HAWAII TERRITORYREVIEW
January 2011
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 discussed at Highline-Southwest meetings
◦ Derrick makes regular sales calls/warranty
◦ Quarterly visits by Susan, Dick, Pam, Chris Last visit: Susan, October 2010 Next visit: Chris and Pam, February 27, 2011
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
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 expansion.
There is demand for exotic woods i.e. Bamboo, African mahogany
• 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
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
Came to Hawaii early with both framed and frameless and developed a good reputation
Plywood construction only – no MDF Framed: Alder, Maple, Cherry, Hickory, RedOak,
Qt sawn White Oak, all at the same price Frameless: Alder, Maple, Cherry, Oak, African
Mahogany and Bamboo all at the same price
Consumer recognition due to full page monthly advertising in Hawaii Home magazine, listing dealer locator
Frameless 15% higher than Framedo The list price is higher on the frameless line
4 week lead time framed
6 week lead time frameless
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
6 simple price buckets based on door style.
Good Customer Service ◦ “Easy to work with”◦ “Fair with credits”
Less expensive than Decora in popular wood speciesCherry is priced like oak¾“ construction, APC, DT, full extension, soft close
drawer standard
Frameless - ¾” box, solid wood edge banding
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.
Kona Kitchen and Bath
Kona Building Supply
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
18 cabinets, incl. end panels, fillers, toekick DeWils cost Framed $3,565
Decora’ cost 35% higher $4,813
Diamond cost 28% higher $4,579
DeWils cost Frameless $4,100
Kitchen Craft 6% higher $4,356
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
Matt finish similar to Medallion, preferred by many over the higher KC sheen
5/8” box, good joints, very nice matt 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
Homeowners Design Center
◦ Wellborn owner flew to Hawaii and then flew owner, manager and designers to Alabama for plant tour
◦ Offered free displays
◦ Came back obligated to Wellborn and Rutt
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
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
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
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
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
New in 2010 with Kemper
Just multi-branded with Kitchen Craft
MSA Planning◦ No up-charge APC Feb 28-May 27
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 on 3rd phase of HR Horton project◦ Request for SDA of .23 wood and .22 thermofoil to “keep” 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 on all KC wood species◦ No up-charge APC Feb 28 – May 27
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
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
◦ 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
Target this DeWils dealer with Omega & Diamond
Discuss Costco program Offer free display Offer no up-charge APC
Oahu and Maui locations:◦ Interested in Contractor’s Choice, Diamond◦ MSA planning◦ Offer no up-charge APC◦ Free sales center for each location
Addition of All Plywood Construction to the Aristokraft product available in Las Vegas May 2011
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
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!