While competition with large national chains is nothing new to independent dealers, consumer concerns about inflation and rising prices has made vying for business even more difficult.
鈥淲e face an increasingly competitive environment in our local market. We have the capabilities and the capacity to serve builders, but frequently can鈥檛 get past the larger, national chains operating locally, taking projects at significant discounts. We鈥檇 love to learn how other dealers compete effectively against much larger competitors.鈥� How would you respond to a dealer who posed this scenario?
Responses from lumberyards, full-line building material dealers, and specialty dealers/distributors:
鈥淲e specialize in post-frame building materials and in that niche we are able to compete with larger suppliers.鈥�
鈥淲e are located in a rural area and primarily serve rural and agricultural builders.鈥�
鈥淲e have a corporate company culture on customer first service where we try to be legendary in the level of service we give all our customers from the retail stores to our jobsite deliveries.鈥�
鈥沦别谤惫颈肠别!鈥�
鈥淲e belong to buying companies, which helps us stay competitive on price, we give great service, and people save two hours of driving time by buying from us.鈥�
鈥淏etter service during and after the sale.鈥�
鈥淭o stand out from our competition, we strive to make a personal connection, and become an invaluable resource. Utilize technology to be our most efficient and work as a team from sales to yard and delivery.鈥�
鈥淪ervice levels that offer value.鈥�
鈥淗onestly, we don鈥檛 try to compete with the larger chains. We do what we do best and that鈥檚 offer great customer service, stay on top of the most up-to-date technology to benefit our customers and employees, and focus on making lasting relationships. We鈥檝e never claimed to be the cheapest but strive to live our Service Promise and Value Statement in each situation.鈥�
鈥淭here is nothing that Builders FirstSource, US 麻豆传媒, 84 Lumber, etc. can do that an independent can鈥檛 do better. You mentioned price in your question. Okay, remember that you have that weapon too 鈥� and sometimes you have to use it.鈥�
鈥淲e struggle with that exact same problem, also keeping CDL drivers who are in very short supply.鈥�
鈥淔ocus on your strengths or create an advantage. Large nationals aren鈥檛 known for high quality, just low prices. Don鈥檛 join the race to the bottom. Spend time sourcing quality material. Don鈥檛 cut corners. Make every sale profitable. It鈥檚 okay to make fewer sales at a higher (or more appropriate) margin. Laser focus on quality material and superior service. Then focus on the customers that can appreciate that and offer the same to their customers. Promote this advantage to your market and make sure the end consumers can see it too.鈥�
鈥淪ell in service.鈥�
鈥淔ind out all their details: What product(s) are they selling and how do they compare to yours? How are they buying? Do you share wholesalers and would a conversation with your rep help? How do your delivery fees/scheduling/flexibility compare?鈥�
鈥淲e stay fairly competitive price-wise with the larger chains, but where we beat them is with delivery and service. We also have very knowledgeable sales people vs not being able to find someone to help you in the large chain stores.鈥�
鈥淜eep quoting and try to sell your service and competency for handling large projects.鈥�
鈥淏etter service/expertise and quality products.鈥�
鈥淎s an independent gypsum specialty supply location, we compete against the top national chains in the same industry. We lose out on some of the huge projects simply due to national-level price advantages and the sheer volume of material. On all other projects, we can get close to the winning number. To compete with these folks, you have to be better and faster at the things they鈥檙e good (or not good) at. For example, they have a corporate safety program, so you build yours to match or surpass theirs. Since your competition sends all quotes to corporate for pricing, it takes them 48 hours to get a quote back to a customer. So, you make your window 12 hours. Also, make one of your goals perfection in regards to shipping and billing accuracy.鈥�
鈥淎sk questions of customers to seek if discount dealers have issues with service.鈥�
鈥淩emind your customers about how you鈥檙e saving them time and headaches when pricing issues come up. As for your vendors, you have to be the squeaky wheel and don鈥檛 let up. Try to partner with ones your competition doesn鈥檛 use and don鈥檛 be afraid to put a longtime 鈥榦ld reliable鈥� vendor in the penalty box if they鈥檙e not helping you. My last advice is to embrace being the underdog 鈥� you won鈥檛 win them all, but the ones you do will be sweet.鈥�
鈥淚t鈥檚 about serving the customer and providing a personal approach to their projects. We get to know our customers and it鈥檚 not all about price. You have to compete on price to a certain level but if it鈥檚 close it really comes down to service.鈥�
鈥淲e are good at our specialty.鈥�
鈥淏e more nimble, out-service the competition, and care about your customers. Be the best you can be.鈥�
鈥淥ne of the biggest hurdles we face is not being able to be competitive with the big chains from a price standpoint, but rather the perception that because we are an independent, local lumberyard, people are often under the assumption that we are automatically more expensive than the big guys.鈥�
鈥淥ffer exceptional service.鈥�
鈥淪ervice, service, service. We do complete take-offs and turn them around quicker than the big boxes can. Most of our deliveries are same or next day on lumber because the big boxes can鈥檛 react that quickly.鈥�
