Holding Strong Against the Big Boxes

Who can forget the panic that ensued when the home centers began aggressively targeting the upscale design market in the mid-1990s?

While some dealers ran about Chicken Little-style, announcing to anyone who would listen that the sky was falling, even those less prone to panic were deeply concerned.

"This could be the beginning of the end for Mom and Pop dealerships" was the general consensus among many kitchen and bath dealers.

Everyone had seen it happen in other industries - and often, it happened fast.

Within a year of the opening of the first book "superstore," independent bookstores were closing in droves. Family-owned bookstores that had lasted through five generations were suddenly showing "for lease" signs, and many veteran booksellers ended up out of work - or forced to take entry-level positions at chain bookstores. Then Blockbuster came to town, and seemingly overnight, Mom and Pop video stores all but disappeared.

Is it any surprise many kitchen and bath dealers feared they would be next?

The home centers seemed to have all the advantages. They could buy in bulk and get discounts far beyond the means of many single-outlet kitchen and bath dealers. They could invest millions of dollars in aggressive national advertising campaigns - and they did. They could afford comprehensive employee benefit plans far beyond what the average kitchen and bath dealer could offer. And, they were able to lease huge showrooms to showcase a nearly endless array of displays.

Yet today, a mere 14 years after Home Depot rolled out the chain’s first upscale EXPO center amid much publicity, the company is planning to close 15 of these stores, and convert another five to regular Home Depots Meanwhile, the remodeling industry remains strong, with many kitchen and bath dealers reporting continued solid growth.

The sky is not falling after all, it seems - even though the landscape may have shifted a bit.

So what happened? How did David single-handedly stand up to Goliath... and live to tell about it?

Some would argue that even though the big-box chains invested a lot of money in bringing kitchen and bath remodeling to the forefront of consumers’ awareness...they never really understood the mind set of the upscale consumers they strove to serve. Despite having the advantage of huge advertising budgets, vast showroom space and bulk buying power, they failed in the one key area that high-end consumers will not buy without- personalized service. As a result, much of the money they spent on marketing ultimately ended up benefiting the smaller, more service-oriented kitchen and bath dealerships, who were better prepared to meet the needs of an upscale clientele that demanded out-of-the-box designs and personalized service.

Others argue that the home centers' aggressive foray into the upscale market forced independent dealers to raise their game. The tough got smarter and tougher, honing their business skills, sharpening their marketing efforts and focusing on their greatest strengths – top-quality designs, personalized service and full-sensory "experience" showrooms.

The weak, by contrast, closed up shop, or were forced out of business by stronger, savvier competitors.

And the industry as a whole grew stronger for all of it.

But, whatever the reason, the dire predictions of extinction have yet to come to fruition. And through the threat, independent dealers learned valuable lessons about leveraging their strengths.

Some joined buying groups as a way to share knowledge and gain greater buying power. Others redefined their client base to service a niche better suited for their skills, products and geographic locale. Still others learned how to beat the home centers at their own game by making sure they understood their clients’ needs better than the home centers did - so well, in fact, that their competitors’ marketing campaigns only served to bring more clients to them.

But before dealers pat themselves on the back and consider the battle won, they should remember that the competitive landscape is always changing. And those who don’t constantly raise the bar will not survive in the long term.

Dealers may have staved off this threat, for now, but just as David has grown stronger and smarter, so, too, will Goliath. The next generation of upscale home centers may well be smarter, savvier and more aggressive.

Or, the next competitive threat may come from another direction entirely - even from the economy itself, which won’t always be favorable for remodeling.

But whatever challenges arise, the dealers who survive - and thrive - will be the ones who never stop preparing for the future, constantly upgrading their business, marketing and design skills, enhancing their product offerings and technological know-how. Don’t wait until Goliath comes knocking to prepare for the next battle.