Evaluating the Competition: Where is the Value?

This past weekend, I chose to visit one of those large big box type hardware stores,
the type that has dominated the home repair scene, for the last 20 or so years.

I am probably one of those guys who thought it was cool to go to a hardware store
that was so large and impressive with its choices of low cost items from China, I was
not sure where to go first. Tools, plants, light bulbs, paint, flooring, etc.

For a lot of men, these stores are like large department stores for women--I know this sounds
sexist, but I do recall my mom schlepping me with her as a child, through what seemed to be
endliss aisles of clothing (and no toys to speak of...). I will never forget the bordom and anxiety
I felt those days. Maybe that is why I cannot spend a lot of time in these stores today......

Anyway, for me, I never felt the same way at these big box hardware stores, when they had
10 versions of the same size nail, and specials for bulbs, fans, lights, and tools.

Well this year, that same beloved hardware store starting to compete with our business, in the form of giving away moving boxes. Beyond the indignation, and utter disbelief, that somehow,
they would be conned into selling moving boxes, but ok, we have survived everyone else getting
into the box business, as this is our 25th years anniversary at Box Brothers, and in the beginning, I was not even sure that the selling of boxes in a retail setting would even work.

Ok, another competitor. Ok, another multi billion dollars competitor, who wants in on our small
business, or as others have deemed it when Walmart does it, knocking out mom and pop businesses. The problem is that Walmart and Target, at least today, are reassonable and that
in this marginal area that we are in, we have not seen predatory pricing as we have seen it with
the largest hardware store chain in the world. Why?

One would think that they are somewhat intelligent at Home Depot. That they have built a large
business from a very small business, but what they have done in the moving box area, lacks
common sense, and more importantly, intelligent application, as they have entered the market
with prices 50% below the industry leader, U Haul. Again, why?

Pricing is a hard thihk in every market and much has been written about it. However, what
sense is there to bring a product line into your business and sell it for less than what others
IN the business actually pay for it? Who were they competing against when this decision was
made and what kind of decision making supervision would allow for them to do this, when it is
clearly Predatory Pricing.

What is worse, is that their upside is rather nill. They make more on a light bulb and one has to
think they are not smart or they are trying to put all of the other box sellers, which again, makes
no sense.

To add insult to injury, their main competitor, had to copy them and they posted the same prices. Stupidity is worse when it is emulated. Go figure that their combined market cap is
more than Dupont and IBM, I am told.

In my next blog, I will let all of you know how the world's largest hardware store chain, gives
thier customers the choice, of bad service or price and how we as consumers, need to know the
difference. Suffice it to say, that I am not impressed with Home Depot's effort to either break the law with their clear predatory pricing, or it they are just plain unintelligent. Either way, they
have caused a lot of people a lot of pain, and for what?