Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, December 18, 1994 TAG: 9412300108
SECTION: BUSINESS PAGE: F-1 EDITION: METRO
SOURCE: LEIGH ANNE LARANCE SPECIAL TO THE ROANOKE TIMES & WORLD-NEWS
DATELINE: LENGTH: Long
While he may have a firm grip on the home improvement industry as president of Moore's Lumber & Building Supplies, he confesses he's no expert with a hammer.
"Let's put it this way," Darrer says about a deck he built. "There was one side you didn't feel comfortable on."
The project taught him something, though. "What I learned was to appreciate craftsmen."
It was a significant lesson, considering that in recent years Moore's has focused on catering to craftsmen - professional builders, contractors and serious amateurs - in order to stay competitive in the building supplies industry.
Darrer and others say the company had to change when, about 10 years ago, Home Depot pioneered the concept of the warehouse-style building-supply store.
Across the country, Home Depot, Lowe's and Builders Square have been edging out traditional neighborhood hardware stores that can't match the retail giants' prices and selection.
Ellen Hackney of the National Retail Hardware Association said the number of smaller stores is declining in the $116 billion-per-year building supplies industry.
"They reached their peak about a decade ago at 26,000 stores, but now there are about 22,000," she said. Nationwide there are 46,000 home centers, hardware stores and lumber yards. "Weak or less well-managed hardware stores have gone by the wayside. The home centers have accelerated their departure."
For Moore's, a 52-store chain based in Roanoke, staying in the game meant finding a niche in the marketplace.
Building Supply Home Centers magazine, a trade publication, named the company as retailer of the year in 1993. Another industry publication, National Home Center News, ranked Moore's among the top 25 in the industry, with $335 million in sales in 1993. On that list, Home Depot ranked No. 1, with $9.2 billion in sales, and Lowe's was second with $4.5 billion. Meanwhile, in its hometown, Moore's was better known for its headquarters downsizing and stores with what appeared to be shrinking inventories.
"Operationally, the company's always had its roots in the contractor business," said Dwight Manning, senior vice president of operations for the company. "We found it very natural for us to return to our roots."
The company did that by shifting its staff resources from the Harry Homeowner-type retail customer to the professionals.
The Franklin Road shop, for instance, two months ago began a $50,000 to $60,000 renovation that will relocate the contractor service desk closer to the front of the store. The project should be complete by the new year, said David Henry, Moore's executive vice president and chief financial officer.
The company also increased the number and types of vans and trucks in its service fleet that deliver materials to a building site. "The average branch had approximately four vehicles, and we've expanded to five or six on average," he said.
When Home Depot came on the scene, the company knew it needed to adopt a strategy to compete. Moore's closed its Virginia Beach store about the same time Home Depot moved into that neighborhood, he said.
"Virginia Beach was a market where Moore's wasn't adaptable," Henry said. It had been among a number of stores that opened in the mid-1970s to cater to retailers.
Moore's closed many more of its smaller stores, those with 8,000- to 10,000 square feet of space on one to two acres.
The Christiansburg store, which abruptly shut its doors in 1992, was among them.
"You need a certain amount of yard space and store space to serve the builders," Darrer said. The company wanted stores on four to six acres that could stock supplies contractors need in the quantities they require.
Henry said the company now has 52 stores in 10 states, down from more than 75 in 1986. They average 16,000 square feet.
Roanoke is one of the chain's largest markets. Most stores are in towns with populations of 25,000 to 75,000, Darrer said.
The stores weren't the only aspect of the company to change. Moore's also made cuts in the staff at its headquarters on Brandon Avenue. Darrer, Henry and Manning now make up the company's key executives. That circle numbered seven before the reorganization.
The company has 1,800 employees in the chain, with 350 in the Roanoke area, Darrer said from his corner office in Moore's orange and black building. While the building's exterior is hard to miss, the inside is anything but showy.
Darrer's office is decorated with framed sayings that read "innovation or evaporation" and "retail is detail."
He noted that the cutbacks have come with the change in focus. "Central support is not as important on the contract side as the retail side," he said. "And the other thing that has entered the picture is technology. Administration is done by and with computers."
Computer upgrades also will enable the chain to stock inventory, process credit authorizations and change prices more quickly, Henry said.
The chain had more than $335 million in sales in 1994, Darrer said. While sales figures were about the same a decade ago, they represent a healthier company because of lower operating expenses, he said. The company would not release earnings or profits.
He also said the company has reached the business mix it was aiming for - about 65 percent contractor and 35 percent do-it-yourselfer. National Home Center News put that mix at 60-40 in 1993 and 50-50 in 1992.
Home building may seem a more fickle business than retailing, but Darrer said today's market is solid.
The contractors the company works with are better financed than they were a few years ago and there is less speculative construction, Darrer said.
The market for single-family homes in Roanoke has been steady through 1994 and is expected to be the same next year, according to Rick Whitney, president-elect of the Roanoke Regional Home Builders Association and president of Fralin & Waldron Inc., a development and property management company in Roanoke.
He names Moore's, Lowe's and 84 Lumber as some of the area's biggest competitors for contractors' business. "We deal with all of them," he said. "We may do more business in a given month at one store, but a lot of that is simply price-driven. All of them offer good service."
Boone, Boone & Loeb Inc. Vice President Ron Booth said Moore's is his company's largest supplier. "I think that they've gotten more efficient as a part of their reorganization," he said.
"There was a cycle where they were dealing with the retail end of the market, and that didn't do very well for them," Booth said. "Now, they've gotten back to the commercial ... When we have concerns either with billing, service or delivery, they are immediately there. They've always been there, it just seems that they can get to us a lot faster than they used to."
Moore's was founded in Richmond in 1956 and has since been through a roller coaster of ownership. It was sold to Evans Products Retail Group in 1965, but that company fell apart, a victim of corporate raiding in the 1980s. Evans Products was acquired by corporate raider by Victor Posner and subsequently entered bankruptcy in 1985.
Moore's survived, however, and in 1986 emerged from the Evans bankruptcy with Grossman's Inc., a Boston-based lumber and building supply company, as its parent. In the fall of 1989, Moore's was sold for $85 million to Harrisons & Crosfield Plc, a London-based company with interests in chemical, agricultural, building and other products. The parent company reported sales last year of $3.48 billion, is the largest building materials trader in the United Kingdom.
While the restructuring and ownership changes aren't posted on store walls, customers may notice the change.
Darrer said a shopper in Lowe's or Hechinger's may notice a wider selection, and items such as lamps and appliances along with traditional building supplies. Moore's focuses on lumber and building products and tools, and stocks them in greater numbers.
"We may have 10 choices, but we have the inventory to back it up," he said. "You can go into a nail department and have 100 types of nails, but only half a dozen in great numbers" in warehouses, he said. "We make sure we carry brands professionals use, and carry nails in 50-pound boxes."
Customers also won't find popular brands like Black & Decker. "We carry professional lines. They may be slightly more expensive, but it's going to absolutely be more durable than a consumer line," he said. "Professionals recognize the quality difference."
He notes, however, that the chain still serves do-it-yourself customers, particularly those embarking on major projects.
Part of the company's strategy is to staff service desks with employees who can help retail customers wanting to build decks or additions, Henry said.
Customers may now see Moore's as a specialty store rather than a department store. By specializing, the company has found its niche, Darrer said.
"At the end of the day, part of it was, can we effectively compete and profitably coexist with this retail center? We do," Darrer said. "We're not going to make them go away ... Nor can they make us go away."
by CNB