Competition in top metro markets fierce

Home Channel News, May 24, 1999

In 1998, $16 out of every $100 spent by Texans on home improvement products at retail was spent in the Dallas metro market. That was equal to $1.5 billion and was 6 percent more than this market generated in 1997, according to estimates by Editor & Publisher in its annual Market Guide.

Those figures may explain the ferocity and bitterness of the battle for market share that is being fought in Dallas by Home Depot and Lowe's Cos. The two companies traded barbs in their advertising throughout 1998, as both companies added stores.

"We had lot of Lowe's and Home Depots opening up in the area," said Charlie Bond, president of Dalllas-based two-store Elliot's Hardware. "Our sales were impacted by roughly 1.5 percent [but sales have been good the past six months," he said in April.

Dallas and two other Texas markets, Houston and Fort Worth-Arlington, were among the top 50 metro markets in retail home improvement last year, according to E&P, whose research also showed that eight of the top 50 are located in California, four in Florida and four in New Jersey.

Chicago and Los Angeles-Long Beach, as they have for the past several years, remain the industry's largest markets in terms of estimated annual sales.

Around the country, dealers experienced different levels of competition and success. For example, in Baltimore, the nation's 19th-largest market for home improvement sales, Stebbins Anderson, an independent home center, had flat sales growth in 1998, according to its general manager Barry Meninger, who cited the cooler weather and the onslaught of larger chains like Home Depot eroding his company's market share.

In Hartford, Conn., No. 50 of E&P's metro markets list, the independent yard Hartford Lumber has enjoyed two consecutive years of increasing sales, according to its vp Richard Fechtor. "I think [the] New England [market] is continuing to improve."

Nashville is one of the fastest-growing markets in the United States. With retail home improvement sales increasing 6 percent to $782 million last year, it ranked 46th in the nation. "Sales in 1998 were excellent, we had no problems," said Richard Carter, president of Carter Lumber there, despite the influx of big-boxes into the market in recent years.

Carter believes Nashville will remain a hot market for at least the next two or three years, and he plans to open four satellite stores.

The country's 16th-largest home improvement market, for the third-straight year, was the Seattle-Bellevue-Everett area in Washington in the Pacific Northwest. Home Depot announced in this month that it will convert its buying office in Seattle here to a divisional headquarters, another indication of the market's strength.

In Everett, Wash., Frontier Lumber II operates two stores which did "pretty well" in 1998. "Everybody here [in the Seattle market] has been very busy," explained Frontier's assistant manger Don Olson. Well, not everybody - Patrick Jensen, the assistant manager at Martin Lumber and Hardware located in Everett, maintained his stores sales slowed last year, primarily because of the weather -- Seattle had a miserable rainy winter. Nevertheless, Martin Lumber is increasing its advertising efforts as well as mailers to contractors to increase its sales.

                       1999 HOUSEHOLD INCOME BY STATE

Rank  State                Income
   1 Connecticut          $77,702
   2 District of Columbia  75,719
   3 New Jersey            74,205
   4 Hawaii                70,211
   5 New York              68,487
   6 Alaska                67,536
   7 Massachusetts         66,419
   8 Maryland              65,515
   9 New Hampshire         63,721
  10 Illinois              63,485
  11 California            63,057
  12 Michigan              61,336
  13 Rhode Island          61,076
  14 Delaware              58,915
  15 Virginia              58,696
  16 Pennsylvania          58,538
  17 Minnesota             57,244
  18 South Dakota          56,026
  19 Ohio                  55,609
  20 Washington            55,376
  21 Nevada                54,999
  22 Wisconsin             54,962
  23 Kansas                54,268
  24 Missouri              54,035
  25 Wyoming               53,959
  26 Texas                 53,748
  27 Nebraska             $53,605
  28 Indiana               53,528
  29 Florida               53,475
  30 Vermont               53,269
  31 Maine                 52,967
  32 Iowa                  52,776
  33 Georgia               52,174
  34 Utah                  51,863
  35 Colorado              51,471
  36 Louisiana             50,795
  37 North Dakota          50,574
  38 Tennessee             50,502
  39 South Carolina        49,728
  40 North Carolina        49,244
  41 Oregon                49,013
  42 Arizona               48,568
  43 Idaho                 48,424
  44 Alabama               48,117
  45 West Virginia         46,352
  46 Kentucky              46,211
  47 Mississippi           46,079
  48 New Mexico            46,015
  49 Oklahoma              45,610
  50 Arkansas              44,265
  51 Montana               43,568


Chicago and Los Angeles remain the country's biggest markets for building
material sales; eight of the top 50 markets are located in California, four
in Florida and four in New Jersey.
Source: Editor & Publisher

                   TOP 50 MSAs IN BUILDING MATERIAL SALES
                         (in thousands of dollars)

