helping our members grow. - do it best · 2010-10-28 · most importantly, however, is the...

Helping our members grow

2008 Annual Report

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Niel Crowson (left) and Bob Taylor (right).

2008 ANNUAL REPORT 3

Chairman’s MessageNiel Crowson Chairman of the Board

President and CEOE.C. Barton & CompanyJonesboro, Arkansas

E.C. Barton & Company has been a proud member of Do it Best Corp.since 1971, and I have had the honor to serve as chairman of the Do itBest Corp. board of directors for the past two terms. The membershipat Do it Best Corp. covers a diverse group of retailers–everything from hardware stores and home centers to lumberyards andcommercial/industrial dealers. What makes our co-op’s board so specialis that it is wholly comprised of Do it Best Corp. member-owners–atradition that has been in place since the company began in 1945.

One of our most important responsibilities as a board is to ensure thatadequate financial auditing systems are in place. We do this byperforming internal and external audits to validate the fiscal year-endstatements. The Board continues to be proud of the financial strengthand stability of Do it Best Corp. We clearly outperformed most others in the home improvement industry by maintaining focus and pace on key strategic initiatives and delivering strong year-end profitability.

With the engagement of your board, a strong strategic planning process at Do it Best Corp. ensures a continued focus on our co-op’snumber one goal – helping our members grow. Over the past year wehave been particularly pleased with the rollout of exciting voicepicking technology in our retail service centers, the opening of a West Coast freight forwarder, the introduction of our vendor portal,and the development of our enviroLINKSM program.

Competition is fierce these days, and success isn’t guaranteed. Do it Best Corp. knows that success depends on hard work, smartstrategies, and innovative ideas and we know that our partnership with Do it Best Corp. will give us that important edge.

DO IT BEST CORP.(FORMERLYHWI) WASFOUNDED IN FORTWAYNE,INDIANA

There is no question that this past year has been one of the most challenging ones in memoryfor our industry. Continued decline in the housing market, exacerbated by an unprecedented rise in the price of oil, has tested businesses and consumers alike. Do it Best Corp. and our member-owners rose to the challenge this past year and passed the test, delivering the third most profitable year in ourcompany’s history. Strong, consistent performance and a rock-solid financial foundation help Do it BestCorp. provide both our members and our staff an important measure of confidence in these turbulent times.

In fiscal 2008, total gross sales for Do it BestCorp. were $2.65 billion, down 5.6% from theprevious year. Within that mix, sales throughdistribution declined 2.8%, directs were off 5.5%, and lumber, impacted by continued price

deflation, was off 12.2%. We maintained good expense control during the year in the face of significantchallenges, and we experienced only a slight rise of 0.9%. A committed workforce allows Do it BestCorp. to continue as the industry leader in operational efficiency, with overhead this past year at just2.13%. That resulted in a decline of 8% in net profits from last year’s record-setting performance; not the results we had hoped for, but still a very solid year, and one that easily outpaces most others in our industry.

The rising cost of raw materials, coupled with the continued increase in transportation costs, have presented challenges for both members and vendors. The pricing pressures have been significant. This underscored the importance of the Do it Best Corp. approach of selling to our members at a fully landed cost through distribution, avoiding extra freight and fuel surcharges. With acquisition expense now comprising a larger share of total procurement costs, this approach provides them with the best opportunity to preserve their margins and protect their bottom line.

Important to our future growth and success was our ability to maintain momentum this past year on a number of key projects and initiatives. In some cases the investment is significant, but so too is thequick return on that investment. Our voice pick implementation in our retail service centers this pastyear is a prime example. Now up and running at all eight facilities, it is having a tremendous positiveimpact on workflow efficiency, reducing mispicks and helping provide a safer work environment for our team. The system will easily pay for itself in less than three years. Add to that our supply chainvisibility project now nearing completion, which will greatly enhance the tracking of inbound shipments,and you have continued extension of our core competency in hardlines distribution.

President’s LetterBob Taylor President and CEO

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OPERATING OVERHEAD

2008 FISCAL YEAR SALES

Our product information management (PIM) project also saw considerable progress during the year. This centralizeddatabase of product characteristics, attributes, and descriptions willprovide an important foundational element in the development of

our world-class online catalog, further enhancements to our e-commerce site and an important linkwith our vendor community through our vendor extranet.

At a time when others are scaling back their promotional plans, Do it Best Corp. members havestepped up their efforts in 2008 and are working effectively to grow market share. Memberparticipation and circulation in our flexible, customizableADpakSM program grew this year by a significant measure. Witha wide variety of promotional elements available, members ofall sizes and types are finding ADpak to be a powerful tool forgrowing sales and building their brand in their local market.

Do it Best Corp. welcomed 135 new members this past year. They joined for a number of importantreasons: our rock-solid financial foundation free of any long-term debt, our wide variety ofexceptional retail programs, our member-focused approach offering menus rather than mandates, our demonstrated excellence in product distribution, and our commitment to our philosophy of… serving others as we would like to be served. Most importantly, however, is the significant cash flowadvantage Do it Best Corp. is able to deliver to our members, both on a daily basis as well as through our industry-leading year-end rebates.

Our mission at Do it Best Corp. is…making the best even better. It speaks to our continualimprovement process and its focus, both at retail as well as in distribution, on our number one goal…helping our members grow. It’s a mission that our team fully embraces at every level, and it’s this special commitment to our member-owners that helps them to not just survive but thrive intoday’s competitive retail environment.

If it’s worth doing…Do it Best!


