September, 2007

Stine lumber: Sulphur, Louisiana

Battling the Big Boxes- Stine Lumber has met its competition head-on by transforming its locations—and how it does business.

By Cheryl Dangel Cullen

When J.W. Stine started his lumber business in 1954, it was a conventional lumberyard. As business grew, Stine’s six sons joined the company one by one, beginning in the late 1960s.

The infusion of family blood invigorated the family business, evidenced by a 30-year growth spurt.

With all six siblings on board by the early 1970s, the company enjoyed sales of $1 million, had 12 employees, and worked from one location with a small showroom for hardware products.

In the 30 years since then, Stine Lumber has been dramatically transformed. Headquartered in Sulphur, La., most of Stine’s locations are in southern and central Louisiana, while one store is located in Mississippi. Today, Stine Lumber has morphed into a home center environment with sales of $175 million annually and 850 associates company-wide across 11 stores, three of which are lumberyards, while the other eight resemble modern home centers.

"When other dealers were going back to the pure roots of lumber and contractor sales with Lowes and Home Depot, we continued to stay in the home center end with consumer and contractor business. Serving both customers has been a challenge, but rewarding,” says Dennis Stine, who assumed the role of president upon his father’s retirement.

The Family that Works Together

In this case, the family that works together succeeds—even against the big boys.

Dennis says, "We are from a large Catholic family and were told two things early on: One, we had to go to college and two, we had to pay our own way, so we all worked at the lumberyard and were given a lot of responsibility at an early age, which resulted in our working as a team to grow the business. We all love the business and though Dad has been semi-retired for 25 years now, he is still is very healthy and is very much a guiding principle for all of us,” he adds.

Today, each of the brothers has a specific role to play. Brother Dick is general manager and on the board of ACE Hardware; Gary is facility manager and store designer; Jay is the lumber and building materials buyer; Tim is controller, and David is responsible for general merchandising and is the marketing manager. The brothers’ sister, who works as a sculptress, is the only sibling that has chosen not to join the business. "Each of us has his own interest and talent and through trial and error, it worked out,” says Dennis. "It has been working like this for many years and it has been healthy for the organization.”

Healthy is putting it mildly. While 40% of Stine’s business is contractor-based, it is the 60% of consumer-driven sales that Stine has dedicated itself to pursuing, even if that means competing fearlessly with the nationally recognized big box stores, even though so far this year’s sales are down slightly.

"It is a little soft this year. We hope to come in at the number we came in at last year, but we may be a little off,” says Dennis, noting that their numbers would be lower if they had not worked hard at driving more product in a softening market. "Our projections are to come in just a few percentage points south of last year’s numbers. We’re 15% off of our numbers now, but we expect to finish only 5% off.”

Since most of Stine’s locations are in southern and central Louisiana and Mississippi, the company felt the impact of Hurricane Rita in 2005. Three stores were damaged, one heavily, but they all remained open. Even though they didn’t have electrical power for two weeks (three weeks in some areas), the stores continued operating out of the yard. They sold a lot of roofing materials and enjoyed some new business as the result of rebuilding.

"Rita came over our primary market.,” says Dennis. "We were out of a couple buildings for two weeks. We were out of our flagship store for three weeks because the roof peeled off and we lost $1 million of inventory, but we were the first business in southwest Louisiana to reopen, and in the meantime, we used our drive-thru lumberyard to assist customers.”

Battling the Big Boxes

What sets Stine Lumber apart from its competitors is its fearless approach to taking on the big box retailers. "The traditional lumberyards vacated retail a number of years ago, [but] it has been effective for us in our markets,” explains David Stine.

"For many years, we went into smaller markets to insulate ourselves from the big boxes but they are now in all the markets we serve. We compete quite favorably with the big boxes at retail,” he says.

"Our contractor side has gotten stronger,” David adds. "We can complete the total package—flooring, light packages, and cabinets. Even large contractor yards are getting into these categories to increase their margins and sell more products to the same customers. Now we’re getting more aggressive in selling—rather than just selling the formula package—the foundation package and the framing package. We have a relationship with the contractor at the beginning of the job and [so] we can drive other specialty products such as flooring, millwork, appliances, and other product categories through that relationship. That has allowed us to grow our business.” "Selling more product to the same customers is our edge,” David says.

Closing the Loop

Selling more product to Stine’s existing customer base instead of constantly seeking new prospects is what the company calls the Stine Loop. "You have to be segmented to be the best at what you do, but we want the people who are talented in their areas to coordinate their area with other products,” explains David. "The Stine Loop is really a marketing leads program for those other categories or in other words, a customer relations management program.”

