By Ashleigh Hollowell
Big R, a farm and ranch supply store that was founded on Colorado’s eastern plains in 1962, started as a small family business with around 25 employees. More than five decades later, it’s the largest ranch and home supply retail chain in the state — and they aren’t finished growing yet.
With stores in three states and more than 700 employees, Big R is laying the groundwork for further expansion. While the company won’t open multiple stores this year, it’s still a pivotal year for growth for the ranch retailer.
This summer, Big R will move into a new, 195,000-square-foot distribution center in Pueblo, thanks to help from the Pueblo Economic Development Corp.
“From our perspective, there are a number of things that would make distribution strong in Pueblo for Big R,” said Jeff Shaw, CEO of PEDCO.
“Pueblo being set up for distribution, it has networks and you’ve got two major arteries — I-25 and Highway 50. When they moved to Pueblo, it was successful for them and it made sense for them to expand their operations. What made it possible was their history of success and their great reputation in the community.”
While the Pueblo EDC sees its main priority as diversifying Pueblo’s workforce through recruiting and expanding businesses with the majority of its exports outside the local community, it didn’t hesitate to help Big R with its expansion goals.
“What we did, we brought their headquarters and their distribution facility to Pueblo and the announcement was the expansion of their distribution facility,” Shaw said.
“So it helps serve their stores, but we don’t work directly in the retail environment.”
PEDCO was able to retool the 195,000-square-foot facility once used by Boeing to build rockets. Big R is remodeling it to match its needs.
“Currently, we don’t have enough space to handle the product we need to support our stores or enough room to house it,” said Adam Carroll, COO at Big R. “A significant driver is the ability to buy in bulk and stage it as the stores need it, instead of short-servicing them because of lack of room or overstocking. The opportunity to buy in bulk will drive down costs, but before this new distribution center, we didn’t have enough space to hold it.”
The new distribution facility is opening with the full support of the Pueblo EDC.
“They have a great network. The owners of Big R are down-to-earth, great people. When we incentivize and work with somebody like Big R versus a Fortune 500 company, it’s obviously a different conversation. We know their history; they’re great partners in the community; they invest in the community.”
In 2015, Big R opened four locations, but the company is slowing down its retail growth to focus on other parts of the business and regenerate capital. In April, it plans to open a location in Pueblo West that is now under construction.
But the company’s main focus will be strengthening its bottom line, training employees and expanding its stock, Carroll said.
“It has to do with opportunity and playing the markets,” he said. “As you build up capital and deplete capital, you want to slow down and replenish capital. A lot of it has to do with opportunity for us. We do not build new, and use second-generation real estate whenever space is available. We take the opportunities while making sure we feel comfortable we aren’t depleting too much of our capital.”
However, Big R is building on the site for the new Pueblo West location. The company was not able to find a second-generation real estate space that suited its visibility and traffic count needs.
“There are always risks,” Carroll said. “You risk spending a lot of capital hoping it will pan out the way you want. Sometimes there are infrastructure costs that right now don’t generate additional revenue, but down the road, they will.
“There’s always that risk and uneasy feeling about making a lot of calculated moves, hoping you’ve done all your due diligence, and that your execution is correct so that when you get there you see the benefit of what you’re really going out to get.”
When deciding to expand, Carroll and his team look at several factors.
“We look at what does that market have and don’t have? Where is it underserved? How is the culture of that market? Is our business model going to fit well? Are we going to be received well in that environment? We study everything from population to household income and even animal population, like the average number of household pets and agricultural animals,” Carroll said.
“We study daily traffic and economic factors We study the markets on a micro scale. First, we look at macro factors, then micro based on what benchmarks are important to us.”
Expansion rates differ from business to business and the decision requires some insight into revenue and finances, said Michael Wakefield, director of the Healy Center for Business and Economic Research and Services and professor of management at Colorado State University-Pueblo.
“The rate of expansion is usually predicated upon the current cash flows and future cash-flow projections. It is important to not outrun your expected profits,” he said.
“That is why it is critical to develop pro forma financial statements — projections of income statements, balance sheets and cash flow, based on realistic assumptions driven by market and economic conditions.”
Carroll’s advice to businesses interested in expansion is to be prepared to meet employee needs, he said.
“Expansion puts a lot of stress on your people when you’re growing,” Carroll said. “Be alert to their needs. Sometimes you don’t know how much you’ve asked of them until you figure out that they’ve maybe been overwhelmed.
“Keep a pulse on the team and add proper resources to keep your team strong.”