Corvallis Gazette Times, OR
02-04-07
Who’s afraid of the Depot? Local retailers brace for impact as home center set to
open in Corvallis
By BENNETT HALL
Gazette-Times business editor
CASEY CAMPBELL Gazette-Times
From the yard at Spaeth Lumber & Home Center, you can see the 130,000square-foot Home Depot superstore under construction across the highway. But
the giant retailer was already casting a shadow over Spaeth’s business long
before the site for its first Corvallis store was approved.
Two years ago, Spaeth had to drop the Behr paint line after the manufacturer
signed an exclusive distribution agreement with Home Depot, the nation’s largest
chain of building supply warehouse stores. After that, independent retailers such
as Spaeth could only sell Behr paint under a private label.
“They said, ‘Well, you can continue to sell our product, but we’ve got this deal
with Home Depot — you can have the table scraps, basically,’” recalled Anthony
Monaco, Spaeth’s manager.
Rather than settling for leftovers, the local lumberyard decided to upgrade to a
premium label, bringing in Benjamin Moore paints to differentiate itself from its
heavyweight competitor, which already had a store down the road in Albany and
had announced plans for a Corvallis location.
With Home Depot’s local store set to open Feb. 15, retailers all over town are
bracing for a hit to their sales figures — but they’re not giving up without a fight.
Like Spaeth, many local independents are looking for ways to set themselves
apart from the big box operator and keep their customers from jumping ship.
“Hardware stores and lumberyards are usually the hardest hit,” said Kenneth
Stone, an Iowa State University economist who has made a career of studying
the impact of big box stores on local economies. “But, in addition, appliance
dealers, garden centers, floor covering stores, paint stores, plumbing supply
stores, etc. will also be hurt.”
Stone cites his hometown of Ames, Iowa, as an example of what can happen
when a “category killer” superstore enters a new market.
“Lowe’s wreaked havoc a few years ago when they opened,” Stone said. “We
went from five consumer hardware stores to two.”
The home improvement warehouse generates an estimated $50 million a year in
sales, according to Stone.
“If you believe in the zero-sum game theory, the $50 million doesn’t come out of
thin air,” he added, “it comes out of the cash registers of merchants in the trade
area.”
While Corvallis merchants are concerned about lost sales, they aren’t conceding
defeat, said Bob Baird, owner of the Book Bin and president of the Corvallis
Independent Business Alliance. Rather, they’re bracing for the arrival of big box
competitors and digging in for the long haul.
“Traditionally what happens is they come in and they nail the locals for a period
of as long as two years, and then at the end of two years, if you survive, you start
to come back,” Baird said. “That’s a real stable pattern with any category killer
that comes to town.”
Robnett’s Hardware has been a fixture in downtown Corvallis for more than a
century, and owners Scott and Tori Lockwood hope to be around for many years
to come. They’ve been retooling their business for some time in preparation for
the big box onslaught, fine-tuning their inventory and making their operating
hours more convenient for customers.
“We’ve been doing Sundays for at least a year, and we’ve been doing longer
hours ... for a couple years now,” Tori Lockwood said. “As we all know, it’s hard
to get things done when nobody’s open.”
She’s expecting Home Depot to open in Corvallis with a big splash, touting low
prices on some items as it tries to wrest market share from the locals.
“We’re going to hold our heads up and try to survive the impact we expect to hit
for anywhere from three months to a year,” Lockwood said.
“We still have our loyal customers and we still give our 100 percent service, and
hopefully that’ll be enough to keep us alive.”
Searing Electric & Plumbing is taking a similar approach, counting on specialized
inventory and a higher employee-to-square-footage ratio than a warehouse store
can provide to make up for Home Depot’s superior buying power.
“We still do what we’ve always done, we give service,” said manager Craig
Christianson. “You can’t get that there.”
Other independents are focusing on service, too. But some are also planning to
compete on price, countering Home Depot’s 2,000-store purchasing clout by
joining buyers’ co-ops.
