84 Lumber Strides Into The Big Time
An American timber company with an unusual name and a rather old fashioned business style has defied the odds and is taking on the big boys of USA hardware.
Its “showroom” is a metal building with high ceilings, no heat or air conditioning.
While the three largest chains in the United States (Home Depot, Lowes and Menards) grab most of the industry’s attention, another company – with an odd name and a distinctive operating style – is continuing to quietly grow and has become a multi-billion dollar giant, too.
Founded more than 46 years ago by Joe Hardy, CEO, and now run by his daughter, Maggie Hardy Mager as chief operating officer, 84 Lumber is dedicated “to being the low cost provider of lumber and building materials to professional builders, remodellers and dedicated do-it-yourselfers.”
What that broadly means, is that the company operates exactly in contrast to its three big competitors:
Windows are one of 84 Lumber’s biggest-selling products.
- Its sprawling facilities are located on low cost land, quite distant from shopping centres and other high-traffic sites
- Showrooms (if they can be described as such) are small – about 10,000 sq. ft., including shed storage of windows, doors, etc.
- Its trading hours are different – 7 am to 6 pm Monday through Friday; 7 to 5 on Saturday and closed on Sundays in some locations. However, longer hours and Sunday openings are also sometimes offered.
- Its inventory of hardware, tools, plumbing and electrical goods is skimpy—aimed at the basics and with no attention given to style or fancy presentation—far fewer SKUs even than most hardware stores.
- Its showroom (if indeed it could be called that) is unheated and not air-conditioned – and often pretty dusty.
Behind these endcaps can be found the limited lines of hardware, tools and other shelf goods.
- 75% of its business is done with professional contractors and builders.
- Scheduled deliveries assure customers of having the products on hand when they are needed at the job site.But in other ways, 84 Lumber is an outstanding example of modern retailing. It knows its target audience and concentrates on serving it. Outside salespeople call on, cultivate and service builders and other “big buyers.” The company works hard to ensure that its salespeople – on the road and in the stores – know their products and are dedicated to helping customers, be they large or small buyers.
Its lawn and garden and seasonal lines are very limited in range.
While its showroom is bare-bones, 84 Lumber provides high quality and informative publications of all types for customers. These range from books of building floor plans catering for homes of 576 sq. ft. to 2,576 sq. ft., to how-to booklets on a large variety of consumer DIY projects, as well as plans for decks, sheds, garages and other larger add-on projects.
Each location has from two to four contractor sales representatives on staff. Its sales program includes incentives to reward loyal customers with prizes such as all-expenses-paid vacations.
The company prides itself on promoting from within, and as it continues growing, it offers employees plenty of growth opportunities. It closed out 2003 with $2.5 billion in sales, the fourth largest firm in the industry and the second-largest privately owned one, next to consumer-oriented Menards. Currently, it operates 450 stores in 34 states, plus 12 component plants. It plans to open another 30 stores and 6 component plants in 2004.
With such a far-flung organization, 84 Lumber relies on area managers and regional vice presidents to meet regularly with store managers and store personnel to ensure the company’s high service standards are maintained.
Management trainees can earn from US$26-32,000 in their first year. Co-managers, from US$32-40,000 and store managers from US$48-100,000.
One of the homes being built by an 84 Lumber customer.
In addition, employees can participate in retirement and profit-sharing programs, to which the company makes significant contributions. Employees can amass very sizeable retirement funds over an extended 84 career. The 100% profit-sharing contribution is fully owned by employees after seven years with the company. On the company’s standard retirement plan, they can contribute 2% to 18% of their eligible income with 84 Lumber contributing a minimum of 25% of the employee’s contribution.
In addition, as a major employer focusing on the quality of its employees, the company offers hospital cover, dental, disability and life insurance. In addition, awards and incentives are offered as short-term motivational factors.
New manager trainees spend five days in intensive training at company headquarters, and new programs are constantly being developed to continually improve their business and people skills. Product knowledge sessions are either conducted locally or in small groups from several stores. Written evaluations measure the progress of every employee.
84 Lumber’s sprawling facilities are located on low cost land away from prime retail space
Employees are taught how to estimate jobs and calculate the materials needed. While company literature also emphasises “merchandising skills,” its unheated, generally dusty shelves and bins are in sharp contrast to the slick, clean product presentations of Depot, Lowes and Menards, its three major competitors.
A unique employee benefit is the rental of a company condo in Florida—available for just $200 a week for associates who have been with the company two years or longer.
Does it pay off?
Due to the fact that it is privately owned, many figures, such as net profit, are not available, but with 6,000 employees and sales of $2.5 billion, it is easy to determine that sales-per-employee are a most impressive $415,000 plus annually.
Bob Vereen, Hardware Journal’s US correspondent