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I now there are many of us doing box stores and I have a few ? on material priceing. Not wanting to get into it on the forum I would like to talk to a few of you on the phone and get some info would realy appreciate it. Dont think it is something to talk about on the fab net, dont know?
Cap, don’t take this personaly ok, this subject gets my long johns in a wad. I don’t do box store work but by mistake I became aware of the box store pricing last year and I was quite shocked to see what a disadvantage it put me in since I do compete with them.
Now I can get the same pricing if I ask the customer if the big blu is bidding too. Why don’t I just give them that option out right because if they say no , they will now, I just shot myself in the foot! Strange practice if you ask me. This has been discussed here before, let’s keep it out in the open. The discount is so good that even with high fuel cost a fabricator could travel 440 mile round trip with 2 guys to do an install, including an over night in a hotel.
I hope my rep reads this, maybe someone can explain it to me.
Cap, how do you do your edges typicaly if I may ask. sorry for the ran’t, not meant to attack anyone personaly
The box stores have to make a profit so I think it comes the way of lower material cost extended to the home center. I have heard many different sides to this story. Some say the material cost is the same while others say it is definitely cheaper.
Of course you can’t talk pricing here, but talking about the situation is a good thing. Makes everyone aware of the challenges they face competing.
I can speak of Avonite and Formica and I can attest that the pricing I sold to my fabricators was never more than what the Box Stores paid.. Lowes for Formica and Expo for Avonite. I never worked for LG so I can’t speak for them, but, I can assure you that you can compete with the box stores very successfully on price.
Since I know sell stone I got a quote on my kitchen from Lowes and HD, and I got our price to a dealer. A dealer could make almost 30% margin and still beat the box stores.Since material cost is typically about 1/3 of the job, and the fact that the box stores use local fabricators to fabricate, and the stores mark up their product, if you can’t compete the problem is not with materical cost. Its easy to blame the mfg for this, but its not true in the products I distributed. Perhaps someone from LG will tone in on this.
David I would assume your in a unique sitiation since your in a very remote area. For a company to ship small qtys of material to you Im sure would be very expensive. I have no clue who the local fabricator is for AK but perhaps they are stocking some material thus getting savings in freight. Perhaps one price list is with freight and one without?My Avonite fabricator here was at least 15% below any other fabricator in the country. All purchased the material for exactly the same price, all Expo’s put the same markup on the fabricators cost. The difference was he is an excellant business person, who has figured out how to produce a great product at a very fair price. He is one of the top rated HD fabricators in the country AND he actually makes money. Some of you may know who I speak of, great person and a great company.
I can speak of Avonite and Formica and I can attest that the pricing I sold to my fabricators was never more than what the Box Stores paid.. Lowes for Formica and Expo for Avonite. I never worked for LG so I can’t speak for them, but, I can assure you that you can compete with the box stores very successfully on price.
Since I know sell stone I got a quote on my kitchen from Lowes and HD, and I got our price to a dealer. A dealer could make almost 30% margin and still beat the box stores.Since material cost is typically about 1/3 of the job, and the fact that the box stores use local fabricators to fabricate, and the stores mark up their product, if you can’t compete the problem is not with materical cost. Its easy to blame the mfg for this, but its not true in the products I distributed. Perhaps someone from LG will tone in on this.
David I would assume your in a unique sitiation since your in a very remote area. For a company to ship small qtys of material to you Im sure would be very expensive. I have no clue who the local fabricator is for AK but perhaps they are stocking some material thus getting savings in freight. Perhaps one price list is with freight and one without?My Avonite fabricator here was at least 15% below any other fabricator in the country. All purchased the material for exactly the same price, all Expo’s put the same markup on the fabricators cost. The difference was he is an excellant business person, who has figured out how to produce a great product at a very fair price. He is one of the top rated HD fabricators in the country AND he actually makes money. Some of you may know who I speak of, great person and a great company.
Some body speak up here but the way I see it if you fab LG for Lowes you get Price A, if if the same fabber does a none Lowes LG product it’s price B. From my understanding it’s a nationwide deal for Big blue fabbers. Don’t get me wrong here , I do alot of LG and the folks who I deal with are awsome and I realy like doing business with them, great folks. To be trully honest, I am very tenatious and I want the best deal I can get, when I loose a job because someone gets the better price on the goods it gets me off my butt and on the phone. I benefit from from some great promos and I pass them on to the customer, my objective is to get my work in to evry house I can, I say “my work” not a certain brand’s stuff. This leads to more work for me. If a brand can keep me happy I push there stuff. Every one wins.
The last thing I’m gonna do though is ask a potential customer if big blue is bidding, not gonna take that chance. I’m a dumb a$$ sometimes and that means I’m a little slow to get it, there must be a logical explination why this pricing thing happens. I want it all my way darn it!