“We belong to a national buying group with 2,700 stores, so as far as being able
to be competitive from a price standpoint, that’s not an issue,” said Matt Gentle,
co-owner of Stover, Evey and Jackson on Western Boulevard.
The Corvallis appliance dealer has been negotiating to add additional brands to
its lineup, and Gentle thinks his business may even improve after Home Depot
comes to town.
“Anybody that I’ve talked to that has had one of these stores come into the
market, if they’re a strong retailer they can actually benefit from it because then
the customer doesn’t have to leave town to comparison-shop,” he said.
And being independent, he says, carries its own advantages, such as the ability
to respond quickly to changing customer tastes.
“A ski boat moves a lot faster than a battleship,” Gentle said. “We just need to
realize where the trends are and react to them and we’ll be all right.”
Garland Nursery, just north of town on Highway 20, is taking a similar approach.
The 70-year-old business has joined the Northwest Nursery Buyers Association
to keep prices down while focusing on its strengths as an independent retailer.
“I try to differentiate myself from (box stores) a little bit by carrying different
products,” said Garland co-owner Erica Powell-Zinn. “I like to inspire people with
products and ideas, and not just have products lined up on a shelf.”
And while Home Depot can beat her price on some mass-purchased items, the
chain store sometimes pays a price of its own for the quantity discounts it
negotiates. Independent nursery operators say the national company tends to
carry some inventory that just doesn’t grow well in this neck of the woods.
“There’s certain things that don’t do well, and we just don’t carry those things,”
Powell-Zinn said. “We definitely are able to be more specific with what we sell.”
Chris Shonnard, co-owner of Shonnard’s Nursery and Florist on Philomath
Boulevard, said he sees value in buyers’ co-ops. But his primary survival strategy
involves creating a niche he feels confident Home Depot can never fill.
“Over the course of the last few years we’ve pushed mainly the water garden end
of it, which is something they will delve into, but they won’t have the expertise
that we do,” Shonnard said.
“We carry a full line of products, everything from liners to pumps to kits.”
Shonnard’s employees attend seminars put on by Aquascape, a national water
gardening product manufacturer, and hold occasional “build a pond day” events
at the nursery, where customers can learn how to create water features for their
homes.
Shonnard’s has taken other steps to become more competitive as well. The
company built a new facility five years ago, incorporating the latest retail
marketing design concepts. And the owners are constantly evaluating their
inventory with an eye to maximizing products that the big boxes aren’t likely to
stock.
“We look for the things that we do that they don’t do, or we create things that we
do that they don’t do,” Shonnard said.
“Those are some of the things we’re going to emphasize — not so much as a
defense but as an offense, if you will.”
Perhaps no Corvallis retailer exemplifies that independent attitude better than
Spaeth Lumber, where pirate flags fly over the building and the staff wears black
sweatshirts emblazoned with a skull, crossed cutlasses and the slogan “The
finest in planks and timbers since 1962.”
There’s even a life-sized skeleton hanging in chains from the ceiling. A sign
around its neck reads “Ye scallywags be warned.”
It’s not exactly a declaration of war on Home Depot. But it does serve notice that
this is an independent retailer that intends to fight for its customers’ loyalty.
Spaeth didn’t stop selling paint when a longtime supplier cut an exclusive deal
with the national home improvement chain — instead, it upgraded to a highergrade product. It also invested in a new covered lumber storage area and a more
customer-friendly layout while deepening its inventory in strategic areas, looking
ahead to the day when it would have to compete head to head with the big box
operator.
Now Home Depot’s almost here, and Monaco says he and his crew are ready to
do battle.
“Competition’s good, too,” Monaco said. “In a perfect world it’d be great if they
weren’t moving into town here, but it also spurs you to stay on the ball.”
Bennett Hall is the business editor for the Gazette-Times. He can be reached at
758-9529 or bennett.hall@lee.net.