Housing economists are like weather forecasters: The more locally they focus, the more likely their predictions will be wrong. They're correct in saying the housing business from a national perspective is tepid, but when doing so they ignore conditions in farming and energy-mining communities that dealers tell me look promising. Similarly, while some surveys have found that dealers in general are having trouble generating business, you can find cases where others–sometimes in the same markets–have come up with ways to make a buck.
I've noticed that one reason why some of those companies are pulling ahead is because they have taken a hard look at themselves and their customer bases and decided they couldn't continue as before. To overstate just a little, lots of dealers used to make a nice income selling sticks and sheets over the counter to small builders putting up single-family detached homes. Today that's a virtual impossibility; for one thing, our sister publication Builder estimates that as many as three-quarters of the building companies in operation half a decade ago have gone bust. Given the perilous state of housing finance and the economy, it's unlikely those traditional core customers will return anytime soon.
So what have some dealers done? As our lead ProWatch article reports, there are ProSales 100 members today getting as much as 25% of their revenues from installing products rather than selling them. And the work isn't just related to single-family homes. Increasingly, it's for commercial and multifamily projects–sectors that some dealers traditionally have been reluctant to explore. > Meanwhile, dealers going after DIY and small remodeling customers are jumping into social media. Sign up for Seattle-based Dunn Lumber's Twitter feed and you'll get asked: "Do you have a DIY idea or project that you'd like advice on?" Miami's Shell Lumber uses Facebook to promote decking demos. And the e-mail from Don Abel Building Supplies in Juneau, Alaska, includes a coupon. Unfortunately, I'm seeing fewer examples of improvements in an arguably more important tech area: Websites. Forrester Research estimates roughly half of all sales in stores today are influenced by the web. That number likely is lower for building supplies, but don't be surprised if one day you hear fellow dealers complain about losing business to Amazon.com.
"In every market (almost), there are submarkets or sub-submarkets where there are positive case histories playing out," reports John McManus, editorial director of Big Builder. Like me, he's paid to keep his ear to the ground, and in recent weeks he has heard what he calls "stories of outliers, anomalies, defiers, and higher-fliers who may have cracked the code of opportunity by tapping into a flow of demand that nobody had thought of or been able to reach."
There are pockets of opportunity out there. Go and explore.
Craig Webb, editor