Operational Balancing Act
A year after ABC Supply’s acquisition of Bradco Supply, which increased ABC’s revenues by 52%, this sector remains in consolidation mode. And where pro dealers outside of the national guys are mostly content staying put in a few markets, one-steppers–even those that have shrunk in recent years–say they’re looking to expand, either through organic growth or acquisitions.
SRS has two more branches “coming out of the ground,” says Ross. Delta and Midway are eyeing new states for branches. Even L&W’s Deely, whose company has struggled financially, seeks growth opportunities.
BlackEagle’s Tolles believes the one-step format is more “leveragable” than its pro-dealer counterpart, and therefore easier to replicate, even in ever-smaller markets. Norandex, for example, has had a successful branch in Decatur, Ill., for many years, says Garber. And Myers says Midway takes “the Walmart approach” to expansion by going to markets competitors don’t want to serve.
As they consider growth, one-steppers are also streamlining their operations. Under Sterling’s ownership, RSG has hired a vice president of supply chain, Ray Sears, whose team does a good job at forecasting and planning, says Willis. And over the last two years, RSG has combined its branches’ ERP systems. “We now have a greater concentration on every facet of our business,” says Willis.
Deely told ProSales in March that his company would soon introduce a new organizational structure “that will make our customers more profitable.” This structure includes centralized sales management, a marketing platform based on category and brand management, and supply chain refinements that hold vendors more accountable for
service and fill rates.
As one-steppers get larger, greater centralization will always be tempting. The balancing act, though, will be allowing managers and salespeople the decision-making autonomy that gave these distributors their competitive edge in the first place. While it provides centralized back-office and accounting support, Norandex, says Garber, still sees the key to its future success in “never losing the entrepreneurial spirit at the branch level.”
