Discipline and drive help company consistently attain goals
BY MARY JO MARTIN
Editorial director
With a small investment of $60,000 — the majority of which was borrowed — and some big dreams, Morris and Sheila Cregger opened the doors to Cregger Company on October 1, 1978. Its first-year sales volume was less than $1 million.
The Creggers’ hard work, dedication and solid vision have guided the West Columbia, S.C.-based company to significant growth — expanding at a rate of more than 14% annually since its founding.
“This type of growth has allowed our company to double in volume every five years,” noted president and CEO Morris Cregger. “This profitable growth has also allowed us to attract more qualified associates and has reduced our operating expense-to-sales percentage by almost five points. Substantial growth allows us to utilize our increased buying power to improve our gross margins. With size has come improved pricing for our customers and improved customer service through an expanding network of branches.”
Cregger Company has used a combination of three strategies to physically grow the business:
- Acquisition of small independents desiring to exit the industry
- Merging of people into Cregger Company who have strong market relationships and desire the Cregger model over their current employer
- New openings in opportune areas with existing staff.
Today, Cregger Company has 190 associates at 18 wholesale outlets in South Carolina, North Carolina, Georgia, Kentucky and Illinois. Of those facilities, 12 were gained by acquisition, four by the merging of personnel into Cregger Company in new geographic areas, and two by expanding into new markets with internal staff. A total of approximately 780,000 square feet of warehouse space houses plumbing, HVAC, decorative hardware and PVF products. In 2008, Cregger Company transacted business in 26 states. In addition to its standard distribution business, Cregger Company operates an investment division concentrating its focus on real estate holdings, capital venture funding, mortgages and stocks.
“Our company is divided into divisions, as we concentrate on having all of our people involved in the team concept, which is key to our mode of operation and success,” Cregger explained. “Our management team has great versatility, as they are involved in the total process as contrasted to a focused area. We are a people company and recognize our success is held by the success of our personnel and our customers. We’re as strong as our people. Our inventories, facilities, operational structure, pricing, etc., does not change in our operations; therefore, our success — or the lack thereof — is measured by the quality of our people. If the customers are our soul, the heart of Cregger Company is our people.”
But of course, the attitude within any company is really directed by its leadership. And those involved with Cregger Company as employees, vendors or customers are fortunate to have someone with as much integrity as Morris Cregger at the helm. In fact, Cregger himself personally conducted four of the company’s physical inventories last year, counting right alongside branch associates.
Cregger credits what he calls the “Three D’s” for a great deal of the success realized by Cregger Company:
- Diversification
- Discipline of operations
- Devotion to customers and associates.
In addition, he has his own personal “Three D’s” that he says have guided his athletic and business careers:
- Dream
- Discipline
- Determination.
“I believe these are the ingredients to success — coupled with tons of good luck and a lot of humility,” Cregger summarized. “We lead by example with humility for the tremendous success that has been granted to us. All of our top management team, including the owners, are hands-on and involved in all aspects of the operation. We have an open door to all of our personnel and customers, from top to bottom. There are no exceptions to this rule, including the owner.”
Commitment to showroom operations
The decorative market is an important part of Cregger Company’s business. Five of its 18 branches offer on-site showrooms. At times, some of these branches generate more than 50% of their gross profit through their showroom — Cregger considers them an indispensable part of the company’s branch profitability. In addition, there are five high-end, stand-alone showrooms branded as Design On Tap.
“We are fortunate to have locations in coastal and mountain communities where baby-boomers are building vacation homes and retiring,” noted vice president-sales and marketing Brendan Donohue. “In those markets where our branches are located in attractive, accessible locations, we have retained in-store showrooms. Where our branches are located in industrial parks or are ‘off the beaten path,’ we have opted to open our Design On Tap offsite showrooms. These showrooms are located in high-end shopping centers and offer tremendous convenience and comfort to our clients. Design on Tap showrooms provide a tremendous breadth of high-end product from a wide variety of vendors. Products are shown in an uncluttered, stylish environment. Most of our consultants are industry veterans who give confidence to our clients, making the selection process both comfortable and efficient.”
Donohue went on to describe the commitment necessary to realize success at the showroom level.
“Just as with any other part of our business, we cannot succeed when we only dabble,” he said. “To succeed in selling decorative products requires a commitment. We must have a commitment of real estate and displays, a commitment to hire, train and motivate great associates, a commitment to operational integrity, and a marketing/branding commitment.
“The showroom has to look great. The products we show must provide both wow and value. Our consultants must both educate and build a bond with each client. Our vendors must get us the right product at the right time. Our warehouse must handle each product, going and coming, flawlessly. From our salespeople to our vendors to our warehouse and delivery associates, it’s a team commitment that culminates in a satisfied customer. We build our reputation and our business one satisfied customer at a time.”
While the showrooms primarily stock traditional decorative bath and kitchen products, Cregger Company occasionally supplies products like cabinets, appliances and lighting for large residential projects — primarily in inaccessible or offshore locations — and at the request of the contractor. The company has added decorative and door hardware in many of its markets, which thus far has generated a positive response. In addition, many of its showrooms promote water filtration and treatment. And since its entry into hvac sales in 2008, some of Cregger Company’s showrooms are making inroad with products that enhance indoor air quality.
Operational excellence
Currently, about 90% of Cregger Company’s sales are to sub-contractors, who Cregger describes as “the soul of our company. We gear our entire operation into serving their needs in all the facets of our business model. In our company, they are the kings and we are the servants.”
