Menards: Building conveys confidence in Midwest

The pace of growth of the big boxes has been one of the major story lines for home centers in the past 12 months. Atlanta-based Home Depot virtually hit the breaks on domestic-store openings in fiscal 2009, opening a mere six stores. Meanwhile, Lowe’s Cos. slowed its pace considerably.

Meanwhile, Eau Claire, Wis.-based Menards is taking more of a steady-as-she-goes approach to store expansion. The No. 3 player in the home center industry added eight stores to its Midwestern empire in 2009, with a handful of others in the pipeline.

The retailer declined HCN requests to discuss the company’s expansion strategy, but its actions speak louder than words. When you open more new stores than the No. 1 player, it shows a certain confidence in the market.

In 2009, the company planted eight new locations on its map. The company’s 252-location empire extends from Wyoming (one store) to Ohio (15 stores) and is largely concentrated around Lake Michigan.

The Midwest has been battered by the economy, especially areas dependent on the ailing automobile industry. But the numbers from the Commerce Department paint a relatively strong picture. In December 2009, the Midwest showed some of the liveliest housing starts figures. Total starts in the Midwest were up 15.8% compared with December 2008, and single-family starts were up 30.0%. But the unadjusted figure has less sizzle. Midwest single-family housing starts came in at 5,200 for the month of December 2009, and only 4,500 single-family starts.

The location of Menards’ steady expansion is of great interest to direct competitors and can alter the balance of home product distribution in any market. Consider Garfield Lumber, which recently closed its doors in the St. Joseph, Mo., market.

When Garfield Lumber was contacted by a local newspaper to describe its reasons for closing its doors, the usual culprit was mentioned: the historically sluggish economy. But there was another reason—the big-box competition in the St. Joseph market.

Menards expects to open in Jefferson City in early spring.