How big is a Big Box, anyway?

If you want to have some fun and perhaps a little ego boost, I suggest you read the article “Sales dipped in ’09 for all of the Top 5 big box retailers” in the November, 2010 issue of Casual Living. I always look forward to this annual article when it estimates the annual outdoor furniture sales of the big boxes. This year’s article was even more interesting because it shows business at big boxes in this category fell around 4%.

 

When ranked by outdoor furniture sales only, the five big boxes came out:

 

1. Wal Mart                      $480 million,

2. Lowe’s                         $410 million,

3. The Home Depot         $400 million,

4. Kmart                          $320 million

5. Target                          $185 million.

 

This is a lot of iron and aluminum, $1.795 billion in fact. And, no matter how you count it, it is very big. However, Casual Living also reported the number of stores in each chain. If you do the math (okay, if I do the math) and figure out their sales per location, here is how they rank.

 

1. Kmart                         $252,193 on average in each of its 1,327 locations.

2. Lowe’s                       $242,031 on average in each of its 1,694 stores.

3. The Home Depot       $202,429 in each of its 1,976 stores.

4. Wal Mart                    $135,211 on average in each of its 3,550 locations.

5. Target                        $106,322 in each of its 1,740 locations.

 

Let me put this into a perspective from which you as a retail business owner might be better able to relate; each of the locations of these mega stores are doing one-fifth to one-tenth the amount of business a small specialty retailer does!

 

Many of you might be saying, “Bruce, all of these corporations have several locations in my area. If you total them up, I’m sure they are doing a lot more than me.” I Thought of that, too; so, I counted the number of locations for each big box in my trade area. Here’s how they rank when I multiply the average sales per store by the number of stores in my area:

 

1. The Home Depot            10 locations             total: $2,024,291

2. Kmart only                        6 locations             total: $1,446,872

3. Wal Mart                           8 locations             total: $1,081,690

4. Lowe’s                              3 locations             total: $726,092

5. Target                               4 locations             total: $425,287

 

Again, any single specialty store doing just an okay job is doing as much or more than any of these groups of stores. In fact, most specialty stores are doing this much business with fewer people and smaller overhead. Even if The Home Depot only has ½ person per shift working outdoor furniture, that is still almost two whole people per location for all of the hours they are open. That means they have the equivalent of 20 people just doing sales in our area. Add to that the back office support staff, and I promise you, their overhead is bigger than ours.

 

I am not naïve. I realize that these five corporations are doing $1.795 billion a year in outdoor furniture and that is a lot of money. I would guess it is more than all of the manufacturers in our industry put together. Such a big pie and few if any of our vendors get a part of it. That figure allows them to exert a lot of influence in our industry. Remember, though, these corporations are so big, they won't go through middlemen. They go directly to off shore manufacturers. In fact, some may own their own factories. Few, if any, of our manufacturers profit off of this segment of the industry. They just wish they did.

 

But, no matter, I still enjoy doing this little exercise. I like being able to say I sell more than (insert big box name here). Not bad for a Mom and Pop operation.

 

Yours in confused retailing, Bruce