When it comes to organic growth, there's typically more to it than just duplicating existing stores and dropping them into new territories. Often, the key to healthy, balanced pro dealer expansion requires opening new lines of business to build a wide-ranging, competitive, and diversified operation that can provide almost anything customers demand. For Tulsa, Okla.–based Mill Creek Lumber & Supply Co., a family-owned company founded in 1934, this philosophy recently resulted in the creation of a new showroom concept in Oklahoma City that highlights the company's window, fireplace, and vinyl siding offerings. The 5,000-square-foot facility is now a capstone for the 52-unit dealer, which supplies everything from concrete to custom moldings to carpet, generating $180 million in materials annually from an 80 percent contractor/20 percent consumer customer mix.
Mill Creek's heritage stems from a boards-and-boots beginning as a traditional lumberyard. Over the past 70 years, in addition to the showroom, which opened in September 2004, the company has expanded carefully to include five yards, an architectural millwork unit, a wholesale lumber distribution business, a carpet and tile division, a home improvement group focused on remodeling, and a tools center.
Mill Creek president Jeff Dunn says the key to successfully diversifying is to ensure that each new venture complements what has come before and that management has predefined objectives. At Mill Creek, these goals have included penetration of new markets and increasing market share of established product sales in the region. Over the past five years, these plans also have translated into an aggressive rollout into the carpet and tile arena, an area where Mill Creek felt there was a “vacuum” in the existing market due to the absence of a single, major player filling the region's carpeting needs. “With any expansion, that vacuum can be in the form of products, the level of service that the existing competitors are giving customers, location, or any variety of opportunities,” Dunn says. The result of the push? Today, Mill Creek boasts 24 carpet and tile retail operations throughout Oklahoma and Texas.
In the case of the new showroom, Mill Creek's objective has been twofold: The facility highlights specialty products in an installed setting for pros, while driving sales of replacement windows and doors in the remodeling business to existing homeowners. So far, the model has generated a 75 percent/25 percent pro-to-consumer sales split, roughly in line with the 80 percent pro-oriented revenues the company records as a whole. The showroom helps builders learn the specifics of non-commodity items, according to the facility's manager of pro sales James Raffety. “In some cases, a 2x4 is a 2x4,” Raffety says. “When you've got a specialty product, you've got to know your ins and outs, and tell the builder why he should buy your fireplace versus the guy's down the street. The showroom helps us do that.”
Jim Harbold of Edmond, Okla.–based Harbold Homes, a custom builder of five to 10 homes a year, uses the showroom as a tool to select materials or give homeowners the option to do so. “For doors and windows, I like the quality they offer,” says Harbold, who can choose from Mill Creek's selection of Weather Shield and Andersen windows and doors and Heatilator fireplaces. “It's very helpful. I have no qualms sending [clients] down there.”
For Mill Creek, whether it's helping a builders' customer select a fireplace at the new showroom or installing carpet, the key to developing any new business is always going to be the people behind the push. “It's the realization that whether it's a green field or an acquisition, employing the right people is absolutely vital to any expansion,” Dunn says. “The idea can be great, the product can be great, and the location can be great, but if you don't have the right people, it's not going to fly.”