LONG-TERMDEBT

Perfect timing.

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Growth in Retail – Indufesa Do it Center.® For Ernesto Bendeck, the timing was perfect. As he formulated plans to expand his stores in Tegucigalpa, Honduras, Do it Best Corp.launched the Signature™ Store Design Program. He chose to open his newest store as abright, spacious Do it Center®. And with a steady 50 percent sales growth in the first sixmonths, he’s not looking back.

Bendeck revolutionized hardware sales in his region in 2000, with his first Do it Center.Until then, customers had been accustomed to over-the-counter sales with very littleretail space. Now, with the Signature Store Design, he has redefined the customerexperience once again.

“Our customers love the new store,” said Bendeck. “They like walking around, seeing thelarge selection of products and being able to touch the merchandise.” Applying conceptsfrom the Signature™ Store Design Program, Indufesa features a lively, contemporaryatmosphere with appealing signage, inspirational photography and dynamic merchandisedisplays. “How-to” graphics educate shoppers and serve to reinforce the store’sreputation for expertise.

“Most importantly,” said Bendeck, “the store is extremely well-organized, making it easyfor shoppers to find what they’re looking for on their own.” As it turns out, by providing asuperior “self-service” experience, Bendeck has taken his store’s customer service to a whole new level.

With the overwhelmingly positive response – and sales that show no sign ofslowing – Bendeck is making plans to update his other stores with the program. For him, one thing is clear: the time is right.


Brownsboro Hardware & Paint. There’s

nothing easy about a major store remodeling.

Just ask Jim Lehrer from Brownsboro

Hardware & Paint in Louisville, Kentucky.

His store recently expanded from 5,000

to 7,000 square feet of retail space with

the help of the RetailPLUS!®

program. “The new space

required extensive construction

work, including major concrete

and overhead beam work,” said

Lehrer. “But with the help of

Do it Best Corp. and their dedicated team,

we were ready to unveil our new store

in 14 weeks.”

The exterior of the store received a new

façade, while the interior was completely

reorganized and remerchandised–adding

hundreds of new products. “We took

advantage of Do it Best planograms,

which were terrific,” said Lehrer.

The new Brownsboro Hardware & Paint

incorporates the Signature™ Store Design

Program. Lehrer reports that feedback from

customers has been tremendous. “They love

the new atmosphere, and they tell me it’s

much easier to shop,” he said. Most

importantly, he’s getting the same feedback

from his bottom line. The store’s grand

opening was on April 5, 2008, and April

proceeded to be the biggest month in store

history. Traffic significantly increased and

sales grew by 28 percent. For Jim Lehrer

and Brownsboro Hardware & Paint, it’s a

“signature” achievement.

INCOM Success: Building Recession-ProofRelationships. Despite the challenging

economic climate, INCOM Distributor

Supply,SM a division of Do it Best Corp.,

continues to thrive at a growth rate of

more than 25 percent in sales. An example

is MRO Warehouse, located in El Cajon,

California, with worldwide sales largely

to manufacturers, contractors and

government facilities.

As Joe Forehand, president and CEO of the

six-year-old company, puts it, “Our business

hinges on our relationships with buyers.

We simply have to take care of our

customers, and INCOM® takes care of us.”

In just four years, MRO Warehouse has

built an impressive customer base, with

50 percent growth in each of those years.

Forehand attributes the continued growth

to the fact that demand remains high for

commercial safety and cleaning

Spotlight on Retail

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Retail PLUS!® is a program

that is used to analyze every

aspect of a member’s

business and is used to

recommend comprehensive

plans to help them become

premier retailers in their

market. The program provides

project management and

other incentives for stores

undertaking a comprehensive

store improvement project.

A RetailPLUS! manager is

assigned to each project to

develop the customized action

plan and timeline and then

continues to manage the

project through its completion.

NUMBER OF STORESIMPLEMENTING THE DO IT BEST SIGNATURE™STORE DESIGN PROGRAM

PLUS!

PLUS!

supplies–including new “green” products. He also reports that

while online sales through the INCOM B2B e-commerce

platform is still a small portion of his business, it is growing

steadily. INCOM supports members in two categories: those

with a niche market–primarily retail hardware/contractor

operations who have expanded that business to include the

commercial/industrial customer market; and those like MRO

Warehouse, who are considered true commercial/industrial

suppliers with little or no retail sales.

“I appreciate the fact that INCOM has the same service-

oriented approach to helping me that I have toward helping

my customers,” Forehand said. “INCOM gives us access to

pricing structures we wouldn’t have otherwise,” he continues,

“and that truly allows us to be competitive. INCOM bends

over backwards to help us source products that aren’t in the

INCOM catalogs, and we also benefit from the drop

ship programs.”

“I never say ‘no’ to my customers,” Forehand concludes,

“and INCOM helps ensure that I don’t have to.”

International Strength. The world-class reputation of Do it Best

Corp. is now matched by a truly

worldwide reach. Global growth

continued in 2008 with the

addition of nine new international

members, with 18 new stores.

Existing members added an additional

11 stores. In addition, the international

division finished a three-year run of

18 percent average sales growth. Today, Do it

Best Corp. provides retail services, products,

and solutions to more than 4,100 member-

owned stores in 47 countries around the world.


doitbestcorp.com

Go online to find a Do it Best® member-owned

store near you.

