Sears, Home Depot Square Off
Tuesday, August 15th 2000, 12:00 am
By: News On 6
DALLAS (AP) â€” Two major U.S. retailers are about to square off in a fight for the home decor and redesign dollars of affluent baby boomers.
On the east side of the Dallas North Tollway sits a huge Expo Design Center by The Home Depot Inc., stocked to sell everything from whole kitchens and bathrooms to picture frames and desk lamps.
On the west side of the road, another warehouse-size store, The Great Indoors, owned by Sears, Roebuck & Co., opened this month, selling a range of items to decorate and update the home.
This Dallas-based face-off is about to be repeated in Chicago and other cities as Home Depot and Sears battle for a piece of the $140 billion home-remodeling industry.
The rivalry may have actually begun last year, when Sears, an icon of American industry that grew out of a watch company in the 1880s, was bumped out of the prestigious Dow Jones Industrial Average of 30 bellwether stocks and was replaced by Home Depot.
Sears, the nation's No. 2 retailer, vows to build 150 Great Indoors stores within eight years, while Home Depot says it will open 200 Expo Design Centers in the next five years.
``I've been in the Dallas (Expo Design) store, and I think it's an exciting store,'' said Sid Doolittle, a retail consultant in Chicago whose firm, McMillan/Doolittle, has worked for both Sears and Home Depot. ``But I think for a number of reasons Sears will be a formidable challenger.''
Sears, the nation's leading appliance retailer, benefits from its vast offerings, a huge network of home-repair and remodeling contractors and a strong credit-card operation, Doolittle said.
While Doolittle concedes that ``Sears has stumbled a lot on their off-the-mall businesses'' the former Montgomery Ward executive believes this latest gambit is ``closer to Sears' core business. They have a better shot at making this a strong division.''
Founded in 1978, Home Depot has grown into the nation's largest home-improvement chain, with 1,000 stores and $38.4 billion in annual sales. Its success has been the subject of business school case studies and fawning books.
The Atlanta-based company opened its first Expo Design Center a decade ago in San Diego and now has 17 stores, including three in the Dallas-Fort Worth area and two in Houston. Mostly around 90,000 square feet â€” although the Dallas location is 146,000 â€” the centers cater to upscale homeowners who want to remodel kitchens, bathrooms and other spaces.
While traditional Home Depots are aimed at the do-it-yourself-er, Expos are geared at the buy-it-yourself-er â€” many shoppers are accompanied by designers or contractors who help them select tubs, appliances, countertops and cabinets.
Although the Expo and Great Indoors stores are similar, they are not identical. Expo features more mock-ups of bathrooms and kitchens. The Great Indoors has more appliances, including televisions.
Analysts said Expo might attract homeowners intent on remodeling an entire room, while Great Indoors could draw shoppers looking to update their appliances or add small decor touchups.
``Home Depot is going after a more-affluent consumer and special-order business. Sears has approached it more on the softer side of home decor,'' said Wayne Hood, an analyst who covers both companies for Prudential Securities. ``Sears saw Expo and felt that was a segment of the market they could attack.''
The 144,000-square-foot Dallas store is Sears' third Great Indoors. The first opened in 1998 in Denver, followed by one in Scottsdale, Ariz.
``I think it's a good-looking store,'' said Jeffrey Edelman, an analyst with PaineWebber, who has visited the Denver outlet. ``The couple that they have up and running are doing well, and the sector is going to grow.''
The Great Indoors targets a younger and more affluent shopper than Sears. Tim White, marketing director for The Great Indoors, said the concept was heavily test-marketed among married women with family incomes above $50,000.
White said the Denver store is posting double-digit gains over last year, with appliances and plumbing selling particularly well. Home Depot officials declined to give individual store sales figures.
Edelman, however, doubts that even a successful Great Indoors will do much for Sears' bottom line â€” the Hoffman Estates, Ill.-based retailer has annual sales approaching $30 billion. And, he said, it'll be hard for Sears to meet its goal of opening 150 Great Indoors in the next eight years.
Expo Design has tinkered with its format over the years and could adjust more in response to Sears' entry into the home-design market.
``We were the pioneer of the concept,'' said Home Depot spokeswoman Melissa Watkins. ``We know what we're good at, and we're going to stick with that.''