Orgill President and CEO Boyden Moore, as part of the company’s online buying event, provided an update on the company that offered details on several key initiatives. What follows are excerpts from his presentation.
“We had a very successful year at Orgill last year. Our sales were $3.8 billion, 9 percent than 2021 and amazingly almost 50 percent higher than 2019. Among the four national hardware distributors, we’ve been the fastest growing for more than 25 years. Last year, we delivered to more than 13,000 stores including more than a third of the hardware stores, home centers and lumberyards in the U.S. We now serve more than 50 percent of the Top 100 Pro Dealers in the U.S. We serve dealers throughout the U.S. and Canada as well as 50 additional countries.
The reason that we’ve been the fastest-growing distributor is rooted in this simple mission statement: Help our Customers be Successful. Everything we do is built around this framework. We work hard every day to ensure that we deliver the products you need when you need them at the lowest prices with the highest fill rates in the industry. We also work to help our dealers grow their sales, improve efficiency and reduce costs. At Orgill, we are focused on your business being successful. If we do that, we believe we’ll be successful.
We operate the newest and most modern distribution network in the industry consisting of eight distribution centers throughout North America with 6.7 million square feet of capacity and more than 75,000 SKUs in each distribution center. We have added 1.3 million square feet of warehouse space in the past two years with the opening of our newest distribution center in Rome, N.Y., in June of 2021 and the expansion of our Hurricane, Utah, distribution center, doubling the size of that facility in 2022. We are currently under construction to replace our oldest distribution center in Tifton, Ga., with a bigger distribution center that will be our most modern yet.
We are implementing robots for the first time in a goods-to-person picking system that will drive new efficiency and cost reduction—savings we can pass along to you. This critical growth and new technology in our distribution network puts the infrastructure in place to support growth for the next several years.
Everything starts with how well we perform in our distribution centers. We know that for you to be successful, you have to get what you need, when you need it, at the lowest possible price. We measure how well we deliver on that through our fill rate, accuracy and delivery speed. Our performance on these metrics is industry leading, but I realize that for the past few years that’s not saying much. We are not content to just be better than the others. We improved our service level from 75 percent at the beginning of last year to over 85 percent by the end of the year. We will return to our historical standards of greater than 95 percent fill rate this year.
We serve a broad mix and balance of home improvement retailers including hardware stores, home centers, pro dealers and farm stores. And that breadth and balance in our business drives a unique product assortment that allows you to better customize your assortment to the opportunities in your market. Customizing your assortment to your market and your brand is a big way to drive more success. Our assortment breadth provides you lots of options to do so.
Orgill has long been at the forefront of retail innovation and building independent brands. Our wholly owned subsidiaries, Central Network Retail Group, also known as CNRG, and Tyndale Advisors ensure that we remain industry leaders in building independent brands. CNRG is our laboratory environment, now made up of 18 different retail brands including home centers, hardware stores and pro dealers – most of the same formats of the customers we serve. Tyndale Advisors provides customized management and marketing services to CNRG as well as other Orgill customers.
These stores are a lens into the industry and a lab for us where we quickly learn what works and what doesn’t—so that we can apply those lessons in our mission to “help our dealers be successful.” Many of the improvements we’ve made in programs, assortments and retail services over the past few years have been developed, tested and refined in the CNRG lab before we rolled them out to our dealers. Many of the seminars at our dealer markets and webinars online throughout the year are led by these teams sharing these lessons learned.
Why do we have 18 different brands as part of CNRG? Why wouldn’t we operate one format and one brand? It’s because we know that you can drive more success customizing your brand, your assortment, your services, your pricing and your customer experience to the communities that you serve. What works best in one place, may not work as well in another.
At Orgill, it’s YOUR brand that matters to us. We know that every one of you is unique. Your store is different. There’s not another one 100 percent like it anywhere. So, we have to be a lot of things to a lot of people—and that’s what we are all about. We recognize that for a retail store to be successful, it must be positioned in every way to serve the unique customers in that marketplace. This is why we take a very customized approach in helping our customers be successful. We’ve found in our research and our experience with CNRG that building a local, differentiated brand, customized to your market and community will drive more success.
