As part of Orgill’s first-ever online buying event, e-Volution, which began August 24 and lasts until September 4. President and CEO Boyden Moore led a Zoom presentation for dealers that gave an update on how the company is evolving to the new realities of business.
“Our team and vendors have worked hard and have done a great job over the past few months in preparation for this event. We have over 1,000 vendor ‘booths’ and more than 9,500 registered customers for the event,” Moore said. “We’ve seen more than a thousand meetings scheduled with vendors so far, and heavy engagement on the site. During the first two days this week, we tracked more than 6,000 of you on the e-Volution site, setting new sales records on Orgill.com in the first days of the event.”
Moore said they specifically did not want to call it a virtual dealer market, saying it would be a stretch to think that they might pull off what happens at a dealer market in any kind of virtual way. “We named it e-Volution, because we built new technical and e-commerce tools to facilitate this event and we are evolving to the realities of business during this pandemic.”
He added that the innovations Orgill built for this online event will be incorporated into dealer markets in the future. During the presentation, Moore led several real-time polls to gauge dealer opinions.
One poll asked what they miss most about not being able to attend a dealer market in person. The most popular response was: talking in-person with vendors (34%), followed by seeing and touching new products (29%), networking with peers (26%) and consulting with the Orgill team in Retail Services (5%).
Moore detailed the many ways Orgill has strived to keep employees and customers safe over the past several months. “We’ve had 79 confirmed cases of COVID-19 since the pandemic began among our roughly 5,500 employees. We’re pleased that so far all of our employees have recovered. We haven’t needed to shut down any of our distribution centers throughout the pandemic so far,” he said.
Moore added, “We’ve hired over 600 additional employees in our distribution centers to help with the demand from our customers. Our office in Memphis moved to a remote work environment for about 85% of those employees in mid-March.”
Another poll asked attendees when they think the coronavirus crisis will subside. The most popular response was: after Q2 2021 (36%), followed by during Q2 2021 (28%), during Q1 2021 (23%) and during Q4 2020 (13%).
Moore responded, “At Orgill, we’re planning for sometime after the second quarter next year, which means we believe demand will remain high for home improvement longer as more people invest in their homes where they are spending more time.”
Like the rest of the industry, Orgill experienced tremendous growth in demand from our customers since mid-March, Moore pointed out. “We serve over 10,000 stores in North America throughout all 50 states, and all provinces and territories in Canada as well as more than 50 additional countries. We saw the biggest growth and demand spikes among our farm stores and hardware stores,” he said.
Moore said they made some difficult decisions as they were faced with demand that was in some cases in excess of their capacity to fulfill it. “We quickly needed to find a way to improve our reliability to our dealers in the face of the increased demand. We appreciated all of our customers working with us when we moved our order cutoff back one day. This gave us extra time to adjust our plans to fulfill the demand. We also suspended all conversion and new business activities while we addressed the surge in demand. We have over 200 store conversions to be completed that were put on hold.”
He added, “We were especially hard hit in our Inwood, W. Va., and Sikeston, Mo., DCs. We worked in those two DCs on a few additional measures. First, we suspended orders from customers who are not primary to us so that we could prioritize our primary customers who depend on us the most. Orgill serves over a thousand Ace, True Value and Do it Best customers as a secondary supplier. As our competitors’ supply chains came under pressure, those customers turned to Orgill. While we value all of our customers, we knew we needed to prioritize those customers with the strongest commitments to us. We then allocated a maximum line count among our primary customers to ensure we could do as much as possible for each of these customers while we ramped up capacity.”
Orgill has increased its capacity to meet current demand in the past few weeks and has removed almost all restrictions on line counts and even orders from secondary customers, Moore said. They have added extra shifts in their Inwood and Sikeston DCs and are considering more in other DCs.
“We accelerated our timeline to open the new Rome, New York distribution center by nearly a full year and now expect it to start shipping about 10 months from now. The new DC will add 15 percent to our total square footage, but much more than that to our capacity. We also accelerated plans to increase our capacity and footprint in the West,” he said.