Jim Lehrer Brownsboro Hardware & Paint

Going Green – Kelloggs and Lawrence Hardware Store. Drive up to Kelloggs andLawrence Hardware Store in Katonah, New York, and the last thing you would expect to find is one of the most progressive “green” retailers in the country. That’s becausethis unique store has been in business since 1887 and occupies a building that dates from 1895. Indeed, Kelloggs and Lawrence is old-fashioned – in a new-fashionedsort of way.

Bart and Diana Tyler acquired Kelloggs and Lawrence in 1995 and became Do it BestCorp. members in 2000. Last year, business took a dramatic turn when theircommunity began an initiative to cut greenhouse gas emissions by 20 percent by the year 2015. Suddenly, customers not only began asking for “green” products, theycame into the store well-informed and knowing exactly what they wanted.

“We already did a brisk business in CFL bulbs,” said Bart, “now, we have a growingdemand for a wide range of items, including push mowers, composters and all types ofgreen cleaning products.” Added Diana, “We began stocking the products that wererequested, and then we were delighted to see more and more of them become availablein the retail service centers through the Do it Best Corp. enviroLINKSM program.”

The Tylers took advantage of the program, introduced in May 2008, to identify productsalready on their shelves that are considered environmentally friendly, and theymarked them with distinctive “green dot” signage. They posted a sign on the front doorencouraging customers to look for those products as they are shopping. “Do it BestCorp. also helped us develop a beautiful green advertising circular,” said Diana. “Theirstaff was fantastic in providing images and helping us create a high-quality piece.”

With more than 1,900 SKUs readily available in the enviroLINKSM program, Do it BestCorp. members can respond quickly and cost-effectively as green initiatives takecommunities by storm. For Kelloggs and Lawrence, it’s the second-time around forthings like push mowers. For Bart and Diana Tyler, the old store seems new again.

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What’s old is new again.


LEED Gold Certification – Yates Building Supply.In April 2008, Yates Building Supply inPhiladelphia, Mississippi, was the first Do itBest Corp. member to achieve Leadership inEnergy and Environmental Design (LEED)gold certification. In fact, according to BillYates, chairman of The Yates Companies, the all-new facility is the first gold-certifiedLEED building in Mississippi.

A program of the U.S. Green Building Council, LEED goldcertification requires a designated achievement in these areas:sustainable sites, water efficiency, energy and atmosphere,materials and resources, indoor environmental quality, and innovation and design process.

The new Yates Building Supply more than doubled the store’sretail space and provided more room for a decorating centerand outdoor living products. “When you enter the store, it takes your breath away,” said manager Stan Yates. “The skylights make everything lighter, and you can tell people truly enjoy shopping here.” Yates creditsDo it Best Corp. for support throughout the projectand for help in the store’s design. Highlights of thebuilding include:

• Permeable concrete parking lot that capturesrainwater and channels it to a cistern for use in toilets and irrigation

• Two-tone exterior–top-level blocks are from otherbuilding sites, while the bottom level consists of Sealtech® Blocks, designed to prevent penetration of moisture and thegrowth of mold and mildew

• White roof coating witha higher solar reflectance index, keeping the insideof the building cooler

• Skylights and sensors that adjust interior lighting in relation to the amount of sunlight from the skylights for greater efficiency

• Carpet, paint and adhesives with low volatile organiccompound (VOC) off-gassing

• Floor stain is from a soybean product

• Paint mixing room is closed off and ventilates outdoors

Environmental Stewards

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LEED Overview

LEED certification provides independent,

third-party verification that a building project

meets the highest green building and

performance measures. All certified projects

receive a LEED plaque, which is the nationally

recognized symbol demonstrating that

a building is environmentally responsible,

profitable and a healthy place to live and work.

There are both environmental and financial

benefits to earning LEED certification:

• Reduce waste sent to landfills

• Lower operating costs and increase

asset value

• Conserve energy and water

• Are healthier and safer for occupants

• Reduce harmful greenhouse gas emissions

• Qualify for tax rebates, zoning allowances

and other incentives in hundreds of cities

• Demonstrate an owner’s commitment

to environmental stewardship and

social responsibility

OVER

IN THE ENVIROLINKSM

PROGRAM

enviroLINK.SM Helping a customer buy a “green” product can be confusing with the various standards and definitions in the marketplace.

Knowing customers rely on our members’ stores for advice, Do it Best Corp. created the enviroLINKSM program. Theapproach at Do it Best Corp. is to serve as a link from ourvendors to our members–and ultimately to their customers.Our enviroLINKSM initiative promotes products that meet atleast one of these five criteria:

• Saves Energy and Water: Products that help reduce energyuse, such as CFLs and low-flow faucets

• Recyclable, Reusable: Items made from products that would traditionally be discarded. Examples includecountertops made of crushed glass bottles and heavy-dutydoor mats made of old tires

• Conserves Resources: Products such as rainwater collectingbarrels, composters and yard waste bags

• Promotes a Safe and Healthy Home: Products meeting this criterion prevent, identify and/or mitigate indoorpollution and toxins in the home, including mold, radon and VOCs. Also included are cleaning products that do not use harsh chemicals

• ENERGY STAR™ Qualified: Guidelines for this categoryare established by the EPA

The Do it Best Corp. enviroLINKSM

program is helping members establish

themselves as the destination in their

communities for environmentally friendly

products. There are currently more than

1,900 SKUs in the retail service centers

that are recommended by their

manufacturers as meeting one or more

of the five criteria described at left.

In-store informational signage helps

educate shoppers about the products and

call attention to the fact that Do it Best

Corp. members are on the front lines in

helping the environment. Items such as

compact fluorescent light (CFL) bulbs,

gentle household cleaners and natural

lawn and garden products are

skyrocketing in popularity.

