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Big boxes invade the Big Apple

Having made it everywhere else, stores like Home Depot are now trying to make it in the country's biggest urban areas.

By MARK ALBRIGHT
Published March 13, 2005

NEW YORK - Tucked into the three-level basement of a new office tower, this is not your run-of-the-suburbs Home Depot.

Out front, there's a doorman dressed in a black wool overcoat with orange trim. The lobby concierge in the more familiar orange apron makes local restaurant recommendations. Customers - many of them wealthy captains of American industry - frequently have no clue about the easiest home fix-up project.

"I was explaining how to finish off a simple job with some spackling," said Ken Richmond, who manages the first Home Depot in midtown Manhattan. "Then the guy stops me to ask "what's spackling?' "

Such culture shock is an everyday occurence at the only Home Depot in the United States with an employee dress code that bans blue jeans. After all, Bloomingdale's trendy nine-story flagship store is just across the street and a Prada boutique is around the corner. So Home Depot Inc. went overboard to fit into a neighborhood where the average income tops $200,000.

Employees frequently must explain the place and do-it-yourself projects in detail that hasn't been heard in a long time in places like the Tampa Bay area where Home Depot has dished out home fix-up advice for 20 years. Believe it or not, some New Yorkers have never even seen a Home Depot, much less attended its free do-it-yourself clinics.

"Some think we're a furniture store. Others ask where the coffee shop is," said Richmond. "These are true home improvement virgins."

It's all part of a much larger challenge confronting some of the nation's retailing juggernauts from Home Depot to Best Buy to Target to Wal-Mart. After papering suburbia with their huge cookie-cutter stores, the nation's big box retailers are finally trying to get a foothold in their last frontier: urban America.

Arguably the fastest growing retailer in U.S. history (zero to $73-billion in 27 years), Home Depot has spread to 50 states, Mexico and Canada. Its 1,892 stores were mostly built in suburban markets where the chain can buy a vacant site and open a store within 18 months or less. What sells in Orlando is not much different than what sells in New Orleans, so the formula doesn't require much more than a tweak.

But still thirsty for growth, the Atlanta-based chain, which has been opening more than 180 new stores a year to further saturate cities it already dominates, is trying to crack into the most ignored neighborhoods where stores take years to develop and lifestyles are far less uniform.

And the biggest center cities and hard-bitten urban neighborhoods, populated with little retail competition, until recently have not put out the welcome mat for big box stores.

Faced with staggering big-city land costs and monumental traffic snarls, Target Corp. is learning how to cope with parking garages and two-story layouts (featuring separate escalators for shopping carts) in places like Los Angeles and Atlanta while scouting sites for its first crack at Manhattan.

Bed Bath and Beyond, Best Buy and Staples have carefully crafted store formats that fit cramped and congested big city spaces. After moving into an abandoned department store in South Central Los Angeles, Wal-Mart's attempt at building its first New York discount store was derailed last month by a buzz saw of opposition.

The proposed Wal-Mart in Queens, which would have been part of a three-story shopping complex with two 25-story apartment towers, was fought by organized labor, residents who don't like the way the world's biggest retailer does business and local politicians who proposed new laws to keep out the big box stores.

The developer gave up before the first public hearing.

In New York boroughs, the few big box stores are surrounded by chain-link fences topped with razor wire, shopping carts cannot be wheeled into the parking lot and security guards patrol the grounds. But except for two Kmarts, Manhattan is big-discount-store-free.

Now the opposition to the types of big box stores that crowd around most every suburban mall slowly is being chipped away by creative designs and stores stocked to fill local needs.

Their success has not gone unnoticed by old-time New Yorkers who cling to every shred of what makes their city distinct.

If chains with huge stores keep coming, they say, what will make Manhattan any different than - horrors - "some edge city like Dallas?"

Despite their long-term love affair with department store chains and trendy fashion retailers from the Gap to Gucci, New Yorkers still harbor a love/hate relationship with chain stores.

"As the influx of big box retail into Manhattan has escalated, New Yorkers have gotten more and more (angry)," observed Stephen Milioti in a recent New York magazine piece explaining how he has come to accept "the kind of bliss" that comes from chain stores.

"I was hanging four shadow boxes by a Northern California artist, each enclosing delicate objects such as petrified quail eggs," he wrote. "I attempted to explain this to the gruff guys at my local hardware store. One stared while the other pointed at the ceiling and said "picture hangers over there.' "There' contained a few dingy plastic bags of hooks suitable at best for a battery-operated singing bass."

In contrast, the new Home Depot had hundreds of options. And Clorox is half the price.

