Tough Call: Who’s afraid of the big (bad) box?

Tough Call big box
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A national big box home center chain is going up right across the street from your store. What would you do?

In the 50-plus years that your third-generation, family-owned lumberyard has been serving your community, you’ve faced too many challenges to count. You’ve survived recessions, material shortages, price spikes, bankrupt builder customers, and even a devastating fire that destroyed much of your yard. Despite those challenges, like many dealers, you’re enjoying extremely strong sales and a robust housing market as the pandemic appears to be fading into the sunset. Unlike many LBM dealers, you’ve deployed successful strategies to attract, hire, and retain young pros just starting their careers. All was right with the world, until you learned that the oversized new building going up across the street will house a prominent national big box retailer.

It’s not as if you’re new to competition. But as the biggest lumberyard in your mid-sized market, with a customer base made up of a mix of pros and DIYers, this will be your first time going head-to-head with a national retail powerhouse. Reaction from your employees and your customers has been all over the map.

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Employees. Many are panicking, certain that there’s no way that your little family-owned company can compete successfully against this behemoth. You’ve no doubt that the new competitor will court your people and, realistically, you’ll likely lose a few. Fortunately, the majority, especially those who’ve been with you for years, have vowed their loyalty.

Customers. Many of your pro customers have given big box yards a chance to earn their business in the past, and they know that the specialized services you provide are far beyond the warehouse retailer’s capabilities. DIYers are a different story. You fully expect many of your retail customers to test the waters once the new competitor opens.

Word on the street is that the competitor chose to locate across the street from you to try to commandeer some of your big builder customers. Apparently, they’ve been fine-tuning a pro-strategy, and your market is the testing ground. If it’s successful here, they’ll roll it out nationwide. Meanwhile, your co-op is urging you not to sweat it. “We have many members whose stores are literally in the shadow of a big box competitor, and who have thrived. Stick with us, and we’ll do everything we can to make sure you come out stronger than ever.”

The final detail is that you’ve been holding discrete conversations with a large company that wants to add your brand to its growing stable of strong, independent LBM dealers. You know from talking with your investment banker that now would be a great time to sell. And you and your spouse have talked about traveling more…

What would you do?

  • STAY THE COURSE. As the leading LBM dealer in your market, with an age-diverse team and the biggest builders as your customers, you’re positioned to win. Ignore the competition, and run your race.
  • CASH OUT. Over three generations, your family business has had a great run. But the strong market won’t last forever and selling now is the smart play for you and the company.
  • OPPOSITION RESEARCH. Study their strengths, their weaknesses, and how other yards like yours have competed against them and won. Then craft a strategy and execute it.
  • RALLY THE HSAs. Reconnect with your local home builder and remodeler associations and push a strong “buy local, build local” message.

What would you do?

If you’d take a different plan of attack, email your suggested solution to James@LBMJournal.com. If we publish your reply, we’ll send you an LBM Journal mug.

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