Jordan Kudler bears the hallmarks of a man content to accept the challenges that undoubtedly face the independents at this turbulent time. New York-based Crest, in the $4 million dealer range, has recently expanded into the southern and central parts of Delaware and is currently experiencing double digit growth.
So what is Crest doing that other struggling independents are not? Kudler reflects: "I think we bring a different level, or a different mindset, to our customers. We’re not necessarily looking for customers that are looking to trade dollars as much as we’re selling a certain type of value."
Indeed, the company slogan ‘Standards of Value’ reflects a mission to deliver a level of customer service that Kudler feels has been found wanting in recent years. Rather than relying on dollar signs as the primary indicator of worth, Crest follows an ethos in contrast to today’s conglomerate culture. "We’re providing fuel to keep the engine of their vehicles running, rather than just selling commodities and peddling our wares," he says. "We consider ourselves a critical component of our customers’ businesses and we take everything that we do very seriously. We try to provide the highest level of performance."
Technology
Kudler has seen first-hand a significant part of the independent community either go out of business or be acquired by big box companies. As the OP landscape has altered, so Crest has altered to adapt to the changing environment.
Kudler considers the advance in technology as vitally important in the changes he has seen in the industry. "A lot of independent dealers, years ago, ran their businesses with a peddler’s mentality, in that they were just going to address whatever the customers requested." As the independent sector has declined in the face of mounting power channel hegemony, the Crest dynasty has been one of relatively few firms willing to fundamentally change and accept the new terms that the challenge of the channel represents.
The fact that Kudler was ready to take the helm of his father’s company when a radical shift in attitude was needed may have played a part in keeping the firm competitive. The OP landscape shift and technological change may have occurred at a time, by happy coincidence, of changing roles within the family business.
He comments: "I saw the same potential within my own company when my father ran the business. He put off getting involved with technological changes as much as he could, simply because he didn’t understand them. It was as I took more control of the business and more of the decision making that we wrapped our arms around it." Evolution is a recurring theme in Kudler’s assessment of how to buffet the storm tides whipped up by the big box players in the independent sector. And he is frank in his opinion of industry members who fail to sail with the wind of change. "Many of the independent dealers that didn’t do so don’t exist today," he notes.
His mood for change can largely be attributed to his company’s membership of is.group. "That has helped us to be able to buy merchandise much more competitively," he acknowledges. While independent dealers like Crest look to sell their business with an emphasis on quality over quantity, it recognises the need to offer a certain level of price competitiveness. "Nobody wants to pay $9 for something that the rest of the world is paying $4 for," Kudler remarks.
As an inventory-based dealer, Crest believes it is crucial that his company is able to deliver merchandise to its customers within a couple of hours. He says his affiliation with is.group and its distribution programme has freed up capital otherwise tied up by the minimum requirements of orders from individual manufacturers. "The distribution programme alleviates that by allowing us to make one freight free order level that can bring in 20 different manufacturers on one or two mixed pallets from each manufacturer."
Kudler’s support and demonstrable success with is.group’s distribution initiative is of particular interest, given the programme’s difficult history. He is familiar with the concerns felt by independents and wholesalers alike over is.group and its programme.
In our Hot Topic feature in OPI‘s July issue, is.group president Mike Gentile admitted that it could have "communicated more effectively" the benefits of membership, alluding to the negative effects on member rebates of the investment to its distribution programme, which ballooned from $2 million to $7 million. Gentile believed that many dealers saw only the costs before they left, before the benefits of bottom line growth were felt on their business.
Flexibility
So what does Kudler make of wholesalers’ misgivings that they will be replaced by a network of dealers who will supply between themselves? As far as he is concerned, the two can work in tandem and are not mutually exclusive – the distribution model is there to increase business, and provide an increase in volume for wholesalers to meet the dealers’ rising demand. In fact, he considers this bolster to the independent as a direct boost to the manufacturer. "The more business [I have] on board, the more wholesale business I have to do." He goes on: "Over the last three or four months we’ve experienced an average of 20 per cent growth over the same month last year. My wholesale volume has been staying at least steady, if not growing along with that growth."
Kudler believes that the negative attention directed towards is.group is symptomatic of defensive businesses looking to protect their interests. And this plays into that age old human fear – change. He remarks: "Anytime you bring something that’s revolutionary to the market, it’s going to create a buzz, it’s going to upset the status quo of how people do business."
This new-found flexibility has had a knock-on effect. "It enables us to inventory some more profitable products than we typically would because, by not having to invest so heavily, you’re freed up to invest in breadth of inventory as opposed to depth of inventory." Such benefits are crucial to keeping ahead of the game in what he calls a "just-in-time climate".
Without an affiliation to a cooperative like is.group, he says his company does not have sufficient direct-buy volume to fulfil certain services. For instance last minute orders. And independents like Crest cannot afford to see its customers looking elsewhere with so much competition from the big players like Staples, Office Depot et al.
With its is.group membership, Crest can now make purchasing orders every few days and employs the D-Force online ordering system. Both of these have given the company a tremendous advantage. Kudler says: "We don’t have to bulk-buy items that we want to promote. We can have the inventory replenished within a few days." He puts forward a persuasive case for dealers looking to maximise their output. It certainly seems to be working for Crest at the moment.
Looking to the future, Kudler is convinced that the independents still have something to fight for. While big box players like Staples look to further penetrate into the mid-market, he believes small dealers like Crest are still there competing because they offer what the power channel cannot. He illustrates this by likening the independent dealer’s competition against the big box to driving a Ferrari in a road race against an 18 wheeler truck.
He says: "We have the agility to turn on a dime and change direction at any given time. Should that truck ever catch us it could certainly run us over, but we have the flexibility and the speed to stay ahead." But what if his Ferrari attracts the attention of Staples and it pulls up for a Crest acquisition? Would he sell out to the big boys?
"Everything that we stand for is what they don’t stand for. Everything that we espouse in trying to promote our business is the antithesis of what they do."
So then, Jordan had better make sure he keeps his Ferrari in good enough condition to stay ahead of the race.
