remodel markets. They are all about convenience. They are located in many cases very close to or in the middle of heavy remodeling areas within a city. The idea is to look at where the population is, to look where the competition is and the companies that service that business, and to locate accordingly.
It’s been a very effective strategy for us. And it’s really allowed us to tap into a traditional customer type that we probably haven’t focused on enough, and we need to keep letting them know that we’re there for them.
MDM: That’s a growing market.
SP: Absolutely. No question. You hear so much talk about new construction. The good news is new housing starts are still very healthy even though they’ve declined slightly. I think if you had looked at it five to 10 years ago, we probably would have been satisfied with where they are projecting new housing starts this year. But the repair and remodel market is at least as big if not bigger. The opportunity there is still ongoing and no matter what new housing does, repair and remodel is still going to be very strong.
MDM: How many Ferguson XPressNet stores have you opened?
SP: About 125 in the last two years.
MDM: Do you have plans to continue rolling out at that pace?
SP: We continue to roll them out. We haven’t put our finger on exactly how many we’ll continue to roll out each year. A lot of it depends on real estate transactions how quickly we can get them. Our big focus this year is to expand the model from the historical plumbing business and try some models in our HVAC business as well. So we’ll have some new target locations that are HVAC XPressNet. It’s certainly a strategy we’re going to continue.
MDM: How do you view the competitors in the markets you are targeting with these new concepts?
SP: We see them all as very strong competitors. You look at a company the size and strength of Home Depot, and we certainly respect what they are doing. We’re certainly keeping our eyes on them. I think they are keeping their eye on us as well. We’re definitely the two largest in this segment. But we also have tremendous respect for a lot of the smaller independent wholesalers that have been the backbone of this industry for so many years. We admire the reputations they have in the marketplace, what they offer, and the loyalty they have built up with customers.
38% – Residential
32% – Commercial/Industrial
18% – Waterworks
10% – HVAC
Six in One
Demand for construction services and infrastructure repair is high in New Orleans as a result of the destruction caused after Hurricane Katrina came through.
Wolseley has taken that demand and run with it. Shortly after the 2005 hurricane season, the company moved six business groups into one facility in the Big Easy: Ferguson’s plumbing, commercial, industrial, HVAC and waterworks businesses with all of Stock Building Supply’s products.
By doing this, Wolseley is consolidating the cost of working in the region. “A lot of times we go to market as one,” says Steve Petock, Wolseley North America’s vice president, Residential Business Group.
In addition, the combined operation saves the company money when it can consolidate labor, for example. Drivers are in short supply. But with six business groups under the same roof, Wolseley can combine runs.
“We looked at the opportunity and felt that we would be able to best serve that part of the country by going in together,” Petock says.
This interview with Steve Petock, Wolseley North America Vice President – Residential Business Group, looks at Wolseley’s strategy to offer more to builders by combining Ferguson products with Stock Building Supply products in blended showrooms. Wolseley has also stepped up its efforts to target the smaller remodel and repair customer by opening a series of plumbing-focused Ferguson XPressNet stores. Ferguson has plans to do the same with its HVAC products. The strategy will help the global distribution giant compete with the ever-growing and diverse Home Depot Supply.
MDM: Are builders asking for more products under the same roof?
Steve Petock: They like the fact they can allow the customer more convenience and offer a wide selection of products for their home instead of sending them to a number of other locations.
A model we’re getting ready to experiment with is joining our sister company Stock and creating what we refer to as a Blended Showroom. In those locations you’ll have the Ferguson products, which are plumbing, lighting, fireplaces and appliances, and also under the same roof, you’ll have cabinets, countertops and flooring product, windows, moldings, stair parts and so on. It really allows the customer to get an idea of what’s out there and how they can outfit their home and even upgrade their home if they want to.
We have one location now in Chapel Hill, NC. We have another in Santa Barbara, CA. We’re taking what we learned there and really expanding the footprint and making them larger. We are also blending them together better than we have done. The products will be more intermingled and strategically located to offer the homeowner or the purchaser a more comfortable feel for how they are arranged and how they work together. So there will be Ferguson’s appliances in a setting with Stock’s countertops and cabinets, and Ferguson’s faucets on top of the sinks. It will all be integrated.
MDM: What is the strategy behind this?
SP: We looked at what Ferguson had done with showrooms and thought why don’t we start doing that model with Stock? When we thought about the bundle of products we could offer a builder and a builder’s customer, it really made a lot of sense to try to look at how we could do it together.
MDM: How does Ferguson XPress fit into your strategy?
SP: You have the XPressNet branches and the Ferguson XPress counter within a Stock location. For the Ferguson-Stock counter, Stock has an existing facility and Ferguson carves out a piece of that space anywhere from 1,000-2,000 square feet. The idea is not only to offer additional locations for Ferguson’s traditional customers but also to offer Ferguson’s products to some of Stock’s customers on the repair and remodel side.
The XPressNet branches are really a growth strategy we came out with about 2 years ago. We copied it from our sister company in England who had done many of these throughout the country. If you know anything about England, it’s heavily populated and not large geographically. So they had set these locations up all over the country as quick in-and-out plumbing locations that cater to the repair and remodel market. We decided corporately we needed to get more actively involved with that customer (in North America). We weren’t a new-construction-only corporation. We thought the best way to reach the repair and remodel market was to go with a similar footprint. So we rolled out the XPressNet locations in the U.S.
MDM: How are those set up?
SP: They are roughly 3,500 to 4,000 square feet on average. They have mostly plumbing products in them. They have some pipe, valves and fittings for a mechanical contractor but not to any depth. The idea is really catered to the repair and