Dallas caters to a diverse retail landscape

Home Channel News, August 10, 1998 by Cheryl Ann Lambert

Big-box presence inspires new strategies Web sales, prototypes, wholesaling

DALLAS - The competitive landscape in Dallas, as fierce as any other major metropolitan city, provides area retailers with some solace: Warehouse home centers, while a significant presence, have yet to dominate the field.

In fact, retailers operating in and around this 378-squaremile southern city are on a fairly level playing field in terms of store count. Within the Dallas-Fort Worth metroplex, there are 4.5 million people served by 23 Home Depots, 11 Lowe's, 35 True Values, 38 Ace Hardwares, 21 lumberyards and 26 nursery retailers. Store count aside, however, the impact of Depot and Lowe's hammering each other in the market is having its effect on the strategies of other dealers throughout Dallas-Fort Worth.

For example, before it decided earlier this year to focus exclusively on pro customers, Payless Cashways had chosen Dallas - where it operates 17 units - as one of its dual-path markets where it served DIYers and pros out of different stores.

Elliott's Hardware, with two stores in the market, will soon launch its Web site specifically promoting its decorative hardware business, Hardware Plus, which it acquired last June from a local resident who couldn't expand it. Elliott's president, Charlie Bond, said his company's first-year sales with Hardware Plus exceeded $1 million, and the division has extended the retailer's customer draw to antique dealers.

Calloway's Nursery, the 15-unit regional lawn and garden retailer based in Fort Worth, Texas, opened a prototype in April that was designed specifically to differentiate it from big-box competition. Called "Calloway's at Stonegate," because of its location on the intersection of Hulen Street and Stonegate Drive in Fort Worth, the store is comprised of four stone, wood and glass structures surrounding a fountain. The store includes a giftware department, Calloway's first. Dan Reynolds, chief financial officer at Calloway's, told NHCN the store's aesthetic upgrade was designed to set it apart from warehouse retailers carrying "essentially the same product."

The encroachment of warehouse retailers into lawn and garden no doubt contributed to the decision by Sunbelt Nursery Group to close its 10 Wolfe Nursery stores in the Metroplex in April, for which it held going-out-of-business sales for six weeks.

On the other hand, North Haven Gardens, which employs TruServ Corp.'s Home & Garden Showplace format, has taken an "if you can't beat 'em, join 'em" approach to the competition. The single-unit nursery retailer operates a wholesale nursery division called Nortex Wholesaler Nursery from its headquarters. Jon Pinkus, president of North Haven Gardens, said the division sells to independents, warehouse home centers and discounters. Pinkus said the division's s main goal is satisfy customers with quality products and services.

Home building spurt

As these examples illustrate, Dallas continues to provide dealers with all kinds of opportunities, which are being enhanced by home building activity here and the market's affluence.

In 1997, housing starts rose 15 percent over the previous year to 44,384 units, according to the Commerce Department and Permits Plus, though permits issued were essentially fiat. And apparently those homeowners have the money to spend. The average household income in 1997 for Dallas residents was $60,574, compared with $58,845 the previous year, according to Woods-Poole Economics and Permits Plus.

Pro dealers, which are legion here, are battling as hard to keep their builder customers as home centers fight for consumers. For example, Dallas-based Foxworth-Galbraith, which operates 16 of its 45 yards in the Metroplex, has been offering loyalty programs with vacation awards to keep its pro customers from bolting to competitors like Mayfield Building Supply or R.E. Sweeney Lumber. Larry Toney, Foxworth-Galbraith's vp-building materials marketing, is convinced that these social events help cultivate relationships.

However, companies like Foxworth and Mayfield are monitoring the activity of warehouse retailers toward attracting more pro business into their stores. In fact, this summer the Dallas chapter of the National Association of the Remodeling Industry (NARI) has been pursuing a relationship with Lowe's here. Chris Miles, NARI's incoming president, wouldn't be specific about the partnership, but said it would be a mutually beneficial if it served to educate professional customers about big boxes as suppliers and consumers about remodelers' credibility on the job. The North Wilkesboro, N.C.-based home improvement retailer will sponsor NARI's home show this year.

Lowe's has definitely been the aggressor in Dallas, and its frontal attack on Home Depot was hard to ignore early this year. That attack extends to Depot's Expo Design Center here on Dallas Parkway. Lowe's store on Inwood Road displayed merchandise that was strikingly similar to Expo's in several categories. Lowe's sells decorator Italian ceramic and porcelain tile, while Expo offered marble and stone flooring and hand-decorated tile appliques. Both stores display carpet squares on space-saving displays racks that resemble large metal filing systems.