To maximize relationships with suppliers, buyers should walk the NAA trade show floor with a strategy.
Facing the prospects of visiting more than 300 exhibitors over two or three days while on an industry trade show floor could seem daunting. Unless, that is, you have a plan. Gardner Rees, Executive Vice President of Business Services for Riverstone Residential Group, Dallas, goes in with a strategy and the proper mindset.
Riverstone Residential Group spends nearly $150 million each year on products and services through national partnerships for the 650 communities totaling approximately 165,000 units in over 32 states. It spends more than $300 million on products and services overall. No doubt, Gardner Rees, who leads Riverstone Residential Group’s purchasing services group, was highly sought by the large contingent of exhibitors at the 2010 NAA Education Conference & Exposition in June.
Rees says he never misses NAA’s annual Education Conference & Exposition. He also was an invited guest speaker who addressed NAA’s National Suppliers Council (NSC) during its committee meeting the day before the conference opened. There, he discussed the value of national partnerships, trends in the apartment industry, and what Riverstone Residential Group looks for when choosing a supplier partner. Following are some of his thoughts about owner-vendor
relationships.
Q: What is your goal when attending an industry trade show?
A: I review the list of exhibitors before the show and typically make appointments with five or 10 of our national partners during the trade show’s off-hours. When the floor opens, my goal is to walk every aisle to see what’s out there and find products or companies I may not yet be aware of. For example, this year, I saw something new in flooring, so I stopped at the booth, learned about the product, got a quote, and solicited feedback from a community that is currently using the product. Typically, there are a dozen or so booths that interest me each day. For those, I introduce myself, tell them I’m interested in learning more, but that I don’t need the full pitch. I just want enough to be able to say, “I’ll make a note and keep an eye on you.”
Q: What exciting new trends in products and services did you notice this year?
A:This trend goes back a year or two, but even today, I still see that green products continue to take the industry by storm. With roofing, water-capturing devices, recycling and waste removal, among other things, there seems to be some green in everything. This is very impressive. It used to be that owners and suppliers focused mostly on the bottom line, but now, many are more focused on the environment. Not all products can become new or green. But it’s good to see technology and improvements being worked into producing things such as paint. With light bulbs, it’s not just about the look, but more about energy savings, too. We closely monitor what’s going on with the companies offering green products or services to ensure our properties and clients have the best and most cost-effective options.
Q: Does Riverstone Residential Group use many “new”
products? Just how cutting-edge are your communities willing to be?
A:We evaluate any new products based on their value and our client/resident needs. We may want to try something on a pilot-program basis. To do so, we first might call for references on the product, reaching out to other properties that might be using it. For companies trying to bring us on board to use their products for the first time, we believe the best approach is for them to offer that product or service on a free-trial basis.
A lot of our owners are willing to try new things. They want to be on the cutting edge. Most are not afraid. With a free trial, if the product or service doesn’t work out, they just drop it. There’s no downside to that. We work with around 650 property managers, so if I can’t sell something to three to five of them and convince them to try it, well then it’s probably not a product or service we’d need.
Q: New products often come from new, smaller companies. Can that present a problem?
A:Companies we partner with must be able to support our portfolio size, which runs national in scope. For example, we recently were working with a signage company that had a good product, but we weren’t sure that it was capable of distributing their product on a national scale. We were interested, so we met with them and told them what we thought was necessary to happen for them to meet this need. They then developed the proper channels and game plan.
Q: Are you contacted by many companies who are trying to sell you new products?
A:For companies with new products, or those who are new to Riverstone Residential Group, it is very difficult to get a foot in our door. It takes a lot of phone calls and a lot of persistence. We suggest that they first get their foot in the door at the property or regional level—not at the corporate level. Our property and regional managers have the authority to make the call on whether they want to try a product or service if we don’t offer it nationally. If they determine it’s something they are interested in, they let me know. Riverstone Residential Group has a network of many subject matter experts, who then investigate the product or service and make recommendations.
Q: It’s interesting that Riverstone Residential Group enables its local properties to make such decisions. Do many take you up on it?
A: We direct our property managers to use our national suppliers, and because our national partners offer the best pricing and value, it’s advantageous for property managers to use them. There are rare cases where our national product or service isn’t available in their particular market or it’s a brand new service and, in those cases, we allow properties to test other options. We also keep in mind that local property and regional managers are the operational experts in their marketplace and, oftentimes, have specific expertise about a product or service in their market. We encourage them to share their experiences with the purchasing group.
Q: With Riverstone Residential Group’s size, you must be able to get great deals based on economies of scale?
A: Riverstone Residential Group’s purchasing power is strong not only due to our size, but the strength of our partner relationships. These relationships are built and nurtured through communication, co-marketing and advertising, and trust. It is a core goal of the Riverstone Residential Group’s purchasing department to
provide national strength and support to our communities so we leverage our size, relationships, and the local expertise of our communities in markets across the country, for the best possible services and pricing.
We have the level of purchasing power of buyer’s groups and this value is passed on to our clients. At the same time, we let clients know if they can get a better deal elsewhere.
Q: With so much consumer information on the Internet and an abundance of companies offering deals left and right, how do you know you are getting the best price?
A: We shop around and conduct price comparisons regularly. It’s a very thorough, intensive process. At the same time, we’re not going to compete with loss leaders. For example, if an appliance supplier is trying to clear its inventory on an outgoing refrigerator model or on one that it has overstocked and is dropping the price significantly, we’re not going to try to beat that deal. We urge our owners to beware of such situations because they might later regret their decision if parts for the product aren’t available.
Q: Once a supplier partner signs on with Riverstone Residential Group, are they yours for life?
A: Our due diligence when selecting national partners has proven to be effective. So if, for example, our relationship with a supplier has been strong for one or two years, we’re not out every day looking for a better deal from another provider. Generally, once you are a Riverstone Residential Group partner, it’s your account to lose. We do, however, shop ‘like’ products in the marketplace regularly to ensure the best possible pricing and renegotiate with partners as needed. Looking at it another way, it’s like the difference between changing brands of ketchup and selling your house: You might find a better price on a bottle of ketchup or discover a brand that tastes a little bit better and make a change. But you wouldn’t decide to sell your house over one small detail, like if you grew tired of the color of the front door.
Q: What scenario might cause you to replace a national
supplier partner?
A: Because of ongoing innovation, at times there are significant changes in the technology behind a product or service such as resident screening. When that happens, we have to rethink our approach and we may choose to re-bid for those services. In doing so, we would include our current provider in the bidding.
Q: So in the end, what role does price play when you select
supplier partners?
A: It’s important to note that it is not our goal to shrink supplier partners’ margins by driving down their prices as far as we can, which is not a mutually beneficial relationship. We work with our partners to ensure that the entire process is more efficient and everyone involved recognizes cost savings. When partnering with Riverstone
Residential Group, businesses become more successful and they get paid, so it’s a win-win.
Q: So what is your overall take on the 2010 NAA Education
Conference & Exposition?
A: For someone like me seeking to develop national accounts, the NAA show creates the best focus on products and doing business than any other industry show. Our industry is all about building relationships between management companies and owners and their supplier partners. The NAA Expo creates the best environment for doing that. Other industry shows might focus on one area or another and I try to go to those shows, but NAA’s show brings it all. It’s the one show I will not miss.