Buying Power: Lumbermens Merchandising Corporation
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How do smaller independents compete with LBM giants? Partly through buying groups like LMC, which narrow the price advantage the big guys normally could command. LMC began doing it with 35 dealers in 1935, and the principles established then still guide LMC today: choose the highest quality dealers while concentrating volume with leading suppliers to maximize purchasing. At ProSales’ birth, LMC had 245 dealers with 600 locations east of the Mississippi. Today LMC features 360 dealers with 1,200 locations nationwide and collective sales nearing $9 billion. Throughout that growth, Tony DeCarlo helped guide LMC, joining it as CFO in 1977 before being given responsibility for all purchasing in 1989. In 1991, DeCarlo was elected president and CEO–a position he will hold until his retirement at the end of this year. In 2008, LMC posted its highest-ever return to members as a percentage of sales while cutting the cost of processing one transaction to the lowest point ever. Next year, LMC will mark its 75th anniversary–a tribute to lasting success.
–Andy Carlo
Installed Sales
Given the number of lumberyards started years ago by builders, one can say installed sales and LBMs go back a long way. But the real growth began in the early 1980s, when homeowners started demanding a higher level of service, requesting that a dealer provide installation service for simple remodeling projects, such as an entry door, bath vanity, kitchen cabinet set, or replacement windows. Builders eventually joined the line as well, and now dealers install almost every product, from foundation to finish, and serve every market segment within our industry, up to and including the builder who wants a turnkey framing job. And it’s still a growth industry; 61% of the respondents on the latest ProSales 100 said they offer installed sales, and another 9% plan to start doing so. Installed sales already provide 3% of a typical ProSales 100 dealer’s revenue, and 54% expect that part of the business to gradually or rapidly expand over the next five years. Many of them use employee installers while some still use sub-contractors as a labor source. Either way you look at it, installed sales are here to stay.
–Mike Butts
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Regional Associations
Ask a dealer how he learned to run a construction supply business. In a lot of cases, source No. 1 is dad, while source No. 2 is the regional building material association. For more than a century, regional groups have provided the meetings, roundtables, classes, and other venues for dealers to look up temporarily from their intensely local concerns, collect management ideas from fellow dealers, and build relationships that often prove to be lifesavers when trouble occurs. Regional groups lobby legislators, host trade shows, create benchmarks, organize trips and, with their golf tournaments and such, provide lots of opportunities for fellowship. No wonder so many dealers are so proud of their local group. In an industry that doesn’t require a diploma on the wall as the price of entry, it’s the regional association that serves as the dealers’ true alma mater.
–Craig Webb