Indeed, the move toward environmentally

friendly options is a tremendous

opportunity for Do it Best Corp. members.

Not only does enviroLINKSM help drive foot

traffic and increase profits, it signals that

Do it Best Corp. and its members are

forward-thinking and responsive to

community concerns.


energystar.govLearn how you can take small steps that make a big difference to protect

the environment.

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Lumber and Building Materials – Huskey Building Supply. Take Jim Huskey aside, and you’ll find he has a solution for surviving the economic downturn. “Recession-proof your business – and have a greatcredit manager,” he jokes. While recession-proofing may be easier said than done, Huskey is thankful thathis company has virtually no problems with accounts receivable during this challenging time. He also feels fortunate to have highly skilled staff that works together as a team and takes ownership in thecompany’s success.

Huskey Building Supply, a Do it Best Corp. member since 1989 in Franklin, Tennessee, has a customer base that is 95 percent contractor/professional and consists mostly of high-volume home builders. In additionto lumberyards, operations include a truss plant and door shop. “Our strategy for long-term profitability is to provide a bigger percentage of each home,” said Huskey. “While we used to just supply the frame, we now do the doors, windows, trim, wall panels and more. We even have a designer who will work with builders to design homes.”

Huskey credits Do it Best Corp. for assistance in opening the door shop. “They were very helpful inconnecting us with good vendors and suppliers,” he said. He also has used the co-op’s basis trade program,in which Do it Best Corp. helps members take advantage of the margin between lumber futures and currentcash prices. “Basis trade has been a no-brainer for us so far,” he said. “During these tough economic times,we think doing more business with Do it Best Corp. is a great decision!”

Despite the current challenges, Huskey is optimistic about having another successful year. In fact, HuskeyBuilding Supply recently opened a new facility in Murfreesboro, Tennessee, with 22 paved acres and a trussplant. With an upscale design, attractive landscaping and a fountain in front, it doesn’t look like any otherlumberyard. “For good reason,” says Huskey. “It isn’t.”

Solid Strategy.


Helping Our Members Through Service and Strength. When it comes to lumber and building materials, Do it Best Corp. iscommitted to helping members in the areas of research, logistics and shipping. Our on-sitesales teams represent all aspects of buildingprojects, from framing to décor–something no other cooperative offers. This full-serviceapproach is working. Even with a slowdownin building and material prices, Do it BestCorp. has seen an increase in unit sales and is actually seeing a market-share increase.

There is no doubt that challenging times lieahead for the lumber and building materialsindustry. But with the strength of ourcooperative–and our proven programs –Do it Best Corp. members have the tools they need to weather the storm.

Reload Centers and Reserved Inventory. As the nation’s largest hardware, lumber and buildingmaterials cooperative, Do it Best Corp. helps membersthrive with specialized services and strong purchasingpower. Through reload centers and the co-op’s reservedinventory program, members have the ability to managetheir costs, inventory and quality more effectively.

Reload centers give members the advantage of large-quantity pricing, the ability to pull out mixed loads,and the assurance that inventory is readily available forprompt delivery. Do it Best Corp. has 12 reload centerslocated throughout the country.

The reserved inventory program allows members to takestrong positions in the market and guarantee margins on their sales. Members are able to lock in their purchaseprice–and then know their costs when they quote a job to a customer. An important aspect of the program is thelevel of service members receive from their Do it Best

Corp. lumber buyer. The buyer does extensiveresearch and legwork in getting quotes andbuying direct from the mills and then passesthat information on to the member, significantlylowering their overall costs.

Rob Jolliff of Bender Lumber, with eightlocations in southern Indiana, couldn’t agreemore. “My Do it Best Corp. buyer knows themills I prefer to do business with, and he savesme the enormous amount of time it takes to

shop a bunch of mills on my own.”

“In addition,” continued Jolliff, “if it’s my reservedinventory, then I know it comes from the mills I count on for high quality. Especially in this market, I can’tafford to lose a customer over quality issues.”

Members like Jolliff also appreciate the buying clout thatcomes with being a Do it Best Corp. member. “Withproduction at the mills being cut back, we might not be

One Size Doesn’t Fit All

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Graph reflects a month-to-month compositecomparison of fiscal years 2006-2008 as theyrelate to fiscal year 2005, when prices were atan all-time high.

Although the deflation of composite pricing oflumber and panels reached a maximum of57%, it finished the fiscal year at 37% belowfiscal 2005.

Numbers based on Random Lengths© Report

PRICE DECLINE PERCENTAGE OF LUMBER AND PANEL PRODUCTS COMPARED TO 2005 AVERAGE.

0%

-10%

-20%

-30%

-40%

-50%

-60%

2006

2008

– – – – – – – – – – – – – – – – – – – – – – – – – – – – – –

2007

able to get the product we need if we weren’tpart of Do it Best Corp.,” he said. “It allows us tobe treated like a big customer–even if we’renot,” said Jolliff.

Lampert Yards Now FSC Certified. In December 2007,Lampert Yards announced that its yards are certified by the Forest Stewardship Council (FSC). FSC certificationensures the responsible use of forest resources. It identifiesproducts containing wood from well-managed forests and guarantees chain of custody. Only 60 retail/contractorsales locations are certified by the FSC.

According to Pam Leier, vice president of marketing, “We sought FSC certification in response to homebuilders, who in turn were responding to the wishes of their customers, who are seeking to invest inenvironmentally friendly homes. In general, more andmore of our customers are following green buildingpractices. Plus it was the right thing to do.”


