The surprise is that Home Depot kept them alive so long.
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
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
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.
R.I.P. Expo Stores
March 1, 2009