McCoy Corporation

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McCoy Corporation

1200 IH-35 North
San Marcos, Texas 78666
U.S.A.
Telephone: (512) 353-5400
Fax: (512) 395-6609
Web site: http://www.mccoys.com

Private Company
Founded: 1923
Employees: 2,200
Sales: $452 million (2002)
NAIC: 44110 Home Centers

McCoy Corporation is parent to the retail chain of McCoy’s Building Supply Centers, which serves the market of those “born to build” in Texas, Louisiana, Arkansas, Oklahoma, Mississippi, and New Mexico. McCoys stores offer do-it-yourselfers, contractors, and custom builders a wide variety of supplies and services, including the proprietary McCoy credit card. McCoy’s is one of the few consumer-oriented retailers not open on Sundays, a reflection of the founding family’s strong Christian beliefs. At McCoy’s, employees are encouraged to find a balance between work and family, and toward that end are offered the opportunity to attend a family life, marriage, and parenting conference.

Origins

The company’s origins may be traced to 1923, when Frank McCoy opened his own contract roofing business in Houston. In 1927, McCoy moved his family and the McCoy Roofing Company southeast to the gulf city of Galveston.

By the 1940s, McCoy’s son, Emmett, had joined the company. At that time, with the building supply industry just emerging, Emmett McCoy opened the McCoy Supply Company. When his father retired in 1950, Emmett McCoy became president of both the roofing and supply businesses. The younger McCoy’s preference became clear immediately. He soon expanded the supply company’s product line and added a second store in nearby Texas City in 1960.

1961 Hurricane Spurs Sales

When Hurricane Carla struck the Texas Gulf Coast in 1961, the ensuing extensive damage spurred McCoy’s growth. Many other building suppliers at the time viewed the situation as an opportunity to raise prices, as demand for supplies escalated among both homeowners and commercial operations. Emmett McCoy decided to hold the line on pricing, thus helping to foster a reputation for fair dealing and community support. Still, the supplies required to rebuild from Carla caused McCoy’s sales to top the $1 million mark for the first time.

In 1964 Emmett McCoy shut down the roofing business and added lumber to the inventory of the McCoy Supply Stores. Soon he added a third store, and, in order to better reflect the increased scope, the chain’s name was changed to McCoy’s Building Supply Centers. During this period McCoy’s stepped up its commitment to the homeowner, the so-called “do-it-yourself” (DIY) market.

1970s–80s: A Period Of Growth

In 1972 McCoy’s Building Supply Centers moved its headquarters to San Marcos, Texas. Three years later, Emmett’s sons—Mike, Brian, and Dennis—joined the business. By 1980 the third generation of McCoys had helped the family business expand to 25 stores. A year later McCoy’s annual sales reached $100 million for the first time. This became the business’s fastest growth period. In just three years, McCoy’s had doubled in size, opening store number 50 in San Antonio, Texas.

Tragedy struck two years later, in 1985, when Dennis McCoy was killed in a plane crash near Brownwood, Texas. Some of the company’s faith-based philosophy throughout this period and well beyond could be traced to Dennis McCoy’s death at age 28. A week after the plane crash, his brother, Mike McCoy, said he picked up a Bible and offered God a deal. He promised to read the entire Bible and then either reject or accept God forever. The experience taught him that God loved him and it changed his life, he said, including his business life. Mike helped the company adopt a new philosophy to “grow self, grow others, and grow the business” in that order.

The company’s growth continued throughout most of the 1980s. In 1987 McCoy’s opened stores in Arkansas and Oklahoma, its first stores outside Texas. The next three years saw McCoy’s stores in New Mexico, Louisiana, and Mississippi. Store number 100 opened in 1992 in Edinburg, Texas. The company continued its early focus on such smaller markets as Pine Bluff, Arkansas, and Waxahachie, Texas, avoiding the urban and more densely populated suburban landscapes dominated by such larger rivals as Lowe’s and Home Depot.

Brian and Mike McCoy took the company reins from their 74-year-old father in 1997 after he had spent nearly 50 years in the building supply business. By 1999 the company had passed $500 million in sales, becoming the third largest family-owned home improvement retail company in the country behind Menard and 84 Lumber. The company benefited from a general increase in the nation’s home improvement retail market during this time—a 12.2 percent industry sales increase in 1996 alone.

Steady Growth Despite Competition

In 1998, according to National Home Center News, McCoy’s Building Supply Centers was “a shining example of how regionalization within the home improvement industry was alive and well.” The company reigned as the second fastest-growing regional retailer in the industry for several years. Annual sales rose every year from 1989 through 1995 by an average of more than 10 percent. Each year saw two to five new McCoy’s stores opening. By the late 1990s McCoy’s had stores in six southeastern states. Sales in 1998 at the then 104-store chain reached $454 million, topping $500 million the next year with an 11 percent increase.

However, signs of challenges to come were appearing. After the number of stores in the chain peaked at 110, new McCoy’s stores in Alabama and Louisiana did not meet expectations. In both 1996 and 1997 the number of McCoy’s stores declined as the presence of the country’s two largest home-repair chains, Home Depot and Lowe’s Companies, increased in McCoy’s home and lead state, Texas.

To adjust to the increased competition, McCoy’s made several moves. In 1998 Brian and Mike McCoy began delegating more operational decision-making to their senior level corporate management team. Some industry insiders felt the switch would positively affect employees by demonstrating that people outside the uppermost management team would have more say in the company’s future. On April 13, 1998, the company announced that, along with Quality Stores, McCoy’s had joined the dealer-owned buying group TruServ, in order to increase its product assortment and gain lower prices from vendors. That year also saw all McCoy locations go online and establish an e-business distribution arm.

