Tim Taylor

Tim Taylor is president and CEO of Environmental Home Center, an 11-year-old Seattle supplier of environmental building products with 22 employees. It sells primarily retail, with some wholesale sales to other retailers. About 30% of its business is contractor-based. HousingZone.com editor Chris Porter talks with Taylor about the store's success.

HousingZone: Could you tell me a little bit about the history of your store, how you got started and what the state of it is now?

Taylor: My partner, Matthew Freeman-Gleason, started the business. He was a contractor who had decided it would be beneficial to use green building materials and was trying to find things that wouldn't kill him or the planet in his building practice. So he decided to migrate his building practice to integrate those sorts of materials and quickly discovered, 11 years ago, that he couldn't find them easily. If anyone was going to succeed using materials like that, there needed to be a supplier who would research inventory and source green building materials. That was how he started.

We sell building materials and finished goods that are more energy-efficient, resource-efficient or better for your health. That's kind of the designation we've chosen. We sell framing products, panel products, insulation. We sell roofing, siding, decking, fencing. We sell interior goods such as paints and coatings, plumbing fixtures, wood flooring, cork flooring, carpet, etc. Kitchen cabinets. So we're pretty broad. We go to market through three primary sales legs of our stool. One is through our retail showroom, the second is with an outside sales group, and the third is through a call center.

HousingZone: About 30% of your business is contractor-based. How does the rest break down? Are you looking at do-it-yourselfers, architects?

Taylor: Generally speaking, architects are customers of ours in that they're end users. But we view architects and designers as being important people in the value chain but generally not customers. So maybe a third of what the outside sales group does is work with architects and designers. We do a lot of brown-bag lunches. We do a lot of educational seminars. We do a lot of forums in our showroom.

A lot of this business is research-oriented and information-intensive. It is the single biggest challenge and the single biggest barrier to entry into this business: the information content intensiveness. In terms of the core customer base outside of the professionals, I would say we are more biased toward buy-it-yourselfers than do-it-yourselfers.

HousingZone: Do you do installed sales?

Taylor: We do, in very limited areas. Probably more accurately, we have a robust referral program that is a circular system of referrals. We think it is a little bit unique, and it works well for what we do. We don't just refer people out. We have a circular information flow on how those referrals are doing with our customers and with our referred companies.

HousingZone: How do you compete with big-box retailers, The Home Depot or Lowe's? What specific products or services do you offer that they don't or can't?

Taylor: Everything.

HousingZone: They don't sell any of the products that you do?

Taylor: Generally not. Obviously, The Home Depot and Lowe's sell something that we sell, so I'm exaggerating. But there are a few things regarding the big-box retailers: Number one, they don't carry the vast majority of what we carry in terms of product. Number two, we completely outdo them in terms of the education, the smarts of our employee base and the research and information we have on the products we sell. And number three, we're about one long block, two long blocks and one short block away from Home Depot. If I could get closer, I would. I'd love to get right smack on top of them. They actually refer people to us.

HousingZone: You've talked about the information and educational aspects. Where do you get your information about new products or new green building processes?

Taylor: Generally, we do our own research, which obviously starts with going to the manufacturers. Beyond that, we may go to the manufacturers' sources. We may do independent research. If the information we're provided doesn't make sense to us or doesn't fit with things we otherwise know, we dig deeper. One of the things we probably hear most commonly from manufacturers when we do product research is, "Gee, nobody ever asks us these questions." I think there is a tendency to not ask, and we see that in terms of some of the wood products particularly, uncertified wood products coming from more dicey areas of the world.

HousingZone: How do you refer to your products? Are they green products, environmentally friendly products, sustainable products? What terminology do you use?

Taylor: I told you why we carry our products, and this will sound a little contrary to that. But we're moving our marketing away from the traditional "buy-this-because-they're-green-products" and toward three standard value propositions. One is the aesthetics of the product and how it is merchandised. Two is durability. Three is personal health. Those three universally resonate with people.

People may disagree and say, "Well, I like that aesthetic, and I don't like this aesthetic." But as a concept, few people will say, "Give me the butt-ugly product." The same with durability. People may say, "Well, I want to understand the cost proposition with durability. But I'd certainly prefer a more durable product over a less durable product." And I know of very few people looking for products that are bad for their health. People always prefer a product that is better for their health. So we're trying to migrate our products in that direction. When people say, "How many customers are interested in buying green building materials?" I tend to say, "Our customers are anyone who buys building and finished materials."

