The switch to digital price tags was a few years in the making for Cut Bank, Montana-based Billman’s Inc. But now that they’ve made the switch, co-owner Jeff Billman says they’ll never go back to paper tags. The benefits, he says, well beyond the time saved having to rip and replace labels.
Rob Stott: All right, we are back on the Independent Thinking Podcast, and I am pleased to be joined today… I don’t know that I’ve ever spoken with anyone from Montana. I could check that off the list. Mr. Jeff Billman, I appreciate you calling in bright and early this morning from Cut Bank, Montana. Looking forward to diving into this with you.
Jeff Billman: We’ve been social distancing in Montana since before it was a thing, so it’s not uncommon for people to have never met somebody from Montana.
Rob Stott: How far is your closest neighbor?
Jeff Billman: The closest town is 20 miles. Or my actual neighbor?
Rob Stott: Yeah. Is it a mile down the road, or are you guys-
Jeff Billman: I’m still a good, I don’t know, 500 feet to the closest… My property line and the next person’s…
Rob Stott: Better than the mile or two down the road that I was anticipating. but awesome to get to catch up with you. A co-owner along with your parents of Billman’s up there in, as I mentioned, Cut Bank, Montana. Tell us a little about yourself. Obviously a family-owned business. This has been something that’s been in your family. But was retail, always something you imagined getting into?
Jeff Billman: I’m third generation, so I’ve been working at the store since I was middle school, so 25 years now. That’s kind of hard to believe. But typical small-town kid, where in high school the last thing I thought I wanted to do was move back here and run the store. I mean, I wanted to do anything else. But apparently it was what I was into. I went to college, ended up picking business management as a major. I eventually found myself even in college as a sales department manager for appliances at Home Depot in college.
Rob Stott: Were the parents a little… Big box versus that mom and pop. How did they feel about it that?
Jeff Billman: I think they knew it wouldn’t last. It was one of those things where I was excited about it for a while. I’m like, “I could transfer around, move up to some other stores, eventually be a store manager for Home Depot.” And eventually I sorted out I wasn’t cut out for corporate life. I’m more of a small business, be my own boss.
Rob Stott: The dark side’s pull just wasn’t that strong.
Jeff Billman: Exactly. So that was when I eventually decided, “I want to get back to Cut Bank, get back into the family business,” and came back here after college, and I’ve been here since.
Rob Stott: And as you mentioned, third generation… Business has been around for, I think, a little over 40 years. Is that right?
Jeff Billman: Yep. Started in 1979. My grandfather and father actually started it as a lumberyard originally. So the store’s been through a lot of changes, going from lumber to hardware. Actually, they had a construction company before lumber, and that was how they got into lumber. The appliances were kind of a late addition. …just got into Speed Queen laundry at one point, and then went to Magic Chef, and then when Maytag bought Magic Chef went to Maytag, and then Whirlpool bought Maytag, so now we are a Whirlpool-exclusive dealer.
Rob Stott: Gotcha. Obviously a lot of evolution over that time. Talk about some of the new businesses. Appliances… What else do you guys… I think True Value… Are you guys part of like a… You’re also a hardware store as well?
Jeff Billman: Yep. So we’re a full-line True Value Hardware store, and then we also do flooring. So our store is basically split into thirds, three different departments, with a flooring department, hardware, and appliances. Each one of them basically accounts for a third of our business. So it’s kind of nice, because you always have those cycles of hardware’s down, appliances are up, flooring’s down, hardware’s up. When one’s down, another one’s always up to help carry things through.
Rob Stott: Gotcha. I mean, obviously over time businesses evolve and things like that. What are you guys doing? Are you still looking to… Are you always keeping an eye on things that you could potentially add to the business? How do you guys walk that line?
Jeff Billman: Yeah, we do. The hard part with us, we’re in a really small town. So our town is actually 3,500 people, but our drawing area is 100 miles around us, so we have a large drawing area. And we’ve gotten to the point now where… When we started, there were three appliance stores in town. Now we’re the only one. There used to be three hardware stores in town. Now we’re the only one. You don’t want to take over every industry in town, or you kind of start looking like the bad guy. I looked. At one point I wanted to add lumber, but we had two lumberyards in town. My dad’s like, “No, we don’t need to take that over.” So that’s kind of the balancing act in a small town is you want to provide things that other people don’t. We’re always looking to add new categories. When I came back from college, we actually started a furniture store as well. So we have a furniture and electronics store at a different location.
