Grabbing their 'share'
November 19, 2001,
There once was a time when $1.47 billion represented the combined annual sales volume of at least two respectably-sized chains.
Everybody talks about growth, but when times get tough, snatching market share becomes the name of the game. And in recent weeks, $1.47 billion has shaken loose.
Ames' announcement last week that it would close 16 stores came nearly three years to the day after it announced it would acquire the ailing Hills Department Stores chain.
Absorbing Hills' 155 units boosted Ames' store base by 50 percent, extended its territory into the Midwest, deepened its presence in the Mid-Atlantic and made Ames the fourth largest discounter in the nation with annual sales of nearly $4 billion.
Over the past 18 months, however, Ames has been hampered by the economic slowdown and faced with stiff price competition from national discounters.
The new closings largely represent Ames' expansion in the Midwest: 10 units in Illinois, three in Tennessee and one each in Indiana, Kentucky and Ohio.
This is the third round of closings Ames has scheduled in the past 12 months, and will ultimately result in the shuttering of 95 stores between November 2000 and January 2002 — or roughly the number of stores that might have made up a regional discount chain 15 years ago.
Estimated volume of sales up for grabs with the newest round of closings: $80 million. Total since closings began in November 2000: $475 million.
Lechters has given up the long battle to reposition its format in a world dominated by more sharply-priced discounters and more deeply-assorted home supercenters. A month ago it announced it would shutter its remaining 315 stores.
Estimated volume of sales up for grabs after the liquidation: $300 million.
House2Home, which announced in early November that it would liquidate under Chapter 11, packed a lifetime into just a few short months.
A year ago, House2Home consisted of five stores in a new indoor/outdoor format being tested by ailing home center chain HomeBase. In December, the company announced it would liquidate 48 HomeBase stores and convert the remaining 42 units to the new home furnishings prototype.
Sales after Sept. 11 plummeted by up to 30 percent, but financially the business was already reeling. For the first half of the year, sales were off 47 percent and by late July, House2Home's operating loss had hit $260 million.
Ultimately, the cash flow ran dry.
Estimated volume of sales up for grabs after the liquidation: $699 million.
The obvious point here is that Ames would not be closing 95 stores nor Lechters and House2Home liquidating if they could have kept their market share from eroding in the first place.
But erode it did, and now that volume is surging back into the marketplace, where the smartest, the slickest and the quickest will slug it out for a piece of the pie.