If people had treated me with courtesy and respect, I probably wouldn't be in this business," Myron Andersen recalls.
It was the mid-1970s, and Andersen was a carpenter installing "shelves upon shelves every day" for The Buckle, a denim clothing chain based in Andersen's home city of Kearney, Neb. Andersen remembers the frustration he felt then at lumberyard contractor desks, when sales staff would lavish attention on larger customers, forcing him to the back of the line with little to no service.
Today Andersen runs Builders., a $44 million building materials business that is probably much bigger than any of the places where he got snubbed. But Builders. doesn't treat its customers like those places treated Andersen.
Younger contractors often need assistance and advice, so Builders. makes sure they get help on how to succeed, including a sit-down with company controller Renae Whitacre on how to set up a bookkeeping system and help from marketing director Scott Casper on promotion tools ranging from business cards and brochures to customized house wraps, billboards, and signs. "Our success is directly tied to their success," Andersen says.
Like that forthright statement and its potentially myriad conseqences, Builders. embraces both the simple and the complex. Its success in both regards have earned it ProSales' Dealer of the Year award.
The simple side starts with the company's logo, whose clean typography and simple roof-like peak over two letters make it memorably attractive for all sorts of media.
Even simpler is the name. What Andersen originally called Builders Warehouse in 1977 is transitioning to just "Builders." After all, a recent survey found that 88% of the dealers' customers referred to the company as Builders, period. "We might as well call us what the customers do," says Andersen. Besides, "That's who we sell to," notes Joe Stein, operations manager at Builders.' latest location, a 100% pro-oriented yard in Denver.
But that's not true at Builders.' Nebraska operations. The home office in Kearney splits evenly between pro and retail customers, while the facility in Grand Island is 80% pro. Then there are a countertop manufacturing facility in Kearney and a truss plant in Grand Island, both operating under the Spelts Schultz banner. The net result is that Andersen has to run what amounts to five different businesses with five different operational strategies; after all, hosting a garden club might boost sales in Kearney, but that idea will do no good at the truss plant. Add in the physical distances–it's 400 miles from Denver to Kearney, and then another 50 miles east to Grand Island–and the management challenges get compounded.
But to Andersen, it's nothing special. "We adapt what we are doing to meet the needs of each customer," he says.
One sign Andersen is succeeding is that, in its fiscal year ended Sept. 30, 2009, Builders.' sales rose 12.8% to $44 million. In contrast, 88% of the dealers responding to a recent ProSales survey estimated sales fell this year. For 2010, Builders. is projecting another 10% gain in sales, to roughly $48.5 million. Only about one of every six dealers in the ProSales survey dared make the same forecast.
The company's net income in 2009 fell about 1%, mainly due to the slowdown in the manufactured component sector, but Builders. projects a return to growth in 2010 of nearly 2%. Its all-around goal for this year is to increase market share, attract top-caliber people, and continue to grow a loyal customer base. That won't be easy at any of its locations, as usual for quite different reasons.
In the Heartland. Grand Island, population nearly 43,000, has seen a little more than 400 building permits for single-family homes issued in the past two years, and the rate had trickled to about 10 per month when ProSales visited. Kearney is even smaller, with fewer than 28,000 residents, but the city also is home to a University of Nebraska branch with 6,000 students and nearly 400 faculty.
Agriculture rules the roost here. Grand Island's chamber of commerce lists the length of the growing season near the top of its community profile, and Kearney's chamber of commerce web pages note the surrounding county is one of Nebraska's richest for both grains and cattle. Robust commodity prices helped push cash into the Platte River basin in 2008, and high futures contracts helped keep the money flowing into 2009. Andersen credits Builders.' good sales in part to the fact that corn prices last year hit $6.20 a bushel.
Given that the average builder in the company's Nebraska markets puts up three houses per year, it's no surprise that just about every home is different. Combine that with the relatively small population, and the result in Kearney is 60,000 square feet of retail box space that's meant to attract homeowner and pro customers alike. There's a large lighting display located at the store's entrance, one of the most complete power tool displays this author has ever witnessed, and a major kitchen and bath showroom.
There are 36 kitchen vignettes alone, with Builders.' own custom countertops accenting each display. Options include granite, quartz, laminate, and solid surface among others, produced by Builders.' subsidiary Spelts Schultz Countertops, also located in Kearney. Andersen says the kitchen and bath displays are rotated out about once a year.
"We dedicated a good side of space to the soft side and dé cor," notes Matt Webster, general manager of retail and pro operations at the Kearney yard. Webster knows a thing or two about home improvement retailing. He managed the busiest Home Depot store in Las Vegas, a top 50 store in the entire company, before migrating to Nebraska.
With more than 1,940 SKUs of power tools available, Builders. does nearly $1 million a year in power tool sales alone, with brand names including DeWalt and Milwaukee. Altogether, showroom sales are roughly $12 million a year.
"We dominate in the category," Webster says. "We drill deeper than anyone else when it comes to tools."
Webster claims his facility has the best power tool display that can be found within a 300-mile radius, and he says he's proven that by doing a lot of driving to rivals, including Menards, the king of Midwest DIY big boxes. There's a 200,000-square-foot Menards located just a Sunday stroll away from Andersen's home.
In addition to 60,000 square-feet of retail space, the company goes to battle with a 44,000-square-foot state of the art drive thru capable of allowing for a full pick-up and 16-foot trailer to cruise through with ease. Both sit on nine acres of hard surface with full deliveries throughout the day.
Grand Island also faces off against Menards and The Home Depot, plus Mead Lumber, a 17-yard pro-oriented dealer. "We take on the competition head on," says Alan Griebel, assistant manager at Builders.' four acre-Grand Island location, which is equipped with a 25,000 square-foot drive-thru yard and a 7,500 square-foot design center.
"We give the customer service and product quality," explains Jeff Doose, manager of Grand Island operations. "We take the time to explain to the customer the differences in product and service along with what we can offer."
It's also common to see a Builders. executive shopping the competition and roaming through a competing store. After ProSales toured the Grand Island location with Andersen, he took a detour on the way home through a Home Depot parking lot to count cars and see if any of his customers were shopping the competitor. Andersen says he recognized a lot of "out of town plates" during the tour.