Rob Stott: Gotcha. What do you credit that to, the staying power of the business, to be able to… You mentioned those other places going out. What is it that kept Billman’s around or made Billman’s sort of the go-to choice there?
Jeff Billman: A lot of it is, small town, everybody gets stagnant, and they don’t want to grow. They want to keep doing things the same way that the previous generation did it. And my family has been really good that way, about wanting to grow. My grandpa was good that way with my dad over. If he wanted to change something, change it and run with it. My dad’s been the same way with me since I’ve come back from college. He turned appliances over to me right away and just kind of got out of the way to where… I’m sure I’ve made some decisions he didn’t like. He thought it was crazy when we started selling on our website, but it’s worked out really well. Been a lot of things like that. I remember in college, I came home from Home Depot one day, and I was walking around our showroom. We have two stainless steel refrigerators on the floor, whereas Home Depot has two white. We’ve got to start getting into the new styles and into the new things and just keeping up with the trends and constantly growing.
Rob Stott: What’s that dynamic like? Obviously we hear about generations being passed on not too often, or at least that we’ve been able to talk to on the podcast here, where it’s a parent and child dynamic. So what’s it like working with your parents and being co-owners there?
Jeff Billman: It’s good. A lot of people, my age would say they haven’t seen their parents in weeks or months, and I rarely… My parents are on vacation right now. I haven’t seen them in a week, and that’s odd for me. My mom actually was going through a cancer battle this last year, and with COVID they weren’t able to work, so not seeing them around the store for six, eight months was, was extremely strange. And with that, that was when things really started get to where I was doing it my way. And now with them coming back and being around the store more, there’s a little bit of butting heads, but we do good about everybody has their own lane. You stay in your own lane. And if somebody has a better idea than another, you get voted out, and we go with that idea.
And then when the weekends and evenings roll around, dinners, it’s family time. It’s not business. My parents actually have a lake house that we all go to on the weekends a lot in the summer, and when we get up there, that’s one of the rules. You don’t talk about the store, and it’s just family time. So it definitely has its challenges, but it’s fun.
Rob Stott: That’s awesome. Now, another service that you guys offer… I saw service and repair is something you do. Has that always been the case for Billman’s?
Jeff Billman: Yeah, to a certain extent. I mean, I remember when I was younger, middle school and high school, our main delivery guy was actually doing the service, but that was back when working on old Speed Queen washers, bailing wire, duct tape, zip ties, whatever it took to fix it. You weren’t working on control boards and electronics like you are now. I think probably 20 years ago we added an actual factory-authorized service tech, and we’ve been in that business ever since.
Rob Stott: Gotcha. Obviously service is something that Nationwide recently made more of a push into with the Service Leaders Network and offering training and support there. But what is it about service that makes it something that’s beneficial to the business? I know there’s some appliance retailers that don’t offer service necessarily. So what is it that makes it an attractive thing for you guys to have as a service for your customers?
Jeff Billman: I mean, it’s definitely something that’s helped us grow our appliance business. Back when there were more stores in the area, somebody would buy one from a different store, and then when they needed service, they’d call us for service. And it gets our foot in the door to where next time you’re looking an appliance, why wouldn’t you buy from us, when we service it?
Lately it’s a lot more of a challenge that way. You get the customers that go buy at Home Depot, Lowe’s wherever, and they still expect you to come service it. And then right now we look like the bad guy when you can’t get parts. So the service industry is one of those right now where I wish we didn’t have to be in it, but there’s not another servicer within 100 miles of us. So if I sell somebody a $1,200 washing machine and six months down the road tell him, “Sorry, I don’t know who to call,” then we’re really in trouble. So it’s kind of a double-edged sword right now with service. It helps you grow the appliance business, but also a lot of times it makes us look like the bad guy when you can’t get parts. And with us, we service a 100-mile radius. So you get a customer that calls 80 miles away with a dead refrigerator, and they want you there today when you already have … dollars locally. It’s a very tough thing to balance.
Rob Stott: Yeah, I can imagine that. Now, the parts thing, is that, do you think, strictly a COVID situation, where things are in short supply? Or is it something broader?
