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Susan Wagner spends 70% of her time dealing with Hawaii◦ 30% of time on administrative duties, payroll, ordering product for training, etc.
◦ 15 year relationships with Hawaii dealers
◦ Handles many routine calls from dealers as well as all correspondence and administration
◦ Pam, Dick and Chris copied and Hawaii discussed at Highline-Southwest meetings
◦ Derrick makes regular sales calls/warranty service
◦ Quarterly visits by Susan, Dick, Pam, Chris Last visit: Susan, October 2010 Next visit: Chris and Pam, February 27, 2011
Rep Coverage
Derrick Partain◦ 20 year Hawaii resident
◦ Former Kitchen Craft, Diamond, Decora’, & Omega dealer
◦ Accomplished, award-winning designer: kitchen featured on cover of Hawaii Home
◦ Active member of Honolulu chapter of NKBA • Maintains contacts and relationships within the industry
◦ NAHB Certified Green Professional
◦ 20/20 trainer
Derrick spends about 40% of his time on MBCI◦ Flexible time as construction project manager
◦ Provides intensive 20/20 training for dealers
Local Rep Coverage
All Plywood Construction STRONGLY preferred due to consumer
perception that APC holds up better in Hawaii’s humidity ◦ Small percentage of builders will accept MDF, usually on lower-end projects
Frameless cabinets much more prevalent than on Mainland -
over 50% in dealer channel
Miter-corner doors pretty much not sold due to joint separation
There is demand for exotic woods i.e. Bamboo, African mahogany
Hawaii Cabinet Market Trends
Permanent population – 1,380,300◦ 48% Asian/Pacific Islander
Government is 23.7% of economy◦ 2nd highest after Washington DC◦ Heavy military presence ◦ Lends stability but under-performs in construction spending
Tourism is third largest industry after real estate/construction◦ Dependent on overall U.S. and Asian economies
Unemployment rate – 6.4% ◦ 7th best in U.S.
Hawaii Market Size
58th ranked market in U.S. for overall consumer spending◦ 2009 Buying Power Index - .4571
95th ranked market for building materials and supplies ($948.8 million)
A.C. Neilson media market ranking - 71
Hawaii Market Size
In a recent survey of 33 dealers on Oahu, 13 had gone out of business ◦ Most featured high-end lines, but mid-priced lines affected as well
Hawaii is first US stop for low-end Chinese lines, resulting in an even higher penetration than in Southern California
Hawaii Kitchen Dealer Market
Moody’s economy.com predicts “robust” construction industry job growth in Hawaii through 2013, ◦ Leading the nation in percentage terms◦ +2.8% in 2010
The Good News
Most frameless competition is from West Coast Manufacturers DeWils
◦ Framed and Frameless: Washington◦ Market leader
Columbia
◦ Frameless : British Columbia
Canyon Creek Aristocratic Huntwood Pacific Crest Hertco
Kama'aina Local Hawaiian Cabinet Manufacturer◦ used by 10% of dealers
All feature “GREEN PRODUCT” on their websites
West Coast Competiton
Came to Hawaii early with both framed and frameless and developed a good reputation
Plywood construction only – no MDF Framed: Alder, Maple, Cherry, Hickory, Red
Oak, Qtr Sawn White Oak, all at the same price
Frameless: Alder, Maple, Cherry, Oak, African Mahogany and Bamboo all at the same price
DeWils is Primary Competitor
Consumer recognition due to full page monthly advertising in Hawaii Home magazine, listing local dealers
Frameless 15% higher than Framedo The list price is higher on the frameless line
4 week lead time framed
6 week lead time frameless
DeWils
Mods: 2 prices ◦ $175 for all minor mods, i.e. moving a rail on an oven cabinet.◦ $350 for major mods requiring engineering.◦ Increased width, height in 1/8” increments - flat charge◦ Reduced width or height – next price up.◦ Mods are the same price for both framed and frameless
Special pricing on projects only
No promos because of all wood species same as oak
Product to Hawaii is will-called at plant by freight forwarder; dealer arranges for ocean shipment
DeWils
6 simple price buckets based on door style.
Good Customer Service ◦ “Easy to work with”◦ “Fair with credits”
DeWILS
Less expensive than Decora in popular wood species◦ Cherry is priced like oak
¾“ APC construction, with 1/8” solid wood edge banding◦ DT, full extension, soft close drawer standard
Frameless - ¾” box, solid wood edge banding
De Wils
Small, privately-held company◦ $25 million in sales
No co-op. Provides monthly magazine ad for dealers
Mainland rep visits every 2-3 months. No help with ocean freight Express Response program
◦ Small items are sent Fed-Ex ◦ ER cabinets picked up by the freight forwarder◦ Dealer may wait until the next full order is ready to be picked up, otherwise expensive
DeWils
Hawaii Planing Mill (4 locations – Big Island) Hawaii Carpet One Highline Kitchen Systems Island Home Building Materials Emee Kitchen and Bath Busekrus Pacific Source- packaged sales – 3 island
locations
DeWils Dealer Targets
Privately held =flexibility and fast reactions
Higher-priced than DeWils
Normally 15-25% higher than KC on standard sku’s ◦ with 10% off promo can get pretty close, depending on
the style
Becomes less expensive than KC on many jobs because of no charge or “next-size-up” mods
Columbia
Satin finish similar to Medallion, preferred by many over the higher KC sheen
5/8” box, good joints, very nice satin finishes
Kitchen Craft has better paints, but not sold much in Hawaii due to joint expansion in humidity
Aggressive Promos:◦ $5800 vacation contest entered with points from sales ◦ On-going$20 a box spiff
Columbia
Wellborn Very aggressive approach with Homeowners
Design Center
◦ Wellborn owner flew to Hawaii for personal pitch and then flew owner, manager, and designers to Alabama for plant tour
◦ Free displays
◦ Owners returned feeling obligated to Wellborn and Rutt
Homeowners Design Center
New in 2010◦ $10,000 sales in 2010
Kitchen Craft, Schrock, AOK, Omega Competition in showroom: Wellborn, Rutt, Canyon Creek
Ready to order Kitchen Craft Display◦ Offer free display
Costco call with Mike Land well received Filling out Costco questionnaire
MSA planning proposed to be presented by Brad in Hawaii◦ Free displays for Kitchen Craft, Omega, Schrock selection center◦ No-upcharge APC Feb 28 – May 27◦ $10 spiff matched by $5 Highline-Southwest◦ Patrick Littel sent to Hawaii for formal training
Secured Brookfield Homes 98 home project with Kitchen Craft on the Big Island◦ Aggressive SDA
Model home order has been placed, with 3
to 4 to follow every few weeks.
