Chris Tompkins of Kruse Plastic and Plywood in Louisville, Ky., has seen his operation go from a regional powerhouse to a much smaller business in the last 10 years. He has seen his business change and adapt along the way.
"The things we used to do to help the small business, things like coming in at special times and making special deliveries, those things have become standard operating procedure for all business now," he says. "That's a function of being more competitive."
With larger companies taking up a big part of the lumber distribution business, being a cabinet supply distributor has become a riskier venture. The Wal-Mart business model has become the standard for large distributors who have consolidated their business into even larger corporations.
"If a distributor in one city partners with a supplier in another, then all they really have is transportation costs," says Chris Tompkins. "This allows them to sell at lower prices."
Stiffer competition from these large consolidations can be hard on the smaller distributors, says Tompkins. It also doesn't help that the fluctuating price of lumber is making it nearly impossible for experts to forecast the market and is one thing keeping the government from lowering taxes on lumber.
Because profit margins are low, a company's quarterly numbers can sometimes be deceiving, showing that they are stronger than they actually are. Small cabinet shop owners lured in by the shine of big consolidations can find themselves in trouble just a few months down the line, especially when the big consolidations have caused smaller companies like Kruse to go out of business, and suddenly they're paying more than what they paid before.
Hurts the small shop
While Tompkins dismisses this trend as "a function of capitalism," he adds that this can also hurt small cabinet shops. "Instead of ordering a few hundred knobs and screws, they order a few thousand because they have the surplus budget," he says. "This ties up the distributor and makes it harder to do those rush orders."
Tompkins is also quick to point out that a customer service representative is readily available to answer the phone, while at many of the big corporations you may get a recording. While Tompkins and others like him struggle in the face of these giant corporations, he accepts it as another part of the evolving business.
"One of the bad parts about consolidation is that it makes it harder for everyone to interact with the customer," says Tompkins. "We used to talk to our customers all the time, but we can't as much now."
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