Home Depot As Competitor: Saturation on Home Services

Nov

Home Depot As Competitor: Saturation

posted by admin in Home Depot

The signs are obvious. The home improvement industry’s retail food chain is being eaten from the bottom up. The mom and pop stores withered, and now the regional chains are dying. Companies like Rickles, Handy Andy, and Grossman’s are history. In 1993, After one year in the Chicago market, Home Base closed all its stores and transferred its leases to Home Depot. The smaller regional players are getting squeezed, said an analyst with Brown Brothers Harriman. They are banding together or getting out entirely, or shrinking back to a base where they think they can continue to exist.

Local merchants have no choice but to give way, a market analyst with Hancock Institutional Equity Services told the Christian Science Monitor. Regional chains and small independents are likely to feel increasing pressure to merge with rivals, or quit, said the Wall Street Journal in January, 1997. it has been Home Depot’s mission to bury its competition. James Inglis, former Executive Vice President for Home Depot noted that Orchard Supply (in CA) proved to be one of the few regional chains Home Depot failed to take a real bite out of.

Grossmans is a perfect illustration of what has happened in the home improvement market. It’s service area is littered with orange-and-white striped empty stores. Grossman’s at its peak in 1983 once controlled 345 stores, but went into Chapter 11 in January, 1997.

There is no question that Home Depot dominates the home improvement market. As Countryside Retailing magazine put it: Having almost saturated the major metro markets, the company is seeking new avenues of growth. President Arthur Blank announced in May of 1994 that Home Depot is developing a store prototype ‘which we think will be more appropriate for rural America’. He could not say how large the stores might be.