Hometown vs. Home Depot

HELENA, Mont. — When the family-run Power Townsend hardware store here heard the Goliath of home improvement was moving to town, owner Mike Wall decided to ignore the pundits and take The Home Depot head on.

Instead of scaling back, as some experts recommend when "big box" stores move in, or folding, as at least one other local hardware store did before Home Depot broke ground in Helena, Wall went big.

He doubled his store's floor space and started work on a mammoth new 5-acre lumber yard, a project that was under way as the Home Depot began taking form this summer just across I-15 from Wall's store.

"You've got to be as big as Home Depot to compete against them," Wall said. "You can compete. It's just not easy."

Wall knows he's taking a big gamble. Even with his expansion project, Home Depot's new store is still more than twice as big. The Home Depot also has deep corporate pockets and a formula proven in 1,600 stores across the country.

"They're not here to compete, they're here to put you out of business," Wall said of Home Depot. "They're not nice people."

It is a fairly common sentiment of local business owners when such giants as Home Depot or Lowe's move to their towns.

Across the country, the National Retail Hardware Association estimates a drop from more than 25,000 hardware stores in the late 1980s to about 20,000 today.

In the past few years alone, the average size of home improvement stores have grown by about 10 percent, while the number of independent "mom-and-pop" stores continues to fall.

Walt Johnson, with the National Retail Hardware Association, said some closures simply were because the owners were near retirement and didn't want to make new investments to stay competitive.

Others, however, likely closed because of the pressure from large, national stores, he said.

"Obviously competition has gotten a lot tougher in the last 20 years prompted by discount stores and the big boxes," Johnson said.

And more often, those stores are either Home Depot or Lowe's. The two retailers alone accounted for about $84 billion in sales last year.

Since 1998, the 25 largest retailers have gone from grabbing 42 percent of the industry's sales to 53 percent, according to a National Retail Hardware Association report.