The company was started in St. Paul,Minnesota, in 1887 and now has 34 yards in five states and a customer base that is 80 percent professional. Lampert has been a Do it Best Corp. member since 1989.

While Leier admits that FSC certification can mean higher prices, she adds, “Overall,the costs do not significantly impact the price of a home.”

Do it Best Corp. is a certified FSC lumberdistributor and is authorized to sell tomembers who are positioned to carry certified wood.

DEDICATEDLUMBERANDPANELTRADERSAT DO ITBEST CORP.

John and Paul Bender Bender Lumber

Building Loyalty.

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Building Loyalty.

Loyalty.


North Manchester Hardware. Do it Best Corp. member Roger Moore freelyadmits that he was reluctant to adopt the co-op’s customer loyalty program,Best Rewards.SM “I didn’t think our customers would bother, but my wife Judytalked me into it,” he said. “And as usual, she was right.”

The Do it Best Corp. Best RewardsSM program was developed to help membersbuild customer loyalty and increase revenue through long-term, value-added customer relationships. Customers, in turn, enjoy real rewards andan implied “thank you” for their business. The program also allows membersto learn more about their customers’ buying habits and compile data thatcan lead to more effective merchandising and more targeted advertising.

North Manchester, Indiana, is a community of just 6,000, one-third of whomare college students or residents of retirement homes. “And yet,” saidMoore, “we have 1,000 reward cards. People here have responded very wellto the program. They are all aware of their awards. At the end of 2007, we hadabout 20 customers with rewards of $150. For them, that was a big deal.”

Moore and his wife know virtually all of their customers by name. And withgas prices keeping shoppers closer to home, they’re seeing more and moreof them. It all adds up to strong sales for North Manchester Hardware – andeven bigger rewards for their loyal customers.

Loyalty.

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Connecting at Retail

ADpak SM– The Flexibility to Meet Members’Needs. The Do it Best Corp. ADpakSM

advertising program continues to earn areputation of being the most effective programin the industry. It allows members to executecost-effective, flexible, customizablepromotions that are tailored to their specificstore type, size, trade area and merchandisemix. Our members’ success speaks for itself.

Ambridge Do it Best.® Located in Ambridge,Pennsylvania, Ambridge Do it Best® became a Do it Best Corp. member in December2007. “In a few short months,” said ownerFrank Strano, “my margins have increased andmy cost of doing business has gone down.”

Strano takes advantage of the customizationoptions of the Build Your Own (BYO) circularprogram. “The pricing is much moreaffordable than with my former co-op,” he said. “I can produce and mail twice thequantity for the same amount of money.And our monthly specials never fail to cause a spike in sales on the promotional items.”

According to Strano, a big reason he decidedto become a Do it Best Corp. member was the quality and effectiveness of the ADpakprogram. “With Do it Best Corp.,” he said, “it doesn’t matter if you’re big or small–theyhave the right promotions for everyone.”

Bering’s Home Center. Located in upscaleareas of Houston, Texas, Bering’s HomeCenter isn’t exactly your average hardwarestore. While their two locations do indeedcarry hardware items, they also featuregourmet foods and coffees, gifts, a stationeryshop and a children’s department. So when it

comes to advertising, Chris Schmitz, COO, works with his Do it Best Corp. advertising representative to create fullycustomized circulars that reflect his stores’ unique, well-established brand.

Bering’s prints and mails 130,000 circulars, sending about halfto an established customer list and half to prospects. “We get a 10 percent customer response rate,” Schmitz said. “And ineach promotional period, we do about $100,000 per store in sales on the featured items–with a nearly 28 percent margin on those products.”

“Do it Best Corp. gives me the flexibility to create high-qualitypromotions with phenomenal turnaround time that helps me be more successful,” said Schmitz. “Their advertising people are just great to work with.”

doitbest.com. E-commerce isn’t just for high-end consumergoods and electronics anymore. More and more shoppers are researching–and purchasing–everyday items online. With doitbest.com, Do it Best Corp. is on the front lineshelping to drive online shoppers into members’ stores.

“I think any member who isn’t taking advantage of the e-commerce program is really missing out,” said Al Broniszewski of Bellevue Do it Best® in westernPennsylvania. “We’re routinely selling items through the website that we don’t normally carry in the store.”

“We appreciate the fact that Do it Best Corp. has developedways to optimize the website for search engines, so that onlineshoppers are easily led to the site when they’re searching forspecific items,” he continued.

Broniszewski, like many other Do it Best Corp. members,benefits on a regular basis from the Ship-to-Store feature. He said, “These days, it’s rare if an order arrives that doesn’thave a website purchase on it. It might just be a $5 item, but it brings that customer into our store, just the same.”Indeed, more and more online shoppers are taking advantageof the free shipping that comes with in-store pickup.

Concludes Broniszewski, “This program is as smooth as it canbe. We love the way it continues to widen our customer base.”


All-American Home Center. Greg Fuller of All-American HomeCenter had been continually frustrated with his store’s creditcard programs–until he launched the Do it Best Corp. CreditMarketing program. “I’m thrilled with two things in particularabout the program,” said Fuller. “First, our approval rates aremuch higher than they were with other credit card programswe tried. And second, our charge customers have sales ticketsthat are three times higher than other customers–with anaverage of $272 per transaction.”

