Stephen Schober, president of Metal Supermarkets, discusses the niche market for multi-location, small-quantity metal suppliers
April 2013 - Metal Supermarkets, Mississauga, Ontario, bills itself as “the convenience stores for metal.” It has a network of more than 65 stores in four countries that provides customers with the flexibility of purchasing small quantities of metal and various value-added services, including hole punching, shearing, cutting and bending.
Modern Metals: What are the advantages of multi-location, small-quantity metal supply?
Stephen Schober: We see ourselves as complementary to the major service centers and not really in competition with them. They want to sell large quantities, usually with a couple of days lead-time, and they often have minimums because they are running much larger facilities—they need to sell higher quantities to make money. We’re trying to do the opposite. We’re selling smaller quantities with quick turnaround time. Often our customers are multi-product users, so they appreciate that we have different types of metal and can be a one-stop shop for them.
Our customers want to be able to get what they need quickly and get back to work. We carry a variety of metals. We have hot- and cold-rolled, stainless, aluminum, alloy bar, red metals and tool steel in pretty much all sizes and shapes.
Another advantage to the customer is we have the inventories at the closest branch, but there is access to the inventory in other locations, as well. Customers have access to a much larger inventory than what’s actually in a particular branch. That’s important because in the small-quantity metal business, you have to have a wide variety of products and services to keep customers happy.
Our customer service reps get to know a lot about all the different types of metals. Quite often, when you deal with larger suppliers, their customer service reps are experts on hot-rolled or aluminum or alloy, but they don’t have the breadth of
knowledge about all metals. With the small-quantity metal suppliers, the staff has a greater degree of knowledge of the different metals, and that can help in terms of a consultative sales process.
MM: How does being a multi-location, small-quantity metal supplier help companies manage inventories and quickly serve customers?
SS: Usually we have the inventory in stock because we carry all the common products, but there are a lot of different sizes and shapes of metal. Many customers have confidence in our stock, and realize they don’t need to hold their own inventory. We become their warehouse. Our inventories are driven by local demand, so we often find a fast-moving part in one area is not as fast in another. We have 60 stores in North America, so among them is an awful lot of inventory and a knowledgeable staff. We’re proud of that. That’s part of the advantage of being a multi-location business.
Like everybody else, we don’t have everything on hand. Another advantage that we have, at least at Metal Supermarkets, is all our locations can see all the inventories at our other locations through our point-of-sale system, which is proprietary to us. If one location doesn’t have a particular type of metal, they can go in and see how much is in a different branch and create an inter-branch transfer. Also, we cut and shear, so we can get the metal cut quickly and ready to go.
MM: What types of customers typically buy from a small-quantity specialist?
SS: Target customers are often in the maintenance, repair and operations departments of manufacturers and processors. We sell to machine shops, tool and die shops, prototype manufacturers, hospitals, universities, high schools, welders, government and military, municipal works yards, and sometimes homeowners and hobbyists.
We find these customers are looking for a smaller quantity of metal, they want it quickly and flexibly and they want the advisory service we offer.
Generally, part of being small is you can be nimble. We also work hard on fast and friendly service. We’re often being asked to deal with rush orders, especially with maintenance and repairs. If something is broken, customers want it fixed. Often, people come to pick up the metal because they have confidence in our inventories; we get people that just drive up and look for things. We’re not just doing small quantities, we’re trying to develop that into a whole value proposition that appeals to those orders that really fit with what we’re doing.
MM: Is e-commerce a part of this business model?
SS: The great majority of our business comes from phone calls, faxes, emails and customers coming to our branches. We offer e-commerce as a complementary option. We’re not pushing customers to e-commerce. This is a relationship business. It’s just another way they can deal with us. However, especially as more young people are in purchasing positions, the reality is more buyers are comfortable with a computer, so e-commerce will continue to build. As metals companies get better at managing their e-commerce platforms, it will become easier and more flexible for them.
MM: Is the multi-location, small-quantity business model growing in today’s marketplace?
SS: Certainly Metal Supermarkets is growing, and that’s because of how we’ve managed our company and how we’re focused on growth and working in partnership with our franchises. Multi-location, small-quantity metal suppliers will be a growing niche going forward, but it is a tricky niche, too. You have to think about your customers and your business from the small-quantity perspective and focus on service. We believe this best occurs in a franchise business with committed, passionate owner-operators.
Occasionally, we find some people who think we’re in the scrap business. We’re not. Sometimes we’re looked at as being oriented toward hobby and homeowners. We do serve that market, but it’s not a focus, either. We’re a critical niche of a much larger business. What makes it different isn’t just the broad array of metal that we stock or the number of shapes, it’s also who our customers are. Compared with larger metal suppliers, it’s a very different relationship with different dynamics and a whole different value equation. MM
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