David… Yes, Lowes fabs get better pricing….. and when I get a call from someone that has priced Lowes I just mention… yeah I have that color, but would you like to see the new LG colors I have that LG doesn’t let Lowes have? I can’t tell you how many “Shasta” jobs I have sold. Most seem to want what the masses cannot get at Lowes…
Kelsey, the only good thing Obama did was help us get rid of Janet Napalatano, his new Homeland Security Cheif, and our former Governor. The same governor that put National Guard Troops on the boarder, but didn’t allow them to stop illegals coming into the country. And when a group charged an outpost with guns and the troops ran she gave the troops a citation for doing the right thing.. HUH? This is home land security?
I hope your getting power etc back….
Wags,
You may have given your customers the same pricing, but most of us do not receive the same material pricing as the home centers. I expect it and would find it highly unlikely that the home centers would not negotiate better pricing for the volume they are doing.
Take a look at national pricing for fast food chains. The pricing is amazing and they don’t do nearly the amount of work the home centers generate.
What the chain stores get is some advertising allowances, and promotional funds. Negotiated pricing is typical when your doing fast food stores. When Starbucks did 1400 new stores, you bet they got some concessions. But who does that benefit? The fabricator. I don’t remember a situation where labor was set by anyone other than the fabricator, with the exception of some sink labor when a free sink is being given.
I have run across the free sink programs being abused by the fabricators on neumerous occasions. If you get a free (or reduced cost) sink with say, a two sheet or larger job, and you get a 4 sheet kitchen and then request two sinks, are you not cheating the mfg ? Somehow most fabricators don’t look at that as cheating, its beating the system. Overall in my many years in this industry I have found mfg to be fair in their dealings.
When material costs are about 1/3 of the job, and you get a 5% or even 10% reduction in the price of material, that only equates to a discount of about 3% on the job. If you can’t overcome a $100 difference on a $3,000 job then perhaps your not selling your just taking orders.
The Avonite “negotiated” price for Expo was MORE than my everyday price, so do I then charge the fabricator MORE to match the Box store pricing? ummmm.
One other thing, I would dare say that most mfg do NOT make money at the box stores. They do sell product and they do help build brand awareness but with all the costs involved to be in a box store its not a money maker. Just look at 1500 stores and perhaps 10 or 15 sheets of material for FREE, just for displays. How many kitchens do you have to do just to cover the cost of the material ? Also some require an upfront fee per store to allow you to show your product in their store..
In the end the elevated brand awareness benifits the local fabricator. A good percentage of folks that go to Depot or Lowes buy from a fabricator or kitchen dealer rather than from the box store. I have not run into a box store price on almost anything, that I could not beat locally. Perhaps we need to sell ourselves and our service etc and not worry that someone else is buying something a few cents cheaper and thats why they are sucessful and im not.
Want to really make some differences in your bottom line, look at how efficent your shop runs.. Most shops don’t even think about how they pay rent 24 hours a day and 7 days a week, yet, they only use the shop 1/3 of the hours and 5 /7 of the days. You have 168 hours in a week, and we use the shop and equipment 40 hours. That means were paying for equipment and facilities 76% of the time while were not using them. If you rented a shop half the size and ran two shifts could you not put more money in your pocket ? There are 100 other ways of lowering your cost of doing business, perhaps we should have a thread on that subject?
How about organizing your install trucks so everything is always on the job, so no time is wasted chasing for caulk or whatever? Its not just about the price of material, look at all your costs. Material is easy because its black and white, but labor and overhead are a much larger cost than material is.Wags:
I appreciate your input, but it sounds like manufacturer apologetics to me.
When I worked for a large fabricator several years ago, there was a sheet kept for tracking all the Corian material job purchases for a large national builder and the HD jobs. I’m assuminig this list was documentation to the distributor for the discounts both had negotiated.
If you think that big boxes are going to buy solid surface and estone by the BOXCAR and not negotiate a very substantial material discount, you are in dreamland. Were I a stockholder in either, I would demand the same.
The sink discount promotional programs can make competing with the big boxes on price nearly impossible. Been there, done that.
The idea that major manufacturers don’t make money in big box stores is ludicrus. Several sheets and several man-days for displays are a very small price to pay for the incredible volume of work a fabricator gets from a big box. I’ve installed these displays too.
I appreciate the tips and encouragement to get more efficient, that is always good advice. The bottom line is, despite all their sales talk, the manufacturers are whores. They and their pimps (distributors) give the best rates to the biggest customers. This is the way it is, like it or not. Denial is lipstick on the pig.
Joe
Joe. Having worked for several distributors, selling to the box stores I can say with 100% accuracy that what I have claimed is true. I also will add, that when I was distributing Avonite, and they took on Expo, we, my fabricator and I went to a meeting in NM with all the expo fabricators. Every fabricator purchaed the material at exactly the same price, and every expo put exactly the same markup on the material. My fabricator was $5 a foot ( on a $35 sell item) lower than every other fabricator in the country. They could not understand how he was doing it an swore he is losing money. He is, in fact, one the best fabricators that HD has, has the fewest problems, best associate relationships and even when HD owed CTI and were switching from outside fabricators to inhouse they told him they could not produce for the price they paid him. He DID / IS making money. He is without a doubt the best business person I have ever met in this industry and I have met quite a few. And, I should add, my everyday price to fabricators for Avonite was LOWER than the Expo prices.