Located 17 miles southeast of Los Angeles, All-AmericanHome Center is in a densely populated blue-collar area. The store is a whopping 175,000 square feet, with sales of $31 million. The flexibility of the credit marketing programallowed the store to design a private label credit card thatreflects the unique store and well-recognized brand. Fuller alsoappreciates the program’s monthly reports. “They allow us to see details of our customers’ activity at a glance,” he said.“In the first six months of 2008, we had $600,000 in volumeon the card.”

“This is a great program,” he continued. “It is flexible to fiteach member’s needs. And it allows All-American HomeCenter to leverage the scope and scale of Do it Best Corp.”

Credit Marketing.

Introduced in 2007, the

Do it Best Credit Marketing

program is a private label

credit card that customers can

use to purchase merchandise,

equipment, parts and service sold

at participating Do it Best Corp.

member stores. Members can

choose to offer standard revolving

credit or a promotional period that

includes no payment and no

interest, giving their customers

a new purchasing option.

Highlights of the program include:

• No annual fee

• Quick credit decisions

• Preferred customer status

• Generous credit limits

• Special financing offers

doitbest.comShop for more than

65,000 items with the World’sLargest Hardware Store.®

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Voice Picking Technology

Welcoming Jennifer™ to Do it Best Corp. retail service centers. Over the years, the Do it Best Corp. retail service centers (RSCs)have achieved extraordinary productivity rates and high levels of quality in a largely manualenvironment, especially considering that 67 percent of the 48 million orders filledevery year are “one-each” picks.

After implementing radio frequencytechnology for scanning product into theRSCs in 2002, Do it Best Corp. began toexplore the possibility of using a technologysolution for order filling. Voice picking offeredopportunities for improvement in bothaccuracy and productivity– and it provided solid ROI. Up until then, it had only beenused in the grocery and drugstore industries.

Leading Edge Technology. Do it Best Corp.worked with Motorola and Lucas Systems tocreate the first voice-directed logistics solutionto run on mobile computers. The co-op spurred the innovation of the new voice pick system for this industry by insisting on a device that could be configured to be multi-functional. For example, after completing order fillingfunctions, the staff person may be redeployed into receiving orperforming audits using the same handheld device. Do it BestCorp. is the first and only company in the home improvementindustry to use voice picking, and already it is proving to be agreat return on investment.

Leadership in Distribution

9977%%AVERAGE FILL RATE

FROMCHINA


Global Sourcing – Shortening the Supply Chain.

Do it Best Corp. has taken significant steps to help members benefit from the rapidlyexpanding demand for globally sourcedproducts in all categories. This year, the co-op opened an additional global sourcingwarehouse in Long Beach, California, whichcomplements operations at the Chicagowarehouse facility and has streamlined thedistribution process. Products sourcedthrough the two Do it Best Corp. buying officesin China arrive at the West Coast facility. Theproducts may be stocked there or distributedto the western retail service centers, creatinga more flexible and efficient supply chain. Ingeneral, the time it takes for West Coastmembers to receive globally sourced itemshas been reduced by 25 percent.

How It Works. With voice picking, the RSC order filler wears a headset and listens to and responds to the system’s spokeninstructions. The system uses a female voice, named Jennifer,and instructs the associate where to go to pick the item. On arrival, the associate confirms the correct location. Thesystem then instructs how many items to pick, and the count is confirmed by the order filler. In addition to reinforcing the picking process, the system can provide reminders if an item has multiple pieces or requires special handling.Thanks to Jennifer, RSC team members are surpassing theirprevious productivity and accuracy rates, already at anindustry-high 99.6 percent.

A Beacon of Hope – Tuttle Lumber. HenryBockus of Tuttle Lumber in Tuttle, Oklahoma,knows firsthand how crippling an ice stormcan be to a community. When the state washit with a sudden storm last December, morethan 600,000 homes and businesses werewithout power–that’s more than 40 percent of the state’s population.

“My Do it Best Corp. retail developmentspecialist called the next day to see if we wereOK,” said Bockus. “And he was prepared with an entire list of emergency SKUs ourcustomers would likely need. I was able toorder generators, chain saws, heaters,kerosene, extension cords, ice melt and gascans quickly, without spending time looking up each item.”

“The very next day,” he continued, “the Do it Best Corp. truck managed to get herefrom Waco despite treacherous roads. To seethe orange truck coming through the fog was truly a beacon of hope for our community.”

“Do it Best Corp. lived up to its philosophy ofserving others–and we were able to pass thaton to our community. We were the only storearound with supplies, and our customers arestill grateful.”

RETAIL SERVICE CENTER PICKING ACCURACY RATE

LONG BEACH

CHICAGO

Waco

Cape Girardeau Lexington

MesquiteMedina

Woodburn

Montgomery

Dixon

Helping a Community in Crisis – Keough’s Paint & Hardware.When manager Ray Barrett closed up Keough’s Paint &Hardware in Ridgefield, Connecticut on a Sunday last April,he knew the constant rainfall was going to become a problem.By the time he made his way to work the following day, thephone was ringing off the hook with people desperate forsupplies to fight flooding in their homes.

“You can never be fully prepared,” said Barrett, “because youcan only stock so much inventory.” As flood waters rose, hecalled the Do it Best Corp. logistics department to see whatcould be done. Within hours a truck arrived with 200 sumppumps–all of which were presold. Barrett realized that morewould be needed. He called the Montgomery, New York, retailservice center, and the manager offered to stay late whileBarrett drove over to pick up another 200 pumps–all of whichwere sold by the time he returned at 10:30 p.m.

