Tuesday, April 5, 2011

Be Where They Are: Retailers Fanning Out as They Chase Shoppers

from Business First - by Dan Eaton

Date: Friday, April 1, 2011, 6:00am EDT

Related:

Retailing & Restaurants, Agriculture

Retailers are expanding to a town not likely near you.

As the retail climate improves, some national and regional chains are revving up growth plans for the region, but the target is beyond Columbus and its suburbs.

“Convenience, value and choice play as well in more rural areas as it does in suburban areas,” said retail consultant Chuck Palmer of Grandview Heights-based ConsumerX Retail. “Everyone is looking for the ‘new normal.’ The suburban rings are saturated, so most are looking urban or rural.”

Hoffman Estates, Ill.-based Sears Holding Corp. and Rural King Supply Inc., out of Mattoon, Ill., are two companies looking beyond the suburbs. Sears opened a new Hometown division store in Johnstown this year and is planning as many as six more shops within a 50-mile radius of Columbus this year, while Rural King plans to open a store in Marion this summer.

“Our growth is dictated by demand,” said Gary Hoyle, Sears’ regional development director.

Outside opportunities

Sears had independently owned catalog stores until 1993, when it converted around 150 of them to the Hometown model, Hoyle said. Ohio is home to 23 of the stores, run by independent dealers of Sears’ most popular brands, and it’s looking at towns like Hillsboro, Wilmington and Circleville for new stores. The division has grown by 40 to 60 stores annually to reach 907 total, accounting for more than a third of the 2,191-store chain.

Hometown stores are authorized dealers of Sears products, not licensees or franchisees. Sears keeps the stores stocked, while the local owners run the operation, pay the bills and collect sales commissions. They don’t pay franchise fees or royalties.

The scaled-down stores typically are 8,000 square feet and are focused on four product areas – appliances, electronics, tools and home and garden. Owners can use Sears’ delivery and service network or opt to do their own.

“Brands like Kenmore, Craftsman, DieHard – there’s lots of loyalty there,” Hoyle said.

He said the Hometown model is a good expansion opportunity for Sears since the company incurs no overhead from running the stores.

“Rural growth makes sense because it’s not saturated,” Palmer said. “If you look at their buying power, you’ll probably see it’s an underserved market.”

Palmer said Walmart stores have long been dominant in rural markets, but its superstores can require customers to drive farther than they may want.

“This is as much about competition as it is about coverage,” Palmer said.

Land, lots of land

The rural movement may say as much about available real estate as it does about demographics.

Rural King is taking over a nearly 73,000-square-foot former Lowe’s home improvement store in Marion, said Eric Eldridge, an agent with Columbus-based Gilbert Group Inc. Lowe’s had moved its Marion store to a new site nearby.

The chain, which has 47 stores in seven Midwest states, has snatched up abandoned big boxes in the Louisville, Ky., market as well, according to a recent report by Columbus Business First sister publication Business First of Louisville. The company did not return calls for comment.

Rural King targets the agricultural market with livestock feed, farm equipment and parts, but also sells lawn mowers, work clothes, housewares and toys. Its Ohio footprint remains small, with the Marion location its third in the state following sites in Wooster and Van Wert.

Another home and hardware player with its sights on Central Ohio is Eau Claire, Wisc.-based Menard Inc., which has opened stores in Marion and Lancaster in recent years, but is moving toward urban and suburban areas rather than away.

“They’re another alternative,” Palmer said. “They’re going into some places where others are not going.”

The company is nearing the opening of its Northland Village store on Morse Road, on a site that once drew the interest of Home Depot, has purchased a site on East Broad Street near Reynoldsburg once intended to be a Walmart, and is in the rezoning process for a site near Polaris in Delaware County.

Palmer said discounted real estate opportunities are there for the taking. Hoyle said Sears tries to get Main Street-type locations in the towns it targets, but is open to strip centers and other sites.

“It’s a buyers’ market out there,” he said. “We’re definitely seeing better deals than we were three or four years ago.”

614-220-5462 | deaton@bizjournals.com

Sears Hometown

  • Business: Independently owned stores in smaller markets that sell Sears’ appliances, electronics, lawn and garden products and hardware.
    Based: Hoffman Estates, Ill.
    Stores: 907
    Ohio stores: 23
    Website: searshometownstores.com

Rural King Supply Inc.

  • Business: Retailer specializing in farm apparel and equipment, as well as work wear, housewares and hardware.
  • Based: Mattoon, Ill.
  • Stores: 47
  • Ohio stores: 3
  • Website: ruralking.com


Read more: Retailers fanning out as they chase real estate deals, willing shoppers | Business First

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