HousingZone: Do you think the word green has a negative connotation?

Taylor: Absolutely.

HousingZone: What perception do people have?

Taylor: That it's overpriced, under-performs, ugly. Basically, those three things.

HousingZone: Are consumers, builders or both saying this?

Taylor: Less and less with consumers. I'd say it's stronger with contractors.

HousingZone: Is this from personal experience?

Taylor: I think a fair number of products came to market based on purely a green, recycled-content, buy-this-because-it's-better-for-the-planet sort of methodology, and manufacturers forgot it had to be priced appropriately. They forgot that it had to function equally if not better. They forgot that sort of standard value proposition. I think one of the biggest jobs we have to do with the information we provide and the way we merchandise it is to be overt with people and physically show them that these products are aesthetically comparable or superior, they're more durable, and they're incredibly price-competitive, as long as you make sure you make the right apples-to-apples comparison.

HousingZone: What would you say to a builder who might be resisting green products?

Taylor: First of all, we try to take a pointed approach. Rather than say, "We think you ought to try our products as a total package" - don't get me wrong, we love to sell whole-house packages, and we love to sell to contractors - we would zero in on things like, "What's your experience been?" and "Where have you had problems?" Then we just work to service them. Sometimes we comp them products just to try them out, see how they work. Sometimes we've provided very specific information: "Here is this suite of products, here is the price, and here is the price of the competing, non-green product." We show them that the actual first cost often is not more and sometimes not even the same - it could be less - so they can provide an added value to their customers, come out looking really good and actually save their customers money.

So we take a very traditional approach, which is to show them how the products work and make sure the risk equation for those contractors is in balance. I've been a contractor. I know why contractors tend not to adopt: because they have the highest risk equation, and they're at the front line when problems occur. As a retailer, we figure we have to solve those problems for contractors. Make sure they understand they won't be at risk trying our products.

HousingZone: What are some of the more common things they've brought to you and said, "This is where I've had problems in the past"?

Taylor: A good example might be low-VOC, nontoxic paints. Contractors may have had experiences with paints that, frankly, were poor quality. They may have been low-VOC, but if they don't flow on right and don't perform and don't dry and don't look the way they're supposed to look and don't last, builders won't be interested in continuing to use them. That's one area. Another area is certified wood. They have wood that's been sitting in yards for too long, and sometimes it has mold, sometimes it has warpage. Wood doesn't do well sitting around through multiple seasons.

HousingZone: Are there regional differences, or is a green product a green product anywhere?

Taylor: A green product, in our view, is a better product. It's just a bigger version of value. If you can give a contractor or a customer a product that's aesthetically superior, lasts longer, is better for your health and is priced competitively on a first-cost basis, that's a better product. And if it was sourced through a recycled source, or if no tree in the last 150 years was cut to make it, or if it saves energy or water, that's simply a better product. It's just a bigger version of value.

Being based in Seattle, we do the largest percentage of our sales in Washington, so it's a little hard for me to comment on what life is like in Santa Fe or Boston. Clearly, there are regional differences in how you build. We don't have a lot of adobe up here, so using breathable wall paint in adobe or cob construction would be valuable, but there's no adobe to speak of, and cob is only beginning to take off here. I'm sure there are regional variations that would result in green products that would be more or less suitable.

HousingZone: What has changed in the last 10 years in the green building market, and where is this going? Will there be more stores like yours across the country? Or what will it take to get more stores like this?

Taylor: If I had to summarize in one sentence what's changed in the last 10 years: The wind's behind us as opposed to being in front of us. You move a lot faster when the wind's behind you, and it's a lot more fun.

Putting a little finer point on it, I imagine myself sitting in a space with everything that could pertain - directly, indirectly or as an indicator to this business - in a circumference around me. If I look forward, I see manufacturers -- large manufacturers - coming on line with better, more sustainable green products as one indicator. Then I look slightly to the right and see smaller manufacturers and regional manufacturers coming on line. Then I look a little further and see the consumer demand. Then I look a little further and see the commercial demand, and I see the architectural firms. Then I see degreed programs on sustainability. Then I see folks such as yourself in the media - print, radio, TV - moving in this direction. And then I see the number of people who call us saying, "Can I open a store like yours?" and "Can you franchise your store in 'X' city?"