Jeff Billman: Yeah. Especially cosmetic parts. Whirlpool right now isn’t shipping anything for cosmetic parts. So you deliver a damaged fridge and try to order a door, you’re not going to see it for a year probably. When customers buy it from us, with us during service, they expect us to rob parts off our floor models and stock models, which usually isn’t a big deal, because you can order another one, but right now when you go to another one it takes three months. It is a big deal. It has it’s challenges like everything else.
Rob Stott: Is it something that’s gotten better since the start of the pandemic? Where do you feel you are in that?
Jeff Billman: No, I think we’re still right where we were a year ago. That’s what’s baffling to me. And it’s not just appliances with us. That’s the nice part with doing the three or four industries. It’s furniture. It’s hardware. It’s flooring. Carpet’s about the only thing that’s not, because carpet… There’s no imports. It’s from Dalton, Georgia, and it’s produced right there, where they haven’t had any issues. But other than that, every other industry we’re in, we’re seeing the same thing.
Rob Stott: And credit to your dad for keeping you out of lumber. I know, talking about furniture, that’s a space that’s hit hard right now. Impossible to get your hands on lumber for… Whether it’s furniture or home projects, it seems like that’s one of the materials that’s in incredibly short supply,
Jeff Billman: Yeah, I think you should have invested in plywood six months ago instead of Bitcoin.
Rob Stott: Oh, that’s funny. Well, I want to switch gears almost in a completely different direction, because the reason actually we first got in touch was something as simple as a price tag. I know you guys recently made the transition into the digital age with price tags. So talk about that a little bit, what it was like going from, I assume, paper tags and things like that, just posting them on products or shelves, into these digital tags with Pricer.
Jeff Billman: Yeah, I mean, we’d always been with CMIC DataTags before, so we were at least having the nicer-looking printed tags. And then we were at the New Orleans PrimeTime five years ago, probably. I think it was the first time that Pricer was there and sent a little tag out with everybody in their packet. I remember looking at that like, “God, this would be awesome to have in our store. Imagine the time it would save.” And that was my big thing at that time, was thinking of the time savings. Then I looked at the expense of it like, “Yeah, I don’t know if my time’s worth that much. It doesn’t take me that long to get it priced.” So it took me a couple years to make the decision to pull the trigger on it.
But we made the switch two years ago to the digital price tags, and I would never go back. I’m happy enough that actually I’m working on them right now to look at starting aisle by aisle doing our hardware section, because hardware right now, the prices are changing so fast, just like lumber, that you take an aisle that has 300 tags in it, you go to reprice that aisle, you’ve got a four-hour project for one of your employees, and then two weeks later it might change again. So I’m looking at changing more of the store over to the digital price tags.
Rob Stott: What was it that… You mentioned obviously the investment and things like that, all the things you have to consider before making that kind of a transition. Was there one thing that pushed you over the edge and said, “All right, now’s the time to do it”?
Jeff Billman: Yeah, it was probably when I decided live with the shopping cart on our website as well, where you could actually shop online. When I did that, I knew I had to get my pricing in line on the website. That was what was holding me back before, was I thought it was going to too hard to run the pricing off there. But once I went over and started… I just switched to market pricing, market pricing every item on our floor all day, every day, and thought, “It would be awesome to have my floor match the website. Let’s do it,| and switched to digital at that point. Because it really helped me with getting to the point to be able to sell online, because now I know my pricing is right. If I bring a new model on my floor, I scan that tag and go to start a new tag, if it pops up and says, “Ask associate,” I know I’ve got a problem on my website. So it’s a good double-check.
Rob Stott: Explain market pricing for someone that’s not familiar with how price tags work and things like that. What does that mean? And why make that decision?
Jeff Billman: Okay, so with market pricing, they give you a lot of different columns on your app that you can use to set your pricing. And you’ve got MAP. You’ve got Lowe’s. You’ve got Home Depot. And you can set your market. So for me, my market, I just use Depot and Lowe’s to set the market. I don’t have a Best Buy within 200 miles of me. We don’t have Sears around anymore. So that’s my two main competitors, and that’s what I use as my market. Well, and now you have to add Whirlpool and there, since they’re selling against us online, so Whirlpool was also listed as part of my market for a competitor. And I set mine to be the lowest between MAP, MSRP, and market. So if Depot or Lowe’s doesn’t have it on their site, say, a 6230 pair that’s retail-exclusive, then it automatically goes to MAP, which is going to be a good margin item. Whereas before, if I was doing handwritten tags, I’d look at that one and think, “I have to have that marked down a little bit.” And no, you don’t, because you’re still going to be the lowest price around when somebody searches online, going with MSRP. So the way I’ve got it set, I’m the lowest between those three all the time.
