New segment redesigns market
December 11, 2000,
Now that Home Depot is opening Expo Design Centers at a healthy clip, it's hard to remember that the company spent five years tinkering with a handful of prototype stores. Likewise, the ballyhoo generated by Sears' plan to expand The Great Indoors to a 150-store chain often obscures the fact that right now it consists of just four stores.
With three chains going now, this do-it-for-me business is starting to look like more than a trend; it's looking like an emerging market segment-the décor specialty chain segment.
If they are to thrive, the décor specialists will have to pull market share from other retail segments, as do all retail stores. Following is a vulnerability index, on a scale of 1 to 5, with 5 being the most vulnerable:
Discounters: With their DIY approach to home textiles and bread-and-butter assortments, discounters are fairly well protected from encroachment by the new do-it-for-me players. It's not merely a matter of price point-the do-it-for-me guys do a masterful job of sprinkling their stores with affordable (and more fashionable) quick pick-up items; it's that even consumers engaged in a redecorating project are going to see their local discounter more as the place to stop for summer place mats, kitchen towels and bedding for the kids' room than their source for a décor overhaul. Vulnerability: 1.
Home centers: Male-driven and project-oriented, home centers will likely lose some share of hard lines products such as faucets, bathroom fixtures and window hardware against the overwhelmingly broader and more fashion-oriented assortments offered by The Great Indoors and Expo. But home centers do enough day-in-day-out contractor business to sustain those areas. The category that décor specialists threaten most greatly is rugs, where home centers have been steadily gaining share in recent years. Vulnerability: 2.
Department stores: For the Bloomingdales and Neiman Marcuses of the world, the new décor specialists post a minimal threat. Their customer has always been a do-it-for-me gal, and she's dealing with an interior decorator who goes direct to the trade. There is more cause for concern among the general run of department stores-such as Profitts, Younkers and Sterns. Those retailers by and large offer cramped and undifferentiated home departments whose mix is short on creative inspiration and long on predictability. Vulnerability for high-end department stores: 1. For regulation department stores: 3.
Mass market department stores: Sears, JCPenney and Wards are each in the midst of an overhaul in which the successful redefinition of home plays an important part. In a certain sense, they will be racing the clock to reset a broad store base against the slow but steady rollout of décor specialty stores across major retail markets. Vulnerability: 4.
Home furnishings specialty chains: Against the fresh and artfully merchandised departments in the décor specialty chains, the heavily stocked, category-regimented assortments of home goods appear dangerously ordinary. It smacks of Toys "R" Us vs. FAO Schwarz, or Target vs. HMS. Further, the DIY warehouse approach can suffer by comparison to the do-it-for-me approach with its trained and knowledgeable staffs. Perhaps it's time to fix the model before it becomes broken. Vulnerability: 4.
That's probably less than welcome news in an over-stored retail industry. But for a home goods manufacturing industry that needs every new retail door, it's at the very least the cause for some measure of cheer.
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