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2005-11-27
Rochester, NY. Home Depot, Lowe’s Kill Another Competitor

The apologists for the national chain stores, who like to pretend they've never heard the term "category killer," will say this story is just about another badly run regional chain store. Right before thanksgiving, the Chase-Pitkin Home & Garden Centers, which began back in the mid-19th century, announced they will shut down all 14 of their stores in western New York by next spring because of an inability to compete with national juggernauts led by Home Depot, according to the Associated Press. "It's capitalism is what it boils down to," Chase-Pitkin's president, Bill Strassburg, told Newsday. "There are virtually no regional home-center chains left in America. Home Depot and Lowe's have eliminated the possibility of anybody being successful." Chase-Pitkin first opened its doors in 1857. More than a century later, it was bought out by Wegmans Food Markets Inc., an upscale grocery-store chain, and underwent a rapid expansion. But Chase-Pitkin started to hit the skids when Home Depots began saturating the region with stores in the mid 1990s. Chase-Pitkin had reached sales of $200 million annually, but was no match for the clout of 11 Home Depot's and Lowe's stores in its trade area. 500 full-time workers at Chase-Pitkin will lose their jobs, along with another 1,500 part-time workers. "Chase-Pitkin is simply not big enough to compete successfully," Wegmans chairman Robert Wegman said. In 1995, Chase-Pitkin had 900,000 s.f of retail space. "Today there is over 2.5 million square feet of Home Depots and Lowe's in our market areas," Strassburg said. "Home Depot and Lowe's combined do over $120 billion in sales worldwide. They can leverage their size and their buying power ... to get a better deal than us, and basically that's what it really boils down to." One newspaper said Wegman's was "ceding the market to the specialists in home-improvement superstores, giants The Home Depot and Lowe's."

What you can do: Many retail analysts are in denial about the impact the large, international discount stores have on smaller, regional chains. But it does not take a retail economist to see the local damage caused by over-saturation in lines of business like the home improvement market. As the superstores saturate their market areas, the smaller Chase-Pitkins go under. Soon, the only free-market forces left are the largest predators, giving those companies the freedom to lift their prices in the markets they dominate.











 
 
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