Mean Green —
Pacific Plumbing Supply banking on green focus
By Mary Jo Martin
Editorial director
One might think that the middle of a recession is not exactly the best time to make significant capital investments in your business — especially when much of it is for a higher-price point product niche like green plumbing and heating.
But that’s exactly what CEO and president Larry Solomon and his team at Pacific Plumbing Supply have done.
About two years ago, as residential construction — which had been the meat and potatoes of Pacific Plumbing Supply’s business — fell off dramatically, the company began developing a new growing revenue source. As a result of listening to their customers, they initiated a very focused approach for responding to a growing demand for green plumbing, hydronic and radiant heating products.
The Green Room
The first step was hiring their highly qualified and industry-respected department leader, Joey Longo. The second step was transforming 2,100 square feet of space at the company’s flagship location in Seattle to The Green Room. This showroom’s flexible display space features solar and tankless water heaters, boilers, fully functioning in-floor radiant heating systems, PEX piping and water conserving toilets and fixtures.
“We have an entire wall of condensing boilers and another of tankless water heaters,” said Ron Abramson, vice president/general manager. “We’ve also found that our in-floor radiant display is a great way to give customers an idea of the comfort level they will experience with this type of heat. Rolling pods in the middle display HET toilets, fireplaces, solar faucets and other green products. These pods are great, because they can be easily moved, and the product can be changed out very quickly.”
A counter/will call area is manned by knowledgeable members of the Pacific Plumbing Supply team who can provide design specs, heat cost calculations, and assist customers in selecting the right products for their applications. There is also a training area where manufacturers’ reps, local utilities and others conduct product training sessions for Pacific Plumbing Supply’s employees and customers.
The training area features a built-in screen with projector; within 20 minutes, the room can be fully set up with chairs and tables that seat 40 people. It’s also been wired so participants can access their own company’s computer system through their laptop and use it as a webinar for their people back at the office. A training course calendar that is listed on the Green Room website as a convenience to customers also allows them the option to RSVP through the site.
“Our Green Room business is growing nicely,” said vice president-marketing Dan Sherman. “In the Pacific Northwest, there is a fairly large segment of the population that is very environmentally active. So, a segment of our demand comes from their ethical position. It is becoming common for people to think globally and act locally.
“We continue to bring in new products and vendors at a fairly rapid rate. This is a new market for us and we just followed what our customers were asking for. So far, it’s rolling along pretty well. It’s fun for us because the products are very new, technical and there’s incredible product innovation.”
Added Solomon: “Our customers’ primary goal at the Green Room is to understand the equipment well enough to articulate it to the consumers so they can improve their heating efficiency — whether that be radiant, tankless, tank type, etc. They want to be able to talk about value, features, money savings and incentive programs. By providing this type of support for them, that helps them be effective and, in turn, strengthens our relationship.”
Organic growth
But The Green Room hasn’t been the only organic growth at the company in recent years.
“We had gone through a very significant period of growth in late 2005 as housing was exploding,” said Solomon. “To improve efficiencies, grow sales and better serve our customers, we opened a new location in Hawaii on the Big Island; another new location in Alaska on the Kenai Peninsula; moved four of our Seattle-area branches into larger facilities; and expanded the space under roof at two other locations. Also during that time, we made some significant investments in the technology necessary to support our growth.
“And, in addition to our new Radiant and Hydronic Division’s The Green Room, we opened a new showroom in Anchorage in September, and in October moved one of our Western Washington locations away from the suburbs as new construction declined, and re-opened it in North Seattle where we can do a better job of serving the renovation and repair segment of the business. All of those strategic moves have continued to serve us well.”
In addition to the eco-friendly focus of The Green Room, Pacific Plumbing Supply’s showrooms are also reflecting consumers’ growing interest in water conversation and the environment.
“While our overall showroom focus has always been on quality, decorative products, the down tick in our economy has shifted consumer interest,” said Sherman. “We find that consumers are looking for ways to improve performance and efficiency without initiating a full remodel. For example, consumers now seem to be very interested in 1.28-gpf toilets, their performance and rebates. They are taking more time to educate themselves about the green aspects, including dual-flush models and grams per flush. The WaterSense program is something we support and promote. The listing they have incorporates most every model made and includes detailed performance data. The water district rebates in Washington are significant and are helping motivate people here. My sense is that the green aspect of the move from 1.6 to 1.28 is more important to consumers than a potential loss in efficiency; they have confidence that these HET toilets will work well.
“Flow restrictors in lavatory sets and kitchen sets is a good idea and we’re seeing more of that from our manufacturers. There’s certainly not the volume of water to save here as there is from toilets but is a relatively simple process for manufacturers and consumers seem to support it. We are also seeing improved performance in showerheads from manufacturers. New technology is providing for a wider variety of spray patterns and spray intensity while reducing usage. By design, hand-showers are very efficient to use and the same technology is finding its way here as well. Body sprays are still very popular and help provide a touch of efficient customization in most any shower.”
