 134 companies nationwide found that sales of paints and sundries amounted to 1% of total revenues at contractor-oriented dealers but 4% at dealers catering to both pros and retail and 7.2% at dealers that primarily sold to the retail crowd.
Since then, distributors’ reports and anecdotal evidence suggest those percentages are rising. “Over the last few years, with the decline in the economy, paint has played a much more significant role” among Do it Best (DIB) members, says Shannon Bearman, national paint and business development manager at the LBM and hardware store co-op. Member purchases from DIB of paint and sundries rose 9.3% in the fiscal year ended June 30.
“We’ve got pro yards that weren’t into paint that found that, [even] if there isn’t a lot of homebuilding going on, there’s definitely remodeling,” Bearman says.
Don Dickson, chief operating officer at Emery-Waterhouse, the hardlines dealer based in Portland, Maine, says he also has noticed an uptick in customer requests for advice on enhancing the paint department. That’s in part because dealers say gross margins on paint routinely run in the low 30s, and for sundries like paint brushes and tarps the profit can hit 50%.
“I think the trend is here to say,” Dickson says. “Most of the stuff you sell in the paint department is definitely consumable, and customers will come back. How many people take the time to clean up a paint brush? I don’t. I throw the sucker away.”
“Paint can be extremely high margin if it’s bought at the right time,” says Lee Nabors, president and owner of Nabors Do it Best Home Center in Houston, Miss. Every six months, Nabors leaves his northeast Mississippi home for the DIB markets, where he often will order 2,500 gallons of paint—enough to fill a trailer—for roughly $30,000. Buying in such quantities can cut 20% off the drop-ship price, he says.
An Ace Texas Dealer
Morton Lumber in Borger, Texas, gets 12% of its total sales from paint and ranks among the biggest paint sellers of any store nationwide in the Ace Hardware network. As with DIB and Nabors, Ace’s sales reps love to see co-owner Robert Archer at a show: He’s been known to order a truckload of paint, then get weekly fill-ins. The paint sits on pallet racking 12 feet high in the Morton paint department, which takes up more than 600 square feet. “When you come in and say, ‘I need 30 gallons in a custom color,’ I say, ‘Yes,’” co-owner Marilyn Archer declares.
Several dealers echoed the Archers’ emphasis on showing off stock. Rick Guyot, president of Guyot Lumber & Hardware in Perryville, Mo., used to display his paint so that each type took up just one row. But after a recent reset, he started putting in two to three rows of the same product.
“That makes it more uniform and eye-appealing,” he says.
Beyond having space to display and store paint, it’s even more vital you find staff with smarts and sales savvy. That’s because so many customers need a helper with product expertise and an eye for color. Nabors credits much of his store’s success to Rebecca Gates, an inside salesperson whom Nabors says “has built a reputation as being a top-notch paint and décor person.”
Paul Gabbard, owner of Malone Lumber Do-it Center in Greenville, Ky., makes a point of sending his two fulltime and one part-time paint specialists to every training seminar they can attend. “It keeps them up to date, involved, knowing about trends,” he says. “So when the customer comes in, they aren’t just order takers. They’ll sell the paint but also recommend an applicator or drop cloth. And there are a lot of add-ons.”
Gabbard also estimates he has spent $4,000 to $8,000 on equipment. Most important is a computer that contains all the formulas of all the colors you sell and can deposit the exact amount of the right tints into the base paints. Next up is a machine that can analyze the color of anything brought in and produce a formula to match it. And then there are the paint can-shaking machines—as many as you can afford, so people don’t have to wait long. The price tag can mount up, but then most pros and DIYers pick up the paint at the store, so you save on trucks and drivers.
Koopman notes that getting involved in paint might require a bigger commitment with the vendor than you expect. “You can buy lumber from 20 people, but once you’re with Benjamin Moore it’s like a marriage, a 20-year relationship,” he says. “They’ve got a game plan and they go with it.”
Alliances are big in paint, particularly if a dealer works through a buying group. Do it Best promotes its private label, made by Sherwin-Williams, and 18 months ago it began stocking Pratt & Lambert, an upscale line that has been taken up by close to 200 DIB members. Meanwhile, Ace recently rolled out a new house brand, Clark + Kensington, that combines paint and primer in one. It has a second house brand and also sells Benjamin Moore.
“I see our paint sales increasing,” Nabors says. “I’m planning to open a second location, and in that transition we’re definitely going to be committed to the paint category. You can compete with the big-box stores and with the paint stores.”
Making the Rainbow Connection
Want to paint the store red with increase sales? Shannon Bearman, national paint and business development manager at Do it Best, recommends you do this:
- Get Chippy No one will know what you can create unless you show them examples. Do it Best offers up to 40 linear feet of color selectors. A decent department will have at least eight and preferably 12 feet worth of choices.
- Stock It High People expect to be able to pick a color, buy a gallon, and get to work right away, so you need to have all necessary products on hand.
- Sundries Matter, Too Brushes, rollers, tarps, and tape should be (as marketers of Coca-Cola say) within an arm’s reach of desire. And profit margins on sundries are higher.
- Light It Up You can’t pick the right color if a light above the sample display is burned out. Equally important, remember to plug in all the lights.
- Provide Great Help “The Home Depot can customer match a paint, but typically in our stores there’ll be someone who can do an eye match and go the extra mile to make sure it’s correct.”
- Play Up Being Local So long as you keep your prices competitive, pros and most consumers would rather buy paint from your store nearby than leave the county to buy at a big-box store.
- Cleanliness Is Key “If you have time to lean, you have time to clean,” Bearman says. Make certain the paint chips are in their proper places on the display. Elsewhere, she suggests you get out the cleaning rags. “It doesn’t make you much of a destination if you have dust on your cans.”