R.I.P. Expo Stores
Our industry’s reaction to Home Depot’s shutdown of all of its Expo stores amounted to a collective yawn. They closed a bunch of them in 2005, and although the remaining stores were supposedly profitable at least until last year’s economic bloodbath, the Expo concept never caught on as much as Big Orange had envisioned. In January the plug was pulled on the final 34 stores - all expected to be gone by early April following close-out sales. Home Depot also is closing two Design Center stores and a seven-location bath remodeling business known as HD Bath.
Less mysterious than their demise was that Home Depot kept them around as long as they did. Throughout HD Expo’s 18-year history, it was widely thought both by financial analysts, as well as by erstwhile competitors among our industry’s showroom-operating wholesalers, that Home Depot’s venture into the high-end décor market wasn’t setting the world on fire. Why it didn’t holds business lessons worth exploring.
Many plumbing wholesalers were close to a state of panic when Home Depot first announced its Expo venture in the early ’90s. How could their itty-bitty family-owned businesses possibly survive the onslaught of this gorilla?
Hints came early that it wouldn’t be as hard as many imagined. Home Depot opened its first Expo store in San Diego in 1991, and I remember a lot of oohing and ahhing by industry players who had visited it. Yet the big box built only six more during the rest of the decade. Then came history’s most stupendous home building and remodeling boom - ah, remember the good old days of just a few years ago! - and the new millennium saw Expo and ancillary stores sprout to upwards of 50 nationwide. By this time wholesalers who would be competing against them pretty much shrugged their shoulders. Word had gotten around that savvy showroom merchandisers could hold their ground just fine against an Expo store, and the vast majority did.
The housing surge raised all ships, and Home Depot’s Expo division grew to a reported $920 million business by 2007. That’s less awesome than it appears considering that Home Depot is a $77 billion business, and Expo’s profitability never truly pleased the corporate masters.
Now they’re gone and you’re still around. Yeah, just about every business is hurting during this miserable recession, but evidence is abundant from sea to shining sea that when it comes to bath showrooms, nobody does it better than the plumbing wholesalers who choose to pursue this adjunct business.
One reason they competed successfully against Home Depot Expo owes to Home Depot’s miscalculations. The Expo stores were identified too much with the corporate parent both physically and psychologically. Lavish products got displayed in what was still a warehouse environment. Home owners tend to recoil at buying pretty pedestal lavs from the same folks they associate with lumber and mousetraps. Nor did Home Depot excel at the kind of customer care that top showroom merchandisers understand is necessary when you’re trying to sell people many thousands of dollars’ worth of stylish goods. No telling how many prospects stayed away from Expo stores simply because they assumed they’d be treated to the same indifference the parent company normally shows its mousetrap customers.
When I first came into this industry 32 years ago, many wholesalers were still tentative about the showroom business and there were about as many failures as success stories. A lot of expertise has seeped into the industry since then. Wholesalers learned a lot by trial and error, and even more by the teachings of people with extensive showroom know-how, our Hank Darlington being preeminent among them. Almost all plumbing wholesalers who operate showrooms nowadays know to separate the merchandising facility from their down-and-dirty warehousing operations. Many have their showrooms in entirely separate buildings, often miles away in retail rather than wholesale districts, and market them under distinctive names.
Some kitchen and bath dealers do a nice job with showroom merchandising, but most are relatively modest in scale compared with wholesaler facilities that increasingly span 5,000-10,000 sq. ft. and up. Also, the kitchen and bath crowd tends to emphasize kitchens above bathrooms, and cannot match wholesalers’ advantages in procurement, inventory and service.
Our industry doesn’t have much to cheer about these days, and I’m not suggesting the demise of Home Depot Expo is reason to cheer. Some 7,000 people lost their jobs, and no decent person likes to see families struggle. But feel free to applaud yourselves for conquering the showroom merchandising market.