The company also began offering credit to its professional customers, about 70 percent of its customer base. The McCoy Card was a private label credit card, an in-house credit program for commercial and contractor accounts. McCoy’s also instituted online access to invoices, statements, and quotes for its commercial and contractor customers. Preferred customers could pay invoices online.

Another way in which it sought to distinguish itself was in employee training and customer service. Dan Stauffer, vice-president of marketing and merchandising, referred to this move as focusing on “people relationships.” “We’re selling the same stick those other guys down the road are, so we have to be engaged with our customers at a different level than our competition,” said San Marcos store manager Bubba Wieland in 2000. Training expanded from developing employee business skills and product knowledge to teaching that employees and customers need respect and appreciation.

To bolster management depth, reduce turnover, and improve customer retention, McCoy’s, in 2000, employed a large provider of performance improvement services known as Provant. That company’s MOHR Learning Unit provided a tailored version of its retail management skills program, which McCoy’s used to train 270 store management team members, providing measurable improvements in productivity and communications skills.

One practical weakness the company identified and addressed was in the design and size of its stores. In the late 1990s McCoy’s began a remodeling phase. The remodeled 18,000 square foot Georgetown, Texas, store boasted about 5,000 new items, some in entirely new product categories. The Victoria, Texas, store became a prototype of the remodeling effort when it relocated and reopened in September 1999. This store featured an area for professional builders, a kitchen and bath design center, and a TruServ-inspired rental center with more than 600 products. It also set a new standard for store size with its 21,000 square feet of inside sales space and a five acre yard.

In September 1999 the company announced an agreement with RTMS to use that company’s software, Archer, to manage millions of purchasing details and develop customized communications for its customer base. In 2000 the company added 50 commercial sales representatives and increased its number of delivery trucks to 300, more than doubling its fleet.

During this time McCoy’s stressed that it would continue evolving the store model. Several stores were retrofitted with a professional sales area, redesigned paint departments, and new pallet and cantilever racking systems to improve product handling. When the remodeled stores showed sales increases, McCoy’s implemented paint department revamps in 40 more stores faster than originally planned. The plan was to remodel all 101 stores by the end of 2002.

Company Perspectives

We provide quality building products and services to our “Born to Build” customers with our valued team of unique people who are committed to both professional and personal growth. Our “Business as UnUsual” philosophy demonstrates the vision and values of our family business. We celebrate an intense work ethic; yet we affirm that life is more than work. We must be profitable in our operations while always striving to make McCoy’s a safe and enjoyable workplace.

Still, faced with declines in the construction industry, the company suffered a downturn that led to closing 14 stores in 1999 and 2000. Sales in 2000 reached $503.8 million, then fell to $467 million the following year.

On April 4, 2001 co-president Mike McCoy and his sister, Brenda McCoy Remme, sold their interests in the company to their brother and co-president, Brian McCoy. By 2002 the operation was smaller but more efficient. That year McCoy’s had 87 stores with annual sales of $452 million, $10 million more than it had realized in 1995 with 110 stores. To better compete with Home Depot and Lowe’s, McCoy’s stocked its newer stores with twice as many products as the older stores. McCoy’s positioned itself as a hybrid between the huge competitors and the traditional local lumberyard. It chose not to compete in the lawn care/nursery segments.

McCoy’s opted for a drive-through lumberyard, thus avoiding the heavy metal pushcarts its largest competitors featured. Instead, the company emphasized customer service by having store employees do all supply loading and delivering. It chose a strategy it felt might miss convenience and occasional buyers but would appeal to its traditional target audience of frequent building material buyers, including do-it-yourselfers and remodeling contractors.

This strategy was supported with an advertising campaign. Early in 2002 McCoy’s spent some $6 million on a three-commercial television and radio campaign to toughen its image and respond to the inroads the industry giants continued to make. One spot showed a series of construction scenes with the audio: “12-lb. Sledgehammer, aisle 9. 8-inch anchor bolts, aisle 7 … cutesy artichoke-shaped cabinet knobs, not in stock …” Video then switched to a construction worker in a baseball cap staring into the camera with a look of disgust who finished the line with one word, “… ever.” The spots sought to distinguish McCoy’s as the choice for serious, dedicated builders. At the same time the company began carrying more professional-grade equipment and less decorating and entertainment items. In May 2003 the company announced a new line of farm and ranch equipment it called Tuf-Mac. The line included rolled wire fencing, corral panels, barbed wire, farm gates, and other products.

Also during this time, McCoy’s bolstered its commitment to the communities it served, supporting many nonprofit organizations including the American Red Cross, Habitat for Humanity, Good Neighbor Settlement House, Kidfish, and the United Methodist Action Reach-out Mission by Youth (UM Army). Regarding the choice of charities and policy of stores being closed on Sunday, Brian McCoy remarked, “I’m unapologetically Christian and we’re in an industry that allows us to do that.”

Principal Operating Units

McCoys Building Supply Centers.

Principal Competitors

The Home Depot Inc.; Lowe’s Companies, Inc.; 84 Lumber Company; Menard, Inc.; Ace Hardware Corporation.

Key Dates

1923:: Frank McCoy opens a contract roofing business in Houston.
1927:: The McCoys and their business move to Galveston.
1940s:: Frank’s son, Emmett, joins the company and forms his own business division, McCoy Supply Company.
1950:: Emmett McCoy is named president of both companies when his father retires.
1960:: The second McCoy store is opened.
1964:: McCoy Roofing is closed and the McCoy’s Building Supply Centers chain is established.
1972:: Headquarters move to San Marcos, Texas.
1975:: Emmett’s sons (Mike, Brian, and Dennis) join the company.
1981:: McCoy’s broke the $100 million sales barrier with 25 stores
1987:: The company expands outside Texas.
1992:: The company’s 100th store is opened in Edinburg, Texas.
1999:: Sales top $500 million.