Sales are dominated by plumbing products, including fixtures, rough-in materials, etc., although the company does do a small amount of PVF, in addition to high-end product sales through Design on Tap showrooms. At this time, Cregger Company’s business is almost equally split between residential and commercial. They are extremely strong in supplying multi-family projects.
Like their industry brethren around the country, Cregger Company has experienced some frustration with the struggling residential market. But they credit diversification with their ability to survive during such tough times.
“We’ve always tried to cast as wide a net as possible,” Donohue said of their strategy. “Lately, we’ve had to get really good at throwing our nets a long way. We are expanding outward from each branch, trying to reach customers who were previously ‘too far away.’ We are expanding the breadth of products that each branch is promoting. Many branches have very recently expanded into hvac products. Branches that had been ‘too busy’ to quote commercial work for the past several years are re-kindling relationships and bidding commercial jobs daily. We spend a great deal of time tracking-down upcoming work and steer our customers towards it. The more work we can help our customers land, the busier we’ll be.
“From water treatment systems to door hardware to refrigerant to electrical wire, we’re selling new products to new customers in an effort to continue to grow our business, despite the tremendous residential plunge in many of our markets.”
In addition, the company employs a variety of operational strategies to gain greater efficiency and return on investment. Cregger commented, “It would be impossible to describe for this article the many areas of our operations that have created the effectiveness and efficiencies to allow us to achieve the bottom-line returns that equal or exceed the industry, and even our publicly-traded companies. Our average return on equity after 30 years of operation is over 28%.
“We have, since day one, taken a very different approach to our strategy in distribution. We have drawn many of our ideas from outside our industry, which has generally kept us a step ahead of our competition; however, we are often complimented by our competition as they catch-up and emulate some of our programs. Even in this economy, we continue to roll out new opportunities to motivate our customers and increase the reasons to do business with Cregger Company.”
Being a part of the wit buying and marketing group has also proven a tremendous benefit to Cregger Company. Morris Cregger laughs when he describes how they became involved: “Mitch Robinson, founder of Modern Supply in Tennessee, told me to ‘Listen to him, stop asking questions and send in your check’ [to wit]. I listened to Mitch, sent the check and joined wit. The advice, assistance and motivation for our growth by my fellow wit owners has been the key outside influence on many of my decisions, as they have served me as consultants, shared and allowed me to use their ideas, and have been my ‘outside Board of Directors.’ I can never repay the wit organization for all they have meant to me personally and to the success of our company.”
A changing marketplace
Customer service is a crucial part of any distributor’s business — and even more important in today’s ultra-competitive environment. And the fact that customers are more demanding than ever before puts even greater pressure on distributors to perform.
“Today, everyone wants everything right now,” described Donohue. “‘I’ll drop it in the mail,’ ‘I’ll call you back tomorrow with an answer,’ and ‘We can have it to you the next time our truck comes that way’ are phrases that we all used a few years ago. Customers today demand immediate answers, communication and deliveries. Pagers have been replaced by cell phones. Faxes are being replaced by e-mail, and nobody has the patience to leave messages any more.
“Obviously, we’ve enabled our associates with the proper tools of the trade — cell phones, internet devices, etc. We stress the importance of timeliness. Many times, it’s not the lowest bid that gets an order, it’s the first bid that the customer receives. We encourage our associates to be the first to return a call, the first to respond with an answer, the first to follow-up.
“With fewer projects underway in every market, and the same number of contractors and wholesalers competing for a reduced pool of available work, profit margins are under tremendous pressure. While the natural tendency is to reduce service levels to keep pace with reduced profit margins, we’ve found success moving in the opposite direction.
“Two years ago, everyone was busy, had big inventories and all of our competitors were well-staffed with experienced associates. That is not the case today. The competitive environment has allowed wholesalers with decent inventories and exceptional customer service to differentiate themselves more readily from those who do not. This has allowed us to take business today that was unavailable to us two years ago when we had a more difficult time differentiating ourselves from our competitors.”
Ever mindful of the importance of relationship building in cultivating loyal customers, Cregger Company has initiated several programs that reward its customers; in fact, they just completed their 14th vip trip, taking their top 25 customers (based on volume) and their spouses on an all-inclusive cruise on the elite Silver Seas line through the Caribbean. In previous years, the program has taken customers to France, England, Italy, Monte Carlo, Sweden, Norway, and more.
In addition, for all of its other customers, Cregger Company just rolled out its “Without Limits” opportunity, which is handled totally through their website developed by vice president-procurement Matt Cregger. “Without Limits” allows customers to accumulate points through purchases. There is no cut-off date, and customers can continue to accumulate points from one year to another. This allows smaller-volume customers the opportunity to earn some of the same great trips and gifts that were previously able to be won by only larger customers.
In looking at the future, Morris Cregger feels strongly about the opportunities for Cregger Company to continue meeting its annual growth goals.
“Cregger Company’s goal since our first day has been to secure double-digit growth as an average each year,” he explained. “We’ll continue this philosophy into our future plans, which in year 2014 or 2015 should place us over $200 million in revenue. The current economic conditions could give us an excuse for changing our long-term or strategic plans, but even though these are difficult times, we see great opportunity for growth through expansion of product diversification, territorial growth, new customer affiliations and internal personnel improvement.
For additional information, visit www.creggercompany.com.