Mike Miazga 2015-10-07 03:53:47
HOME COOKING Organic growth fuels Central Arizona Supply's success. Brandon and Jeremy Smith both were exposed to the PHCP distribution business at young ages. As kids they worked for their father, Don, and uncles, David, and Dan, stocking shelves, loading trucks, making deliveries and doing other miscellaneous tasks for Mesa, Ariz.- based Central Arizona Supply. For Jeremy Smith a particular business philosophy his father employed left a major impression, one that still comes into play today as the brothers continue to operate and grow the 10-location company. "My dad paid for things as he went along," he says. "His philosophy was you can sleep well at night knowing you don't owe anybody anything. That's how dad grew the business. It's been pretty organic over the years." Instead of opening new branches or making acquisitions, Central Arizona Supply, members of ASA and the Omni, Luxury Products Group and BlueHawk buying groups, has thrived by improving upon what it already has. "We've tried to grow conservatively in a sustainable way," Brandon Smith says. "Our plumbing wholesale business is pretty capital-intensive. When you add sales, you are adding inventory to support sales and are adding accounts receivable for those sales. We want to continue to grow and do so sustainably so we don't stretch ourselves out and don't need to do something drastic in order to meet our obligations." PUTTING THE CENTRAL IN CENTRAL In order to make its 10 locations (that span metro Phoenix and areas to the north and south, plus one in Las Vegas) more operationally efficient, Central Arizona Supply opened a central distribution center in Phoenix seven years ago. "It was kind of bad timing when it opened during the recession," Jeremy Smith says with a laugh. "Arizona really took a hit. Our housing growth was off the charts and then it collapsed so dramatically. In some ways it allowed us to perfect the DC and get our processes correct." Jeremy Smith, who lauds his brother's vision and implementation of the DC, explains the Mesa store, which was the company's first location in 1968, previously acted as a de facto DC. "My dad and his brothers kept growing the company and they had little warehouses and buildings to store inventory. There would be faucets in multiple places and we were constantly pulling products from different locations. The DC allows us to consolidate orders in one place and get them to the customers when they need it." Central Arizona Supply locations receive deliveries either daily or twice a week. The company's customer coverage area now encompasses almost the entire state, a part of New Mexico and Las Vegas. REMODELING JOBS Part of Central Arizona Supply's organic growth has involved some cosmetic and geographic facelifts to its locations. The company's original Phoenix store had a small counter area and was located in a dying part of town. A move to the prominent Biltmore area, and the subsequent expansion of will-call and counter space, plus the addition of a 10,000-sq.-ft. showroom catering to designers, builders, plumbers and the public greatly bolstered Central Arizona's Phoenix presence. In the Surprise and Apache Junction stores, Central Arizona Supply allows customers to selfselect and pick up their own products. In order to make that process run smoothly, similar store upgrades were made. "We organized bin locations more logically," Jeremy Smith says. "We labeled aisles like grocery stores. Delta products are down this aisle, copper fittings down this aisle. People help themselves and are doing so more quickly." The upgrades have paid major dividends for the fourth-generation company. "Same-store sales have grown. We don't have to keep adding locations and salespeople," Jeremy Smith says. "We have stores that are able to accommodate more customers and different types of customers. We can get the materials that plumber in Scottsdale needs right away. We now carry 10 different types of toilets when we used to carry two. You multiply that out times the bigger footprint and that's how we are able to accommodate the different types of customers we do." ACES IN THE HOLE Central Arizona Supply isn't afraid to put its neck on the line when it comes to introducing new products and technologies it feels will best help its customers. That's particularly easy when the company still has the expertise of Don Smith and his brothers. "The thing about dad and my uncles is they still do the purchasing," Brandon Smith notes. "Dad is a licensed plumber who was out in the field. He knows what is good and what is bad, if this product is going to be a hit or not, and if we should take a risk bringing it in. The experience of my dad and uncles is a huge asset. They hear from the reps or manufacturers or from people in Omni or from our customers. We're not afraid to bring in new products and see where they go. More often than not, they are hits. TOTO has grown into one of our largest lines and it all started with a toilet paper holder dad thought was cool." Jeremy Smith recalls when tank less water heaters first arrived on the scene. "It was kind of weird and bizarre when they first came out, but they said let's try it and it's turned out really well for us," he notes. "My dad and my uncles always are interested in the newest, and latest and greatest, and us being the place that brings customers what is happening next and now." SHOW ME THE WAY While Brandon Smith always has been involved in the business (he became the Flagstaff branch manager after college), his brother took a detour before returning to the family operation. Jeremy Smith moved to Los Angeles after college to work in the retail fashion industry. He brought that fashion expertise back to Central Arizona Supply - particularly on the showroom side. "Showrooms are my passion," Jeremy Smith says. "In retail fashion, I would see customers spend so much money on different clothing items. Customers were coming into our stores and spending so little on a faucet they are going to have in their house for seven or eight years or longer and will use it so many times a day. For me it was trying to expand that and showing them you should buy a better product that works well, will last a long time and is aesthetically beautiful just like a hand bag or a pair of shoes." Again, the remodeling gloves came out and Central Arizona Supply embarked on upgrading its showroom look. Now, The Studio at Central Arizona Supply is part of seven company branches where dedicated showroom team members focus solely on the showroom side of the business. "We launched the Studio at Central Arizona Supply to differentiate and inform our customers that our showrooms aren't the old wholesale showrooms of yesteryear, but are innovative and design-driven," Jeremy Smith says. "Updating the showrooms is a never-ending process. Our Phoenix showroom is three years old and looks much different from when it first opened. Your look can't be stagnant. We're always looking to bring new products in and present them in fresh ways. If you aren't keeping up with what's going on, customers will go someplace else." Brandon Smith adds: "Jeremy brought the fashion industry into plumbing. It's fashionable to sell plumbing." Products and store design, though, only go so far, the brothers say. "We have killer people who are awesome and passionate about what they do," Jeremy Smith says. "It's something my brother and I have worked hard on over the years. You have to find the best people possible. We can't train passion. You either have it or you don't. I can train you on faucets and putting stock away, but if you don't have the passion for what you do or don't care what you do, I can't teach that." Central Arizona Supply also is big on bringing its local customer bases and communities together for events. For example, it's annual Hot Rods and Hot Water event encourages customers to showcase their exotic cars. A TOTO customer event at the Japanese Friendship Garden in Phoenix is in the works and will marry Japanese culture and aesthetics to TOTO products, while the Scottsdale showroom hosts an Oktoberfest event that includes beer tasting and product displays from some of the company's German manufacturers. "It's not always about the bottom line," Jeremy Smith says. "We care about our customers. They are our family." The company is proud of its heritage and of the fact it is one of the few remaining independent PHCP-PVF distributors remaining in the state. "Fifteen years ago everybody was an independent," Jeremy Smith says. "We're one of the final ones left. Fifteen years is not a long period of time. It's pretty strange and exciting at the same time. We have been an outlier. We not trying to grow like crazy and sell millions of dollars of cheap products. Instead we've grown organically and we work with local plumbers and treat them as individuals. We're not a one-size-fits-all model. We want to help make your business better." Brandon Smith says Central Arizona Supply plans on being one of the last remaining Arizona independents for many years to come. "My brother and I aren't going anywhere," he says. "There is longevity here and our customers know it exists. There's a place out there for the big guys, too, but we like our way of doing business. We enjoy what we do and we enjoy our customers. We're proud to be an independent. For us, it's Arizona or bust."
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