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The days of the mom and pop shop are over.... Wal-Mart and Home Depot are here! That’s fine by me, I like those big stores and I find myself going there often.

Now let’s take a step back. Home Depot is getting into the painting business and they are already in the flooring and roofing business. What does that do to small contractors?

I think this has been brought up before and everyone said that their service will stink... maybe, but there is still the issue of people trusting and wanting to go to the big guys! It’s easy to... You’re in the store picking out your new paint color and the sales guy says, "Would you like us to apply that for you?"

Now, I'm not totally pessimistic about this whole thing and I believe many contractors can actually benefit from this competition! What I would like to hear though is some discussion on the issue. How can you come out ahead of the big guys?

Above all I hope this is a wakeup call for many. We need to start running our businesses like well oiled machines and marketing ourselves accordingly. Because if we stay on the top of the lists as the most distrusted industry next to car dealers homeowners WILL go to Home Depot and skip the hassle of going to the small buy they know nothing about.
 

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You ever see what they pay their help? The only way I can see them hurting us is if they go to a sub package and work with us. Most retail lumber yard employees I've seen need to be taught while you work with them.

Bob
 

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If you can't compete with the big box store's, you will need to completely reavaluate your business.
Home Depot customer's should not be your customers. Maybe a few, but you should set yourself apart from them, and make yourself very clear to high end clients who realize professionalism and want to pay for it.
It can be a real struggle to try to make a home depot, internet shopper your customer. So don't even try....they will learn someday maybe.
Just work on making yourself known as a full service professional company who is locally owned and operated.
I am doing the Home show here in town, and I see no Home Depot whatsoever, or Lowe's. What I see is well educated, people who understand quality, service, and more intimate business relationships can mean a whole lot more than saving money, and giving them more to worry about.
This will never go away, If home depot dropped out, it would be some other store the penny pinchers will go to.
 

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I have seen what they pay! The customer pays $2.75 a sq ft. The order goes to an intermediate company that handles the scheduling and pays the contractor $1.10! They also pay a flat $35.00 for a measure and wanted me to work within a 50mi. radius. Time for the single digit salute.
I have also watched them work and they are getting almost every dime of what they pay for, I don't think that any of them know what they are doing.
To me they are not a threat at all. They sell cheap flooring and do poor installations. What, me worry?
Re: Mom and pop stores. I work with a number of them, all high end and quite sucessful, as well as some franchises such as Carpet One.
The rest is as Flor says. Most people understand that you don't get a Caddilac at Chevy prices, just make sure that they get the Caddie. :Thumbs:
 

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Nate I like the big guys like home depot and sears. Here is why: They raise the bar for all legitimate contractors. When they go in with a price twice the average, guess what? That raises the average :) Also they are going to put the real scum out of business leaving more work for us legitimate contractors. Another thing, if they don't close the sale on the first meeting they pretty much forget about it. Theat means my chaces of closing just went up.

Home depot does sub their work. They just bought their biggest sub, IPUSA. It was in the news a few months back. I inquired abotu subbing for them but they pay squat. We'd be working for free. I did work for Lowes for a brief period and they paid ok, not great, but their staff was all morons so I fired them about 3 months ago.


What Flor said was very insightful. Give the customer the personal touch. Target people that want the personal touch. Find a niche away from home depot's niche. I've lost one job to home depot. This is because the customer called 4 contractors, including me. 1 was home depot, 1 was sears, another was Siding1 and then me. I was charging a fair price as I always charge. Not low but not as high as these big boys. I lost cause I was the lowest bidder by a few thousand. It was just sucker luck, and I chalked it up to experience. That combination won't happen often BUT she found us online and our website was impressive enough that she thought we were one of these big box comapnies :)
 

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Does anybody else price shop these stores?
I am always asking my sister and friends to get estimates for imaginary projects just so that I know what they are charging. I figure that if their price can feed 3 mouths (the store, intermediary and contractor), it should feed one (mine).
 

