September  2002

     Big Box Bulletin

Sometimes Smaller
Is Better

Some customers aren’t interested in shopping at huge stores, reported a recent article in the Boston Globe.

“A decade ago, the big-box store ruled, and ‘bigger is better’ was widely accepted retail gospel as Wal-Mart and Target crushed small rivals. But now such giants as Staples and Home Depot are favoring stores that can be 15 to 30 percent smaller than their big boxes of a few years ago,” said the article.

Apparently customers feel that they can get in and out of smaller stores quicker. But that’s not the only reason the article gives. Anther reason is: “For a retailer that can manage the trick of squeezing more sales out of less space, smaller stores mean lower costs—and potentially bigger profits.”

“Stores are evolving smaller because we’ve learned to operate more efficiently,” said Home Depot spokesperson John Smiley.

The Mouse that Roared

Home Depot Inc. of Atlanta and Walt Disney Co., headquartered in North Hollywood, Calif., recently agreed to a marketing and product development alliance. The alliance includes a three-year, media-buying pact across leading Disney properties such as the ABC, ESPN and Lifetime television networks.

Small Retailers Fight to Survive Against the Big Box Stores
Another building products retailer, Baker’s Hardware in Los Angeles, has fallen victim to the big-box stores, reported a recent article in the Los Angeles Daily News. The family-run business was known for its wide selection of merchandise packed into long, narrow aisles and helpful salespeople, who are on a first-name basis with many customers and who have decades of experience, said the article.

The article quoted a long-time customer of the store, Sally Spalding, who said, “This is the place where you can get everything you need and be helped graciously by everybody.”

“Ben Thomason, who runs Baker’s Hardware with his father, Brett, said it has become increasingly difficult to compete with big-box retailers. Within a five-mile radius of Baker’s Hardware, there are four Home Depots and one Lowe’s,” said the article.

“Each one takes a chunk of our business,” said Thomason. “It would be fun to run the family business, but it’s time to make a change.”

The store is expected to close by the end of this month.

But a small hardware store, Pile Hardware, in Charleston, S.C., is managing to survive the influx of the big-box stores, reported a recent article in the Charleston Gazette.

The business has been family owned for 70 years. Bill Pile is the current owner, and his son works at the store too.

According to the article, “Pile said he doesn’t wake up in a cold sweat, worrying about big hardware retailer Home Depot … He weathered the Lowe’s invasion, and he’ll weather this one, too.”

“We’ve seen them all come and heard they’re going to run me out of business, but I’m still here,” he said.

How are some stores surviving the big boxes?

“[They] have carved a niche for themselves that the big boys can’t fill. They provide advice and services customers can’t find anywhere else … They’ll also sit down with a customer and help them figure out how to install a light fixture or a sink,” said the article. 

Home Depot Expands Showrooms for Appliances
Home Depot of Atlanta plans on expanding its appliance showroom in up to 350 stores. The improved showroom will exhibit between 150 and 200 appliances. In comparison, around 75 models are currently on display in most Home Depot shops.

Nearly three years after getting into appliances, the nation’s largest home-improvement retailer had a 3.9-percent market share in the first quarter, up from 2.6 percent a year ago, said the company.

The new showroom, which was tested in 53 stores in several markets, will feature 150 to 200 appliances on the floor compared with about 75 models now relegated to a single aisle in the back of most stores. Two hundred existing stores will be retrofitted for the new look, and many of the 200 stores opening this year will feature it as well. 


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