I could start out by saying, “I hate to say this but…” However, that would be a lie. For back in the mid-1990s, when everyone was worried about national builder-supply chains entering the supply house business and some were predicting the death of independents, I was writing, “This too will pass.”
The recent news that Home Depot will be selling off their HD Supply unit and Hughes Supply came as no shock to me, because I, as an HVACR professional now retired, have been in their stores looking for an occasional part, and I was very disappointed. So, selling parts that require a license to purchase them out of a store for consumers just doesn’t work. And purchasing a supply house chain doesn’t mean that you know how to run it, for the philosophies are very different.
On the other hand, Home Depot’s plan to follow the lead of Sears in offering residential HVAC (which must be installed by licensed contractors) appears to be working out great, because people do come to their stores when things break down, and it’s good to offer a solution to all of their home needs.
You know, we see many ideas and crazes come and go; the temptation for a writer is to make more of these passing phases than necessary, because it makes good copy. Why, back when I first started writing, I wrote extensively about the quality process and I made big predictions about its success in the future. And though providing quality is a great idea, people will be people, and you don’t hear much about the quality process anymore. I also (early in my writing career) wrote about how franchises will soon dominate the business of HVACR contracting; but they too have come and gone. However, when utilities started entering the HVACR contracting business, I knew of their track record and ways, and told contractors not to worry.
The problem with any publicly held company buying out another business or competitor is that it seldom works to anyone’s benefit (especially consumers). The reason why they often do this is not because such a purchase is a great idea, but because the stock market has given them too much money to invest and they don’t know where to put it, so they buy another company - and they usually pay too much (as was apparently the case with Hughes).
A prime example of what I’m talking about is that of a residential HVAC manufacturer with several brands who bought out another similar manufacturer with several brands several years ago. This resulted in the closing of some factories and putting people in small towns out of work, and eventually, in the deletion of some respected old product names. The reason for this purchase, I was told, was because the president of the purchasing company was to receive a sizeable bonus if he grew his company by a certain percent - so he bought another company. And anyone who has figured out which companies I’m talking about knows that this didn’t work out well in the long run. Then they too were gobbled up by an even larger manufacturer with too much investment money to spend. We’ll see how that works out.
As for large builder-supply companies entering our business, the fact is that they have a lot to teach us about how to better run our stores. It’s a shame that we didn’t learn any more in the process. For while we know our industry best, we could really improve our business and our stores if we would just look at more progressive ways of arranging our store layouts and stock, diversifying our stock and marketing our products.
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