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I just ran into this situation. A customer flat told me something along the lines of: "We talked to Lowes about doing this also and your price is almost double theirs, why is that?"

Basically I told them flat out that I was never going to be as cheap as Lowes or probably anybody else they talk to. The difference is that Lowes is paying such low prices to the contractors that do the work that they only get brand new people in the business or people that nobody else will hire. At the price they are paying the contractor usually has one shot at getting it done right, and the situation to do the job has to be perfect with no room for error, because the contractor will lose money if they have to do anything out of the ordinary and will have to cut corners to make sure he doesn't lose money, or will just walk away from the job. I'm charging you a rate where I am able to do whatever it takes to make your project perfect. I will stand behind my work and give you a warranty in writing. When working with Lowes you don't even have what I would see as the greatest benefit in using them, which would be if there is a problem you would have a huge company standing behind the installation. In reality Lowes will pass the buck on to the contractor and you are stuck right back where you started as Lowes stands clear of the whole mess. You are dealing directly with somebody that nobody else would even hire, working for a tiny wage and trying to get them to come back and do the job which they see would be working for free.

It turned out the customer was able to apprectiate the difference and inked up right there on the spot. "Actually the wife jumped in and said, no, no, no we aren't going to use them and get into that mess just to save a little money, we want you to do it so it is done right."

If that doesn't do it I tell them they want to know the dirty secrets about Lowes, Home Depot and the like to look at the website http://consumeraffairs.com, do a search for "home depot contractors" and you will be flooded with horror stories from consumers like yourself.

Last month I got a phone call from a customer that was in tears. She said she had contracted with Expo Design center for some bathroom work and the contractor had just walked out of her house saying he wasn't doing the work. It turned out the work was very custom and not a wham bam thank you mam job. I did that job too, and ended up quoting the customer more than double what she had contracted for with them.
 

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I would also think that the people that are hiring home depot and lowes type companys might not be so credit worthy and dont have alot of choice, plus they like paying that 21% int. rate. and no payments for a year.
I bet big box stores like that lose money on the retail side but make up for it in the financing side. It's there cash cow.
 

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Home Depot really markets to "Their" customers. Some people love home depot soooo much they would buy dog food from home depot if home depot sold it.

Home Depot has revenues of 67 billion dollars per year. I am fairly sure they make some profit out of that ;) Also for home depot's home improvement financing, is offered through CitiBank.
 

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1BADF350 said:
I would also think that the people that are hiring home depot and lowes type companys might not be so credit worthy and dont have alot of choice, plus they like paying that 21% int. rate. and no payments for a year.
I haven't found anything to corelate that. The one I am talking about lived in a $700,000 house.

If you are familiar with the stats of Mcdonalds you know that something 99% like every Amercian household does a transaction with them in a year.

Lots of consumers are familiar with Home Depot because almost everybody that owns a house has a good chance of buying something from them, so it is only natural to discover they offer some contractor services. Don't make the mistake of assumming your customers are smarter than they are. The vast majority don't know that there is a pro or con to hiring Home Depot to do something for them or an independent contractor. The big advantage in a consumers mind is that Home Depot is a big company and they are familiar with it, highering an independent contractors means going out and finding somebody you know nothing about and taking the chance of being screwed. If Lowes and HD ever figure out to raise their contractor services prices higher and actually cover the work instead of passing the installation warranty issues on to the contractor they hire, watch out!
 

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Mike Finley said:
The big advantage in a consumers mind is that Home Depot is a big company and they are familiar with it, highering an independent contractors means going out and finding somebody you know nothing about and taking the chance of being screwed.
This is HD's WHOLE selling approach. Insult the compitition. Create fear int he customer's mind.

Mike Finley said:
If Lowes and HD ever figure out to raise their contractor services prices higher and actually cover the work instead of passing the installation warranty issues on to the contractor they hire, watch out
Raise their prices higher?! Their roofing prices are already twice the norm. When I say the norm I mean by legitimate contractors, not trunk slammers... but established companies that aren't considered cheap. Their siding price is not quite double but at least a good 30% higher than mine, and I am not cheap. They charge about $125 more on any given window than I do, and I aint cheap.

