LBM Journal’s Dealer of the Year awards recognize LBM companies of different sizes that epitomize the entrepreneurial spirit. By our definition, a Dealer of the Year describes a company in which leadership excels at identifying underserved—or emerging—markets, satisfying customers, and constantly working to grow and improve business. While these companies represent vastly different operations, the common thread is their fierce commitment to finding ever-better ways to serve their customers and their communities.
Krempp Lumber Company: Investing in inventory
Successful businesses often find recognition that is described in terms such as “innovative,” or “groundbreaking,” or perhaps they’re mentioned as a “trailblazer” in their markets. These are all traits that describe an LBM Journal Dealer of the Year, but for Krempp Lumber Company, the recognition is described another way: as quietly as possible. The sixth-generation, family-owned company in Jasper, Indiana, operates at a level that draws accolades from a national business magazine, but you won’t find anyone at the company boasting about it.
The hardworking, humble success of the Krempp family traces its roots back to 1864 when 28-year-old Andrew Krempp Sr. immigrated from Germany to the U.S. In 1877, Andrew settled into the road construction and general supply business in Jasper. By the early 1900s, Andrew’s son, Andrew Jr., and his business partner operated the supply business as Traylor and Krempp. In 1918, Andrew Jr. acquired his partner’s equity in the company. Then, with his son Edwin Krempp later joining the family business, the Krempp Lumber Company was officially incorporated in 1928.
Through the mid 1900s, Edwin’s two sons, Stanley and Kenneth Krempp, joined the business as fourth-generation owners. Under their direction, the business diversified. Stan Krempp saw opportunity in kitchen cabinets and established Aristokraft Cabinets, which was later sold and is now known as Masterbrand Cabinets and still headquartered in Jasper. Ken Krempp and his sons pursued commercial construction, which was later spun off and now operates as a separate entity. Krempp Construction is still operated by fifth-and sixth-generation Krempp family members.
With Stan and Ken occupied by their respective pursuits, Mark G. Schneider took the helm as the general manager of Krempp Lumber Company in 1975. Under his leadership, the single-location retailer focused on selling to contractors and custom homebuilders. Krempp Lumber Company gradually refined the process of supplying building materials and became the leader in its market, made possible by the loyalty of Schneider and many other employees—Schneider led the company for 40 years and four other employees currently have between 24 and 41 years on the job.
In 2015 when Schneider retired, Brady Albright took over as general manager. With career experience in retail merchandising, Albright immediately took to improving the capacity of the store’s hardware assortments, buying aggressively, and improving relationships with pro customers through increased contractor events. These efforts quickly began to show in the company’s culture as well as its financial statements, Albright says.
Like most LBM dealers, Krempp Lumber Company offers a full line of building materials, a kitchen and bath design sales center, and extensive paint and hardware departments. “We’ve made it easier for a DIYer to shop here,” Albright says. “We focused on updating special order displays, decking, doors, windows, and a big part of that is to make it nice for DIY customers who don’t know as much about building products.”
The renewed focus on DIY has earned the attention of customers willing to drive from the nearest large city 60 miles to the 14,000 population town of Jasper.
“We inventory over 22,000 products, with online access to another 60,000-plus through Do it Best. Over the years, we have developed our knowledge and services to fit the needs of our contractors. This is the main reason our customer base is approximately 80% contractors,” Albright says. “We will continue to provide the very best service for our contractor customers and their respective homeowners. With the current housing market, economy, and historically low interest rates, we look for 2021 to be another growth year.”
One way that Krempp Lumber has positioned itself for growth throughout the years is through what the ownership team refers to as an “unconventional approach” to doing business. While it certainly is unconventional in the sense that it is uncommon, it’s also good business practice.
“Our 100-year history of success has given us the ability to operate fully depreciated and debt free with substantial liquidity,” Albright says. “As we all know, there have been some tough down cycles in the housing market over the decades. Krempp Lumber has survived them all. We believe that our unconventional use of capital and financial strength has given our company longevity.”
One of the ways Krempp Lumber unconventionally invests its capital is in inventory. Albright says the company strives to deliver superior customer service through competitively priced products and philosophy of “right items in stock 100% of the time.”
“Unconventionally, we invest more than the average LBM dealer in inventory. Substantial liquidity allows us to buy more competitively to compete with larger multi-location operations and big box stores. While other LBM dealers manage smaller inventories and focus on turns and cash management, at Krempp Lumber our approach is investing all resources to deliver the best possible pricing and service to our customers.”
Krempp Lumber buys large quantities of product when the prices are low, or the commodity markets permit. While there is risk in this approach, Albright says the financial situation allows the company to buy heavily at low market prices, as well as through multiple regional winter and summer buying shows. And just as importantly, he says, is the ability to buy aggressively at the bi-annual Do it Best markets.
“Our hardware department relies heavily on the partnership with our co-op and their ability to deliver to us weekly to keep us in stock,” Albright says. “We also use their markets and vendor relationships to drop ship and buy heavily at discounted rates. We often buy six or eight months of inventory on specific products or brands if we believe that is going to be the best price long-term. We believe this approach will ensure that we remain competitive and help us deliver the best possible pricing to our customers.”
As a general manager at a six-generation company, the word “legacy” is often on Albright’s mind. Now six years into his leadership role at Krempp, he works with a team of 16 mostly full-time employees, all who are invested as much in Dubois County, Indiana as they are in Krempp Lumber.
“We’ve only had one opening in the past two years. I hope every one of our 16 other team members are here for a long time,” he says. “I’d rehire every one of them again tomorrow.” In Albright’s tenure, Krempp Lumber has doubled the size and scope of the inventory and overhauled the flow and layout of the showroom floor, which now highlights an impressive power tool department, as well as an expanded paint department and high-end kitchen and bath displays.
As the company looks ahead to sustained growth, Albright says the team at Krempps will be cautious about inflation in coming years, paying very close attention to the housing market.
Any challenges the company may face are external, Albright says. “We have always prided ourselves on having an exceptional sales staff and logistics department. Our entire staff understands construction and they understand the needs of our community of builders.”