Another poll asked about current expectation for sales in 2021. The most popular responses were: up less than 10% from 2020 (40%) and up more than 10% from 2020 (39%), followed by down less than 10% from 2020 (16%) and down more than 10% from 2020 (5%).
Orgill is expecting more growth in 2021, according to Moore. “We believe some of the trends driving the increase in our industry generally will continue with an increased share of consumers’ wallets invested in their homes and home improvement,” he said.
Existing home sales, which are 85 percent of all home sales, were up 8.7 percent year over year in July. Housing starts are up 23 percent year over year in July. These are very positive trends for our customers, Moore noted. “We’re also seeing increased DIY activity as consumers have more time at home and fewer options to do other things.”
Embracing agility and innovation has been a common theme to 2020, Moore said. “This crisis and the things we’ve had to do to quickly respond to fast-changing conditions has energized our team. We are doubling down on embracing agility and finding new ways to move faster. The speed with which our team effectively and efficiently moved to a remote environment has inspired us. Our sales team is learning new tools and finding more ways to bring additional value to our customers in execution of our mission to help our customers be successful,” he added.
“Our CNRG stores are providing real-time comprehensive feedback on tests, programs, trends and insights that make our entire retail services better and faster. This health and economic crisis has sped up trends that were already in motion like e-commerce adoption. Online sales were 16 percent of total retail in the 2nd quarter, up 44 percent from 2019,” he noted.
Moore said their investment and strategy with their retail stores at CNRG (Central Network Retail Group) is very unique to Orgill. “It’s not a strategy to simply own retail stores. It’s not a strategy to simply address succession planning or generational transfer of ownership, it’s not a strategy of simple growth. The difference in what we’re doing with CNRG and Tyndale Advisors is that those teams are 100 percent in service of Orgill’s mission—to help our customers be successful. CNRG is a lab in which we’re working to continually challenge and work to overcome that performance gap between Home Depot and Lowe’s and the independent channel,” he stated.
He touted the success of their integrated e-commerce strategy. “We had to figure out an e-commerce strategy to implement in CNRG’s brands that was meaningful. We knew it had to represent all of the SKUs a store offers whether those items are supplied by Orgill or not, be integrated with POS systems for local pricing and inventory counts, and be integrated with marketing and loyalty programs to be successful,” he said, adding that they formed an e-commerce work group that has grown to over 325 people. “Our integrated e-commerce platform is now powering over 550 retail stores in the industry and is improving and growing every day.”
Realizing that there wasn’t an off-the-shelf offering that did all of what they thought was important in a loyalty program, Orgill began working on its own a few years ago, which was introduced last year as FanBuilder.
“As an example, we introduced ‘Club OSH’ in our eight new Outdoor Supply Hardware stores in California a week ago, driven by FanBuilder. The response has been overwhelming: nearly 5,000 customers have joined Club OSH in just the first fivedays, even before any marketing took place to promote the program,” Moore said.
Moore said they are working on a lot of other ideas on how they can build new tools using Orgill’s retail infrastructure and experience to provide competitive advantage for our customers. “A lot of this is technology driven, but we’re also embracing agility with a new alignment of our technology teams under our new Chief Information and Technology Officer, Marc Hamer. Marc is working with all of our technology teams from the distribution centers, infrastructure, retail and retail services, sales, pricing, e-commerce and data and pulling all of these resources together into a more comprehensive strategy and technology vision. Marc is focused on using technology to not only help us run the company more efficiently and provide us actionable data quicker, but also to build additional technology solutions for our customers. We believe data and technology solutions will be a differentiator in our industry in helping both of us grow. We’re investing in the future now and we’re excited about what’s coming next,” he said.
In conclusion, Moore thanked the dealers in attendance for their business, their partnership and their trust. “We’re working hard to earn it every day. Congratulations on the success that you’re driving in your businesses. We’ve ramped up to support your growth and will continue to do so. We’ve faced some big challenges with you this year and we’re excited about the opportunities that we see ahead. Working together with you we’ll meet tomorrow’s challenges,” he said.