HousingZone: You get those calls?

Taylor: Are you kidding me? I get them twice a week. I've had calls from Boston; New York; D.C.; Philadelphia; Florida; Santa Fe; Dallas; Houston; Santa Barbara; Marin County; Portland; Vancouver, B.C.; Ann Arbor, Michigan; Chicago; Denver. And those are just ones I can remember.

Another indicator: the number of members in LEED [Leadership in Energy and Environmental Design]. The number of acres of certified land. The change in how industrial forest products companies look at their sourcing and forest management practices. Indoor air quality measures. Sick building syndrome. Energy consumption. All the way around the 360-degree spectrum, all points are significantly pointing in the direction that this is absolutely one of the most on-trend components in the building industry.

HousingZone: You get these calls because people see a need for it. Do they want to do it because they know they can save money in the long run, or do they have this altruistic, save-the-environment attitude? Or is it a mixture of the two?

Taylor: I think there are some drivers. On the commercial side, there is absolutely no doubt that LEED has been a big driver. It's a robust, sophisticated program that's been very effective. I've read significant references to look at what's happened in the building materials industry as a way to develop a more sustainable approach within a given industry, and it's been very effective. So hats off to the U.S. Green Building Council and LEED for that, and all the architects and people involved in those projects.

On a more personal level, there's a growing recognition that sustainability in terms of sourcing products, how products perform, how products last, life-cycle analysis - all of that thinking is becoming much more prevalent with consumers. I think health issues are a huge driver. Growing health concerns, indoor air quality. And I think energy is a big driver, although energy hasn't, until fairly recently, been a big selling point. Very few companies have had a lot of success, particularly on the residential side, in building a platform based on energy consumption. It's unfortunate, but I think it would be accurate to say it hasn't been a successful marketing strategy.

HousingZone: Do you think it could or will be?

Taylor: I think it's changing. You're starting to see it in cars, as an example.

Again, I would go back to what I've hammered away or tried to hammer away on, and that is if you think about it as green, that's one way to look at it. But think about it like this: I can get what I want at the price that I want it and have it be absolutely, drop-dead gorgeous, have it be maybe somewhat unique, have it be more durable and have it in certain cases be better for my health.

We had an architectural group in here this morning, and one of our outside salespeople commented: "There is an integrity to the materials we sell." That these materials, unlike some competing materials, look better and better every day they are in use, as opposed to other materials that look the best they ever will look on the day you walk into the house or put them into your home or use them in your building, and they degrade from there. That's a powerful framework from which to build a business. When people walk into our showroom, they may come in here because they have extreme chemical sensitivity or because they're doing over a room and want the best for their newborn child. They may want to save the Amazon rain forests or make sure they're not flushing excess water down the drain. They may have a whole variety of reasons, but invariably, they say the quality, integrity and beauty of the materials they see here surprise them.

I won't give you a lot of information, but I will tell you that the biggest validation of the market is whether our business is growing. We have extremely good growth, particularly in a lousy economy. As we all know, the housing industry has held up really well compared to some industries. So I can't attribute all of our growth rate to being green, but we've had several years of very strong sales growth, and we also have margins that I think most people in the business would aspire to.

We're trying to get it right here, trying to make sure the model is right and our systems are right. Trying to make sure our manufacturers are right. But we'd like to grow by having additional stores, and we think the most sensible way to do that, rather than going from green market to green market as a sole strategy, is a more contiguous growth plan. Growth up and down the West Coast, for example, would be more of an approach we would take. Opening additional stores and doing those primarily through our retail showroom format and through an outside sales format in each of those markets and leveraging our call center.

We talk to many people who are manufacturers or are in the industry one way or another, and they sort of go, "We're focusing our efforts on people who are fast adopters." Well, contractors are an integral part of the value chain, and if you don't provide a service model for them, adoption will be that much slower. That's why we've really focused on the outside sales group, solely on that contractor community, and worked to resolve issues for them.

HousingZone: Basically, it comes down to, "Will this help me make money?"

Taylor: Absolutely. Or, "Will it give me headaches that I won't want to deal with?" If it causes problems, they're the first ones to hear about it.