Big box: Not always cheaper
summit daily news
Editor’s Note: This is the fifth in a series about the potential impacts of a Lowe’s Home Improvement Warehouse on Silverthorne and the surrounding area. The next story focuses on traffic flow with the incoming store.
According to a recent Summit Daily News online poll, the incoming Lowe’s Home Improvement Warehouse is attractive to Summit County residents because it will offer better selection and price on home items they need.
Out of 2,177 voters, 1,535, or 70.5 percent, said that’s what’s most important to them about Lowe’s coming to town.
But though a large store may offer broader selection, prices aren’t always less. Research shows that when a store like Lowe’s comes to town, the corporation can set prices low and offset local losses through sales at other locations.
Lowe’s is expected to open between the Outlets at Silverthorne and the entrance to the Wildernest and Mesa Cortina neighborhoods in the early part of next year. It’s currently under construction in the gateway district of Silverthorne. Town code defines the area as one with large volumes of vehicular traffic that should have businesses that accommodate and take advantage of that traffic. The goal for that part of town is to cater to the traveler and tourist at the same time there are opportunities for pedestrian movement.
People stand on both sides of the shop local versus shop conveniently fence. Some enjoy one-stop shopping, others want to support the local economy. Some save money by spending at stores with purchasing power, others purchase fewer items at higher costs, still others do both.
Prices at independent retailers like Breckenridge Building Center compared to those at large Denver stores seem to be a wash: Prices differ according to product, quality and brand. Some things may be cheaper at the Lakewood Lowe’s. Other things may be cheaper at the nearby building center.
“Sometimes, you’re not comparing apples to apples,” Sanders True Value owner Ritch Sanders said. “Color and accessory items can make a difference (in price).”
A 2-oz. bottle of Gorilla Glue at the building center costs $4.25. At both Lowe’s and Home Depot in the Denver area, the same product costs cents short of $5.
Rust-oleum Crystal Clear Enamel at the building center is priced at $5.79, compared to roughly $4 at the Denver Home Depot. A Kwikset nickel residential doorknob was cheaper at the building center than at both box stores. Paint and tools varied according to brand and quality.
On the more expensive end of the spectrum, Sander’s True Value in Silverthorne carries a Weber Spirit 3-burner gas grill for $499, which matches its retail value at Home Depot.
The bottom line is, when looking at a variety of products, savings can be a wash whether spending locally or at a chain.
However, some experts warn that when large chains come to town, they have power and strategy independent retailers lack: support from stores in other geographical areas.
There’s a term in the business world known as a “loss-leader.” They are items stacked high at the store’s front and priced well below cost to impress low prices upon the buyer. The psychological tactic is said to have originated from the first Wal-Mart, and is meant to encourage shoppers to stock up on other items that produce a profit. The idea of making up the losses in other store departments eventually evolved into making up losses in stores elsewhere in the country.
“Corporate retailers commonly offer very low prices at newly opened stores, sometimes sustaining losses at those outlets for months or even years to gain market share. Once people have gotten into the habit of shopping the big box, however, prices rise,” writes Stacy Mitchell in her book, “Big-Box Swindle: The True Cost of Mega-Retailers and the Fight for America’s Independent Businesses.”
“Grabbing market share from rivals is part of competition,” Mitchell writes. “But the chain’s vast resources and their ability to oversaturate markets, sell goods below cost, and operate individual outlets at a loss indefinitely gives them an edge.”
Kathy McAllister, a store manager at Sanders True Value, said her store doesn’t operate that way.
“When I do pricing, we don’t lose money on any product just to get you in the door,” she said, adding that prices are competitive to the nearby market. Other True Value stores may operate differently, she added, because it’s a co-op system where stores operate independently under an umbrella of perks, but not mandates.
She added that often, price equates to quality.
“You get what you pay for,” she said, using the example of STIHL chainsaws, which aren’t sold at box stores because the manufacturer wants customers to understand safety and operations before buying.
“Sometimes, you’re buying a disposable (product)” McAllister said, such as lawnmowers or snowblowers that can’t be repaired for less than the cost of the product itself.
For long-time Western Slope resident and Summit County homeowner Albert Stowell, Lowe’s coming to town is less about price and more about availability.
Recently, he looked for products at all three Summit County home improvement stores, and struggled to find what he needed. He eventually found the item.
“I seem to have a successful venture out to Breckenridge Building Center one out of five tries,” he said via email.
To Stowell, the incoming Lowe’s won’t affect much.
“These local stores will not be affected because most builders bypass them now and head off to Denver to avoid the frustration. If these stores take advantage of the situation and train staff and update inventory, their business will increase,” he wrote. “I would much rather buy local, but after decades of monopolies, they have gotten lazy and inattentive.”
On the other hand, McAllister said she aims to carry a range of products in her store that cater to all levels of customers.
“We try to carry the good-better-best,” she said, explaining the contractor grade tools versus homeowner repair grade vary in price.
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