By Bill Sendelback
Photos: ©2017 Greg Martin Photography. www.gregmartinphotoalaska.com.
In the fall of 1977, when two high school buddies began cutting firewood in the remote Alaska bush, and selling it, they had no idea it would lead to a highly successful retail operation in Fairbanks. Today that retailer, The Woodway, sells stoves, fireplaces, heaters, outdoor power equipment and grills in what The Daily Beast website calls “America’s coldest city.”
“The snow got so bad that winter that eventually we couldn’t get out to the woods,” recalls Kent Severns, now owner of The Woodway. The father of Severns’ wood-cutting buddy had been selling wood stoves in Fairbanks, but when he moved from the city, the two friends took over the dealership.
“After selling a couple of wood stoves from newspaper classified ads, we figured out that this was a lot easier than cutting firewood,” says Severns. On April 1, 1978, the pair opened a wood stove shop in Fairbanks.
In 1982, Severns bought out his partner, who then became a hunting guide and bush pilot. “He dealt with stress by going hunting,” says Severns, “but I felt we needed to deal with the issues. We’re still good friends.”
Today The Woodway offers wood, pellet, gas and oil stoves; wood, gas and electric fireplaces; wood-burning cookstoves; oil wall heaters, chimneys, accessories, grills and outdoor power equipment (OPE), as well as power equipment service.
|The Woodway looks just as you would expect an upscale Alaskan hearth shop to look – with beautiful wood everywhere.|
The raw northern Alaska climate makes Fairbanks ripe for any type of heating equipment. It has a city population of about 33,000 and an area population of close to 100,000. Summer temperatures may hit 90 degrees F, but average winter low temperatures range from minus 15 degrees to minus 25 degrees, with temps occasionally dropping to minus 60 degrees.
“With these winter temperatures, obviously our homes need plenty of heat,” Severns emphasizes. Fairbanks has no natural gas, so oil is the primary heating fuel. Oil-fueled wall heaters are a very popular heat source in the area. Severns sells the Toyo brand from Toyotomi, “an efficient, relatively inexpensive heater to install and run,” he adds. While hearth products (primarily wood stoves), are 46% of The Woodway’s gross sales, Toyo oil heaters are a respectable 15%.
Outdoor power equipment (OPE) is 25 percent of the store’s sales; that includes chain saws, snowblowers, mowers, brush cutters, generators, pumps and log splitters. Repairs and service are 10% of sales, evenly split between hearth products and outdoor power equipment. And while OPE sells well in Fairbanks, Severns points out that “the margins in power equipment are just horrendously bad. Manufacturers want us to sell it for a very low margin that probably doesn’t even cover our costs and overhead. In power equipment, the money is in the service.”
Severns’ market is unique compared to that of most hearth dealers in the Lower 48. “After you get beyond the 100,000 people in our area, there is nobody for another 200 miles. We have all kinds of people here, from those who want to live in the bush to young people just getting started.”
Severns does sell regularly in the town of Delta, Alaska, 100 miles southeast of Fairbanks, but with only scattered villages beyond that, The Woodway sells and works with bush communities by delivering products by bush planes. “We don’t travel there often for service, but we will if it’s needed,” he says.
Alaska’s economy is closely tied to the price of crude oil, and it had been strong until a few years ago when oil prices fell to $40 and $50 a barrel. “The current drop in oil prices has really hammered the state,” says Severns. “The local and state economies are hurting because we derive most of our state income from oil production. So there have been a lot of cutbacks in state jobs, and that trickles down to cutbacks in the private sector. When the cost of heating oil – the primary heating source in Fairbanks – goes down, there’s not as much cost savings in burning wood.”
Homebuilder business is very small for The Woodway. “We don’t get huge new home projects like down in the Lower 48,” he says. “A builder here might do six or seven new homes in a rip-roaring year, but our economy is now on the downside.” Severns says a lot of people in the area build their own homes, typically starter houses of 400 to 600 sq. ft. “So we work a lot with individuals who are building their own homes, ranging from starter homes to some multimillion-dollar custom homes.”
