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Industry Insights: Orgill

orgill insights
Boyden Moore, President & CEO, Orgill

In the 2024 Market Measure Report, published by the North American Hardware and Paint Association, industry partners offered insights into 2023 operations and their goals for 2024.

Read the insights from Orgill‘s Boyden Moore below and download the complete report from NHPA here.


 

How did business change for Orgill in 2023 compared to 2022?
After growing 21% in 2020, 14% in 2021 and 9% in 2022, we expect our sales in 2023 to be flat to down 1%. This has been a significant shift from working to grow as fast as we can to support our customers through extraordinary growth to now managing through a softening in the industry that is projected to be down 3% in 2023. We’re proud that we are able to continue to outperform the industry.

We were glad to see the inflationary environment ease and focused on helping our customers manage their inventories and pricing strategies as we managed through some deflation on some products.

As traffic in the industry slowed, we focused more on helping our customers drive promotional business and footsteps into their stores. In fact, our quarterly buying events grew slightly, up 0.3% this year, and our popular PMAPP promotional program (primarily power tools and accessories) has more than doubled.

What were some challenges in 2023 and how did Orgill address them?
In addition to what I’ve already mentioned, our No. 1 challenge and focus in 2023 was to return to our standard on service level to exceed 96%. We had set a goal to exceed 90% by the end of the third quarter, which we hit. Our goal is to exceed 95% by the end of the year, which we’ll approach, but may not exceed. This remains our biggest challenge and top focus as we know how important it is for us to be able to deliver what our customers need, when they need it, at the lowest possible price.

What are some critical areas of focus for Orgill going into 2024?
In addition to our focus on service levels to our customers, we are working hard on some critical projects for 2024. We expect to complete the construction of our new distribution center in Tifton, Georgia, during the first quarter. We are implementing new technologies to Orgill, including robots and artificial intelligence in a new goods-to-person picking module. We expect this new technology to increase our speed, capacity and accuracy, as well as being able to better customize what we put in each tote. If this works as well as we expect in Tifton, it will lay the foundation for further improvements in all our distribution centers.

We are also working on the construction of a new concept center adjacent to our home office in Collierville, Tennessee. At 500,000 square feet, this new concept center will double the size of our existing center and create even more space for the customized work we do with our customers. We are proud to serve a very balanced breadth of customers in the industry. We know that customized assortments focused on our customers’ brands and the specific markets they serve drive more success. As a result, we manage more planograms in the industry than all of our competitors—combined. This concept center will double-down on our strength in this area and also provide us a unique facility to imagine some new Orgill and industry events for our customers and vendors.

With a projected slower growth environment, we are focused on driving more significant promotional business opportunities for our customers. We are also working to drive better gross margins through our retail pricing programs. Our FanBuilder® loyalty program continues to grow. Our entire mission is “to help our customers be successful.” We are working to expand all the ways we can envision executing that mission.

What are your projections for 2024 for the home improvement industry at large and the independent channel specifically?
We are expecting the industry to be flat to down 1% in 2024. We expect the second half to be a little stronger than the first half. We believe that the independent channel has an opportunity to outperform big boxes, and we’ll be working to help our customers pick up market share. As a result we’re planning on growth at Orgill of about 2% for 2024, also reflecting some exciting new business opportunities that are in development.

“In addition to our focus on service levels to our customers, we are working hard on some critical projects for 2024.”

About Melanie Moul

Melanie is the communications and content manager for the North American Hardware and Paint Association. She joined the NHPA team in 2016 as an editor for Hardware Retailing and now helps lead the communications team to deliver relevant, timely content to the industry.

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