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Addition by subtraction for Lumber Mart

There is no shortage of business advice on how to boost your company’s profits and strengthen the bottom line. Seldom among that advice, however, is it suggested that a company downsize its space and decrease the number of SKUs it carries.

But that’s what Trent Peabody and his father, Bob, did with Lumber Mart in the Grand Forks/East Grand Forks market (one store in North Dakota, the other across the Red River in Minnesota), and it resulted in a boost in revenue driven by a 7% increase in margins.

It started with an offer from a grocery store in 2015. When a new chain wanted to move to the area, the Peabodys were offered a good sum for the land on which its Grand Forks location operated. But the family-owners of Lumber Mart turned them down. Then they turned them down three more times. Finally, on the fifth visit by the grocery chain, the offer was too good to pass up, Trent says.

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The downsize

So, in the spring of 2015, Lumber Mart sold four of its six acres in Grand Forks and rebuilt a new store on the backside of the lot on which it previously operated.

“We repaved, poured new concrete, the old office was gutted, rewired, roofed, sided, and we added new windows, new heating and cooling, and LED lighting,” Trent says. They added cabinet and window displays, as well as pertinent hardware. They rebuilt their sales office and reconfigured a drive-through warehouse. Then they added a second warehouse, all on a much smaller footprint. On a third of the land, the company went from a 22,000 square foot location to an 8,400 square foot store and, as a result, increased its pro-builder customer base from 60% to 80% of the store’s overall sales. That’s where the revenue boost came in. It turns out a lot of the inventory the store carried before the downsize wasn’t clearing the margins the company had hoped. But a focus on higher-margin, builder-specific items jumpstarted profits.

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“We did a four-year analysis of our inventory to determine what was selling and what wasn’t,” Trent says. “A perfect example is what do you do with a phone jack or a coaxial cable jack? We had inventory of those items, but we didn’t make much on them, or sell many. We had to assess what was moving and what was going to sell. When you’re in the hardware business, a lot of the times you think you need to carry a few of everything.”

But that wasn’t the case, Trent says. By moving away from a full-line hardware store and embracing the pro builder, Lumber Mart was able to further distinguish itself from the big box stores just down the road.

Still, the process of addition by subtraction didn’t happen overnight. Initially, with the changes to the Grand Forks location, retail sales were down across the board, Trent says. He admits that they also lost some of the professional-builder customer business at first.

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“There was a learning curve for our customer base and a learning curve for our contractors when we made  the change,” he says. “At first, they questioned the levels of inventory we carried, but those sales have grown. This year, we’re seeing an increase in those pro-builder numbers at a rate of 5-10%.”


Along with the improvement in inventory efficiencies and revenue came another area in which the company learned it could operate smarter. The move also allowed Lumber Mart to tackle the staffing shortage that has plagued the industry in recent years. As a hardware retailer, the company employed a number of part-time and specialty staff members. As the company grew leaner and operated smarter, the Grand Forks location was able to be supported with eight full-time employees, down from 26. The store’s part-time staff is now four of an original eight.

“Currently, we’re a staff of 12 on a pretty consistent basis,” Trent says. Across the river at the East Grand Forks location, staffing was maintained at 15 full-time members, along with another seven in the company’s truss operation.


Lumber Mart was first established in 1949 in East Grand Forks, Minn., as Tomlinson Brothers Saw Mills. Trent’s father, Bob, started working with the company in 1956. Later, a longtime manager of the firm bought into the company with another partner, and they ran it as Tomlinson Brothers Lumber Company. Bob Peabody bought into the company at that time and held a 3% stock ownership when the operation was sold and became Erickson Lumber Mart. The company expanded into commercial property builds and management (apartments, restaurants, hotels, bars, etc.); as the business over-diversified, the partners split up and Bob Peabody took sole ownership in 1982, maintaining just the lumberyard.

Around that time, Trent was finishing college and, looking to get into the business field, helping his father at the lumberyard. From there, Trent says, “We’ve worked our tails off to get where we are today.”

About 24 years ago, the family purchased the Grand Forks, N.D. location from a bankruptcy court. It had been the flagship location of a regional lumberyard chain and Trent says the family purchased it “as more of a defensive move” to prevent others from coming into the market. After some additional analysis, they made the decision to open it as a second location.

Three generations

At 80 years old, Bob is still involved in the business. He comes into the office every day, Trent says. “He gets to pick and choose which battles he’d like to get involved in, and maybe a few that he’d rather not. We’re very thankful and appreciative that he’s here. He’s a good sounding board for me, and all of his knowledge just can’t be replaced.”

Trent says he’s fortunate to now have his children starting to get involved in the business. His oldest son, Brandon, is one of the company’s draftsmen who also works in design and estimates. His daughter, Laurel, who works for a Minneapolis digital marketing firm, handles the company’s website and social media presence. And his youngest son, Nathan, is finishing an education in drafting, design, and business. He’s currently working at the company as a truck driver and will be moving into sales.

Trent wants his children to become involved in the business as long as they want to, but he says their roles will be earned just like anyone else’s would be.

“They’re employees and they’re learning,” he says. “This is the same way I did. They all start by pushing a lawnmower through the ditch in front of the store, and they work their way up to helping with deliveries and eventually on to sales.”

One of the most important requests he made of his sons, was to have them get their CDL licenses. “I’ve often stated I won’t ask employees something that I’m not willing to do. We all stock Sheetrock or load a roof with shingles.”

Looking forward

There are no immediate plans for expansion on the horizon for Lumber Mart, but that doesn’t mean acquisitions aren’t discussed. Having been through the change the company has with the Grand Forks location, the Peabodys are acutely aware of what makes a business a success and when the right opportunity presents itself, they will be ready.

“We make sure we’re investing in the right people to do business with,” Trent says. “That’s how it is now—we work with the right contractors and vendors. Their success is our success.”

As his father transitions out of the business and his children take on larger roles, Trent says the same business philosophy will always apply at Lumber Mart. That includes a focus on the basic fundamentals of the business and a commitment to builders.

“Whether it’s a small contractor or a large commercial account, the same values apply,” Trent says. “We’re focused on what we can do to improve and be more successful   so we can pass that on to our customers and help them be successful.”



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