February, 2007

Friend Lumber Co., Hudson, N.H.

A Friend Indeed:The 60-year-old Friend Lumber Companies intend to keep customers coming back with good old-fashioned service.

By Cheryl Dangel Cullen

While this friendly, neighborhood lumber company may bear little resemblance to the lumberyard that launched it in 1946, President Mark Jaffe still cherishes its old-time traditions. "We want the lumber company of the past for the future,” he says. "We want you to get the feel and smell of the old-fashioned lumber company, but yet we want [a business] that makes sense for the future.”

Today, with two locations in the heart of New England, Friend Lumber Company is thriving by giving consumers what they want. "When they can see it and picture it, they’ll buy it,” says Jaffe. That conviction has also led him to take "show and tell” to a whole new level. "When we put money into displays for the kitchen, bath, windows, and siding, we capture the imagination of the customer,” he says.

Jaffe says investing in displays that people can walk through, touch, and experience has profoundly influenced his business. In 2005 he created a showroom that rivals those of many design centers. The investment paid off by boosting sales and helped the business land other projects simply because of the "wow” factor on display.

"It shows people what we can do, and [customers] realize we are capable of providing a beautiful, wonderful kitchen because they can see it in front of them,” he says.

Jaffe’s grandfather and a business partner started the business 60 years ago. After a time, Jaffe’s grandfather bought out his partner and Friend Lumber Co. became a family enterprise. Jaffe’s uncle came on board in the 1950s, followed by his father in 1960. Jaffe began his own career at the business part time while studying for his MBA at Boston University. He purchased the company in 1991 and began to implement his growth plans. The display concept was one of his most important innovations, but it was just one in a series of ideas that could be considered unusual for a lumberyard.

One of Jaffe’s first changes was to move the location of the business. Today, he has two locations—one in Hudson, N.H., and another in Burlington, Mass. Both sit amid thriving retail complexes, surrounded by a Sam’s Club, McDonald’s, and other nationally recognized chains. Those locales are a far cry from the business’ origins in Lowell, N.H.

"That was a terrible location,” says Jaffe of the Lowell site. "I determined it was in our best interest to move out of Lowell. We could eke out a living there but not grow and prosper.”

So Jaffe moved the facility to Hudson, opening a 40,000-sq.-ft. warehouse and 13,000-sq.-ft. store. The lumberyard took on a retail persona, keeping pace with its neighbors by staying open until 9 p.m. Monday through Friday.

Pundits say good things come in small packages, and that describes Jaffe’s philosophy perfectly.

"We consider ourselves an alternative to the big box,” he says, noting that there are as many as eight big-box retailers within 15 miles of each of his locations. "We focus on service and getting the customer in and out quickly. We concentrate on solving builders’ problems, not being the cheapest alternative choice.”

While Jaffe concedes that the big-box stores may have a larger product selection in some areas, he quickly ticks off the advantages of his retail outlet: Among them are his drive-through lumberyards, which he opened in Hudson in 1996 and in his Burlington, Mass., location in 2001. "It just works fabulously,” he says. The drive-throughs make sense for customers, too. Instead of having customers push unwieldy carts piled high with planking or lumber through the aisles and then loading the purchases themselves, Friend Lumber Company employees do the work.

Buyers walk into a store and are welcomed by either a greeter or a television screen that indicates where they will find the item they seek in the yard. Outside, a yard person greets customers and loads their material. Customers pay for their purchases at a booth as they exit.

Not surprisingly, the drive-through has attracted a huge following. In fact, Jaffe’s customer base today is 40% retail. "That’s far higher than is typical,” says Jaffe, adding that contractors comprise 55% of his business, while the remaining 5% is commercial/industrial.

Jaffe’s other advantages? Employee expertise and experience (more than half have worked at Friend Lumber for more than five years); free delivery (75% of their material is delivered free of charge within 24 hours), and the quality of the merchandise all set the company apart from its competitors.

Although business has been very good in recent years, Friend hasn’t escaped today’s housing slowdown. With 105 employees, including nine sales people on staff, Friend exceeded $32.5 million in revenue in 2005, which Jaffe expects to drop 2-3% for 2006.

Jaffe attributes the drop to a corresponding shrinkage in the size of an average home in New England—down from around 3,200 sq. ft. to about 2,200. Additionally, lumber and plywood prices are down and fewer houses are being built.

"Given all that, I’m lucky to be down only 2-3%,” Jaffe says. "We have to fight every day to get as many orders as possible, but we’ll do okay.”

Jaffe remains optimistic because he sees contractors changing their strategies in response to market conditions. A push is on to build more competitively priced, over-55, senior-type housing on smaller properties. "The climate is changing and we’re in the middle of this change now,” he says. "I think we’ll end up with as many houses built, and we’ll have a better market share of those being built.”

What worries Jaffe most is the perception that the housing bubble is about to burst. "With the constant media focus on this, people will [be] loath to put money into housing,” he says. To fight that gloomy outlook, Jaffe works to keep employees upbeat and to help contractors develop strategies for a changing economy.

"We always have to change to remain the same. That’s critical,” he says, pointing to his product line. "Ten years ago, we only sold raw pine. Now we have discontinued selling premium pine. It’s the same in decking. We used to sell only 5-1/4 x 6-in. pressure-treated decking. Today, 75% of our sales come from composite decking material. It’s hard to communicate to your employees that we have to pick up on those changes.”

Jaffe remains optimistic about the future, and believes growing his consumer business remains a tremendous opportunity in a slower market. "There is a certain group of people who love the shopping experience at big-box retailers. Others don’t think they get the service or know-how that they want or need there. That’s where we come in. "Our business is complicated, so throwing the onus on the consumer works sometimes, but not always. I know that I would not feel comfortable spending $15,000 on a kitchen at Home Depot. The level of expertise isn’t there.”

Although Jaffe stresses his company’s expertise and service compared with the big- box competition, facing those retailers and their enormous advertising budgets is still tough. Jaffe’s ad budget is slight, but he spreads the word about Friend Lumber with flyers inserted into his area’s biggest daily newspaper, the Boston Globe. He also sends direct mail and occasionally works one-on-one with contractors. "I’ll take [contractors] to baseball games and do more personal contact work. It’s all about relationship-building,” he says.

Although Friend Lumber has a web page, Jaffe doesn’t pursue much Internet marketing. "For us, it’s word of mouth, location, and advertising. Internet marketing is a distant fourth in our marketing options.” He does, however, offer customers Internet access in his stores to help them find specialty products. "That works, but I don’t think a person will buy a kitchen or even a deck through the Internet. It’s just too complicated,” he says.

Jaffe is taking a wait-and-see attitude for the next two to three years to see where the economy goes. "Vigorous isn’t always better,” he says. "I want to do the best job serving customers in [my] market.”

A third store may be on the horizon, but he isn’t ready to commit yet. One thing is certain: He won’t pursue installation work. While Friend does get some kitchen installations, Jaffe steers clear of competing with his customer base. "We’re retailers, so we have our work cut out for us to do retailing. It’s a completely different strength.”

Likewise, Jaffe doesn’t plan to pursue manufacturing, either. "When a lumber company starts becoming a window or truss manufacturer, its expertise isn’t as good as it might be.”

For the time being, Jaffe plans to stick to what he does best—being New England’s friendly neighborhood lumber store.

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