With a staggering 56 percent increase in sales over the previous year, one would think that store fixture manufacturer Penloyd LLC has either a Midas touch or an extraordinary marketing secret. Truth be told, the Tulsa, Okla.-based manufacturer has neither. This year's success has been the result of a time-honored business building technique: adding new customers, increasing business with existing ones and doing what is needed to keep all relationships strong.

"We had an existing relationship with Dillard's department stores and then we added Federated to the mix as well, and that's been a good growing account for us," says Pat Kirkpatrick, vice president of sales. "Especially now that Federated has acquired May Company stores, we've been doing a lot of work based on that."

Kirkpatrick says he expects to see these relationships grow throughout this year and on into 2007. Aside from Dillard's and Federated Department Stores, Penloyd has several other well-known clients, including Eddie Bauer and Coach.

Key location

Penloyd LLC has three plant facilities in two locations to service customers. The facilities manufacture wood, metal and glass fixtures and components. Total footage of the facilities is in excess of 500,000 square feet, with 400,000 square feet dedicated to manufacturing and approximately 100,000 square feet for distribution and warehousing. Penloyd's main facility is located in Tulsa and houses the company's millwork shop, engineering department and corporate offices. A second Tulsa facility handles glass work. Penloyd's third facility is located in Bowling Green, Ky.

Kirkpatrick sees the Tulsa locations as a plus for the company. "One nice thing is that as the business has grown, there's a lot of infrastructure in Tulsa that you can take advantage of, such as warehouse space. It's easy to size up if you need it for fixture storage, so that's a real advantage. It's also a good advantage being in the center of the country when you're dealing with nation-wide firms."

Working with imports

Imports have also played an important part in Penloyd's success, and according to Kirkpatrick, the company has made this more of a focus in the last year and a half. "We've been growing our import business," Kirkpatrick says. "The importing we've been doing is for parts and complete fixtures from Chinese partners."

Importing has been a necessary move for the industry, according to Kirkpatrick. "Retail is extremely competitive for the consumer dollar," Kirkpatrick explains. "They've got to be very cost-conscious when they're building their stores and buying their fixtures. It all moves downhill, so to speak. In order to be solution-providers, you've got to be able to provide competitive pricing, which sometimes means importing some parts from China or sometimes working with a Canadian source."

Streamlined operations

Another, less obvious facet of Penloyd's success has been efficiency initiatives in both their manufacturing and administrative operations. "We have tried to streamline our processes and focus more on our core business," Kirkpatrick says. Penloyd has recently dropped off some businesses where they were not competitive and are now concentrating more on department store and specialty store fixtures.

Kirkpatrick notes that when operations were reviewed, management realized there was manufacturing that was taking place that was not only a drain on operations, but was also producing a minimal profit. Examples of this were such things as an occasional interior or a one-off contract furniture piece. While management was dismayed to discover this was taking place, Kirkpatrick adds that it was not a surprise, given the nature of their business, and store fixture businesses in general.

"At most of these companies, the original owners of the companies were entrepreneurs. As the company matured, they realized there were things they could build better than other companies and do better within the market, but they didn't always remember to drop the things they didn't do as well."

Potential facility expansions

Expansion is something that Penloyd is strongly considering, particularly in the area of metal and metal manufacturing, according to Kirkpatrick. The reasons for this are multi-fold.

"We're basically looking at metal manufacturing in order to have stronger domestic manufacturing capabilities," he says. "In essence, there are two struggles. One is over price, and the other one is always over lead time."

Kirkpatrick observes that unless a company is willing to air freight parts in from China, then the lead time is normally 12 weeks. For many clients and jobs, lead times need to be no more than four to six weeks. In order to get lead times down to four to six weeks, then parts need to be manufactured in North America.

Looking ahead

Kirkpatrick says he expects Penloyd to continue in a growth mode. "What we're trying to do is to continue building our department store and specialty store business," he says. "At the same time, we're working on being competitive in the lower-middle department store market as well."