“Over the next four days, Do it Best Corp. continued to sendtrucks with pumps, Shop-Vacs, fans and dehumidifiers,” saidBarrett. “They were amazing–they went above and beyond tohelp us out.”

In fact, Keough’s Paint & Hardware surprised many people thatweek. “People couldn’t believe they were able to call a small-town hardware store and get the help they needed,” saidBarrett. “I just kept explaining that even though we’re small,we have the power of Do it Best Corp. backing us up. Andthanks to that, we were able to help our community when itneeded us most.”

Responding to Communities

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Valu Home Centers Benefit Habitat for Humanity. It seems fitting that Valu Home Centers helps to provide houses forlow-income families. The company started 40 years ago in inner-city Buffalo, New Yorkwith a mission of helping people care for theirhomes. Since 1993, Valu Home Centers hasraised more than $2.2 million for 15 chaptersof Habitat for Humanity in western New Yorkand northwest Pennsylvania.

“Each year,” said executive vice presidentRick Arena, “we hold a six-week fundraisingsweepstakes in June and July. Our cashierssolicit $1 contributions from customers, whichenters the customers in weekly drawings for$1,000 Valu gift cards and other donatedprizes. All of the money raised stays in thecommunity in which it is donated, with 100 percent of the contributions going to the local Habitat chapters.”

Arena says the company also encourages theircustomers and staff to not only participate atHabitat job sites, but also to volunteer theirtime in other needed capacities, includingadministration, accounting and legal services.

As it turns out, the six-week event is Valu Home Centers’ strongest sales period of the year. “It just proves that our customersshare our commitment to giving back to thecommunity,” said Mike Ervolina, Valu HomeCenters president.

American Cancer Society Relay for Life.Inspired by the successful fundraising efforts of Do it Best Corp. employees at theWoodburn, Oregon and Cape Girardeau,Missouri RSCs, a team from the corporateoffice in Fort Wayne, Indiana, participated in their second local Relay for Life to raisemoney in the fight against cancer and tocelebrate the lives of cancer survivors and victims.

The team, made up of 20 employees, raised$10,500 in donations–becoming the firstcorporate team in the area to reach $10,000.Many employees participated in year-roundfundraising events at the home office,including popcorn and bake sales, ice creamsocials and a raffle.

“The Relay for Life is truly a grassroots effortthat has the full support of Do it Best Corp.,”said Sara Goff, community representative forthe Fort Wayne chapter of ACS. “We areproud of their accomplishments on behalf of the American Cancer Society.”

Junior Achievement® Grand Prix. In July 2008, a team from Do it Best Corp. raced more than 25 other companies in the annual Junior Achievement Grand Prix go-cart races, one of the non-profit’s largest fundraising efforts. The full day ofcompetitive racing featured multiple heats, pit stops and topspeeds exceeding 35 mph and was a fun way to support JA’seducational programs.

Do it Best Corp. invited some vendors to get involved as well,including Guardian, Irwin, Mohawk, Paulausky/LangenfeldAssociates, Shaw, SunnyWood, and TeamEfforts, with sponsordecals on the car and with monetary contributions.


Do it Best Corp. in the Community

VOLUNTEER HOURS DONATED BY DO IT BEST CORP. EMPLOYEES AND MEMBER-OWNERS TO LOCAL CAUSES AND NON-PROFIT ORGANIZATIONS SUCH AS BIG BROTHERS/BIG SISTERS, UNITED WAY AND HABITAT FOR HUMANITY

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Bright Stars.

Each year, the North American Retail HardwareAssociation (NRHA) presents its Young Retailer of theYear Awards to a new generation of industry leaders. In2008, Do it Best Corp. member stores wererepresented by five outstanding candidates. ToddKirschner, of Trio Hardware in Plainview, New York, waschosen by a panel from NRHA as Young Retailer of theYear in the Under $2 Million Sales Volume category. Do it Best Corp. congratulates each of the nominees formaking their stores shine brighter.


Stars.

When Todd Kirschner joined Trio Hardware back in 1990 as a stock boy, little did he know that under his leadership Trio would become one of the most recognized stores on Long Island–and that he would become one of his community’s most recognized retailers.

Todd became Trio’s manager after guiding the storethrough its reopening in 1997 after a fire. At thattime, the store’s total annual sales were $450,000.Since then, Todd has more than tripled thatnumber–to $1.5 million in 2007. Even moreimpressive is the fact that Todd has achieved thisincrease without an increase in space–Trio Hardwarestill has the same 3,400 square feet it had when Toddstarted. His inventory management skills have alsomade the store very profitable, delivering a stunning50.2 percent margin.

Much of Todd’s success results from his ability toconnect with his community and meet its needs.Despite the limited space, he offers paint, electricaland plumbing departments, and he has led the way in stocking sewing, art supplies and other items aimed at attracting female shoppers.

Todd enjoys virtually zero employee turnover, with his newest employee having been with the store for 11 years. He has implemented 401(k) and profit-sharing programs and offers health insurance at nocost for full-time employees.

Says a long-time customer, “Todd Kirschner is theembodiment of what a retailer should be. There isn’t a person around who doesn’t know and respect ‘Toddfrom Trio.’” Through legendary customer service andgenerosity toward a wide range of organizations, Toddhas made Trio Hardware a pillar in the community.And in 10 short years, he’s become a pillar, too.

YOUNG RETAILER OF THE YEAR

Todd Kirschner General ManagerTrio Hardware Plainview, New York

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Bryce Allyn Store ManagerAllyn’s Building Center Goldendale, Washington

Bryce Allyn grew up working in Allyn’sBuilding Center, the family business hisgrandfather opened in 1968.

