Dan Starr Discusses How Do it Best Corp. Has Responded to Disruptive Change
Dan Starr, president and CEO of Do it Best Corp., kicked off the co-op’s Fall Virtual Market with his traditional President’s Address to Shareholders also held virtually. He shared how the co-op and its members have responded quickly to disruptive change due to the pandemic and other market forces, making their 75th anniversary celebration memorable in unique ways.
“It was in June of 1945…when founder Arnold Gerberding launched Hardware Wholesalers, Inc. as a way to support independent home improvement dealers in Indiana, Michigan and Ohio. Over the next seven and a half decades, the company has grown to the international co-op it is today, serving thousands of hardware stores, home centers, lumberyards, e-tailers and industrial commercial suppliers all across the U.S. and in more than 50 other countries around the globe. And even though when we started our planning to celebrate this milestone anniversary, I envisioned I would be taking the stage in the Sagamore Ballroom in the Convention Center in Indianapolis, this year ended up… differently,” Starr said.
He added, “Evolving, unusual, disruptive, unprecedented—We’ve heard these words a lot when describing the retail environment this year. But Do it Best and our members have quickly evolved to meet the demands of these unusual times. The pandemic has thrown a lot at all of us. There have been so many things to figure out, work through and press on in rapid succession. Our industry has faced challenges with supply chain, health and safety, federal and state mandates, new federal loan programs and so much more—hitting all of us at lightning speed. And while I won’t pretend it’s been easy, it has been truly rewarding to see how resilient you’ve been throughout it all.”
With all the disruption in our business, it would have been easy to shift into a “heads down” mode or get distracted by the urgent at the expense of the important, Starr pointed out. “But you and your co-op were actively ‘heads up,’ looking down the road in an effort to anticipate what would come next. Especially in the heat of the fray, our members remained focused on the main things, building the business of tomorrow,” he stated.
The speed with which this country closed down was unparalleled, Starr pointed out. “In those very early days, we all worked together to get prepared for what was to come. I’ve been really proud of the entrepreneurship you’ve demonstrated. While it was great for our industry to be open throughout the pandemic, it certainly hasn’t been easy. You’ve had to manage through all these changes while still working to meet the growing demands from customers.
“Like you, our business continuity plans were put to the test. And it’s worth noting that these plans addressed a significant event affecting one or maybe two locations at the same time, like a hurricane or an ice storm. We never envisioned a global issue that would impact every single person on the planet. So, as we found gaps, we responded to them quickly. With federal and state orders and a near universal designation as essential business, our combined readiness ensured you were able to continue to serve those customers to the very best of your ability,” he said.
The pandemic has forced companies to operate with unprecedented agility, according to Starr. “Customer service during the pandemic has taken on new meaning. Your ability to make quick adjustments to your operations, like phone and text orders, social distancing, checkout guards, touchless service, hours of operation, curbside pickup and home delivery all happened in hours, not weeks. Your creativity and flexibility in securing the safety of your store, your staff and your customers reinforced your essential status in your community,” he told members.
“Agility has been shown to be critically important. No matter how much better we’ve all gotten at it, we need to continue to be even better. The world around us isn’t going to move any slower. And your co-op is focused on agility as well. We’ve conducted digital hiring events and on-site job fairs as demand surged and labor tightened, we re-engineered distribution and delivery routes, and we worked to secure product and identified new sources when the supply chain bottlenecked. Through it all, I’ve been extremely proud of our combined agility as we’ve moved ahead,” Starr said.
Communication has never been more important for their business, according to Starr. “Things happen quickly and we saw the need to keep everyone informed and keep the lines of communication open, just as quickly, and through varied ways. When travel bans sidelined our field staff, they shifted to daily outreach to members in their territory, sharing insights, identifying potential issues and working on quick resolutions. We launched a COVID-19 resource page on mydoitbest filled with information on vendor status, the CARES Act, signage and best practices. We sent out emails and videos to keep you informed. And we launched podcasts, like What You Should Know, a bi-weekly supply chain update, and Better Together, my opportunity to share more in-depth insights on growing the business—all to connect and communicate with you in new ways,” he stated.
HELPING OUR MEMBERS GROW
Starr pointed out that 2020, Do it Best’s 75th anniversary year, is one for the record books as the co-op posted record warehouse sales, record profit and record member rebates.
“Going all the way back to this time last year, it’s kind of hard to remember that the first big issue of the day was the ongoing battle with tariffs. While not as severe as the prior year, the administration was discussing moving about $250 billion in imported goods to a 30 percent tariff and implementing a 15 percent tariff on everything else on September 1. While these moves were later delayed or reduced, the ongoing uncertainty had everyone preparing for continued disruption and price increases,” he stated.