Projected as $615,000.◦ Most projected to ship in 2011 ◦ 2010 sales $178
Maui Homes
An MBCI dealer for 10 years◦ Diamond, Kitchen Craft, Decora, AOK
Competition in showroom: DeWils, Hertco
Has struggled the last couple of years, however, he has revived State of Hawaii Diamond project ◦ 22 unit third phase of a state project. A SPA has been approved at .2045 collect, to
help secure this project that the state sent back to vendors to re-bid.
Ran January pre-select for 10% off cherry, maple, alder and rustic alder
DeWils is major competitor
MSA Planning No up-charge APC all brands Feb 28 – May 27
$25,000 Diamond sales in 2010 ◦ down from $80,000 2008
Kona Kitchen & Bath
10 year Kitchen Craft dealer ◦ $76,000 2010 sales, mostly from the Oahu main branch
Competition◦ Local custom “house” brand, used for projects◦ Canyon Creek.
Locations on all major islands. MSA planning • Free KC sales centers for branches • No up-charge APC February 28 – May 27, 2011• $10 MBCI spiff
‣ January Pre-select : 5% off $10 spiff
Honsador Lumber
Nicest showroom on Maui with many brands
10 year MBCI showroom
Columbia taking market share due to $20 a box spiff
$70,000 in Decora business in 2009, $120,000 in 2008 ◦ Took Decora out 3rd qt 2010 because of presence at Home Depot ◦ Took Schrock out with introduction into Lowes
Target this account for Omega/Dynasty
MSA Planning◦ No up-charge APC Feb 28- May 27◦ MBCI $15 spiff matched with $5 Highline-Southwest◦ Kitchen Craft display 70% off credit memo 30% 12 mo◦ Free Omega Dynasty display◦ Promote Costco
Exclusively Yours
New in 2010 Brought container load of Contractor’s Choice
into stock Bringing in APC product from Indiana adds too
much freight to compete with local Chinese cabinets◦ Re-visit when CC APC available from Las Vegas
Recently multi-branded this account with Diamond and Decora’◦ Secured Decora’ for NAHB “New Hawaiian Home”
MSA Planning◦ No up-charge APC Feb 28 – May 27
Collaborative Solutions
New in 2010 with Kemper
Just multi-branded with Kitchen Craft
MSA Planning◦ No up-charge APC Feb 28-May 27
Concepts 2 Completion
Mostly project work with Kitchen Craft◦ $92,000 sales in 2010
Current approval for an SDA of .23 to secure a 93 home upscale project in Waikaloa
Six kitchens and baths ordered for 3rd phase of HR Horton project◦ Request for SDA at .23 wood and .22 thermofoil to prevent these 60 homes from going to local
competition
Using January pre-select to try to “get him into our book” for other than project work.
Competition in showroom: DeWils, Canyon Creek
Obstacle: He doesn’t sell maple. Alder is preferred and KC only offers APC on maple and cherry
MSA Planning ◦ Offer free KC display◦ No up-charge APC Feb 28 – May 27
Kona Building Supply
Honolulu location
Not currently selling cabinets
Interested, but some hesitation because they are very close to Homeowner’s Design Center, which refers appliance sales to Ferguson’s
Target Omega, KC and Schrock as National Account
Ferguson Design Center
Decided to stay with local Ohana product for low end.
Target with Decora’ for higher end market
MSA planning• Offer no UP-charge APC• Free display
Hardware Hawaii
Target with Kitchen Craft
Looking for something less expensive than Columbia
MSA planning◦ Offer no up-charge APC on all wood species◦ Free display or sales center
Emee Kitchen & Bath
Target this DeWils dealer with Omega & Diamond
Discuss Costco program
Offer free display Offer no up-charge APC
Hawaii Carpet One
Oahu and Maui locations:
Interested in Contractor’s Choice, Diamond◦ MSA planning
Offer no up-charge APC Free sales center for each location
Mikake Concrete
Addition of All Plywood Construction for Aristokraft available from Las Vegas May 2011 potential game-changer for Hawaii
Will open up new opportunities in the Hawaii market
Offering a no up-charge for APC in Hawaii would help compete with the Chinese product
APC for Aristokraft
Only line with resident representation Five member rep team alternating visits will
bring individual expertise to Hawaii market MSA Planning to grow territory
◦ Aggressive promos◦ Free displays◦ No up-charge APC for Hawaii territory Feb 28 – May 27◦ NEED: SDA for KC dealers to order APC on all wood species◦ Approach Homeowners Design Center as partner◦ Provide factory training on island◦ Target new dealers with above plan to take market share
Attack the competition!
Summary