Alex Melvin, Vice President of Rural King Supply spoke today in Midwest Entrepreneurs. Alex joined the family company about three years ago. He graduated in 2005 from Monmouth with a degree in Business Administration. Alex, long with his CEO Father Gary, successfully lead their team in increasing overall store sales to $550,000,000 in 2010. They plan to open four new stores in 2011. Alex worries that unless they streamline buying and go direct to manufacturers their margins will suffer. He hopes Rural King’s 52 stores improve their margins from around 27% to closer to 30% by direct relationships and efficient management. “Top management at Rural King are few in numbers but our line people pick up the slack”. Having low overhead helps improve Rural King’s retail margins that are the envy of the big box competitors.
“We compete directly against Walmart, Home Depot, Lowes, and Tractor Supply”. Alex owns a trucking company and maintains 38 semi-trucks and numerous tractor trailers. He believes government regulations in the trucking industry are “huge impediments” to profitability. “Limiting hours to 10 per driver per day will hurt my business”.
He believes in offering ownership to key employees to keep them engaged and focused. An investment of $2,500 in private Rural King stock is now worth $50,000. Alex is now focused on opening new stores and increasing the web business. One year ago he opened his first new location that he manages and owns. That location is in Wentzville, MO outside of St. Louis. His work with his team has been successful in finding new sources of quality products internationally, and he pushed web sales to their highest levels in Rural King history.
Marketing-wise, Rural King advertises with a weekly circular newspaper insert that “has many products”. He doesn’t believe in radio. Recently, they have been collecting zip code information from customers and through data analysis, he has created Google Maps that track how much money is spent by zip code so they can heavy-up or decrease advertising in less desirable areas.
Alex complained about government intervention and taxes. He called Illinois a less-friendly business state when compared to Indiana. He worries that internet retailers have an advantage because they do not charge tax, but he predicts his internet store business will go up dramatically. “My biggest mistake is that we didn’t push online sales two years ago”.
Alex says it is tough to work with family or help find a job for a friend. “They know you will hesitate to let them go if they don’t perform. Plus the people you help the most, disappoint you the most [and are usually ungrateful].”
Buyers at Rural King are part of a buying co-op. They are discouraged from accepting gifts, lunches, or boondoggles from sales representatives. “It compromises our focus on lowering costs and finding the best values for our customers”.
