Life can't get much better for Toledo-area do-it-yourselfers. After a 15-month dearth of home-improvement stores after the loss of national chains Handy Andy and Builders Square four years ago, local people may find retailers battling for their shopping dollars.
Home Depot of Atlanta, which opened its first local store in March, 1997, added a third area store last week, is building a fourth store on Lewis Avenue at Alexis Road, and is considering a fifth store in the metro area.
Its chief competitor, the Lowe's Cos. of Wilkesboro, N.C., has applied for permits to build its initial local store off West Central Avenue in Sylvania Township and is looking at several other area sites, a spokesman said.
Plus, Menards, an Eau Claire, Wis.-based chain, asked local commercial real estate agents a few months ago to find suitable Toledo-area sites for multiple stores. Menards is the nation's third-largest home-improvement chain.
Aisles of tools occupy part of the newly reopened 100,000-square-foot Home Depot in Rossford.
Also competing are The Andersons, a Maumee company with stores that have home-improvement merchandise and services as well as groceries and other items, and local hardware and lumber stores, which customers turned to more often during the national chains' absence.
The intensity of competition potentially will mirror the rapid growth of national drug store and major grocery chains in the area over the last few years. The irony, though, is that Toledo had two large home-improvement chains five years ago, then none in 1997, and only one store just two years ago.
The home-improvement industry has become so competitive that some markets will experience fierce retailing battles and oversaturation before a shakeout occurs, said Aram Rubinson, an analyst with UBS Warburg in New York.
``Companies get big and they need to sustain their rates of growth, so you often find stores going up where you find stores already present,'' he said.
``Certainly [Home Depot, Lowe's, and Menards] are confident they can drive the competition out. The issue is: Are you overbuilding the market in the process? It creates a tough situation for a couple of years until one actually does drive the competition out.''
Meanwhile, shoppers are likely to benefit from the competition in lower prices, some said. Others disagree.
The local rivalry has been years in the making, and just lately has become visible.
Builders Square, which had two local stores, and Handy Andy, which had three, ran into financial problems at about the same time nearly five years ago. Handy Andy went bankrupt and liquidated in early 1996, closing its stores, and Builders Square ran into cash problems and closed its Toledo stores and some others.
Home Depot planned to enter the market anyway, prior to those two departures, said Mark Zyndorf, chairman of Zyndorf/Serchuk, Inc., a Toledo commercial real estate firm.
``Their timing was perfect,” he said. The initial store on Airport Highway at Holland-Sylvania Road had $50 million in sales in its first year, he explained. “The store was so busy they couldn't keep drywall in stock.''
The chain's second store, on Secor Road near Central Avenue, opened in 1999 to take pressure off the Airport store, Mr. Zyndorf said. A third store opened Thursday on U.S. 20 in Rossford and a fourth is under construction at Lewis and Alexis in the vacant Handy Andy owned by Mr. Zyndorf and his partner, Steve Serchuk.
Jeff Watson, district manager for Home Depot, said the company considers the Toledo area to be a gold mine because of its large base of do-it-yourselfers, remodelers, and contractors.
``I really feel Toledo can be a strong market for us,” he said. “There's even talk about adding a fifth store in the future.”
It appears that Home Depot is on a fast track to add stores to close out potential competitors, Mr. Zyndorf said.
Kevin Oswald, co-owner of True Value Hardware on Secor Road in Lambertville, said the arrival of Home Depot hasn't hurt the small competitors like himself as much as some predicted.
``Everybody took a hit when Home Depot opened, and anybody who says they didn't isn't telling the truth,'' he said. ``When they first came in, nobody could compete with them on power tools. They were just giving stuff away, but now we're competitive with them.”
At first, the prices in the chain's 100,000-square-foot stores were the lowest around, but they have increased to what others were charging, he explained.
Mr. Watson, the Home Depot district manager, said his stores try to have the lowest prices and guarantees the chain will match lower prices found elsewhere in the market.
Mr. Oswald, of True Value, said family-owed hardware stores like his, which has 20,000 square feet, have learned to compete against the giants by offering more personalized service, expertise, and convenience as well as items that people need immediately, as opposed to a wide selection for a remodeling project.
``We try to keep our prices as competitive as we can, and we provide as much service as possible,” he said.
The Andersons, a longtime local favorite for hardware and home improvement items, has learned how to compete with the big chains. A Home Depot and a Lowe's are within a half mile from its Columbus store.
``That store didn't lose much at all to them. We were quite pleased,'' said Jim Hinkle, The Andersons retail operations director. The company has found that its stores' broader merchandise mix attracts customers, he said.
``We are blessed in that we don't line up with them item for item in every store,” he said. “Our diverse products allow us to stand up well as a retailer.''
The Maumee business's Toledo-area stores had a great year when Builders Square and Handy Andy left, but the renewed national competition has forced it to examine some merchandise. For example, it studied Lowe's, Home Depot's, and Sears's offerings in fasteners and decided to top them all.
“If you look at our fasteners area, we have completely redone that,” Mr. Hinkle said. “I would say that would be a direct result of the competition in the business. We wanted to be the best in hardware.”
Still, the buying power of the 1,100-store Home Depot chain means it can sell some items below its costs, which makes it tough on smaller operators in a market such as the six-store Andersons chain, he explained.
Just as the home-improvement giants don't worry about such smaller competition, they apparently aren't concerned about head-to-head competition either.
A spokesman for Lowe's, the nation's No. 2 home-improvement retailer, declined to identify how many or which sites in the Toledo area it is interested in, but the chain reportedly is considering a site on Alexis Road east of Jackman Road where a developer wants to remove a trailer park. The chain has been scouting other sites for several years, Mr. Zyndorf said.
Menards is equally serious about the Toledo market, although it would have some ground to make up, said Pete Shawaker, a partner with Toledo's Michael Realty Co., a commercial real estate firm.
``They're looking this way, they're looking all over Ohio,” he said. “They still see opportunity here. The fact that they're nosing around is because they feel it's not saturated yet.''
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