According to data from the 2004 PROSALES 100, residential remodelers still only account for 9 percent of the nation's largest pro dealers' businesses. This despite the fact that the overall remodeling market size—at $250 billion, according to 2004 data from the Harvard Joint Center for Housing Studies—rivals that of new construction. One reason is pro dealer acquiescence of all but the most sophisticated of remodeler accounts to the big boxes. “Those [remodelers] who do larger jobs and utilize subs pretty much require the same services as other customers,” says Bob Egan, vice president of operations and sales for St. Paul, Minn.–based Lampert Yards, who expects his company's focus on remodelers—currently at 5 percent of all accounts—to increase in 2005. “Those who do all parts of the job themselves tend to favor the big boxes, because they have everything in stock that the remodeler needs.”
That purchasing trend, however, may be beginning to change. “The true lumberyards are starting to get stronger than ever when it comes to professional remodelers, because everyone [in the channel] is realizing that the boxes just don't have what we need,” says Darcy Lauzier, president of Framingham, Mass.–based Darcy S. Lauzier Design/Construction Associates, a 2004 REMODELING magazine (a sister publication of PROSALES) Big50 firm. “They don't have the service and they don't have the product knowledge. I just don't think they can compete on the personnel end.”
In addition to remodelers like Lauzier leaning toward the yards, manufacturers, as well, are beginning to key into the importance of the pro dealer role in approaching a remodeling market that can have more lucrative potential compared to full-on home building. In May 2004, Winchester, Va.–based Timberlake Cabinets restructured its sales force to better focus on the professional remodeler through the pro dealer supply chain, developing merchandising, sales support, product training, and cutting lead times to help dealers sell more product. “We recognize the opportunity that [remodelers] represent not only to us, but to the industry, and we're committed to helping pro dealers maximize their profit potential through the sale of cabinets,” says company vice president of professional markets Gary Rosenfield. “We estimate that the remodeling market in cabinetsydusvvzf represents approximately $4 billion, compared to $3.1 billion on the new construction side. The remodeling market is growing, and we want to grow with it dramatically,” Rosenfield says of his company's pro dealer approach.
Dealers Take Stock Balancing markets to establish greater revenue certainty is one reason some pro dealers like Lampert Yards are beginning to push deeper into the remodeling sector. “I think pro dealers recognize that the housing boom won't last forever, and they are looking for areas to diversify,” says Egan. “Remodeling is an area that tends to improve when new construction slows, so it is a natural area to look at.”
With that slowdown still somewhere down the road, some dealers find that the frenetic pace of new construction activity can be a barrier to locking in new remodeler accounts. “We're really trying to focus on getting more remodeling contractors, but it is difficult when you are busy as hell,” says Michael Mans, president of six-unit N.A. Mans Lumber and Millwork in Trenton, Mich. While Mans didn't experience an overall increase in the percentage of remodelers on the books in 2004—which runs approximately 15 percent—he expects that to change this year. “We realize the value of that market, it is getting bigger and bigger, and we are making a concerted effort to go after it.”
According to Tom McManus, vice president of operations for two-unit Cape Cod Lumber in Abington, Mass.—where one in four accounts is a residential remodeler—pressure from large production home builders to lower prices is one reason independent dealers are looking for new places to aim their business. “The remodeling segment is a great place to look,” he says. “Lower interest rates for the past few years have also made remodeling a very attractive target for independent dealers as homeowners are pouring their equity back into their homes with additions, new kitchens, and decks.”
Downshifting from high-volume, delivery-bound tract builders to remodelers more apt to stop by the yard themselves involves rethinking logistics, McManus suggests. “Remodelers do quite a bit of pickup business and the demands of that can be great for yards more geared to shipping their business out,” he says. “Dealers should look at how easy it is to get in and get out of their facilities with the correct product. Helping customers maximize time on the site and not in your yard can pay off.”
One strategy N.A. Mans employs to lure more remodeling contractors to the company is an equipment rental program, available at three of the company's locations. “It helps a lot to get them into the yards,” Mans says. “We are never going to be to the point where they come here for cases of electrical boxes—you know where they go for that stuff. But we focus on what we can do for them, and services like rental are helping to get them in the door.”
Continuing Education For pros looking to keep remodeling contractors and develop them into full-fledged accounts, product knowledge and business assistance are emerging as the top customer service must-haves. Remodelers like Lauzier acknowledge that many yards have stepped up to the plate in this regard, but suggest that asking project-specific questions and offering product knowledge beyond the bullet points provided by manufacturer spec sheets can put a yard salesman in the limelight. “They should be asking questions about [product] application, and thinking ‘What do I know about that type of application so I can offer this person more products or more ideas on how to get there?'” Lauzier advises. “Specifically, tell me why you carry the lines you carry, and why you would use this over something else, so I can pass that on to the client. If you can introduce your product to remodelers with enthusiasm, we will be selling it.”
McManus agrees that remodeling contractors rely very heavily on their suppliers for education and information, adding that Cape Cod, in turn, seeks out detailed product information—from specs to proper installation—to pass on to its remodeling customers. “We lean heavily on our vendor community to help us educate our employees so that we are the place for customers to get answers,” he says, adding that gearing showrooms toward product education as well as product display will go a long way with remodelers and their brand-overloaded clients.