Five Star Group of East Hanover, N.J., distributes paint and accessories in a 13-state area to a customer list that includes such pro dealers as Builders General, Somerville Lumber, and Riverhead Building Supply. It's a mutually beneficial relationship. Some of these dealers generate "several hundred thousand dollars" in annual sales from these products, says Joseph Leven, Five Star's senior vice president of operations.

At the same time, these pro dealers get quick access to a product range that's too wide to manage on their own and that needs a lot of in-store attention. Five Star's Web site lists 712 product lines and 30,000 SKUs, including 17 brands of paint remover. And Five Star's minimum order requirement is only $500.

But what happens when a specialist sells directly to a lumberyard's potential customers? In Chicago, B.E. Atlas has found success serving as a secondary source of plumbing and electrical products to hardware stores and lumberyards. A lot of what Atlas sells is will-call business from dealers "that are hungry and don't want to see their peg hooks empty," says CEO Jeff Kovarsky.

In contrast, Maine-based Hammond Lumber won't buy from one-step roofing and siding specialists such as ABC Supply or Beacon Roofing, says Matt Masse, Hammond's purchasing director and operations manager.

These contrasting stories from the East Coast symbolize the ever-shifting relationship between specialty dealers and distributors and their more full-service, lumber-oriented counterparts. Some specialty dealers and specialty distributors are trying to win over contractors pretty much the same way LBM operations do: by emphasizing their services and, occasionally, by expanding into new product lines. At the same time, some lumberyards are bypassing specialists and buying their goods directly from manufacturers.

Recently, it's the specialists' expansion into LBM territory that's drawing a lot of attention. For instance, the Atlanta-based roofing distributor Heely-Brown Co. recently added siding and columns to the inventory of its Blountsville, Tenn., distribution center after picking up business from a local subdivision there, says sales manager John Holley. And last year, Bradco Supply of Avenel, N.J., extended kitchen cabinets to seven more of its distribution centers for a total of 33 branches stocking that category.

Strong Arms

Direct Connect: For the fi rst time in our annual PROSALES 100 survey, we asked dealers to tell us what percentage of their goods they buy directly from manufacturers. Of the 75 companies that addressed the question, the results were almost equally distributed among five categories. Here are the responses. "The business has evolved over the past 25 years, and construction is no longer just additions, windows, and doors," says Larry Gelber, Bradco's corporate product manager for windows, doors, and kitchens. What his company brings to the table for contractors includes repackaging, design, and inventory management. Gelber notes that many contractors "don't schedule well," and need to buy through distributors to manage their intake because manufacturers "are going to ship, whether the builder is ready or not for it."

One-steppers dominate some products; just ask anyone that tries going up against the likes of Ferguson Enterprises in the plumbing and bath fixture categories. But the sometimes incestuous nature of this sector's supply chain is something that any dealer or distributor must address competitively.

For example, Bradco stocks five cabinet lines, with KraftMaid and Merillat the leaders. KraftMaid, says Gelber, sells almost exclusively through distributors, but Merillat sells through Masco Contractor Services, the turnkey contractor network of its parent company Masco Corp., in Georgia, Florida, Texas, and California. Consequently, Bradco distributes Merillat cabinets where Masco Contractor Services doesn't have a presence, says Gelber.

Given these supply-chain dynamics, some dealers simply stay out of certain categories. ProBuild, for example, doesn't stock plumbing and electricals, according to its spokesperson. 84 Lumber has gotten out of roof shingles in the Washington, D.C., market. "Why try to play into someone else's strengths?" asks Frank Cicero, 84's executive vice president of store operations.

But don't confuse concession with retreat, say dealers, as they, too, continuously tweak their assortments with new and updated merchandise, even when they might not be sure how such items will mesh with their existing products and services menus.

For example, take ProBuild's acquisition last December of Rosen Building Supplies, the largest gypsum distributor in south Florida. ProBuild's Strober division already had an expertise in drywall, so that category has been less of a challenge to integrate into its yards' mix than steel framing, one of Rosen's strengths in the Las Vegas market but a category for which ProBuild hadn't previously offered a turnkey program.

The company's spokesperson told ProSales in April that Bill Myrick, ProBuild's senior vice president of strategic initiatives, was working with an internal team to figure out how the company could get maximum efficiency out of all its moving parts.

ProBuild's spokesperson also says that the dealer's philosophy is to purchase through distributors when a product is either "a handling challenge or a sales challenge."