The Stine Loop is an internal program that urges salespeople to proactively ask for business. They are encouraged to go to a contractor and remind them when it is time to talk about roofing or appliances. "We’re tracking every customer, every job, and every product selling, and if we lose something, we know what it was and who we lost it to,” says David Bushnell, Stine’s professional sales manager, who choreographed the Stine Loop. "From that we make judgments on what to do. Maybe we lost an order because we didn’t have the product selection. At least we know that now. As a result of the Stine Loop, we’re having big success asking for the business.

"The Stine Loop...allows us to contact [our customers] frequently. We’ve got to get the phone call and be in front of the customer. Some customers are being called five or six times,” Bushnell explains. "One segment hands-off to another segment to make sure we get the business.”

Dennis agrees. "It’s like when you have a runner on every base. It’s all very robust and very exciting. We have one salesman who sold a guy the foundation package, windows, doors, and door hardware in one sitting. From that meeting, he led the individual into all the other products we carry.”

As a result, while the consumer business receives top priority, Stine’s success can also be attributed to its highly focused attention to its builder business. "We have watched those numbers grow dramatically, to $75 million-plus in the professional business. In our market, related to housing starts, that’s a very good market share that we enjoy as a tribute to David’s work,” adds Dennis.

Expanding the Offering

Supporting the company’s mission to sell the entire package is a new class of Stine Lumber stores. "Our stores are neater, cleaner, and sharper. We’re more of a complete home improvement store with more product selection,” David explains.

Appliances represent a new category of Stine’s business that was rolled out two years ago. "Home Depot got into appliances five to seven years ago and it became a home improvement channel product. Circuit City got out of appliances, so we started looking at it as a home improvement channel product. Appliances at big boxes are a growing category and we’ve done exceptionally well the last two years,” says Dennis.

Stine Lumber will install appliances and service them, too. Installation services are also offered for flooring, insulation, vinyl siding, kitchen cabinets, and doors and windows.

The housing market is a concern since 40% of Stine’s business is on that side. However, the Stine brothers believe they can still grow each of the businesses by bringing home the product and selling it.

"We have reinvented our company in the last 10 years in the sense of a broader product selection; we’re rebuilding our stores so the showroom will be large enough to support the broader product selection,” says Dennis. "There’s lot going on and we’re building the capacity for continued growth. We doubled our volume in the last five years and hope to do it again, so we’re working on having the capacity,” he adds.

Expanding the Space

To that end, Stine is replacing several stores, converting its outside lumberyards to drive-thru yards connected to large showrooms, and building capacity in human relations, information technology, and management.

The overhaul has included renovating some of the later prototype stores, built in the late 1990s, to add more products and more exciting displays. "We took a 35,000-sq.-ft. store and just added 5,000 sq. ft. We spent the bulk of our money in remodeling by adding an appliance department—which took the additional square footage—and a design center. In all, we spent $1.5 million to get the presentation we were looking for,” says Dennis.

Smaller stores, averaging 20,000- to 25,000 sq. ft., are being replaced with 100,000-sq.-ft. stores (including the warehouse) that are being rebuilt from the ground up at new locations.

"By next year, we’ll have six completely rebuilt and two remodeled locations. The other three are contractor yards where we added a design center in one building. We’ve changed nine of the 11 locations and the others are smaller facilities in smaller markets,” David notes.

Poised for More Growth

Growth on the contractor side will come by pushing more specialty products throughout the market. On the consumer side, Dennis sees the biggest opportunity in the high-touch products, including kitchen cabinets, flooring, and applications that, because of the complexity of the product, require a lot of interaction between the customer and the sales person.

"That’s where we excel,” says David. "We do a great deal of training and we have the finest staff in America with a very mature group of individuals in each category to represent our products. We’ve also hired the very best people in the marketplace in the high-touch categories, and it has paid off for us.”

Stine’s biggest challenge lies in its specialty shops. "We’re trying to get as many packages sold [as we can] when we sell the foundation. You can’t ask for windows when they are through framing. You have to sell them early and get the guys focused on doing it early on,” says David.

Building Awareness

Staying in front of the customer isn’t always easy, but Stine Lumber does it with an aggressive marketing program that includes a full-color 32-page flexi-catalog, a 20- to 24-page tabloid, and a broadsheet aimed at its consumer business. Stine Lumber mails out 300,000 catalogs to its mailing list every two weeks.

Its marketing efforts also include television advertising and continuing education programs for contractors, including half-day seminars, as well as special event get-togethers like crawfish boils to build partnerships and goodwill.

Stine Lumber isn’t shy about promoting its strengths, touting its 60,000- to 70,000-sq.-ft. showrooms in their larger stores. "We feel that our stores are upscale to Lowe’s and Lowe’s is upscale to Home Depot. Our stores are very female-friendly, too,” says David. "We don’t have the typical warehouse look. We have a very friendly look that differentiates us from the big box retailers.”

With more than 20 years covering the LBM industry, Cheryl Dangel Cullen is a writer based in Chicago.