Rob Stott: So this is… Not only is it a time-saver in ripping and replacing and writing new tags, but also doing the research for you.
Jeff Billman: Exactly. It makes it easier on my salespeople too. When somebody comes in… “What if I buy a fridge, stove, and dishwasher. You going to take 15% off?” No, I’ll make sure that we’re the lowest price around, and I can guarantee you it’s going to be the lowest price you have. So we’ve got an iPad around the Salesforce. If somebody starts trying to dick around price, pull up that iPad and show them, “Hey, look right here. We are the lowest price around. We’re the exact same as Home Depot. We’re the same as Lowe’s. You’re not going to find it cheaper anywhere else.”
Rob Stott: What are you some of the other unintended benefits or things like that, as you’re, I think you said, two years into it now with these tags, that maybe you didn’t anticipate, but you’re coming to learn to love with these digital tags?
Jeff Billman: The biggest unintended benefit was actually increased margin. I mean, I had heard that it could be a possibility, but there was no way that I thought our margin would actually go up. I thought it would probably stay the same, because you’re going to have some prices that drop, some that will probably go up a little bit. And the first time I noticed it was Black Friday, because we always meet the box stores at the bottom, to where when they drop it down to a 6% margin ticket, we’re the same, but then we never come back up to meet them at the top. And that was actually one of the things that drove me towards doing it, was the year before I had a salesman caught me, and he says, “Do you know we’re $500 cheaper than Home Depot on this refrigerator?” And it was because I hadn’t pulled the Black Friday tag in time, to where we didn’t go back up when they went up.
And now, watching that, our margins have gone up. Our sell-throughs have gone up. And when I looked through tickets at the end of the day, I’ll see a microwave go through every once in a while they’ll run something crazy, 2%, 1%, somewhere in there, but then you look up the sell-through, and it’s got a big sell-through on the back end of it. The Box Stores aren’t stupid. We might like to criticize them and act like they’re stupid, but they’re not. They’re not in this business to lose money, so if you’re matching their price, you know there’s some backend money there to cover it. And that was by far the biggest surprise, was that our margins went up.
Rob Stott: That’s incredible. And now, you mentioned the market pricing and things like that. If you stood in your store and stared at a price tag for a day, could you see that price fluctuate throughout the day?
Jeff Billman: No. I switched my now to where they only update at night. I did have them set to where it would run updates constantly whenever the website would, and it got a little unnerving. You’d have a customer standing in front of a washer and dryer, and all of a sudden the price goes up $100 in the middle of the day, and I didn’t want to do that. The other thing I’ve had to do with my salespeople is, if a customer’s in on a Monday looking at something, and they come back Tuesday or Wednesday and they’ve got their printout showing, “Hey, you showed me that this was 599. Now at 699,” we’ll still go back to that price, but only go a couple of days. And the customers know that when they leave the store, that we’re only guaranteeing those prices for a couple days.
Rob Stott: I know we’re talking about a lot of backend technology with these things, an app and things like that to manage them. Is it a big learning curve? Or was it a big learning curve for you guys to get this up and running?
Jeff Billman: It wasn’t for me, because I was already running the website. We’ve actually been with AYR1, I guess now is what they go by, since they were allyourfurniture.com. So before they were ever with Nationwide, they were with our furniture buying group that we were in at that time, so we’ve been with them forever. So I was already running that side of it, so it wasn’t a huge learning curve there. The Pricer app is so easy to run that… With us being out here in rural Montana, they couldn’t get somebody out here to get the install done in time for me. I did the install myself, and they got me a credit for covering the install myself. So it’s not something that’s difficult to run whatsoever.
Rob Stott: And I mean, you mentioned obviously the return… It’s increased margins, things like that, the time saving. Have you seen an ROI on it, or is it something you’re still kind of waiting on at this point?