鈥淎ny customer that buys on price alone may not be your customer. Focus on customers that are in line with your value proposition.鈥�
鈥淲hen you hear of a job that was lost to another company, be upfront with the contractor and ask what they did that you didn鈥檛, was it pricing or service? This will in turn build a relationship with that customer above the big stores. We all know they don鈥檛 get treated at a 鈥榟uman鈥� level at the big stores. Also, tell your front counter to greet customers by first name every time they see them. This creates a welcoming feeling, which is also not received at the big stores.鈥�
鈥淪uperior product knowledge and customer service.鈥�
鈥淲e offer the builders a lot of customer service and many years of experience to assist them with projects that big box retailers just don鈥檛 have around here. We do not focus on the discounts that builders get from those places, but on the one-on-one interactions we provide to them. We keep a list of contractors on hand and go through it every fall. We give about 40 contractors a $25 gift card in a Thanksgiving card to the grocery store closest to them. Then we also give them a hand-delivered Christmas gift with our logo on it, i.e. sweatshirt or this year a sports chair. We choose to spend money on the contractors by thanking them in this way. We have some new builders in the past couple of years who have specifically said how much they appreciated being appreciated by us.鈥�
鈥淥ne of the ways we compete is with higher levels of service, specifically more knowledge about the product and its application. We also buy as strategically as possible to level the margin playing field.鈥�
鈥淜now what you are and know what you aren鈥檛.鈥�
鈥淛ust keep trying/find a niche.鈥�
鈥淲e distinguish our company by providing more services and financing than our competitors. We don鈥檛 try to compete with the bottoms feeders. We have learned that builders who always want the rock bottom price will never be good profitable customers, so let someone else lose money trying to sell to them.鈥�
鈥淥ur outside sales team prices to where it needs to be to win.鈥�
鈥淲e definitely rely on our knowledge, prompt follow-up, and expedited delivery capabilities.鈥�
鈥淪ervice, you can鈥檛 beat them on pricing.鈥�
鈥淧ick your battles. Try and go after work that they aren鈥檛 interested in. Find local builders to work with, partner with them, and service them to the best of your abilities. The big jobs always look intriguing, but no one makes money on them by the time they beat you up on price.鈥�
鈥淥n-time delivery with no mistakes.鈥�
鈥淔ocus on custom builders. Focus on homeowners by changing the way you market your business. Look to schools and civic organizations so homeowners know you are present in your community. Make a point to market yourself differently.鈥�
鈥淧rovide service, have knowledgeable sales staff, and stay in front of the customer.鈥�
鈥淭here is no silver bullet鈥攊t comes down to continually working on building relationships and being ready to jump when an opportunity presents itself. The big guys will mess up eventually. When they do, take your shot and impress the customer. Consistently outperforming and out servicing your competitor is the only way. You will never win on price so don鈥檛 try, but you have to be close. Almost equally important is evaluating your operation. Make sure you鈥檙e not beating yourself first. You may have to change how things 鈥榟ave always been done鈥� to stay competitive.鈥�
Responses from wholesale distributors, manufacturers, and service providers:
鈥淚t isn鈥檛 hyperbole to say if the price difference isn鈥檛 in the 25-50% range with a big box/national chain, it simply isn鈥檛 a better overall value. This is of course true in terms of service but it may be most prevalent when it comes to billing. The time invested dealing with these billing departments can be a hidden expense that often goes unaccounted for.鈥�
鈥淎dapt and change approaches to your strategies. Whether that be alterations to your supply chain processes, adopting new technologies, sales tactics, etc. Overall, becoming more creative will open up new avenues.鈥�
鈥淩elationships backed by products with a proven track record of success and first class service.鈥�
鈥淟ead with value and service first. Price will only be an issue in the absence of those two offerings.鈥�
鈥淲e try give the fair prices along with quicker service. Personally as a sales representative, I keep a professional etiquette with the competition.鈥�
鈥淓veryone needs to make a profit. Don鈥檛 be fooled by some of the discounts that are thrown around by the large chains, deliver what you promise, more often than not they can鈥檛. Don鈥檛 be afraid to go after the big stuff, just don鈥檛 let them down and more will beat a path to your door. We have done it too many times to count and we are operating out of one location but are shipping products nationally.鈥�
鈥淟everage superior service, support, and relationship building, show how you can be more flexible than larger organizations. Stay close and wait for opportunities great or small to service the builders鈥� needs or be the person that picks up the pieces when others stumble.鈥�
Which of the following best describes your primary competition?
Comments from dealers:
鈥淲e are the only lumberyard in this town, but we have several big box stores 50 miles away.鈥�
鈥淎mish lumberyards.鈥�
鈥淭wo competitors would be Supply houses and White Cap.鈥�
鈥淪pecialty 1 Step, Roofing, Siding Deck.鈥�
Comments from vendors:
鈥淓quity-owned manufacturers.鈥�
鈥淐onsolidation and mills.鈥�
鈥淥ther lumber treaters/manufacturers.鈥�
鈥淭echnology/POS systems.鈥�
鈥淥ther manufacturers.鈥�
