‘It’s a very simple formula’

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With a lean and efficient business model, a commitment to the entrepreneur, and prioritizing forging community connections, Castle is poised for success no matter what’s going on in the market

THIRTY YEARS ago, Ken Jenkins entered the industry on the manufacturing side and has worked in that capacity in all markets across Canada and into the US. In 2006, he was offered the role of president and CEO at Castle Building Group. He accepted, and he’s held that position ever since. When asked what drew him in, without hesitation, he acknowledges that it was the opportunity to interact with independent entrepreneurs. “The type of individual required to be successful as an entrepreneur is someone to be admired,” Jenkins says, noting he had ample experience with the corporate side of the business as well as the independent channel over the course of his career and he knew which side he fell on.

Castle is a member-owned and member-directed, not-for-profit lumber and building materials buying group. Our focus is on the success of our independent retailers, and we deliver on the promise of exceptional value, prosperity, and an unwavering dedication to our members. Our members make up a national network of retailers who are the pillars of their communities. Our connection to these members, our vendor partners, and our industry have positioned Castle for continued growth. Together … We Build Communities. www.castle.ca

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“In many cases, we’re partnering with multigenerational owners who are extremely competent. They take tremendous risk, try to better the communities and regions that they service, and it all rests on their shoulders. It’s those people I find to be the most exciting and rewarding to deal with in the industry”

Ken Jenkins, Castle Building Group

From the base structure of the business, Castle’s business model attracts the kind of people who have that entrepreneurial grit. A member-owner, not-for-profit co-op, all the focus is on the members who are shareholders of the group – there’s a deep commitment to making them successful in their respective regions.

Boasting an industry-leading affiliation cost, Castle “doesn’t have private equity nipping at our heels,” Jenkins notes, and because it owns no corporate stores or distribution platforms, it isn’t in competition with members or the supplier community. There are no concerns about profit loss or distribution models, he adds, and overall it runs “very lean and efficiently.” Because the cost of goods is fairly consistent across buying groups, “we look to strip out unnecessary fees related to our banner and put more of those dollars back into our dealers’ pockets,” Jenkins explains. “Our model has not changed fundamentally,” he continues, pointing to continued success despite the recent downturn in the home improvement sector due to waning customer confidence amid the spiking cost of borrowing and the cost of living in general. Castle has grown well through the last 18–24 months when many competitors and other segment participants have struggled.

“Municipalities, townships, cities have to be looking internally at how many barriers they’re putting in place for development,” Jenkins notes, adding he hasn’t heard the government take any ownership of or commit to reducing the impediments contributing to the issue. “Affordability will not correct itself until there is a significant movement to build more. In fact, things will get worse over the next three or four years before it gets better, because we just do not have the number of units across this country to support critical housing needs. The government must get out of its own way and let development take place – that’s the only pathway to long-term affordability in this country.” But even against this backdrop and eying the potential that could come to fruition, Castle’s goal is not to be the largest by sheer number of locations, size, or volume – it’s to add quality to the relationships with the shareholders, both existing and yet to come aboard. “It’s about being very good at everything we do and knowing that our organization requires the type of entrepreneur that is very much hands-on and in control of their business,” Jenkins notes, adding that Castle looks for a “strategic fit” and its credit criteria is extremely stringent. Again, it ultimately comes back to Castle’s commitment to the entrepreneur and the community they represent, and in many ways the two are synonymous. “A lot of these communities were built by multiple generations of dealers like ours that have operated in that network,” Jenkins says. “Our ability to focus purely on the entrepreneur’s success differentiates Castle in this industry, and it’s why we continue to grow. We prioritize the quality of the people we work with who support our long-term vision. It’s a very simple formula.”

Lean and efficient

Published January 27, 2025

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“Our ability to focus purely on the entrepreneur’s success differentiates Castle in this industry, and it’s why we continue to grow. We prioritize the quality of the people we work with who support our long-term vision. It’s a very simple formula”

Ken Jenkins, Castle Building Group

The more corporate, top-down approach by some of the other participants in the home improvement sector doesn’t lend itself well to Castle’s model. The relationship between building supply hardware operations and the community they operate in is typically foundational: you can’t build the latter without the former, and many of Castle’s members have been pivotal in the development of their respective communities – in some cases for many generations. That’s one of the distinguishing features of a community-based business such as Castle, where everyone is keen to honour those long-standing bonds. Far from any sort of centralized decision-making process that is unlikely to identify what individual communities need, Castle gives its members the autonomy to figure it out for themselves. They are trusted to build their business based on what’s best for their region, their contractors, and their consumers. That community element is “extremely beneficial to our members, and we urge them to continue to develop their community relationships in order to continue not only to facilitate business but to just have a presence in the evolution of the regions that they represent,” Jenkins says. “That’s just not something you can get from a corporate experience. We think it’s a better approach for the independent entrepreneur, as it’s very difficult to mandate a one-size-fits-all solution for a geography as large as this country.”

Castle’s community connections

Operating in every province and into the territories with the intent to grow that network, Jenkins says the growth horizon looks promising for Castle. “The LBM side is thriving, the commercial side is expected to grow exponentially over the next few years, and, with an increase in consolidation in the industry, there’s a lot of opportunity Castle is well positioned to take advantage of.” However, he notes there needs to be more focus on reducing the amount of bureaucracy and expense preventing development in Canada. While a lot of the stagnation and reduced growth in home construction can be tied back to interest rates and the cost of borrowing – which ideally eases before the landslide of mortgage renewals over the next few years – there’s an issue at a more macro level that needs to be addressed.

All eyes on the growth horizon

Castle’s history

Founded in 1963

At 61 years, the longest-operating buying group in Canada

330 Castle member locations

Growing every month across Canada

Across the country

“Our business actually performs better in down markets – we don’t hide from tough conditions. We see this as an opportunity to showcase our business model.”

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