PM’s Supply House of the Year: The Granite Group
Creating value through innovation
Concord, N.H.-based The Granite Group has spent 41 years growing its business and creating value for its vendors and its customers. Back in 1972, when Chairman P. Kevin Condron purchased Worcester, Mass.-based Central Supply Co., his eye was on nurturing his fledging business — with one location and $2 million in sales — so that it would flourish far into the future.
He accomplished this by acquiring a supply business here, starting a branch location there. In the recession of the early 1990s, the company’s sales went down 20% for four years and employees went from 180 to 90 people, Condron says. But it came out of that recession without closing any of its locations. And the company’s growth began increasing again.
By 1997, the plumbing and heating wholesale distributor, now known as Central/Goulet, had 10 locations doing $40 million in sales. The following year it merged with one of its competitors, Capitol Plumbing & Heating Supply in Concord, to form The Granite Group, which takes its name from New Hampshire, known as The Granite State. The new company had 14 locations and $65 million in sales.
Today, The Granite Group has 27 locations, more than $150 million in revenues and about 355 employees. It is listed at No. 40 on sister publication Supply House Times’ 2013 Premier 125 list.
Chief Operating Officer Bill Condron, who came to work with his father in 2001, believes much of the company’s success comes from its employees, many of whom have been with Granite Group for 25, 30, even 40 years. “The biggest strength of the company is the quality of the people we have working here,” he says.
That wealth of experience and innovative spirit is just one reason keeping The Granite Group’s contractor customers coming back. That is certainly true of Granite Group’s central distribution center in Londonderry, N.H., opened in 2005, just a short distance from the Manchester, N.H., airport. The 165,000-sq.-ft. central distribution center makes daily deliveries to all 27 branches. During the start of heating season and through Thanksgiving, the CD will run close to 24 hours a day.
“No other wholesalers in New England of our size service their locations every day,” says Chris Ploss, vice president of branch sales and operations. “For outside salespeople and staff at the branches, it’s a huge plus. If a branch puts in an order for a customer by 4 p.m. today for a Kohler Purist faucet, we can have it to the Canadian border by noon tomorrow.”
Bill Condron adds: “It’s the ‘supermarket’ for our branches and the heart of our company. Our customers have access to more than $10 million worth of inventory that can be at their local branches the next morning. We also have soft-sided tractors and buggy trucks making deliveries of pipe and other large products to customer jobsites each day.”
Mike Waynemanages the huge distribution center and its 22 employees, including 10 full-time drivers. The CD cross-docks as much of the material it receives as it can — taking material off manufacturer trucks and loading onto pallets for each branch. A green tag means the item is sold and will be picked up by a customer at the branch. A red tag means it is a stock item for the branch.
Pallets are staged before the docks, which are labeled with branch numbers. Each truck is assigned several branches and deliveries are made throughout the night and early morning. “We try not to let the trucks leave half-full,” Wayne notes.
What doesn’t get sent to the branches is stored in the 100% paperless warehouse. Each item is bar coded and employees use radio frequency scanners to receive and ship materials. The Granite Group’s central distribution center has a 99.7% order accuracy rate.
While traditionally a plumbing and hydronic heating wholesaler, the firm added HVAC equipment in 2005 — residential and commercial air conditioners, mini-splits, package units, condensing units, heat pumps, and gas and oil furnaces. Bill Condron’s goal is for the HVAC business to comprise 15% of Granite Group’s business; it’s now at 12% and growing rapidly.
“Constant innovation is required in this business,” he explains. “What I’ve come to learn about this business is that it’s a game of inches. It doesn’t change much; there’s stability to what we do. But opportunities are everywhere to constantly innovate and improve. We’ve embraced a lot of that lately in our business, so I think that’s helped our success.
“We’ve gone to customers and said, ‘Let us manage that inventory for you, or let us open a branch near you to serve you better. You’re tying up your cash flow in inventory that could be used to fund your own business. Let us do that so you can get the product you need to go out and do what you do best, which is install and service the best-in-class products.’”
An example of that extra service is the Granite Group On-The-Go branch, which opened early September in Burlington, Vt. The smaller, conveniently located facility has more focused inventory representing the needs of the local contractors. It is laid out in a way so contractors can quickly get what they need and get back on the job.
“For contractors, time is money,” Condron says. “We have to find ways to move much quicker, get them product much faster, get them what they need in parts and pieces in a much quicker fashion. Everyone’s lean, everyone’s trying to get by with less.”
The Granite Group holds customer dinners where Condron and other management staff talk to customers and find out what’s working, did they have a problem with an order, how quickly did they get a response and was the problem resolved to their satisfaction.
“It’s about listening to your customers; what do they need and how can we help them and provide value,” he says. “And if you have the relationships with your manufacturers and your customers, you can do that.”
The majority of savvy homeowners want to know what their plumbing and heating contractors are fixing. They can go on the Internet and learn about Btu and efficiencies. To retain customers and find new ones, contractors need to be the experts in their field.