Inside Pacific’s operations
One of the ways that Pacific Plumbing Supply has been able to maintain its profitability and operate efficiently is thanks to its purchasing system.
“We use a centralized purchasing approach, but the branches are allowed to do special orders if they need product in a more timely fashion,” said Abramson. “We also have a sophisticated branch replenishment and transfer system every day — and weekly container shipments to our locations in Alaska and Hawaii — designed to ensure we have the right product on hand. We don’t have a typical stand-alone DC; rather we give that responsibility to a couple of locations that primarily serve as a hybrid between a DC and a branch. This total approach allows us to use all of our purchasing power and manage fill rates and terms better.”
Solomon noted: “I would just add that we have a fairly robust communication system whereby even though we are centralized for administering the purchasing, we are small enough that we are influenced very definitely by customer contact at the branch level and them communicating that with our purchasing department. We are a very nimble company and can react quickly.”
Of course, being a part of the well-respected Embassy Group Ltd. buying and marketing group has been extremely beneficial to Pacific Plumbing Supply in a number of ways.
“We have been a member of Embassy for about 14 years now,” Solomon noted. “I’ve had the honor of serving on our board, and our VP of sales Brad McDonald has served two terms on the vendor committee, chairing it as well. It is a great group of industry folks, many of whom have now become our friends. Embassy gives us a great deal of support and has helped us improve relationships with our vendors.
“The obvious benefit is the way in which it impacts our bottom line on purchases. But beyond that, I would say that the networking that occurs between members at the shareholder meetings every August has been very helpful. We break into roundtable discussions and share best practices and benefits. It’s been extremely useful to be able to ask questions and see how other people solve problems.
Relationships with their customers have always been a high priority at Pacific Plumbing Supply. The company hosts regularly scheduled events designed to build customer loyalty.
“We’ve hosted the Pacific Plumbing Supply Annual Golf Tournament for 18 years,” said McDonald. “It’s a full tournament that includes a welcome gift, lunch, 18 holes of golf with a cart and is capped by a buffet dinner and lots of prizes for our customers. The best part of the event is that we have been able to donate the proceeds to the Make-A-Wish Foundation. Over the past 13 years, with the help of our sponsoring vendors and the incredible generosity of our customers, we’ve been fortunate enough to be able to donate over $145,000. It’s a great opportunity to gather our vendors and customers together for a day to have fun, build relationships and also contribute to this outstanding organization. We are really looking forward to our 19th annual event being held on August 12th, once again benefitting the Make-A-Wish Foundation.”
But that’s not all. Here are some of the other ways Pacific Plumbing Supply stays close to their customers:
• One Thursday in 2004 they invited a small group of customers to a Mariners game to enjoy an afternoon of sun and baseball. It provided a great opportunity to spend quality time with customers away from the distractions of the day.
“Our customers had a great time and suggested that it would be a great annual event,” said Sherman. “The idea stuck and it grew a bit; we now partner with a few select vendors for the event, which includes a pre-function at Pyramid Ale House and a double suite at Safeco Field for the Mariners game.” Guests include customers, sponsoring vendors and Pacific branch managers and salespeople.
• There is also an annual trip promotion for Alaska customers. It is incentive based in that they need to hit certain purchasing goals to earn the all-inclusive trip. The destination is usually a sunny resort in Mexico or in one of the Southwest states. “The trip has been very well received by our Alaska customers,” Sherman noted. “It's a great chance for select employees and customers to get to warm weather and relax for a week. We've actually had customers come on the trip at their own expense because they wanted to spend time with other contractors and our employees - even through they could not hit their goal.”
• Pacific Plumbing Supply donated $75,000 in plumbing products to Habitat for Humanity in 2010. A portion of the donated product went to support their constructions projects and a portion went to their retail building supply store in Seattle.
In addition, Pacific Plumbing Supply has always run a lean, very well-managed organization — something that proved beneficial when the economy presented new challenges. “We have been known over the years as a lean company that doesn’t tolerate productivity squandering,” Solomon noted. “As the recession hit us, we made a special effort to communicate with everyone that we were going to be looking closely at sales per employee and sales per day. We’ve set up flash reports that our team can review daily. It helps everyone gauge their performance and ensures we are all getting the job done.”
All of this bodes extremely well for the future of Pacific Plumbing Supply, and Solomon is bullish on the possibilities: “A lot of our growth in the near term will be about improving our own position in the markets we serve, rather than taking additional geography. We continue fighting to improve our position in the market and posturing for additional growth. That said, we’re planning to make some location and growth moves. I’m confident you’ll see more from Pacific Plumbing Supply — but we’re not prepared to report about that quite yet.”