Everywhere that Mary went, her lamb was sure to go. A story from Knight Ridder News today explains why every time you see a Home Depot, you can expect to find a Lowe’s store following. Or sometimes in the reverse order. Home Depot is the 34th. largest corporation in the world, and the third largest retailer (trailing only Wal-Mart and the French retailer Carrefour). It’s revenues in 2004 were twice the size of Lowe’s. But Lowe’s is now ranked the 129th largest corporation in the world, and its revenues grew nearly 17% in 2004 — faster than Home Depot’s 13% growth. Citizens often complain that once they see either a Home Depot or a Lowe’s trying to get into their town, they know the other giant is about to show up also. Lowe’s spokeswoman Jennifer Smith told Knight Ridder that 75% of Lowe’s stores are within 10 miles of Home Depot, which she called “our largest, unnamed competitor,” and this location decision is based on a simple strategy. “We do a tremendous amount of research, and weigh more than 400 factors, when it comes to selection of a new location. And althought Smith told Knight Ridder, “Our (site selection) strategies are tied to no other retailers,” in three out of four cases, they are tied to Home Depot sites. Neither store likes to admit its decisions are mindful of the other’s, but a Home Depot spokesman said that a successful Lowe’s location encourages Home Depot to check out a nearby location, rather than turning them away. “Maybe somebody does beat us to the punch in a certain community,” the Home Depot spokesman admitted. “We’ll take a look at how that store seems to be doing. If it’s successful, it says something about our potential to be successful,” he said. “We’ve been known to look at a potential store site for several years – find a tract of land, buy it and wait for it to mature,” he said.
When Home Depot opened this month in Fort Ogelthorpe, Georgia, Mayor Judd Burkhart said he was proud to have The Home Depot in his city. “We are excited about them hiring a lot of people and putting younger and older people to work,” he said. “Everything about it is a plus-plus for the city.” He said the additional sales tax revenues from the store would help keep property taxes lower. And then he added, “Now we don’t have to go to Tennessee to get things Lowes doesn’t carry.” To Mayor Burkhart, whose understanding of community economics couldn’t cut a piece of quarter inch molding, home improvement shopping means Lowe’s or Home Depot. The other merchants in his town apparently don’t even exist. The fact that big box stores like Home Depot and Lowe’s like to cluster to create a shopping mass, is precisely the reason for communities to defend themselves by creating zoning limits on size, special permit requirements for large stores, and other local control limits. Once one store arrives, many imitators will follow, until the community is sprawled one project at a time. So don’t “wait for it to mature,” but stop the store now by rewriting your zoning code to bring it into the big box age.
