How did business change for Orgill in 2022 compared to 2021?
After two strong years of growth, we began to see growth moderate in 2022 and expect to end the year with an 8% increase in sales, which is likely more the result of inflation. After a very intense period of price changes in the past two years, we are now seeing much more stability in pricing. In fact, we have the lowest level of price change requests in process than we’ve seen in a long time and are even beginning to see some declines in pricing. With demand moderating, we were able to make more and sustained progress improving our service levels to our customers. As COVID has decreased, we’ve had fewer absences and more reliable staffing levels.
What operational investments will you make in 2023 and how will they impact your customers?
We celebrated the one-year anniversary of our newest distribution center in Rome, New York, in June. We’ve made a lot of progress in the first full year of having that facility online, but we have more opportunity to continue to improve our operations there. We completed a significant expansion of our Hurricane, Utah, distribution center this year which will really have more impact on our business in 2023. We recently announced the investment in a new distribution center in Tifton, Georgia, to replace our current facility in the same area. This new distribution center will include robotics in a goods-to-man picking solution that we expect to drive more efficiency, accuracy and speed. That project will be ongoing in 2023 and begin to impact our business in 2024. We continue to make these investments to support our customers’ growth and our ability to provide the lowest possible prices “to help our customers be successful.” We also continue to invest in our fleet and drivers. Our truck drivers are key in the relationships we build with our customers delivering goods reliably and efficiently.
How are you helping your customers address technology?
We are using our CNRG stores as a lab environment to develop and test technology solutions in our own stores then sharing best practices where we are able to build demonstrable success. Those solutions include technology that supports merchandising, marketing, e-commerce, loyalty programs, pricing, store communications, staff scheduling, managing shrink and more. We have a big vision for how we can work on technology solutions for our customers as part of our mission “to help our customers be successful” and we have a lot of opportunities to continue to improve this.
How are you helping your customers address succession planning?
While Orgill has many customers who are considering the right plan for succession, it also has many customers who are trying to find ways to grow their businesses through acquisition. We have found ways to be helpful to both types of dealers in this process, whether through assistance with transaction planning and business valuation or through the various retail support programs that make the transition process much less disruptive to the dealer’s business.
What are your projections for 2023 for the industry and for your organization?
We expect the industry will grow modestly in 2023—maybe 1% or 2% based on the researchers we follow. If that is the case, we expect to grow 4% to 5% in 2023 driven by continued improvement in our service levels to our customers and some new business growth. We’ve really had to pause new business growth to support higher service levels for our current customers. With continued improvement, however, we look forward to growing more new business.