To deliver this customization, our Retail Services team maintains more planograms than all of our competitors combined. They do this work at Orgill’s concept center. The concept center is a 250,000-square-foot facility in Olive Branch, Miss., about 10 minutes from our corporate offices. We also use the concept center to plan, stage, and merchandise all the products and sets that are the nucleus of our dealer markets.
And, speaking of the concept center, last year we announced an exciting project. We are in the planning stages of the design and construction of a brand new, state-of-the-art concept center. Our plans call for doubling the size of the current space to 500,000 square feet and turning it into a multi-functional facility where we can host customer events, vendor conferences and corporate or industry meetings. We are planning a technologically advanced, highly flexible working space where we are able to feature the breadth of our assortments and capabilities year- round, weaving together our annual dealer market, our four online buying events and everything in between. A living market, if you will.
The location for this reimagined and expanded concept center will be right behind our corporate offices in Collierville, Tenn. This will create a 50-acre campus unmatched by any of our competitors in how we deliver customization for our customers.
We have built capacity to serve your growth. We have improved our service levels significantly but won’t rest until we return to our standards. We are investing in new technology to continue to lower your costs. We are investing in a one-of-a-kind facility to continue to drive industry-leading assortment customization. We are driving innovation in our technologies to make doing business with Orgill easier and more convenient. And we are focused on the new challenges that we’ll face together in 2023 with a looming recession, a slowdown in housing starts and sales, moderating consumer demand, higher interest rates and continued wage inflation.
Here’s a few things we’re doing to help you be successful tackling 2023’s new challenges:
• Review Assortments – Many of you have told me that you are focused on cleaning up your store. After three years of buying whatever you could find to take care of your customers, some of your assortments are broken. Some of you have told me that you are over stocked in some areas. Let us help you think through this.
Our Smart Start programs are built to review and update your assortments with buyback money available to help you do so. And our new Integrated Smart Starts provide multi-vendor Smart Starts to take the best of many different vendors when resetting your assortment.
Another area that you’ll want to consider while reviewing assortments is the role that our private-label brands that are exclusive to Orgill can play in driving sales and additional margin for you. These brands like PowerZone, Landscapers Select, ProSource, Vulcan and Omaha Grills are only available to Orgill dealers. You won’t find them at any big box or mass retailer. As inflation has risen, we have already seen a shift in customers selecting more affordable private-label brands throughout retail, not just in our industry. We can help you assess what role these brands might play in your assortment to your customers.
Lastly, while you are reviewing assortments, consider how well you are positioned with impulse items in your store. A good impulse program can add a lot of sales to your store with items that are compelling for customers to grab while they are in your store that they didn’t consider buying from you before seeing it. Orgill has a strong impulse program that we featured at this year’s dealer market.
• Review Pricing – We processed over 98,000 price changes in 2021 and 83,000 price changes last year. A normal year for us is more like 35,000 price changes. It has been hard to keep up with all the changes. We strongly recommend that you review your pricing and ensure you are positioned correctly. We are here to help you. Our Market Specific Pricing program has driven margin improvement at our stores at CNRG every single year for 11 years.
• Return to Promotions – We also see promotions being more important in 2023. You’ve been too busy and the supply chain has been too broken to drive many promotions or advertising over the past few years. We see that changing this year and our vendors are working with us to support much better promotional programs with both a recovered supply chain and improved promotional pricing. Our four online buying events help you in quarterly planning for your promotions. Our brand-building team stands ready to help you consider what might be right for your business to drive more sales in 2023.
• Sales Support – We have the largest sales team in the industry. Our 400-plus sales representatives are in your stores to help you drive success and connect you with our resources that can help you in all of the above.
The industry is projected to grow between 1 percent and 2 percent this year based on forecasts from Cleveland Research and the Home Improvement Retail Institute. At Orgill, we are projecting 6 percent growth in our sales for 2023.
We see an opportunity to recover more sales this year with the improvements in our supply chain. We see a huge opportunity to drive better seasonal business this spring as last year’s weather was some of the worst ever. We also see a lot of new business opportunities that we can pursue with a recovered supply chain. We are optimistic on the industry for 2023 and on our customers’ ability to outperform the industry. We look forward to tackling the challenges on the horizon with you as we find new ways ‘to help our customers be successful.’”