 1 Chicago, IL                     $4,321,132
 2 Los Angeles-Long Beach, CA       3,968,521
 3 Boston-Worcester-Lawrence-
   Lowell-Brocklon, MA-NH           3,211,192
 4 Detroit, MI                      2,647,771
 5 Washington, DC-MD-VA-WV          2,647,771
 6 Philadelphia, PA-NJ              2,500,452
 7 Nassau-Suffolk, NY               2,270,339
 8 Minneapolis-St. Paul, MN-WI      2,260,982
 9 New York, NY                     2,224,334
10 Atlanta, GA                      2,171,983
11 Houston, TX                      1,810,742
12 St. Louis, MO-IL                 1,634,034
13 Dallas, TX                       1,523,750
14 Riverside-San Bernardino, CA     1,460,119
15 Orange County, CA                1,456,800
16 Seattle-Bellevue-Everett, WA     1,450,527
17 Phoenix-Mesa, AZ                 1,427,830
18 San Diego, CA                    1,420,454
19 Baltimore, MD                    1,379,613
20 Cleveland-Lorain-Elyria, OH      1,323,059
21 Pittsburgh, PA                   1,322,801
22 Portland-Vancouver, OR-WA        1,273,660
23 Oakland, CA                      1,244,396
24 Denver, CO                       1,242,606
25 Tampa-St. Petersburg-
   Clearwater, FL                   1,233,975
26 Cincinnati, OH-KY-IN             1,213,043
27 Miami, FL                        1,168,344
28 New Haven-Bridgeport-Stamford-
   Westbury-Danbury, CT             1,158,513
29 Milwaukee-Waukesha, WI           1,123,838
30 Charlotte-Gastonia
   -Rock Hill, NC-SC                1,080,548
31 Indianapolis, IN                 1,058,576
32 Kansas City, MO-KS               1,037,610
33 Sacramento, CA                   1,030,076
34 Orlando, FL                        967,100
35 Newark, NJ                         956,801
36 Columbus, OH                       926,240
37 Greensboro-Winston-Salem-
   High Point, NC                     911,517
38 San Jose, CA                       909,069
39 Fort Lauderdale, FL                895,166
40 San Francisco, CA                  879,459
41 Fort Worth-Arlington, TX           879,403
42 Norfolk-Virginia Beach-
   Newport News, VA-NC                879,068
43 Raleigh-Durham-
   Chapel Hill, NC                    826,106
44 Grand Rapids-Muskegon-
   Holland, MI                        812,217
45 Bergen-Passaic, NJ                 806,065
46 Nashville, TN                      782,000
47 Salt Lake City-Ogden, UT           747,434
48 Greenville-Spartanburg-
   Anderson, SC                       727,199
49 Middlesex-Somerset-
   Hunterdon, NJ                      722,555
50 Hartford, CT                       710,012
   TOTAL                          $72,326,099


                      BUILDING MATERIAL SALES BY STATE
                        (in thousands of  dollars)

 1 California            $16,811,455
 2 Texas                   9,327,647
 3 Florida                 9,140,116
 4 New York                9,139,873
 5 Ohio                    7,175,360
 6 Michigan                6,862,022
 7 Illinois                6,757,655
 8 Pennsylvania            6,729,689
 9 North Carolina          6,330,646
10 Virginia                4,649,435
11 Georgia                 4,547,116
12 Wisconsin               4,546,144
13 New Jersey              4,265,125
14 Indiana                $4,085,209
15 Minnesota               3,991,326
16 Washington              3,974,897
17 Missouri                3,779,270
18 Tennessee               3,529,988
19 Massachusetts           3,262,996
20 Maryland                2,980,680
21 South Carolina          2,788,232
22 Colorado                2,657,994
23 Alabama                 2,605,405
24 Kentucky                2,552,915
25 Oregon                  2,483,180
26 Louisiana               2,472,709
27 Arizona                $2,440,875
28 Iowa                    2,375,588
29 Connecticut             2,190,416
30 Kansas                  1,561,521
31 Arkansas                1,529,837
32 Oklahoma                1,311,178
33 Mississippi             1,307,679
34 West Virginia           1,162,918
35 Utah                    1,154,461
36 New Hampshire           1,143,360
37 Maine                   1,105,912
38 Nevada                  1,061,405
39 New Mexico                973,649
40 Nebraska                 $954,015
41 Idaho                     918,073
42 Montana                   763,073
43 Delaware                  590,455
44 South Dakota              573,577
45 North Dakota              568,319
46 Hawaii                    549,530
47 Vermont                   546,759
48 Alaska                    464,499
49 Rhode Island              462,271
50 Wyoming                   256,156
51 District of Columbia       73,006
   TOTAL                $163,485,616