Bryce went off to college and lived abroad, and when he returned, he found a store thatneeded improvement. Inventory had not been maintained, computer systems needed to be upgraded and profits had been flat fortwo years.

Bryce made significant changes inpurchasing, margin adjustment, and productselection. And it has paid off–Allyn’sBuilding Center enjoyed an astounding 143 percent increase in profits in the firstyear of Bryce’s return. Bryce is currentlyoverseeing the store’s relocation to a new35,000-square-foot building that is beingdeveloped with the Do it Best Signature™

Store Design Program.

For Bryce, working at Allyn’s BuildingCenter is not just about having a goodjob–or even doing a good job. It’s aboutsomething far bigger. It’s about continuinghis family’s legacy.

Janet Beatty Vice President of OperationsWhite’s Hardware, Inc. Tucson, Arizona

When Janet Beatty’s parents bought their first hardware store in 1991, Janet was a full-time college student. Despite hercourse load, she was there working besideher father from day one.

Today, Janet is vice president of operationsand is involved with implementing processesand programs that make the company’s two locations run more efficiently. Underher leadership, sales have increased by 72 percent over the last five years. She iscurrently heading up an expansion projectthat will double the original store’s spaceand use the Do it Best Signature™ StoreDesign and RetailSTART!® programs.

For Janet, what started out as family loyaltyhas blossomed into a lifelong career. White’sHardware is her past, present and future.

YOUNG RETAILER OF THE YEAR NOMINEES


Bryan Hutchison PresidentHutchison Lumber, Inc. Pine, Colorado

Bryan Hutchison spent his childhoodlooking up to his father in the family’slumberyard. Now, he’s the role model at Hutchison Lumber, leading thecompany’s three locations to biggersuccesses every year.

After graduating from college in 2002,Bryan entered a management trainingprogram at a large national lumberyard.When his father’s health faltered in 2005,Bryan assumed the role of president ofHutchison Lumber at the age of 25. Sincethen, sales have increased by more than 18 percent and reached $9.1 million in2007. Bryan has implemented technologyand accounting upgrades and activelypromotes the store via online advertising.He has also overseen an expansion projectthat includes a 12,000-square-foot retailhardware store with a design center andwarehouse space.

Based on his performance so far, thequestion isn’t whether Bryan willaccomplish his goals for Hutchison Lumberit’s how quickly he will exceed them.

Mike Solano Vice PresidentWeed Building Supply, Inc. Weed, California

When Peter Eddy, owner of Weed BuildingSupply, took a chance on hiring MikeSolano, it was winter and business was slow.He didn’t really need a new employee.“But,” Peter said, “I hired him because ofthe potential and abilities I saw he couldbring to my business.” Now, 10 years later,Mike Solano is vice president and co-ownerof the company. Since his promotion in2004, sales have increased by 25 percent.

Mike has built his success by nurturing hisemployees. “All of my goals involve thegrowth of my employees–using theirabilities and talents and putting them in the right positions.” Mike’s rapport with hisemployees translates into a higher level ofservice to their customers. His stores havebuilt a reputation for being the mostknowledgeable and helpful in the 100-milearea they serve.

From entry-level employee to owner, it’s been a meteoric rise for Mike Solano. With his enthusiasm, values andcommitment, it’s clear this is only the beginning.

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Vice Chairman:Mike Fujimoto Hawaii Planing Mill, Ltd.Keaau, Hawaii3 locationsMember since 1999

Tom LamberthRussell Do it center®

Alexander City, Alabama9 locationsMember since 1991

Randy SkinnerTahlequah LumberTahlequah, Oklahoma2 locationsMember since 2003

Howard Miller Hartville HardwareHartville, Ohio1 locationMember since 2001

Seated, Front Row

Standing, Front Row

Standing, Back Row

Secretary:Tony Ruggiero Horseheads Do it center®

Horseheads, New York1 locationMember since 1978

Tom Brown American Home & HardwareElkton, Maryland1 locationMember since 1999

Steve PhillipsPhillips Do it center®

Cedar Hill, Texas1 locationMember since 1980

Ron GadekNorthbrook Do it Best® HardwareNorthbrook, Illinois2 locationsMember since 2001

Chairman:Niel CrowsonE. C. Barton & CompanyJonesboro, Arkansas22 locationsMember since 1971

J. JohnsonJohnson’s Home and GardenMaple Valley, Washington1 locationMember since 1994

Treasurer:Pat SullivanSullivan’s Do it Best® HardwareIndianapolis, Indiana3 locationsMember since 1970

Frank BlairSchnarr’s Hardware CompanyLadue, Missouri1 locationMember since 2000

Board of Directors

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Executive Staff

Steve MarkleyVice President of Merchandising

Dave HaistExecutive Vice President and COO

Quent OndricekVice President of Lumber and Building Materials

Bill ZielkeVice President of Marketing

Dan StarrVice President of Human Resourcesand General Counsel

Back Row

Front Row Dave DietzVice President of Finance

Kay WilliamsVice President of InformationTechnology

Jay BrownVice President of Sales andRetail Development

John SniderVice President of Retail Logisticsleft-right

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P.O. Box 868Fort Wayne, IN 46801-0868

Phone 260-748-5300Fax 260-493-1245

www.doitbestcorp.com

PhilosophyServing others as we would like to be served

MissionMaking the best even better

GoalHelping our members grow

®

helping our members grow. - do it best · 2010-10-28 · most importantly, however, is the...

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