Retailing and Home Depot

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Part 4
Case 1: Retail Development Comes To Hattiesburg, Mississippi

Hattiesburg-a small town full made up of university students mostly has been losing its customers to nearby large towns and cities such as Mobile, New Orleans and Biloxi. However, the new mall Turtle Creek Mall is expected to lure back the crowd inside the town. This huge center has many big-box retailers such as Bed, Bath and Beyond, Old Navy etc. it is expected that the new retail facilities will increase retail square footage by 30 percent. Also Target’s introduction has also increased the economic development of the city. The city’s expanding roads, and the conversion of a K-mart, a new 14-screen movie theater and a new Best Buy have all contributed to the increased retail development of Hattiesburg. Hattiesburg has a sound economic base and a young population. It has the state’s largest university with a population of 15,000 plus students. The city also has a diversified economic base due to a university, industrial base and healthcare facilities. The major objective of the new mall is to influence the purchasing behavior of the residents. The loss of shoppers is due to excellent roads and connecting highways. However, the introduction of new giant retailers is expected to turn around the trend. The introduction of the new mall is seen as a win-win situation for the retailers situated at Hattiesburg.

Case2: Small Chains, Big Store Location Tactics:

Large retailers prefer perfect store locations, whereas smaller retailers seek out lower-quality cheaper locations. This case examines the location strategy of two such retailers. Wireless Toyz looks out for corner locations at busy intersections. They look out for the middle-class areas, blue-collar neighborhoods that have a minimum population of 50,000 people with in the trade area. Wireless Toyz acquires locations that need renovation and are completely useless to look at, for example former gas stations. Wireless Toyz leases out small space, but when they lease a larger space, they usually lease out half of it to another retailer. It considers strip malls as its ideal location or seeks locations with Wal-Mart and target as anchor tenants. Wireless Toyz has expanded from 27 to 63 locations. In 2004, its sales increased by 30 percent for year in a row. DTLR is also seeking locations sized 3,500 to 4,000 square foot in Mid-Atlantic States and also in metropolitan markets. DTLR thinks dealing with competition and resistance from neighboring rivals as the biggest channel in choosing a location. It welcomes competition from national chains, and has grown from 18 to 40 stores and plans to add 10 stores per year.

Case 3: Home Depot in New York City:

Home Depot at Manhattan is its first three-story store complete with a doorman and a concierge. This new store caters to different markets: decorators, building contractors, superintendents, brownstone owners, and households that own or rent apartments. Even according to the Eastern Division president, Home Depot, it is the first time that they have done everything under one roof. Before coming to Manhattan, Home Depot had been running stores successfully in downtown Detroit, Seattle, and Lincoln Park neighborhood of Chicago. Home Depot is now planning to expand out of the downtown markets. The new Manhattan is in a natural preservation area and the building cannot be modified, thus it has a huge signage indicating its presence. The store offers an unparalleled 20,000 different products and special ordering can increase this limit to 100,000 products. However, despite all the variety offered, Home Depot does not have lumber department and does not stock plasterboard, insulations or plywood. The Chelsea neighborhood had a variety of independent retailers, however now it is full of category killers such as Old Navy, Bed Bath & Beyond and Best Buy. Store such as Home Depot will increase sales for all the retailers in the neighborhood. The concierge...
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