Expo, Lowes, HD etc all understand the cost of doing business, they want advertising and promotional support which is more important than a lower price. They know its not price that sells products its promotions.
Even today, with Quartz were doing business for a large “box” store, not HD or lowes. Its not price that was of utmost importance. If your selling on just price then your missing the boat.
But untill you have been a distributor and seen the invoices then perhaps your under the misconception that they push for only the lowest price. If that was the case they would all be buying direct from China and cut deals for fab only with local shops.
And if you think the cost of displays are a small item you have no clue. One Great Indoors store when they first opened here in Az was giving out almost $5,000 of Formica SS Samples PER MONTH. Obviously no matter how much material you sell you can’t recoup those costs, so limits were put on the samples.
And I stand by my statement that Mfg don’t make much money at Box stores. It helps brand you and helps sell material through other avenues, but, when you add up all the costs, its not a money maker. Which is why you don’t see more companies in Box Stores.
I also know from my own shop I use to sell to Builder Square.. I charged them MORE than I did my Kitchen Dealers. Its easy to blame the box stores for what may be, our own lack of good business sense.
Posted By Wags on 05 Feb 2009 01:52 PM
Joe. Having worked for several distributors, selling to the box stores I can say with 100% accuracy that what I have claimed is true. I also will add, that when I was distributing Avonite, and they took on Expo, we, my fabricator and I went to a meeting in NM with all the expo fabricators. Every fabricator purchaed the material at exactly the same price, and every expo put exactly the same markup on the material. My fabricator was $5 a foot ( on a $35 sell item) lower than every other fabricator in the country. They could not understand how he was doing it an swore he is losing money. He is, in fact, one the best fabricators that HD has, has the fewest problems, best associate relationships and even when HD owed CTI and were switching from outside fabricators to inhouse they told him they could not produce for the price they paid him. He DID / IS making money. He is without a doubt the best business person I have ever met in this industry and I have met quite a few. And, I should add, my everyday price to fabricators for Avonite was LOWER than the Expo prices.Expo, Lowes, HD etc all understand the cost of doing business, they want advertising and promotional support which is more important than a lower price. They know its not price that sells products its promotions.
Even today, with Quartz were doing business for a large “box” store, not HD or lowes. Its not price that was of utmost importance. If your selling on just price then your missing the boat.
But untill you have been a distributor and seen the invoices then perhaps your under the misconception that they push for only the lowest price. If that was the case they would all be buying direct from China and cut deals for fab only with local shops.
And if you think the cost of displays are a small item you have no clue. One Great Indoors store when they first opened here in Az was giving out almost $5,000 of Formica SS Samples PER MONTH. Obviously no matter how much material you sell you can’t recoup those costs, so limits were put on the samples.
And I stand by my statement that Mfg don’t make much money at Box stores. It helps brand you and helps sell material through other avenues, but, when you add up all the costs, its not a money maker. Which is why you don’t see more companies in Box Stores.
I also know from my own shop I use to sell to Builder Square.. I charged them MORE than I did my Kitchen Dealers. Its easy to blame the box stores for what may be, our own lack of good business sense.
Wags:
I believe that you are relaying all of your experiences truthfully. I don’t agree with your conclusions.
Avonite isn’t Corian, Wags. Not even close, sales and brand-recognition wise.
I must disagree with your assessment of big-box strategy. It is based on price. I’ve spoken with the CEO of Consetino. HD has made it clear that no one will be able to compete with them on price for Silestone. They buy enough Silestone to make that happen.
Are there strategies other than price? Of course, and smaller fabricators have to figure one out. No boats missed here.
If Formica gave out $5,000.00 a month in samples, they were idiots. After recieving a $100.00 deposit from a potential customer, you have them take home an entire box of samples. When the customer returns the samples complete, they are refunded their deposit. Sample losses would be virtually nill and the willingness of the potential’s to deposit would be a good sales qualifier too. Plus you’re gauranteeing be-backs. Maybe I should submit a resume to Formica before they throw away any more money. No wonder those dufusses went bankrupt.
Wags, I can’t believe that you honestly believe that manufactueres only sell in box stores in order to “help sell through other avenues”. So Corian is in Home Depot, giving away sinks that cost me $400.00, to further my business? Yeah, right.
Joe
Posted By Norm Walters on 05 Feb 2009 01:27 PM
Joe, don’t hold back, tell us how you really feel.
Norm:
I appreciate your concern. However, when it comes to defending fabricators, I will walk point every time unapologetically. Especially when belt-tightening advice is handed down by people who are associated with those that have a documented history of not treating fabricators like the customers we are.
I’ll try to watch my tone, though, really.
Joe
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