To survive and thrive in this rugged country in a down economy, Severns learned long ago the importance of relationships and treating people right. “We build relationships by treating people the way we want to be treated, whether it’s customers, suppliers or employees,” he says. “It’s not just about the sale. It’s about making sure that customers get the products and the service they want. It’s about having a relationship with suppliers so you work hand-in-hand to benefit both parties. It’s also real critical with your employees. If it’s a good deal for the customer and a good deal for my employees, then it’s a good deal for me.”
Severns certainly has developed strong relationships with his employees. The Woodway has 20 full-time employees and eight part-timers; one of the full-time employees has been with The Woodway for 27 years. Four more have more than 15 years of service. Hearth product sales and installations account for eight employees, including a chimney sweep. The outdoor power equipment sales and service also employs eight people, plus one in Toyo heater sales. Other employees include Severns’ wife, Cheryl, daughter Aspen and Severns himself.
|L to R: Clinton Severns, vice president of The Woodway (owners’ son); Lorene Kinsey, bookkeeper for 28 years (grandmother); Cheryl and Kent Severns, owners.|
Severns’ oldest son, Clinton, is vice president, which provides him with “a needed fresh set of eyes” and direction for the future. Fairbanks is an EPA non-attainment area for emissions, so Clinton has been instrumental in guiding The Woodway into product lines with very low-emission wood stoves. He also heads up employee training for things such as pellet and gas stove sales and service.
Severn’s daughter, Aspen, is involved mostly in a variety of special event promotions sponsored by The Woodway. “All of our kids worked in the business as they grew up, but I was a little hesitant to get them too involved because I didn’t want them to feel obligated to take on the family business.”
He encourages his employees to be well educated and trained in the company’s product lines, especially hearth products, with training provided by the National Fireplace Institute and the Chimney Safety Institute of America.
Part of Severns’ personal education was obtained at the HPBExpo, an event he recommends attending. “You hear people say that each show is the same as the last one. It is unless you start digging. If I were able to implement everything I learned at the show, I probably wouldn’t need to go back the next year. But you never get everything accomplished. So I need to go back the next year, learn more and get inspired once more. Going to the trade show, learning and getting educated has helped me a lot.”
Severns points out the tremendous influence that manufacturer’s reps Tom and Lloyd Pugh (both are deceased) have had on his business. “They were an incredible influence on me and how I do business,” he says. “They were all about building relationships, and Tom’s book “Blueprint for Success” was very helpful. Many people have come along who have played a big part in my business, but Tom and Lloyd took time to build a relationship with me and help me build my business – not to just make a sale for their bottom line.”
Like most successful retailers, competition is not much of a concern for Severns. With few competitors still in business in Fairbanks, his biggest competitors now are Toyo dealers selling wood stoves, and Big Box stores selling wood and pellet stoves.
“You deal with competition by having relationships in the community and by having employees who know the products,” he says. “That’s how we differentiate ourselves. We have a ton of knowledge that you don’t get in a Big Box store, and you don’t get that in a store that doesn’t invest in education and training.”
Service and installations are so important to Severns that he insists on keeping those functions in-house even though he’s concerned about liability issues. “We can control things by doing them ourselves,” he says, “plus it gives us a leg up on competition when you have knowledgeable, professional crews. Our reputation for that has kept competition from getting a foothold here in the last few years.”
Both service and installation functions are profitable for The Woodway. “You’ve got to run it right to be profitable,” he says. “We’re getting to the point where we know what we’re doing, and this can be profitable.” But he points out that service work for his OPE is much more profitable than OPE sales.
Product purchases for The Woodway are through a combination of dealer-direct and distributor dealings. More important for Severns is keeping a limit on how many suppliers he has. “There’s always the concern that if I don’t take this line, someone else will. But I have found that it’s relationships that are important. If I buy from fewer suppliers, I’m buying more from each. That helps me have a better, closer relationship with those suppliers.”
|Once again, the use of wood sets off the store’s products: this time it’s Heartland Appliances.|
For example, he limits his wood, gas and pellet stove suppliers to three main ones plus a few boutique product lines. “We try to limit how many different brands we carry so we know our products well and have deeper relationships with those suppliers,” he says. “Sometimes it also means better discounts, but even if it doesn’t, it means I can more easily call and get answers when I need them.”
