February, 2006

Bennett Lumber, Minneapolis, MN

With new leadership at the helm, a 117-year-old yard takes its growth from the city to the suburbs.

By Dan Emerson

As one of the oldest independent LBM dealers in the Twin Cities of Minneapolis and St. Paul, Bennett Lumber & True Value hardware enjoyed decades of steady growth within the walls of its single facility in the Mill City. Last year, for the first time, Bennett expanded to new territory: a 92,000-square foot, former office-manufacturing space in the south metro suburb of Burnsville’s Southcross Corporate Center.

Harry Bennett founded the company in 1889, at a site in northeast Minneapolis, not far from the banks of the Mississippi River. The company operated at two different locations on the north side of the city until moving to the south side in 1939. In 1984, Bennett moved to its 5-acre headquarters location in the Uptown neighborhood of south Minneapolis.

The company had been planning to expand for a number of years, without any specific location in mind, until settling on Burnsville. According to company President Dick Paukert, Bennett chose the southern Twin Cities suburb for its first branch location because "about 25% of our business is located in that area, which is densely-populated but still growing, with a nice mix of remodeling and new home construction.

"In the south-metro suburbs there is some competition from big boxes and lumber companies, but we think we’re far enough away from them that we shouldn’t clash,” Paukert, says, noting that 84 Lumber plans to open its first store there soon.

Paukert is a relative newcomer to the industry. He joined Bennett in mid-2004, after stints as an executive with electronics firms in Minnesota and Wisconsin. Paukert was recruited by a headhunter to replace Clint Trousil, who retired after 34 years as Bennett’s president. As an LBM industry newbie, Paukert says he was initially somewhat surprised by its complexity, and need for speed.

"I was surprised at the urgency builders and contractors have to get fast deliveries. Before I got involved in this industry, I assumed it took a couple of months to build a house and they didn’t need everything five minutes from now. We do get a lot of rush or ‘need tomorrow’ orders.”

Along with proximity to contractors and homeowners in the perennially-growing south metro area, Bennett’s new location in the Southcross Corporate Center also offers high visibility: an average of 60,000 cars pass by daily.

Not that the Burnsville facility is a perfect fit. With its smoked glass windows remaining from the previous tenants, it "still looks like an office building,” Paukert admits. With room to accommodate a 62,000-square foot indoor lumberyard, "We thought the space would be a big advantage, something different from other lumberyards. But it’s hard to get people to believe it’s a lumberyard,” Paukert notes. "So we’ve had to work hard with signage, direct mail marketing and print ads.” Hosting "how-to” sessions for do-it-yourselfers and certification seminars by vendors such as Marvin Windows, also helps.

In addition, as part of its strategy to bond with the Burnsville-area community, Bennett’s has sponsored events at the city’s annual festival, and hosted chamber of commerce events in its large employee breakroom.

The Burnsville site also has three showrooms showing kitchen and bath options (with 12 kitchen vignettes), flooring and windows and doors. "Having designers on staff has helped a lot over the years,” says marketing director LuAnn Becker. "Anyone can sell cabinets, but having designers on staff helps the customers work through all of their ideas and help them decide what will work, or not. The designers keep up on the newest and latest trends, have a very good foundation on building codes and what is acceptable and everything else in-between. When a customer comes to Bennett to purchase cabinetry the job is not done when the cabinets get delivered, it’s done when the dream becomes a reality.”

At the Minneapolis facility, Bennett plans to downsize slightly to accommodate an adjacent, planned condo project; the company Bennett recently sold one acre of its Uptown property to a developer. It has moved some warehouse space to Burnsville and done extensive remodeling of the showroom, offices and dispatch area. Catering to remodelers of the older homes that predominate in south Minneapolis, the Bennett’s Uptown shop does a lot of business recreating and replacing damaged molding, doors and millwork.

Retaining a core of experienced employees will be a key to Bennett’s future success and growth, according to Paukert. "We have a number of long-term employees, some of whom have been here as much as 30 to 35 years. And it really helps to have good, experienced people doing take-offs and estimates.”

An essential part of retention is making ongoing efforts to help employees grow and "making them feel they are contributing not only to our customers, but to Bennett Lumber’s success,” Paukert points out.

One of Paukert’s assigned tasks has been developing first-rate marketing and training departments; the company did not have either until about three years ago. The company now requires that each employee receive at least 24 hours of training per year. "What we’re trying to do now is promote from within, not only in titles, but in responsibility, and give people a more clear definition of what they are expected to do. Over the past year, everybody here has taken on more responsibility.”

Paukert also hopes to increase the company’s reliance on modern technology tools. Bennett has been testing a Nextel wireless system to dispatch and track its delivery fleet of about a dozen vehicles. He also plans to develop more custom-designed software, supplementing the Activant ECS-Pro system now in place. "For a long time, Bennett’s philosophy has been to make it easy and convenient for the customer. That remains our direction, and we want to be a leader in using new systems that allow us to deliver better and faster.”

In the past decade, Bennett has enjoyed steady annual revenue growth, from around $14-million 10 years ago, to today’s $24-million level. While continuing to expand Bennett’s operation, Paukert wants to retain the company’s strong suit, which is serving the small-to mid-sized contractor.

For a time, five or six years ago, the company was growing a little too fast, which led to "some service issues,” Paukert notes. "We were going after some customers we couldn’t service very well. We needed to balance our customer base between builders and remodelers.”

At this point, "we’re trying to achieve nice, sustainable growth, not necessarily always in double-digits—steady, manageable unit growth,” Paukert says. "As a small company, if we grow too fast, the impact can be tremendous, especially on customer-service. A key element in that growth will be bringing new things to our current customers.”

Bennett’s brand association with True Value Hardware dates back about 20 years. "Obviously, the brand identity helps us, and helps in inventorying the proper tools and hardware contractors need.” Demographic data provided by True Value’s corporate office was a valuable aide in choosing the Burnsville location and will play a role in future expansion decisions, Paukert notes.

With its new Burnsville location up and running, Bennett is beginning to look at adding more outlets. "Our five-year plan calls for adding more locations in selected areas, completely different from what we have today—facilities that would be ‘true’ lumberyards.” Two primary factors entering into any expansion decisions will be "looking at how we are servicing our current customers—that’s where our strength is—along with evaluating competition and access.

"We’re trying to expand in areas that will ‘fit’ our current customer base and that also offer some growth potential for us. We won’t be trying to expand just for the sake of expanding; I can’t see us transferring some of our existing business from one location to another.”

As a whole, the Twin Cities metro area continues to be a booming housing market; condos are constantly going up in the urban areas, and the outer suburban areas continue to develop rapidly. "We want to continue to do what we do best: servicing the small-to mid-sized builder and remodeler and stay focused on that, rather than trying to be something we’re not. There is enough room in the Twin Cities to support a number of suppliers; we just want to find our niche.”

Dan Emerson is a Minneapolis-based freelance writer.