Orgill Sees Sustained Improvement in Supply Chain
During Orgill’s 2022 Fall Buying Event, which runs August 17-26, Orgill President and CEO Boyden Moore delivered a company update and shared his thoughts on where the industry and company are headed as well as new happenings at Orgill.
“We are beginning to see sustained improvement in our supply chain recovery. Demand has moderated from the incredibly high levels that we experienced last year, and many of our vendors have improved their performance to us that has led to this sustained improvement. This has been our number one focus and will remain so until we are fully recovered to our traditional standards of service level over 96 percent. We expect to end the year above 85 percent and are working with vendors on plans to close the remaining gap during the first half of 2023,” Moore said.
The second piece of good news to share is on inflation and pricing, according to Moore. “After experiencing the highest number of price changes from our vendors and in the market in 2021, we are now seeing much lower numbers of price change requests—and some of these changes are now even decreasing prices. We’re beginning to see inflation moderate broadly. Most economists are expecting continued declines in the rate of inflation throughout the remainder of this year and a return to lower levels of inflation in 2023,” he stated.
Moore shared the August 2022 forecast from the Cleveland Research Co., which showed that core inflation seems to have peaked in April and has moderated somewhat in May and June. They project continual moderating through the end of the year and 3.2 percent inflation in 2023.
Moore noted, “As consumers wrestle with today’s inflation environment, we are beginning to see more customers turn to private-label options to save money throughout all areas of retail.” He encouraged retailers to add some of the Exclusively Orgill brands to their assortments. “Those brands are perfect for today’s environment, allowing you to help save your customer money, while also making more gross margin for your store. The other added benefit of Exclusively Orgill is that our current fill rates on those items that we source directly from factories is over 96 percent today,” he added.
With a more dependable supply chain and a more moderate level of inflation, Orgill is hoping to return to a somewhat more predictable and dependable business environment, according to Moore. “As we continue to manage through the most challenging and unpredictable times many of us have faced, hopefully we’re beginning to see some better conditions for the future,” he said.
After growing 40 percent over the past two years, Orgill’s sales are up 10 percent year to date this year, Moore noted, which compares favorably to the industry numbers from the Census Bureau. According to the Census Bureau, sales from Building Material and Garden Supply stores are up 6.2 percent year to date this year. “Of course, inflation is positively impacting sales throughout the industry and we’re beginning to see some traffic slowdown in stores—even though an inflation-driven higher average ticket is supporting higher sales,” Moore said.
The challenges of the past two years have made promotion planning seem like a waste of time and money for many, according to Moore. “We see promotions being more important going forward and we’re working hard to provide you with strong traffic-driving promotions to support your business throughout the second half of the year. We’ve also been working hard on our capacity to support this growth. We celebrated our one-year anniversary of opening the Rome, N.Y., distribution center in June and we completed the expansion of our Hurricane, Utah, distribution center in the first half of this year, effectively doubling the capacity of what we can do in that DC. Those investments were critical in building the capacity to support our customers’ growth and we’re already working on plans to continue to expand our capacity to support your growth in the future. In fact, we expect to announce another project very soon. We already operate the most modern and efficient distribution network in the independent channel. These investments help ensure that remains an advantage that we can pass along to you,” Moore said.
He added, “This year we held our first hybrid in-person dealer market with an online buying event. It was very successful and we received great feedback on it. We also had some great feedback on our 175th anniversary party at Universal. Thanks for helping us make that night special. We have some great ideas on how to continue to improve this hybrid event so that you can maximize your in-person time with better and better online planning and buying tools. We added two online buying events this year so that there are now four quarterly opportunities for us to work with you on your merchandise and promotional planning more closely associated with the times that you’ll need the product. This was our first effort doing this. Participation in these new events was great, but we are excited about ideas we have to make them even better. Next year we will keep this same cadence with one interesting difference.
Orgill will hold its Spring Dealer Market February 9-11 in New Orleans concurrent with a Spring Online Buying Event, which will run from February 6-19. They will hold a Summer Online Buying Event May 8-21, Fall Online Buying Event July 31-August 13 and Winter Online Buying Event October 30-November 11.
Moore said they were excited to learn about the NHPA’s new Independents Conference, which will be held August 2-3 in Dallas. “We are enthusiastically supporting and sponsoring this event, and have adjusted our Fall Online Buying Event dates to coincide with it. We will have some Orgill-specific exhibits and programming for our dealers that will complement their conference,” he said.
In conclusion, Moore stressed that they are continuing to invest in growth at Orgill. “We see some promising signs with an improving supply chain and are 100 percent focused on returning to our standards as fast as possible. We also see promising data on inflation moderating, both overall as well as specifically at Orgill with a significant decrease in price change requests from vendors. As customer traffic slows, promotional planning will become more important. We are committed to your success and we’re building the distribution and retail services, communications, and support infrastructure focused on the future to help you drive it,” he said.