Jeff Billman: Oh no, absolutely we’ve seen a return on it. I mean frankly between the margin, increased sales, and then with combining it with… It makes you manage your website better too. So I think that’d be a big advantage to people that aren’t managing their website. Once you have the Pricer tags, you’ve got to manage your website, because that’s where your pricing is coming from. And the amount of sales that we see generated from our website… We always have the people to come in with their printouts. “I found this on your website.” But now I go through once a week and update what’s in stock too, and with the in-stock appliances right now, we’ve got people driving from 150, 200 miles away to buy appliances from us, because they can’t find it cheaper, and they can’t find it in stock anywhere. And the tags are what really drove that for setting it in stock and having your pricing match. So yeah, it’s been huge for us.
Rob Stott: And that’s… I mean, even whether you’re talking pandemic market or not, when things like that… I think people looking for something that they can get right now has always been a driver of where they decide to shop or what they decide to buy, something like that. But to see it now… Are you noticing customers sort of interacting with you in your stores differently? Is the customer experience different because of these tags?
Jeff Billman: Well, this last year, it really was. It was really lucky to have these tags this last year, because a lot of people did not want a salesman helping them. They were either shopping online and coming in just strictly to see the product before they get it loaded up or they weren’t even coming in the store. And that helped them a lot, because you watch… Especially the younger generation that comes in shopping, if they don’t have a salesman with them, the first thing they do is they look at a tag, they pull out their smartphone, and they’re on the internet searching the price. So when you’re standing there and they won’t let you wait on them, if you didn’t have those tags, you didn’t know you’re the lowest price. There’s a good chance you’re going to see them walk without them even giving you a chance to talk to them. Whereas with the tags, you know they’re not going to find it cheaper anywhere else. The looks on some of the people’s faces, especially November months with Black Friday and all the promotions going on, when they pull out their phone and see that we’re the same as what Home Depot and Lowe’s Black Friday pricing, it really drives the confidence up in the consumer.
Rob Stott: And kind of yourself as well, I imagine. It’s kind of like a, “Ha ha, you’re wasting some of your own time there,” watching them search, knowing that you are the lowest price.
Jeff Billman: Especially where we’re at, because with us being in a small town, our nearest real competition is 120 miles away, which everybody thinks is an advantage. But to a certain extent it’s not, because before when people really wanted to shop… The internet was a good thing for us, because if people wanted to shop, they’d drive to Great Falls where there’s four or five stores and they can shop Home Depot, they can shop an independent, they can shop multiple places, and once they leave and they drive down there, it’s a shopping day for them at that point. They’re not just there to buy a washer. They’re there because it’s a day out of Cut Bank and they get to shop around. And once you lose them down there, even if you were the same price, you probably weren’t getting them back. Whereas now, with people shopping price via the internet and phones, we’re beating them before they ever leave our store, so we don’t see near as many walking and then going to check price elsewhere.
Rob Stott: That’s awesome. And now, I know you mentioned you’ve seen the benefit of these already and looking to expand. So you have them… How are they set up in your store right now? Do you have them on appliances? You mentioned possibly looking to expand into hardware.
Jeff Billman: Right now I just strictly have them on appliances and Traeger. And yeah, I’m looking to expand into hardware. Hardware is going to be expensive because there’s not a lot of items in there. So right now I’m going through and trying to figure out which aisles are going to change the fastest. So right now it’s plumbing and electrical is what’s changing the fastest, so that’s probably going to be where I start. We’ve got 16 aisles worth of hardware. I want to try getting to where I do four a year, trying to break it up a bit in cost.
Rob Stott: The cool thing about that, though, is that it shows that these digital tags have a purpose whether it is on a big item, like an appliance, that you can put a big tag on, down to those hook and pegs and things like that you can put a tag on the front of. You’re still going to find value no matter the size of the product or where it is in the store.
Jeff Billman: Exactly.
Rob Stott: That’s awesome. Cool to hear. We’ve seen a lot of info on these tags. We talk about them a lot amongst ourselves and with the vendor partners as well, but to hear someone using it and the benefits and how it’s changed the experience for you in the store and then also just increased… Peace of mind. It’s almost peace of mind because of these tags. So, Jeff, I appreciate you taking the time and sharing the story. And like I said at the top, crossing off of my list being able to talk to someone from Montana, so-
Jeff Billman: Not a problem.
Rob Stott: This was great. I appreciate your time and look forward to catching up soon.
Jeff Billman: Sounds good. Thanks.