Going to the HPBExpo helped him design the showroom to be much more functional and effective. “In 1982, in our old store, when you walked in the door our counter was on the right,” he says. “To the left was a small, well-lit room, but we couldn’t get people to go into that room. It was bizarre.”
At an education session at the HPBExpo, Severns learned that customers naturally tend to go to the right, so you should put your counter on the left. “When we designed our new building in 2009, we took into account how our 5,000 sq. ft. showroom would flow, and it made a tremendous improvement.”
When customers walk through the door, an RSF wood-burning fireplace is operating on the right. The showroom continues on the right, by gas fireplaces into a kitchen featuring Heartland cookstoves, and then into a wood stove area before finally coming back to the main showroom. OPE products are displayed in an area to the left of the counter.
“You don’t want people wandering around lost,” he says, “but if you’re busy, there’s a natural flow to the showroom for the people to shop.”
While most hearth product retailers in the Lower 48 have moved their advertising efforts from traditional TV, radio, newspapers and Yellow Pages, Severns still puts 45% of his advertising into radio spots and 35% into TV commercials, with 20% left for numerous open house promotions.
He knows that his ad budget of 1.25% of gross sales is low, but even with the slow economy making him tentative, he expects that percentage to increase in order to advertise more for his Toyo heaters and outdoor power equipment as competition increases in those two categories. “We won’t have to advertise hearth more, but we do have to keep our name out there,” he says.
Included in the special events sponsored by The Woodway are a spring May Day open house and a fall open house. “We also put on four First Friday open houses with local artists showing their creations throughout our store,” he says. Daughter Aspen hosts these events, and organizes each one.
Store exposure on social media has been “a weak point we need to work on,” says Severns. The Woodway is primarily on Facebook, and Severns uses email to send out occasional promotional newsletters.
With Alaska’s economy moving at a slow pace, he is “a little tentative” about future expansions, which include thoughts of a satellite store. “I’m not really looking to expand,” he says. “In a downturn, you want to make your operation more efficient and make it run like clockwork.”
Being more efficient includes paying your bills, according to Severns. “One of the simplest things, but maybe not the easiest, is to pay your bills. When I can make 2% by paying on the 10th of the month instead of the 30th, to pass that discount up is just insanity (right now Tom Pugh is gazing down and applauding). Money may be tight, but if it’s tight, someone did not prioritize.
“My bookkeeper for the last 27 years, my mother-in-law Lorene Kinsey, is fanatical about this, and the amount of money that she saves me with discounts more than pays for her salary.” According to Severns, Lorene plans to retire next year on her 90th birthday!
Alaskans have adventurous spirits. They enjoy the midnight sun, the northern lights, glaciers, wildlife, ice carvings and sled dog races, according to Severns. “The Woodway helps them create a comfortable home in this dark and frigid Arctic, which makes living in Alaska that much more enjoyable.” The Woodway has been “warming the heart of Alaska” since 1978.
Store Name: The Woodway
Address: 1830 RJ Loop, Fairbanks,
Phone: (907) 452-4002
Fax: (907) 452-5332
Owners: Kent and Cheryl Severns
Year Established: 1978
Number of Stores: One
Number of Employees: 20 full-time, 8 part-time
% of Gross Annual Sales by Product Category:
Hearth – 46%
Outdoor Power Equipment – 25%
Oil Wall Heaters – 15%
Service – 10%
Accessories – 3%
Grills – 1%
Square Footage: Showroom: 5,000; Warehouse: 8,000 and 5,400; Shop: 3,500
Hearth – Quadra-Fire, Blaze King, Harman, Heartland, Hearthstone, Kuma, RSF, Valor, Heat & Glo, ICC, Kidco, Hearth Classics
Outdoor Power Equipment – Shindaiwa, Jonsered, Red Max, Exmark, Honda, Columbia, Brave Log Splitter, Lewis Winch, Husqvarna, Scag, BCS, Briggs & Stratton
Oil Wall Heaters – Toyo
Grills – Big Green Egg, Louisiana Grills
% of Annual Gross Sales for Advertising: 1.25%