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A Road Less Travelled - The Big Box Phenomenon
By: Sven Kraumanis - owner/operator Legacy Vintage Building Materials & Antiques
Under the headline “Lowe’s joins Reno Battle”, the Financial Post recently reported that the World’s second largest home improvement retailer is coming to Canada. The “fight” is over a share of the $35 billion dollars spent each year on shelter for Canadians.
Presently, Home Depot, Rona, Home Hardware and Canadian Tire gather in only one half of those dollars, so, why not come? Home Depot crossed the border a mere eleven years ago and now has 120 Big Box stores in 10 provinces with plans for 21 more for this year. Seems easy and appears profitable. Canada ably contributes to Home Depot’s 16% annual growth.
With an average 2-year growth of 18% and sales of over $45 Billion ($Cdn.) Lowe’s has the confidence that comes from fifty-nine years of experience. Lowe’s handles 11,000,000 customers per week. With sales that exceed Canada’s entire market by over 25% Lowe’s could on it’s own handle all of Canada’s needs! Is this a disturbing thought? Of course it is but why lament capitalism in its finest form? Lowe’s management appears to have suppressed the greed and avarice that has infected a generation of company executives, jailed Martha and resulted in the enactment of stiffer securities laws. No sweat shop scandals have surfaced that could brand this corporation as anything but ethical; and, although we can expect a temporary increase in the Friday flyer avalanche, we won’t have to listen to grossly overpaid golf or basketball stars convincing us to buy more stuff that we don’t really need but that will inevitably break, wear out or fade from fashion therefore requiring an expensive replacement whose sale proceeds are in large measure earmarked for the overpaid golf or basketball star’s incentive fee, signing bonus, salary, appearance fees, royalties, and performance bonuses.
The conspicuous absence of screaming headlines touching on Lowe’s corrupt corporate governance, trampling of human rights or delusory marketing practices- being the occupational hazards of 21st century commerce- is litmus test enough for me… if Lowe’s behaviour is not newsworthy how bad can it be?
But what about the culture of the host community?
Imagine what would life be like in Canada with only one vendor of home improvement goods? Half of our market is now serviced by four vendors. If Lowe’s is as successful as Home Depot two thirds of Canadian’s needs will be serviced by five vendors. But wait…didn’t the free market bring us here? Isn’t bigger better? Don’t the big chains offer more choice? Vancouverites don’t think so. In June of 2005 Vancouver council voted to keep Wal-Mart out of town. And the French…in the same month they voted against a proposed constitution for the ever-expanding European Union established to take on the burgeoning Eastern and Western market places. The French vote was interpreted as a backlash by the commoners…the same people who in many small towns reject fast food chains. “Slow food” towns… sounds very welcoming. Like the good old days: you wait for your food instead of the food waiting for you. The Netherlands was next to reject the proposed constitution. What’s being rejected here?
Dr. Ken Jones, director of the Centre for the Study of Commercial activity at Ryerson University says that the saturation of the market by power centres is a sign that the retail industry in Canada has matured. Since Wal-Mart’s drive began in 1994 the number of small businesses, independents and street-front retailers in Canada has declined. In Canada there are now 100 chains with 300 banners that capture 65 percent of retail sales. (1) Lowe’s presence would bring the home improvement industry up to the norm.
How Did we Get Here?
The Big Box store phenomenon is a recent experiment, in the grand scheme of things, so let’s put things into perspective. Archeologists have carbon-dated over a half million artifacts confirming that man was active as a hunter-gatherer in Clovis, New Mexico 12,000 years ago. Even one hundred centuries later shelter and creative comforts in the New World comprised hand wrought home improvements either brought from Europe or made in the pilgrim’s shed. In most early households everything was self-made- and this included the tools to make the furniture, shoes, clothing, toiletries, utensils, weapons and farm equipment. A family’s success and very survival depended on its member’s skills, talents and dedication. Many a carpenter’s competence was field-tested by a bear clawing at the door. Over time communities formed, specialties evolved, barter supplied a mix of goods, and industries flourished. Although the blacksmith was indispensable to any community, the first forge dedicated solely to the manufacture of door hardware was established in Saugus, Massachusetts in 1640. Of course many factories existed in England and Europe in the 1700’s but by necessity they were tethered to streams for waterpower until the steam engine was refined by James Watt in 1774.
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