By Craig Webb, President, Webb Analytics
This may be the year in which the best way to grow organically will be by taking sales from others.
Multiple forecasts point to sales volume growth in the low single digits, with most sales growth coming primarily through higher prices, particularly if the Trump Administration's tariffs remain in place for months. Builders FirstSource is telling stock analysts that it expects its 2025 sales to rise between 0.6% and 6.7%, while The Home Depot forecasts comp sales store growth of about 1.0% during the fiscal year that started Feb. 1.
In 2025, some dealers will boost their numbers by buying other companies and opening greenfield sites. But for many others, the focus could turn to increasing both the share of customers in their market as well as the size of sales they make to their customers.
Given that backdrop, the scenes at both Orgill's spring market and the International Builders' Show were timely. Orgill had booths devoted to helping True Value and Ace Hardware dealers convert. True Value dealers are a particularly juicy target because their parent company was sold to Do it Best as part of a Chapter 11 bankruptcy proceeding. True Value dealers now are members of a new Do it Best division, but Orgill and Ace both are wooing them to switch before the Do it Best relationship takes hold.
Orgill usually adds about 180 to 200 customers per year, President & CEO Boyden Moore told Webb Analytics. In contrast, this year's show was attended by roughly 350 customers representing 900 stores who were new to Orgill or preparing to move. Orgill serves 13,500 stores in 50+ countries, he said.
Market share matters a lot among distributors because the goal is to handle as many products at the lowest fixed cost as possible. Moore said True Value at the end was moving perhaps $1 billion worth of products out of 12 distribution centers and Do it Best was handling $1.6 billion from nine DCs, while Orgill is handling $2.6 billion worth of product at eight DCs.
Meanwhile, it was easy to see how The Home Depot was ramping up its efforts to win over pro customers. Its booth at the Builders' Show was devoted entirely to the pro audience (which it generally defines as anyone who uses its Pro Xtra card when making a purchase).
Chip Devine, THD's Senior Vice President for Outside Sales, said the company now has flatbed distribution centers with outside sales reps and takeoff services in 17 markets, with plans to expand to the top 40. Pro operations in those 17 markets created $1 billion in "additional lift" to THD's total sales last year, he said.
THD intends to sell itself as a dealer that can provide virtually any product needed to build and fill out a home, Devine told Webb Analytics. That puts THD in a better place than virtually any dealer to get maximum share of the customer's wallet.
The company also announced a partnership with Buildxact that makes it possible for smaller builders and remodelers to use the software to manage projects and do estimates that automatically pull THD prices for the materials to be used.
Next door to THD's booth, Builders FirstSource emphasized how its Paradigm software unit, ReadyFrame software, and installed sales services could speed construction and cut costs. BFS President and CEO Peter Jackson, speaking Feb. 20 on the release of the dealer's fourth-quarter earnings, said Paradigm contributed $134 million in revenue last year and is likely to add another $200 million this year.
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