Leadership, experience and strategies prove
key to growth at Hirsch
BY MARY JO MARTIN
Editorial director
Two of the visionaries in the concept of “master distribution” were Hirsch founder Joe Hirsch — who planted the seed — and his successor Dan Mariscal, under whose leadership the company launched its National Sales division.
Hirsch founded his namesake company in Los Angeles in 1933, and led it with a very simple philosophy: “Treat your customers the way you would want to be treated, and get them what they need when they need it.” He also believed that by investing in the Chicago Faucet line he could grow the business beyond just a local supply house. This idea was the cornerstone for the future growth of Hirsch.
When Mariscal acquired the business from Hirsch in 1978, the company had just two branches and 26 employees. Before the practice of master distribution became more common in the PHCP/PVF industry, Mariscal saw a great opportunity to expand Hirsch Pipe and Supply by leveraging their deep inventory and expertise in the Chicago Faucet and Sloan Valve product lines nationally. Mariscal opened Hirsch National Sales in 1980, and was very successful in growing that platform.
About a decade later, current CEO Bill Glockner joined Hirsch and eventually acquired the business. With a degree from Princeton, an MBA from UCLA’s Anderson School of Business and a background in management consulting, Glockner brought a whole new set of ideas and energy to Hirsch’s operations, including expanding Hirsch National Sales to include the redistribution of a broader range of residential products to the kitchen and bath showroom market. Among some of the other initiatives Glockner launched were Hirsch International, Fine Faucets kitchen and bath showrooms, and Internet retailer Faucet Depot.
Today, Hirsch operates 19 stores throughout Southern California — all of which are supplied by the company’s Central Distribution Center in Commerce, Calif. Their business model includes:
• Sales through supply houses, showrooms and direct shipments from the CDC to customers in Southern California
• Sales throughout the nation through Hirsch National Sales
• International sales through Hirsch International.
Glockner has assembled a capable management team that includes a mix of talented industry veterans, along with selective hires from outside the industry to round out the group.
Master distribution is a partnership
Hirsch National Sales primarily focuses on decorative lines, and carries over 25,000 different line items. Among their key lines are:
• Chicago Faucet
• Sloan
• TOTO
• Duravit
• Porcher
• Grohe
• Hansgrohe
• Delta
• Danze
• Moen
• Blanco
• Jado
• American Standard
“We like to describe the relationship with have with our vendors as a partnership,” said Tom Malarkey, sales manager of Hirsch National Sales. “The suppliers who work with us know that they can count on us to take care of the customers’ needs and make the inventory investment required to properly support their line. The vast majority of our sales come with brands that we have carried for decades. However, we are always open to expanding our product offering when we see a manufacturer that we think has addressed a nascent market need.”
He went on to note that the first consideration Hirsch National Sales looks at when evaluating a potential new supplier is “’Will the customer buy it?’ If we are hearing a buzz from our customer base, we are definitely going to pay attention. Then we ask ‘does it work for our market’ and ‘is it a reliable product with a strong backing by the manufacturer’? Plus, let’s not forget profitability. If we are going to invest in a product line, we need to make sure there is a real return on that effort. Finally, we look at the return policy — this goes to the ‘risk’ of the ‘risk/reward’ equation. All potential new products are reviewed by a team of managers from the divisions that would have involvement, and by our purchasing department. We look at sales projects with GMROI analysis.”
Hirsch National Sales uses both outside and inside sales teams to serve customers, and uses a variety of communication channels to market the business, although they consider their service and performance their best marketing tool.
“We have long-term relationships with our customers because they know we can deliver on our promise of providing ‘The product you need when you need it with expert advice.’ On that level, we feel that performing day in and day out is the best marketing tool we have.”
And of course, the economic conditions over the past few years have made customers more price conscious than ever before.
“The expectation is that we get better, more efficient and do it all for the least cost,” noted Malarkey. “Probably the biggest change of the current recession has been that price is a dominant decision maker. There is no longer an ability to charge a premium for better service. We have to provide the better service and match all of our competitors’ prices. Then we have to figure out how to do it while making a profit. Sometimes that is tough, but that is the world we live in.”
Changing with the times
Hirsch has always been a company that embraces new technology, which has proven very beneficial in helping them operate at peak efficiency — and serve their customers with a high degree of accuracy.
“Electronic technologies have moved from ‘nice to have’ to ‘need to have’,” said Malarkey. “We are currently in the final stages of rolling out a new online ordering system. Our shipping department is online with all of our carriers to have the latest updates on any order.
“We also track activity on our website, but it’s not a major driver of new business. The wholesale business is fundamentally different than retail. In retail, it is all about eyeballs and conversation. In wholesale, your website is your business card, but it is not the dominant factor creating sales volume.”
Of course, inventory accuracy is a huge priority for any master distributor, because of the immediacy of need when customers call with an order. “If you don’t know what you have on your shelves, you can’t purchase properly, and you ultimately will end up disappointing your customer,” said Malarkey. “We have a pretty intricate system of checks and double-checks that helps us wring errors out of the system on the picks and cycle counts, and that helps keep our error rates very low.”
Hirsch National Sales currently stocks in excess of 25,000 SKUs from well over 100 vendors. And they see that number continuing to grow.
“There are only a few ways to sell more — find new customers or sell your existing customers more,” Malarkey explained. “On the second point, the more we can broaden our offering to become a ‘one-stop shop’ for our customers, the better chance we have of a deeper, mutually beneficial relationship. Also, the market continues to bring new products and new product lines, filling new niches. And we are proactive in embracing that trend.”
Optimistic for the future
With more companies entering the master distribution niche market, it is more important than ever to be at the top of their game. And Hirsch believes that they differentiate themselves in a number of ways, including:
• A wide product offering
• Highly reliable inventory
• Deep technical expertise, including many team members with decades of experience
• Personalized service
• Regular deliveries
• Same-day shipping.
“I think we will see continue demand for master distributors,” Malarkey noted, “but the game has really sped up. Today, the typical distributor or showroom is stocking less. That means when they need it, they need it now. Essentially, we are in a world where information and transportation increase supply chain efficiencies. The customer has multiple options at his fingertips, and either you are on top of it, or you will miss the opportunity for a sale.
“I see the future of master distribution as a mixed forecast. On the one hand, the desire to reduce inventory investment means there is an ongoing niche for master distribution. On the other, the economy has been disruptive. For example, we have seen a recent trend for manufacturers to increasingly open up smaller showrooms direct. This is the result of the manufacturers grasping for sales, which is understandable in a downturn, but there is no “free lunch.” At some point, the finance guys will whip up a spreadsheet showing the increased transaction and inventory carrying costs and the pendulum will swing back the other way. One area of market disruption with long-term implications is the maturation of the web channel. As more volume moves to the web, less moves through the showrooms and contractors. At the same time, consolidation on the web will mean more direct sales relationships between manufacturers and retailers, resulting in disintermediation of the master distributor. To survive and thrive in that environment, it is incumbent on us to stay nimble so we can find and exploit the opportunities that inevitably accompany those kinds of market changes.”
For additional information, visit www.hirschnational.com.