Back in 2003, Ferdinand Co, now Managing Director of CW Home Depot, was building his own house and found himself annoyed by the fragmented nature of the home supplies retail scene at the time. He had to go to one store to buy a doorknob, then another to purchase a faucet, before trudging across town to yet another location to procure some door hinges. He knew there had to be a better way, and the concept of a one-stop shop for homeowners and builders was born.
“It used to consume so much of your day,” Ferdinand recalls of shopping prior to the advent of CW Home Depot. “Sometimes you would go to one place and if you didn’t find what you were looking for, you had to go to another place. At that time, the idea of construction materials being sold all under one roof, like a supermarket, was a very new concept. The idea came about out of my own frustration.”
With appliances, tools and materials for gardening, plumbing, repairing and constructing anything around the home, the initial CW Home Depot store offered unrivalled convenience, making it easy for shoppers to make intelligent purchasing decisions by being able to compare different varieties and brands in the one store.
Consolidating a number of dispersed specialist stores into a single shopping mall-style set-up has also allowed shoppers to avoid traffic congestion, which has worsened significantly in Indonesia of late.
Expanding the platform
A joint venture between Cebu Oversea Hardware Company Co. Inc. (COH) and West Point Industrial Sales Co. Inc., meant that CW Home Depot had a considerable wealth of industry knowledge that it could draw from. COH has been servicing the construction industry for more than 50 years and is a major supplier of hardware and finishing materials. West Point, meanwhile, specialises in importing and wholesaling construction materials.
Ferdinand himself was already established in the hardware supply business and says the new store drew on experience and connections he had built up in previous retail ventures. “We just expanded to the platform of a modern retail big-box approach. We made it a lot better in terms of convenience for the customers.”
Still, Ferdinand says, introducing customers and suppliers alike to the new concept presented its challenges. Consumers were initially sceptical, believing the modern, air-conditioned CW Home Depot store must be more expensive.
“People thought: ‘Why should I go there if I can buy from my regular suppliers at a cheaper price?’” he recalls. “That was their impression. That was the big challenge at the front end.”
Hurdles to leap over
Ferdinand says that there were also obstacles to overcome at the back end. “A lot of the suppliers had concerns about supplying to us, because they had other supply commitments and were worried they might offend their regular B2B customers.”
Banks also approached the untried idea with some hesitation. “They were very conservative in terms of giving credit. Even the concept of displaying your wares, as in a supermarket, carried risk in their view because they were concerned that items might get lost or broken. All these concerns were growing pains we had to address.”
Gradually, CW Home Depot was able to address these perception problems through advertising the benefits of its platform. It also offered suppliers the opportunity to trial the new model. For hesitant consumers, it promised to beat competitors’ prices. Eventually, everyone was won over, even the banks, who decided to offer CW Home Depot credit once they saw that the concept could turn a consistent, stable profit.
With finance finally in place, CW Home Depot then expanded from its original Ortigas location to a total of nine stores. It has also recently purchased two other sites that will be turned into stores. Like the existing stores, the new outlets will be organised into four divisions: a DIY section, a Home Interior Superstore, a Home Appliance Superstore, and a range of specialty stores.
“We recognise that a lot of the customers have travelled hours and have limited time in the store,” Ferdinand says. “We want to go to them in terms of store location, and we also want to value their time.”
Listening to the customer
Each new store has been launched in direct response to customer demand. Ferdinand says that this reflects CW Home Depot’s customer-first approach; the company does not see those buying from their store as end users, nor does it consider the relationship with the customer finished with the purchase.
“You try to treat your customers as if it is not just a one-time deal; you try to follow up with them. You might ask how the delivery is, for example. For the home owners, it is an ongoing project. They might do a bathroom, then later they come back because they need grout, or because they want to put in a mirror. It’s a good thing, being able to service their needs.”
In the hardware retail industry, Ferdinand says the consumers are often described by an ‘ABCDE’ acronym, meaning the customer base is comprised of architects, builders, contractors, designers and developers, and engineers. “I would like to add an F, for friends,” he says.
Asked about what values he would like to pass on to younger staff who come into CW Home Depot, Ferdinand says that he seeks to emphasise teamwork, which is important to the company.