If home depot ever organizes it's at home services they will be dangerous... the problem is they hire unskilled workers and have a huge turn over.

Lowes operates totally differently, and after being one of their certified installers for about a week before I fired them, I know that their biggest problem is also orginization and unskilled workers.

I could turn around home depot's operations... I saw so many flaws in their business model. It is just half assed backwards.
 

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One of the biggest reasons HD does not hurt me, is because we carry alot higher quality and cater to the customers that want that. Plus we are a part of a buying group that is bigger in flooring than HD.
Plus if I bid against HD on laminate flooring, they will send out a guy to measure, and they will pad the measure to make sure they don't come up short. So they are incredibly easy to beat.
The customers HD takes from the flooring industry are not my customers anyway.
 

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Wow, your Home Depots and Lowes sound way different then the ones around here. They always seem to be lower priced for anything they do. That seems to be their main attraction for people around here that look at their services, at least from what I have heard from friends and customers. I have no experience with any major services such as roofing. I can't imagine anybody hiring them for that, but I'm sure they do.

As for being insulting to the competition, I have definitly never experienced that. The competition never seems to come up. They seem just as happy to sell you an entire kitchen for you to install yourself or sell your the installation to. I have never experienced any pressure or even mention of any competitors in that regard.

When you say they hire unskilled workers to do installations that is totally different around here to. Around here they don't send employees out to do the installs, they hire contractors as subs.

Personally I don't believe that the installation business is really much on their radar at the moment. It seems to me like they are focused on their main source of business which is selling supplies and not the service to install them. It seems to me that they are involved in the installation side only because probably so many customers have asked them if they could install that dish washer or garbage disposal too.
 

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Mike Finley said:
The big advantage in a consumers mind is that Home Depot is a big company and they are familiar with it, highering an independent contractors means going out and finding somebody you know nothing about and taking the chance of being screwed.
BINGO!

Mike Finley said:
If Lowes and HD ever figure out to raise their contractor services prices higher and actually cover the work instead of passing the installation warranty issues on to the contractor they hire, watch out!
Watch out for what? They could probably shoot their market share of the painting work through the roof just by charging / paying what it takes to have real contractors do the work. Then they'd have their pick of those good contractors who wanted to do the work AND they'd be selling a good product. Just imagine, you go to buy your paint, hire a good contractor backed by a national chain AND get a job well done by a professional. That's worth more money to me just for the ease. But don't worry, the near-sighted bean counters at corporate will NEVER let that happen.
 

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They always seem to be lower priced for anything they do
And that can be a bad thing for them.
Wealthy people rarely pick the lowest bid.
 

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When it comes to the roofing, the siding, the windows... these are run by a seperate company "At Home Services Inc." which is wholy owned by Home Depot and is not the same as the FLooring and cabnetry people you see IN the store.

Their whole sales approach for the roofing, siding, and windows is this: First they set the customer up telling them that some companies are going to charge a really high price, then they tell the customer that some companies are going to chare a really low price. The companies that charge a higher price is: Sears. The companies that typically charge a lower price are your normal run of the mill contractors like me.

The whole presentation is a selling trick from start to finish. They scare you right from the get go by saying things like... "We are home depot. We have the best buying power in the industry? Do you think anyone can do it cheaper than us and still do it properly?" "The problem with going with anyone other than Home Depot is your either paying too much or your gambling, because you are not getting what you are paying for." blah blah blah

Not on their radar? The CEO of Home Depot says he is going to boost sales 20% and his strategy revolves around "At Home Services, Inc." What's 20% of $68 billion?
 

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Grumpy said:
What's 20% of $68 billion?
Hmmmmmmmm...it's more than $5,000 - right?
My calculator doesn't go that high. Regrettably, neither does my imagination. :cheesygri
 
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