Wolf

Why is Wolf so bullish on the independent dealer?

Tom Wolf published this article on March 16, 2011 in Build your Business. Total Comments: 2 | Comment

I’ve been asked why Wolf is so bullish on the independent dealer channel. Apparently, some people have convinced themselves that the independent (i.e. the professional) dealer is at a competitive disadvantage to the big boxes. Many of these skeptics seem to feel that these big boxes will do to the independent building products dealers what Walmart did to the independent retailers of this country.

I disagree. The rise of Walmart is not a good analogy for what is happening in the building products industry. There are three reasons why I believe this. First, the building products industry – especially the professional channel – doesn’t have the inventory management challenges modern retailers face. SKU counts are typically lower in the pro-oriented outlets, the network of wholesale distributors is more robust in the building products industry, and since independents buy much of their product in large quantities and generally enjoy operational efficiencies, their pricing is typically competitive with the big boxes. All of these factors contribute to the strength of the independent dealer and help explain the resilience of that channel.

Second, the independent channel’s focus on the professional customer gives it a strong economic foundation. Almost all new residential construction projects and most residential remodeling projects are done by professionals. And most professionals – 70% according to a recent Home Channel News report – buy their products from independent dealers. This is another flaw in the Walmart analogy. Most people don’t require a professional to install a necktie, but most of us do require a professional to install a kitchen or a deck or a room addition. So as long as professionals do the bulk of the big project work in residential construction and remodeling, and as long as most of them continue to do their business with independent dealers, the independent channel will continue to have a real reason for being.

Finally, the independent channel will always have more of what the professional customer wants and needs to succeed. Experienced sales consultants, a broad knowledge of products (including new and innovative products), efficient logistical capabilities, and a clear understanding of the particular challenges professionals face all give the independent channel a special appeal to the professional customer. Many people point to the significant personal relationships that exist between dealers and their professional customers, but it is important to note that these personal relationships are founded on the most concrete and rational bonds of service, trust and self-interest.

I believe the independent channel has staying power because it has a strong and enduring base of customers who simply can’t get what they need anywhere else. Based on that belief, Wolf has built its business plan around the independent dealer. That independent dealer plays a necessary role in the housing industry and Wolf is committed to doing everything it can to make sure that dealer remains strong and independent for a long time to come.