There's Gold in Nonexotic Products

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Service, convenience and a recession-proof business have driven Wilmar Industries Inc. to grow from $36 million in sales in 1993 to more than $150 million in 1997. Primarily competing in the highly fragmented, $2 billion apartment repair and maintenance products market, Wilmar, Moorestown, NJ, has carved out a successful niche by being one of the few companies to target apartment managers in the United States with the supplies they need.


Founded in 1978 by the father and son team of Martin and William Green to increase sales at their hardware store and on the premise that it's not convenient for apartment managers to run to a hardware store every time something needs to be repaired, Wilmar Industries Inc. is now the leading marketer of repair and maintenance products in the United States. Its stock trades on the Nasdaq exchange under the WLMR symbol.


It was William Green whose entrepreneurial drive led him on a door-to-door mission to sell hardware products to local apartment managers. Green started with a two-page flier of products that developed into a three-ring binder that served as a catalog until the company developed its first official bound catalog in 1986. The company reached sales of $5 million that year.


The company has grown in national market share in its primary market from 3 percent in 1995 to 8 percent in 1997. The key to this growth has been acquisitions and expansions into new geographic areas. In 1993, William bought out his father's interest in the business and in 1995 received additional funding from venture capitalists. In January 1996, the company completed its IPO -- which raised $47 million -- and in July 1996 completed a secondary offering, which raised another $43 million. These funds were used to pay down debt and fund further acquisitions.


The company is like many business-to-business firms whose catalog is primarily a marketing and brand building tool used by its direct sales force and telesales group as well as a stand-alone sales vehicle.


The company's catalog operations consist of the Wilmar Master Catalog, which is published once a year. The catalog has more than 1,000 pages and features more than 15,000 stock-keeping units. It's one of the most product-extensive and highly targeted catalogs in its industry. In addition, the company mails more than 100,000 monthly sales fliers. The mailings of the catalog and fliers are targeted primarily to lists of apartment maintenance managers in apartment buildings with more than 50 units.


It has the largest sales force serving the apartment market in the United States. The direct sales force consists of 208 representatives who target property management companies and on-site managers. To be successful, the typical salesperson needs 150 active accounts and Wilmar expects salespeople to call on their customers twice per month. Sales representatives also cement relationships by being problem solvers providing technical assistance and helping organize the storage areas and workshops of maintenance staff, essentially acting in an inventory-management capacity. Sales representatives are responsible for 85 percent of the company's sales.


Outbound telesales consists of a team of eight telesales representatives who contact potential new customers and maintain relationships with customers outside the geographic reach of the sales force. Outbound telesales are assigned geographic regions and given lists generated through an internal telemarketing model of prospect and customer lists. This segment is responsible for 15 percent of total revenue.


In addition, the company maintains a Web site. The site is for information only at this time, as Wilmar has determined that its primary target customers, apartment maintenance people, seldom have access to computers or the Internet.


Products and Markets. The company primarily targets the more than 94,000 apartment complexes in the United States that are large enough to require maintenance managers. The average number of units in buildings that the company serves is 200. In addition, because of similarities in maintenance product requirements, the company is now expanding to include hotels, motels, hospitals, military bases, nursing homes, prisons and schools, a combined market that is four times the size (in sales) of the apartment maintenance market or $8 billion. Nonapartment revenues represented 5 percent of 1997 sales. The company sells primarily plumbing, electrical, hardware, chemical, janitorial and window and floor covering products. Plumbing and electrical products represented 48 percent of 1997 sales, while hardware represented 15 percent, chemical and janitorial were 5 percent, appliances were 5 percent, appliance parts were 5 percent, window and floor coverings were 7 percent and HVAC was 8 percent of total sales.


Competition. Wilmar competes on several levels: local hardware stores, large home centers and other catalogers such as W. W. Grainger and Barnett, Maintenance Warehouse and Century. Wilmar believes that it's able to compete based on its wide selection of products, reliable and timely delivery, low prices, customer service and strong sales relationships that have resulted in a 90 percent customer retention rate.


Strategic Planning. The company's strategic plan is built on a foundation of expansion into geographic areas where the company is not present. Such expansion facilitates growth of its direct sales force efforts, subsequent growth in the customer base and, most importantly, speeds product delivery to customers. Because of the nature of the highly fragmented business, Wilmar has a wealth of acquisition targets in new geographic areas, as well as continued opportunities in the nonapartment market, which serves an estimated 265,000 facilities nationwide.


Bill Dean is president of W.A. Dean & Associates, San Francisco, a catalog, consulting, publishing and research firm.
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