“I have partners who help me run the business, and I really appreciate their teamwork with me. The culture we have here is that we reward performance and results. You could say we play favourites, but our favourites are the ones who are performing all the time. That is an important message for the younger generation: that we reward performance.”
CW Home Depot has a fairly young management team in place, and Ferdinand praises the “young ones” as the future of the company. “They have so many ideas to share,” he enthuses. However, he says, younger employees progressing to management was not a strategic move, but simply a by-product of the company’s meritocratic approach to promoting the best performers, regardless of their background or age.
“We will defer to older staff if they’re performing well. What we’re trying to communicate to our stockholders, our family owners, management and employees is that we will reward those who are performing, who reach their targets. We have annual evaluations and the best performing staff can get performance bonuses. That is an important part of what we’re trying to do.”
We will reward those who are performing, who reach their targets … That is an important part of what we’re trying to do.
The company remains a family-owned concern, and Ferdinand says its focus on the bigger picture has been one of the drivers of its ongoing success. “It is run by some representatives of each family, who are extremely capable, and it’s run in a very professional way. It’s very corporate in nature. I’m so lucky and appreciative that everyone in the family helps the business. They approach every decision by asking, ‘What’s best for the company?’ I think that is key, because we are able to focus on not just what is good for ourselves but what is good for the company. In the end, what is good for the company is good for ourselves.”
A sunrise industry
Considering the future of retail for home owners and builders, Ferdinand says it is not a sunset industry, but that it may be already peaking, with customers having long come around to its all-under-one-roof model. In fact, the success of its platform has seen it emulated by competitors.
“There are now more stores in the provinces, though, trying to operate the same platform as us. The difference is they don’t have our scale or the same variety of products to provide to customers.”
In addition to the rise of close competitors, Ferdinand says that rising real estate values across the fast-developing regions of the Philippines will present its own challenge. “When
we started the first store, we never imagined that we would have to keep expanding to different areas,” he says.
“We want to continue to support our customers by expanding the right areas. The cost of land may be a limitation on expansion, but we are confident that our retail platform is a winning concept when it comes to providing convenience to the customers.”
Ferdinand says CW Home Depot has a feedback mechanism in all its stores and is committed to addressing every complaint it receives. “Even very small concerns, we will use them as a learning curve of the things we need to improve on. We are trying to implement best practice across all our stores to achieve a culture of excellence.”
Beyond using feedback to refine its offerings, Ferdinand reaffirms that customers are placed at the very heart of CW Home Depot’s operations. “We often remind our employees that it is not actually us paying their salary, but the customers. So we say, ‘Please take care of the customer, and then you’ll be taken care of by the customer.’ That’s one thing we believe in, the culture we’re providing.”
Ferdinand Co’s leadership style
Ferdinand defines his leadership style as “firm, fair and flexible”. He might give more leeway to a successful middle manager by, for instance, giving them scope to run their own department how they see fit, as long as they meet certain criteria and conditions. “You have to take into account the situation and the person you are talking to.
“Certain departments will need to be supported properly and you have to watch over them. With others, you have to be a little bit softer until they are able to perform at the level you expect. At the same time, you have to be firm but fair. You have to recognise those who are performing and those who are not, so that we have some sense of order and achievement for everyone.
Being open to feedback from all levels of the organisation, as well as its external stakeholders, is also vital, Ferdinand says. “You have to communicate with your employees and managers, but also your customers, partners, suppliers, stockholders. It’s a matter of listening. Honestly, the best form of doing business is to try to listen to them all. It’s impossible to know everything, but we pick the best ideas and put them all together.”
Ferdinand says the best business advice he has ever received dates way back before the inception of CW Home Depot. “In my formative years, my father told me that you can make money or lose money, but that the values you keep and values that you honour whenever you do business should go beyond just numbers. Whatever you do with your friends, or in business, should have something beyond money that you honour. It is crucial to have that view. You have to respect everyone and they will reciprocate.
“I’m not an original thinker; I defer to my father. In business, there are so many techniques you can use. You can advise, listen, decide, whatever, but if you understand the foundation of your values and how you want to run everything, that is crucial.
In the end, it’s about how you treat people.
“In the end, it’s about how you treat people. You have to show them respect and be honourable to everyone and have the right values. That is the best foundation that you can apply, not just in work but in your family life and with friends. Once you apply those things in your life, how can you go wrong?”
