Mass Merchant Home Centers
Mass merchant home centers such as Home Depot have made life difficult for independent home furnishing retailers, but there are examples of smaller stores that are surviving.
In the lighting sector, independents have tried to avoid competing on price and looked for particular niches for which home centers are less suited, such as high-end items.
Increased competition has forced independents to become more efficient and more customer focused.
There’s one big advantage to being a little fish in a sea of big ones:
You Become A Strong Swimmer To Avoid Being Swallowed
Such is the case of the independent lighting showroom. As such massive home centers as Home Depot, Builders Square, Hechinger, Rickel and others move into town and compete for the consumer’s dollar, the specialized lighting experts must work harder to make it.
According to industry estimates, home centers’ share of the $1.06 billion market for lighting fixtures jumped to 41 percent in 1993, up from 29 percent in ’92, while the specialty stores’ share declined from 58 percent to 51 percent.
In number of units sold, home centers may have surpassed the specialty stores. To counteract this shift, showrooms are becoming more business savvy.
Realizing that they can’t match the buying or promotional power of their gigantic counterparts, the mom-and-pops have had to redefine themselves, often playing up the advantages of their small size and flexibility in order to effectively – and profitably – coexist with the volume retailers.
Successful independents have refocused their merchandise mix, learned to better manage their space and inventory, taken advantage of educational tools offered by vendors and industry associations, and concentrated on customer service.
A New York-based manufacturing executive, Murray Feiss, said he believes the small independents are stronger for the competition. “They’ve toughened up and learned how to manage their businesses very well,” he said.
Showrooms tend to stay away from the basic flush mount and hanging fixtures, ceiling fans, bath bars, lightbulbs and hardware offered by home centers.
But the home centers are becoming more aggressive on fashion fixtures and upscale merchandise, and so the independents can’t always avoid head-to-head competition, either.
“Home centers are upgrading as fast as we are,” commented Dean Gottesman of Royalite Lighting in Buffalo, N.Y. “Most times we’ll match prices for the same item and if we have to make a shorter margin, so be it. We can’t be bullied entirely by them.”
While it is not the norm, there are several showrooms which have been successful competing on price with the home centers.
Chatsworth, Cal.-based Lamps Plus, for instance, has gone head-to-head with the giants on price because it can: Lamps plus is the 40-unit retail arm of Pacific Coast Lighting, designers and manufacturers of fashion lighting.
Pacific Coast sells moderate-to-upscale lighting to retailers outside of its dealer base and does not sell to home centers, according to a spokesperson.
Most showrooms, however, choose to avoid the price war. “We can compete with them on price, but if the customer doesn’t know it, what good does it do?” queried Greg Speicher, owner/president of Buffalo Lighting in Buffalo, N.Y. “It does you no good to lower your prices to their level because they advertise every week,” which is something the independents don’t have the budgets to do.