Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, October 21, 1993 TAG: 9310210076
SECTION: BUSINESS PAGE: B8 EDITION: METRO
SOURCE: Associated Press
DATELINE: CHICAGO LENGTH: Medium
"Growth is the name of the game," said Marilyn McDougal, a spokeswoman for Builders Square, a division of Michigan-based Kmart Corp. "It's progress."
The superstores, with their 100,000-square-foot outlets and massive inventories, account for close to 30 percent of the $116 billion U.S. hardware retail market, said Hal Marsolais, managing director of the National Retail Hardware Association, an Indianapolis-based grouping of independent stores.
And the independents are steadily losing ground. According to Marsolais' organization, the top 25 chains have gained about 5 percentage points of market share in five years.
Independent retailers are battling back by educating staff on the uses of the products they sell, by stocking specialty items and not meeting competitors head on.
"Smaller hardware stores won't have a chance against these big marketers unless they find a niche and service the hell out of it," said Bo Cheadle, an analyst with Montgomery Securities in San Francisco.
He said companies like North Carolina-based Lowe's Cos. and Atlanta-based Home Depot are growing by giving consumers super-low prices and a huge selection.
"If you go in for a gallon of paint, you will leave not only with the paint, but with a brush, tape and stuff to clean up with," Cheadle said.
But Cheadle said independent operators can compete successfully against Lowe's and Home Depot by giving customers what the chain stores don't.
He noted that the most profitable outlet is Orchard Supply, a California chain of 40 stores. One of their stores is across the street from a Home Depot.
"If you break a lamp, at Home Depot they will sell you a new lamp," Cheadle said. "But Orchard will sell you a part to fix the lamp. And it is likely the salesman will be an older person who can help you fix the lamp."
Roanoke-based Moore's Lumber and Building Supplies this year said it would remodel its stores to add greater customer service.
Lowe's, which operates 300 stores in the Midwest, Middle Atlantic and South, had $3.8 billion in sales last year.
W. Cliff Oxford, a Lowe's vice president, said consumers are drawn to the large stores because of the free parking, ease of shopping and variety of products to choose from.
"In terms of how that affects the independent operator, I don't see that as just taking away market share," he said. "It expands the market. "We offer numerous products that were never offered in the market."
Staff writer Sandra Brown Kelly contributed to this report.
by CNB