Q: Orgill recently topped $3 billion in sales for the first time. What do you see on the horizon for sales?
A: We had extraordinary growth in 2020 of 21% and expect to see measured but continued growth in sales for 2021. We are planning for sales to increase another 7% this year. While DIY and consumer-focused businesses led the increase in sales in 2020, we expect that pro-focused businesses will be a bigger contributor to our growth this year. There are a number of trends occurring that should continue to drive housing. First, there is strong demand for housing driven by the 73 million millennials that continue to move into their prime household and family formation years, replacing 71 million boomers who are also preferring to age-in-place and are investing in their homes to make it easier to do so. Add to this that we think there will continue to be investment in home offices fueled by remote work strategies and the fact that remote work is enabling a preference for suburban and rural over urban housing. Orgill is fortunate to serve more than half of the top 100 pro dealers in the industry, and we expect all of our pro-focused customers to be very busy this year.
On the other hand, we’ve also heard from many of our consumer-focused retail customers who picked up some market share during the pandemic and have been able to maintain some of those gains as many consumers preferred smaller format and local stores. We think that the pandemic helped people discover or rediscover their local hardware store or home center and they were pleased with the experience when they did.
Because we are expecting to see sales continue to increase in 2021 and beyond we are investing in and preparing the company to support that continued growth.
Q: Have you seen lasting trends emerge from the focus on e-commerce during the COVID-19 pandemic?
A: Yes, the pandemic certainly has accelerated consumer adoption of and reliance on e-commerce and using online options more fully in the path to purchase even when the transaction may not happen online. We launched our integrated e-commerce platform in 2018. It is now in use in more than 600 stores including pro lumber yards, hardware stores, and home centers. While there is rightfully a lot of focus placed on the actual transaction with e-commerce, one of the biggest advantages to connecting with customers online is the speed and frequency in which you can communicate with them. You have to be able to execute on the transaction side but you can’t disregard the importance of the convenience and communications opportunities offered through an online platform. Integrating effective marketing and communication strategies with e-commerce strategy deepens the relationship dealers have with their customers, whether consumer or pro. It has been great to watch some of our customers, who are really the best in the independent channel, share their experience, successful strategies, and lessons learned in our semi-annual e-commerce symposium.
Q: With material shortages and high lumber prices dominating news headlines, how is Orgill working with its dealers to mitigate delays?
A: The challenges facing the supply chain right now are in many ways universal. But what we are focused on is addressing and mitigating the challenges that we can control and there are several things our teams are doing in this regard. We have hired more than 1,000 new employees in our distribution centers since June. We have added additional shifts to enable us to receive and ship more needed product than ever before. We’ve been working with our vendors in every way possible to remove any obstacle in getting what our customers’ need. We’ve accelerated the construction of our newest distribution center in Rome, New York, by a full year.
Q: Was the decision to accelerate the construction of your newest distribution center in New York driven by the pandemic?
A: The acceleration of our timeline was definitely influenced by the COVID-19 pandemic. Our business in the Northeast has been growing fast. That was the primary reason the plans for Rome were initiated. As the pandemic began to drive extraordinary demand on top of the fast growth we had already been experiencing, we looked for ways to complete this project sooner. Our team did a fantastic job rising to that challenge and getting it done.
Q: What are the biggest trends you’re seeing in LBM products? Are these trends driven by manufacturers or by dealers?
A: There are a few trends we’re noticing. With more people working at home remotely there has been increased investment in their homes. Specifically, there is much more investment in outdoor spaces and the related products for those projects, like composite decking, pressure treated lumber, covered patio and porch materials, patio heaters, grills, etc. We’re also seeing more people invest in home offices. The other big trends we’ve been seeing are pricing going up and supply chains being challenging.