“That’s the value they provide,” Condron notes. “For the Granite Group, we really need to be on our game, training our people, training our customers and providing whatever they need to succeed. The homeowner is going to continue to become much more knowledgeable and we need to find ways to provide value in that process.”
Showrooms, trade shows and training
The company has 13 Ultimate Bath branch showrooms, which offer contractors a venue to send their customers to look at faucets, fixtures and other decorative plumbing for their new homes or renovation projects.
“Contractors who allow our showroom salespeople — who pride themselves not only on their knowledge of the products we offer but their contractors’ processes — to become their salespeople and close the deal get the best result,” Ploss notes.
One of the big changes with the showrooms is having them open during retail hours in the evenings, as well as on weekends, he adds. That includes Sundays, something no other area showrooms do.
“We’re dealing with retail-type consumers,” Ploss explains. “It’s difficult for homeowners to get to a showroom before 5 p.m. during the week or before noon on Saturday. We have to be available when they’re available.”
Adding to the increased service options for contractors is the Granite Group’s Emergency On-Call Program, which Ploss championed two years ago. If a contractor customer calls after hours and is in need of an emergency part, a local Granite Group on-call associate will pick up the call on a company-provided mobile phone, log into Granite Group’s computer system from his home and check for product availability. Once the product is located, arrangements are made to deliver it to the contractor right away.
Customers are charged only $25 when a location is opened after hours, which goes directly to the on-call associate who provided the emergency service. “If our contractor customers are offering 24/7 service, then we have to offer 24/7 service,” Ploss says.
Another piece of Granite Group’s success comes in the form of trade shows it conducts each year at three different venues at the beginning of heating season. “These are our line cards come to life,” says Mike Mullaney, vice president of marketing. “Each trade show draws about 400 contractors with more than 60 manufactures and manufacturers representatives on display.”
Each show begins with four education sessions in the morning (continuing education credits offered), lunch, live-fire demonstrations and the trade show. Every three or four years, the trade shows rotate to a different area to make sure that all customers have a chance to attend.
“These shows are the engines that drive us through fall, showcasing who we are to customers and vendors,” Ploss says. Other events are planned throughout the year, he adds, where all the staff can interact with customers.
Mullaney is frequently tasked to come up with creative ways to engage with customers. This includes Granite Group pens and desk calendars, and rechargeable Ultimate Bath gift cards that customers can win through different promotions throughout the year. Those funds can be used for anything, including paying the contractor’s bill.
The company’s Destinations travel incentive program sends about 350 contractors every other year to an extravagant destination getaway. “We need to create our value in the distribution chain,” Mullaney explains. “Early on, we realized that relationships are the way to go. And we realized that training builds relationships; it’s the conduit between the contractor and the manufacturer. We want to be that conduit.”
Training may be at the local counter, a regional event at a hotel, training rooms in about a half dozen of the branches, a customer’s shop or a manufacturer’s factory. “We love bringing people to the factory for training,” Mullaney notes. “That’s a successful formula for us. Depending on your interest, we find the resource to get you there.”
The company recently built a live training area at its corporate headquarters. It was designed for training on Kohler generators, a new product the wholesaler is carrying, but can be reconfigured in the future for boiler and water heater demos.
A small, privately held company, The Granite Group is very open about its financials. Everyone sees sales numbers and gross profit, every manager has his own profit-and-loss statement. The company has an annual meeting as well as quarterly meetings.
At the quarterly meetings, Bill Condron, Kevin Condron and President Bill Hilfinger split the company up and go out to every branch to show staff company sales, branch sales and margin percent. They talk about what’s going on in the branch and listen to any issues or concerns that staff may have.
“Kevin started this years ago,” Bill Condron says. “And that built up a lot of good will that we needed as we managed through the downturn. ‘Now you see that we’ve dropped to this level and we have to do this; if we get this type of improvement, we get this back.’ People understood why we were doing things, even if they didn’t agree. That type of constant communication, internally, was critical.”
Wholesale distribution is here to stay, Kevin Condron says, but who the customer is has changed, as well as how products are sold.
“The sophistication level it takes to be in the wholesale business today is much different than when I started,” he explains. “Typically, people who came into the wholesale business did so because of their product knowledge. Today, product knowledge is available from so many resources. What you need today are modern business practices that recognize that it’s a different world technologically.”
For example, when the company started in 1972, every invoice was handwritten, he adds. In 1982, the company had $16 million in sales and 32 people working in the back office. In 1988, the company had $36 million in sales and 19 people working in the back office. Today the back office is a fraction of that size.
“We’re not on the leading-edge of technology, but we’re not backwards either,” Bill Condron notes. “I think that’s a knock that the industry unfairly gets. With the regulations, codes and product technology, plumbing and heating tradesmen have to be unbelievably technically savvy. Many of the heating systems today are complicated and that technology is growing exponentially. As a wholesaler, we need to be there with our customers to provide the support, products and training they need so they can continue to grow their businesses and thrive in a changing world.”