“With the emergence of the virus, here’s where the lesson of readiness really paid off for all of us. While you were working to secure your stores, your customers and your employees, we moved quickly, too. Even though our work environments were already deemed low risk, we knew it was important for our teams to be safe and healthy to keep our centers open and operating. However, we did close our doors to all outside visitors. We launched an intensive virus awareness and self-monitoring campaign for our team. In Fort Wayne and in our regional lumber offices, we swiftly moved to a temporary remote work environment. And while that really isn’t novel today, in March of 2020, we only had about a week to test our systems, our bandwidth and new policies before sending 350 people out of the building. That was about three-quarters of our team. That was a new experience for us. And at the time, our goal was to provide every bit the same level of support so our members wouldn’t notice any difference at all. I’m so proud of our team, because I believe they met that goal with a lot of hard work. Just like your team, there were weekends, overtime and a lot of ‘on call’ responses,” Starr stated.
It was a little different story in Do it Best’s warehouse. “Just like your work environment, remote work just wasn’t an option. Safety was an increasingly top priority in containing and preventing the spread of the virus on a daily basis. We learned and adapted quite a bit throughout the process. I’m pleased to say that as of today, very few of our staff have contracted the virus. And, to the very best of our knowledge, not a single one of those exposures occurred in the workplace,” Starr noted.
He added, “I’d be remiss if I didn’t point out the most phenomenal aspect of this result. Not only did the team continue to stay focused on keeping product flowing through the warehouses, they did it in a year where there were record hours worked— 12- to 14-hour days, through weekends and holidays for months on end, just as you did in your stores. That’s over 230,000 hours worked more than last year…while maintaining the lowest accident rate in our company’s history. To help illustrate the sheer volume our teams have been processing, think about this: At the height of the pandemic, they essentially moved an entire warehouse’s worth of product in, through and out the door in just three days. I’m so proud of the all-in effort our team made to serve you safely while helping you grow.”
He added, “Despite our very best efforts, the record demand for product in the fourth quarter put stress on our vendors and the entire supply chain dropping our very strong service level—well over 96 percent—down to levels not seen before. That’s a consistent trend within our entire industry, but it’s not where we wanted to be. However, it’s important to note that while we had some clear challenges—and still do—our team was able to avoid many of the policy changes implemented by our competitors. Both Ace and Orgill suspended certain services and withheld product lines so they could focus on the highest demand products only. They pushed out deliveries. Orgill went so far as to prioritize or suspend warehouse shipments based on its perception of a store owner’s loyalty to Orgill—But not Do it Best. For 75 years, through it all, we have been all-in, and serving every one of our member-owners to the best of our ability. We wouldn’t have it any other way.”
He added, “COVID challenges persisted throughout the fourth quarter despite our very best efforts. For virus-related products, member demand jumped 15 times normal in several categories. We sold through what would have been decades worth of volume in certain products in under a month. Non-COVID related products and vendors held their own until about mid-April and then suffered massive declines brought on by factory closures, social distancing mandates, raw material and labor shortages and extreme demand. Given the unprecedented impact on the supply chain, our team upped the communication. Providing you the What You Should Know podcasts twice a week, bringing you up-to-the-minute information on disruptions, options and alternatives so you’d be in a better position than your competitors.”
Starr said, “Now almost six months have passed since the COVID-19 virus first hit the U.S. shores and our supply chain is still heavily impacted. We continue to see sustained and extreme demand for a number of products in our core categories. We have recorded upwards of 50 percent growth across major categories like lawn and garden, outdoor living, farm and ranch and paint and paint supplies. While almost all of these vendors are back up and running at levels similar to pre-pandemic conditions— with many actually increasing their output—very few are able to withstand the double-digit sustained growth in demand that we’ve seen for such a long period. Safety stocks are depleted, manufacturing is at full capacity and many vendors have significantly reduced their available SKUs to focus on improving their productivity on their core items.”
To read more about Starr’s President’s Address to Member, click here.
DO IT BEST HOLDS VIRTUAL FALL MARKET
At the virtual Do it Best Fall Market, member-owners discovered numerous opportunities to immediately increase their profitability while strengthening their businesses for 2021 and beyond. The semi-annual market, held exclusively online September 13-18, featured thousands of new products, exclusive vendor programs, informative seminars and more to help independent dealers compete and win in today’s dynamic marketplace. Do it Best also unveiled a host of innovative new features to its e-commerce platform designed to help members further grow their business and provide online customers with a streamlined shopping experience.
“Our markets have always provided our members with a great opportunity to connect and collaborate while exploring the great new products and special deals available to them. That’s never been more important than this fall,” said Dan Starr, president and CEO of Do it Best. “With the many disruptions to our lives and business this year, we’ve worked hard to create an online market experience that feels as close to the traditional event as possible. Now more than ever, and no matter where they connected, our members benefited greatly.”
The fall market offered outstanding buys powered by the Market Savings Builder. Popular returning events included the Sneak Peek, Power Preview and LBM Super Specials, along with deals tied to the company’s 75th anniversary. The robust market website allowed participants to visit vendors’ and Do it Best program booths, watch strategic buying presentations from Do it Best lumber, building materials and merchandising experts, as well as educational training sessions from industry veterans. Attendees were also able to view Dan Starr’s annual President’s Address and Brad McDaniel’s Chairman’s Address.
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