D A L L A S, Aug. 16, 2000 -- Two major retailers are about to square offin a fight for the home decor and redesign dollars of affluent babyboomers.
On the east side of the Dallas North Tollway sits a huge ExpoDesign Center by Home Depot Inc., stocked to sell everythingfrom whole kitchens and bathrooms to picture frames and desk lamps.
On the west side of the road, another warehouse-size store, TheGreat Indoors, owned by Sears, Roebuck & Co., opened this month,selling a range of items to decorate and update the home.
This Dallas-based face-off is about to be repeated in Chicagoand other cities as Home Depot and Sears battle for a piece of the$140 billion home-remodeling industry.
Close to the Sears Core
The rivalry may have actually begun last year, when Sears, anicon of American industry that grew out of a watch company in the1880s, was bumped out of the prestigious Dow Jones IndustrialAverage of 30 bellwether stocks and was replaced by Home Depot.
Sears, the nation’s No. 2 retailer, vows to build 150 GreatIndoors stores within eight years, while Home Depot says it willopen 200 Expo Design Centers in the next five years.
“I’ve been in the Dallas [Expo Design] store, and I think it’san exciting store,” said Sid Doolittle, a retail consultant inChicago whose firm, McMillan/Doolittle, has worked for both Searsand Home Depot. “But I think for a number of reasons Sears will bea formidable challenger.”
Sears, the nation’s leading appliance retailer, benefits fromits vast offerings, a huge network of home-repair and remodelingcontractors and a strong credit-card operation, Doolittle said.
While Doolittle concedes that “Sears has stumbled a lot ontheir off-the-mall businesses” the former Montgomery Wardexecutive believes this latest gambit is “closer to Sears’ corebusiness. They have a better shot at making this a strongdivision.”
Eyeing the Buy-It-Yourself-er
Founded in 1978, Home Depot has grown into the nation’s largesthome-improvement chain, with 1,000 stores and $38.4 billion inannual sales. Its success has been the subject of business schoolcase studies and fawning books.
The Atlanta-based company opened its first Expo Design Center adecade ago in San Diego and now has 17 stores, including three inthe Dallas-Fort Worth area and two in Houston. Mostly around 90,000square feet — although the Dallas location is 146,000 — the centerscater to upscale homeowners who want to remodel kitchens, bathroomsand other spaces.
While traditional Home Depots are aimed at thedo-it-yourself-er, Expos are geared at the buy-it-yourself-er —many shoppers are accompanied by designers or contractors who helpthem select tubs, appliances, countertops and cabinets.
Although the Expo and Great Indoors stores are similar, they arenot identical. Expo features more mock-ups of bathrooms andkitchens. The Great Indoors has more appliances, includingtelevisions.
Analysts said Expo might attract homeowners intent on remodelingan entire room, while Great Indoors could draw shoppers looking toupdate their appliances or add small decor touchups.
The Softer Side of Home Decor
“Home Depot is going after a more-affluent consumer andspecial-order business. Sears has approached it more on the softerside of home decor,” said Wayne Hood, an analyst who covers bothcompanies for Prudential Securities. “Sears saw Expo and felt thatwas a segment of the market they could attack.”
The 144,000-square-foot Dallas store is Sears’ third GreatIndoors. The first opened in 1998 in Denver, followed by one inScottsdale, Ariz.
“I think it’s a good-looking store,” said Jeffrey Edelman, ananalyst with PaineWebber, who has visited the Denver outlet. “Thecouple that they have up and running are doing well, and the sectoris going to grow.”
The Great Indoors targets a younger and more affluent shopperthan Sears. Tim White, marketing director for The Great Indoors,said the concept was heavily test-marketed among married women withfamily incomes above $50,000.
Edelman, however, doubts that even a successful Great Indoorswill do much for Sears’ bottom line — the Hoffman Estates,Ill.-based retailer has annual sales approaching $30 billion. And,he said, it’ll be hard for Sears to meet its goal of opening 150Great Indoors in the next eight years.
Expo Design has tinkered with its format over the years andcould adjust more in response to Sears’ entry into the home-designmarket.
“We were the pioneer of the concept,” said Home Depotspokeswoman Melissa Watkins. “We know what we’re good at, andwe’re going to stick with that.”