Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
Worthington Hardware Versus Home Depot
At a holiday party the other day I had an interesting conversation with a local Home Depot manager. I told him about how in the last year I had replaced two major kitchen appliances. I told him that in both instances when the appliance failed I first went to Home Depot in search of a replacement. But I ended up buying at Lowes because Lowes kept a large selection in stock while Home Depot required the customer to order everything and wait days for delivery. His response surprised me. I thought perhaps he would be concerned about the fact that his company had lost thousands in business from me because of its stocking policy. Not at all. Instead he noted that Lowes had recently hired a Home Depot executive who was bringing the same stocking approach to Lowes. So... soon I would have to wait to weeks to get the appliance from either store.
Perhaps Home Depot and Lowes know what they are about. But I don't think so. It strikes me as short-sighted maximization of the efficiency of their capital and the taking of oligopoly profits at the expense of serving customers well.
By contrast, the old fashioned independent hardware store Worthington Hardware (https://www.facebook.com/pages/category/Home-Improvement/Worthington-Hardware-218045868210376/) typifies a different approach built on stocking what the customer needs. The motto of the store seems to be "if we don't have it, you don't need it." And they have everything. When I wanted a 20 ton hydraulic jack, no other store within thirty miles had one. But of course Worthington had the jacks in stock. Want a fitting for an old-style plastic natural gas line? They have it. In stock.
But stores like Worthington Hardware are becoming rarer and rarer. Instead, the hardware landscape is increasingly concentrated. According to the Open Markets Initiative (https://concentrationcrisis.openmarketsinstitute.org/industry/hardware-and-home-stores/) market concentration in the hardware and home improvement stores category has dramatically advanced over the last decade and a half. In 2002, the three largest stores controlled 47 percent of the market. By 2017 they had 87 percent market share, with Lowes and Home Depot alone controlling 80 percent.
As these firms increasingly gain market power, they can use it to squeeze the consumer -- charging higher prices for inferior service. It appears that next time I need a major appliance I will have to wait for the oligopoly to bestir itself. No need to serve the customer. The customer cannot choose but to serve the stores.
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