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2006-02-20
Reidsville, NC. Cabot Betrays Its Dealers For Deal With Lowe's

It's tough being an independent merchant these days, when the big companies dominate so much of the market. This week Sprawl-Busters received the following cautionary tale about a national manufacturer of stains, a buy-out, and a giant building supply company. Caught in the middle, is the small family business that played by all the rules: "My name is Kim Swann-King. I own and operate our family owned paint and sundries business in the downtown of Reidsville,North Carolina. I wish I had understood more about the damaging effects of Big Box stores on small businesses. About 2 years ago our small town had a Lowe's Home Improvement go up about 2 miles from our store. We are one of the few local businesses who have been able to keep our head above water in the downtown district. Since Lowe's has been here we have lost business, but seem to be building back up, due to the fact that we are able to give good customer service and we carry Premium Paint and Stain lines that Lowe's does not carry. We have strived to only buy products from manufacturers who claim to be loyal to the independent paint retailer. Of course, we have had to drop certain products because Lowe's has lured them in and we could not buy and sell at the same price as Lowe's can. The only way a paint company can make it now is to carry a really good national line that is committed to the independent dealer. We have been in business for 16 years now. About 7 years ago we had dropped a stain line, "Flood Inc," because the line ended up in Lowe's. We were approached by a sales rep form Samuel Cabot Inc. Cabot was a family owned and operated stain and coatings manufacturer that had sold exclusively to the independent dealer and had grown enormously from that. It had become a national line that could only be purchased at independent "Certified Cabot Dealers." For the past seven years they have held the #1 position in Consumer Reports on their 1400 line deck stain. All Cabot Dealers were on their website location map. Cabot was helping us to crawl out and build our business back up again. About 6 months ago our Cabot Sales Rep came to see us to give us the news that Samuel Cabot had sold his $54 million a year business to Valspar Inc, which is at $2.4 billion per year. Valspar has bought many, many companies, whose products now are sold at Lowe's and Home Depot. When our rep. told us this news we were very shocked and upset. He didn't know what Valspar was going to do with the Cabot line, but was led to believe that there was a high likelihood that Valspar would not interfere with the Independent Cabot Dealerships by selling Cabot product to the box stores. He was hopeful because of the fact that Cabot's business and great reputation had grown to it's standing because of the Independent Cabot Dealers. But on February 16th, we got a phone call from our Cabot Rep who first wanted to tell us the good news that Valspar was going to have over a $13 million investment in mass advertisement for Cabot Products! Then came the devastating bad news: Valspar was putting the top-line sellers of Cabot products in all of the Lowe's Home Improvement Stores, and that Cabot was going to be advertised as Lowe's Premium Stain Product starting this May, right at the time of the big exterior summer stain and paint job season, what we as the independent count on hugely. We are so angry and upset about this and just don't know what to do. We have been stabbed in the back. On top of it all, Lowe's is no more than 2 miles from our store. They are going to be reaping the benefits of all or our hard work with selling Cabot products. I have not had a chance yet to talk to other dealers, but I know that they must feel as strongly as I do. This is going to destroy alot of independent dealers. We have over $40,000 of Cabot Inventory in our warehouse right now that we might not even be able to move with all the advertising and sales that Lowe's is going to be doing."

What you can do: This story of betrayal and changing partners was prepared by Kim Swann, of the Swann Paint Company, Inc. The Cabot dealers apparently had no exclusive contracts with Cabot, and even if they did, those contracts would have had to be honored by the new buyer, Valspar. The small, independent dealer gets squeezed by the large corporations. With the impact of these giant chain stores, and the chain suppliers, there is very little room in the market left for the American dream of owning a small retail business. Cabot could have insisted in its deal with Valspar that Cabot products continue to be distributed through independent dealers, but that does not seem to be the case. Now, the independents that helped build Cabot into a national brand, are left with no cover. It's a bad stain on Cabot to have sold out its supplier network.










 
 
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