Perhaps no other chain has proven as willing to adapt as Home Depot Inc. The home improvement giant remodeled a century-old Hasbro toy factory in the trendy Flatiron District for its first store in Manhattan last September. A few months later the first midtown Home Depot opened in the basement of the new 59-story Bloomberg Tower at Third Avenue and 59th Street.

The midtown store covers a city block, so at 108,000 square feet it's the size of the typical Home Depot. But both of its sales floors are an escalator ride below street level and daily delivery trucks can get to the stock room down in the third basement only through an elevator big enough for a semi rig.

"Fortunately, we weren't arrogant enough to just move in and try to do in Manhattan what we've done elsewhere," said Jason Feldman, Home Depot's merchandise director for new concept development. "We surveyed customers and researched the New York market until we were orange in the face."

Analysts figure each New York store will do four to five times the business of an average Home Depot, or up to about $200-million a year, because there is little competition. The company plans four more stores in Manhattan, which is served largely by small hardware stores, pricey interior design firms and an army of repair and maintenance people.

Not that Home Depot entered the market without some name recognition.

"For years I made a pilgrimage every two months to a Home Depot in New Jersey," said Louis Rosa as he combed the aisles for Liquid Nails and closet organizing systems.

Virtually every element of a Home Depot was rethought for Manhattan.

Residents don't drive. So the doorman hails cabs for customers lugging bulky items. Or customers steer their carts into a same-day delivery desk before they move on to settle up at the checkout. For a $20 fee, Home Depot delivers any order in Manhattan within a three-hour time window.

New Yorkers live in co-ops and apartment buildings. So lumber and building materials orders are phoned to a warehouse in New Jersey. Appliances include a variety of stackables and small sizes designed for small spaces.

About a third of the store is dedicated to in-home installation services stocked with model kitchens (15 of them), baths and other rooms common to New York apartments. About 20 "closing rooms" equipped with computer-aided design terminals and tables for spreading out floor plans are available for customers and their interior decorators to hammer out deals with sales people.

Employees are still getting used to their new customers' willingness to spend.

"Customers don't blink at paying a $20 delivery fee for a $29 light fixture," said Richmond.

The other two thirds of the store is a dressed up version of the same stuff found in most every Home Depot. But every aisle has been adjusted for Manhattan tastes.

The store stocks 10-times as many drawer and door pulls (2,000) as a normal store because New York apartments are flush with storage cabinets. More than 40 one-of-a-kind area rugs priced as high as $5,000 hang in the floor covering department. Four aisles of cleaning products are touted as the biggest selection in Manhattan.

The store carries several brands of super-sized top-of-the-line appliances such as the $4,800 GE Monogram gas stove because research found many New Yorkers live in apartments larger than a single-family home. The store carries George Kovac lamps, but other high-end brands such as Viking stoves are missing.

Home Depot even changed its standards to fit the New York way of life. Pets on leashes are welcome to roam the store, for instance. Unlike most Home Depots, the staff was not transferred from other stores. Rather, the chain recruited local building trades who are familiar with local carpentry, wiring and building codes.

The lack of sunlight shrunk the garden center to indoor plants. But demand overwhelmed supply, so more basement floor space was added for more live plants. "We had no idea there were so many rooftop gardens in New York," said Feldman.

The key to cracking the lock business, they discovered, was having an around-the-clock locksmith. Then they stocked 10 brands for residents who don't think twice about putting five locks on a single door. That's triple the variety of a typical Home Depot.

"After 15 years at the city public housing authority I can assure you, I have seen every lock in the book," said Angelo Heck, who heads the lock desk.

One strategy that helped Home Depot grow to become the nation's second-biggest retailer has been its ability to give novice do-it-yourselfers the confidence to tackle more and more projects. The company hopes New Yorkers will be no different.

Both New York stores showcase slick displays aimed at inspiring amateurs. Touch screen kiosks offer project instruction and printouts of materials needed for a job. The stores - equipped with plasma screen TV - stage three times as many daily how-to clinics as the average store. It remains to be seen how much time harried New Yorkers are willing to spend learning a new hobby or doing repairs they can bug the landlord to do.

New Yorkers flocking to the new Home Depot remain conflicted.

"It won't last," said Clem Brown, a postal worker. "New Yorkers are not do-it-yourselfers."

"My only question is what took them so long," said Tae Sun Lee, an office worker from Brooklyn.

Ruth Pappas, a commercial artist and New York native, feels guilty every time she loads up.

"New York has always been full of unique independent retailers. They are part of the flavor of the city. Home Depot is New Jersey," she said. "People like me are really the problem, but I just cannot resist Home Depot. The prices are cheaper. The service and selection are much better."

- Mark Albright can be reached at albright@sptimes.com or 727 893-8252.

[Last modified March 13, 2005, 00:24:03]