I’m slowly coming around to the point of view that big box retailers really don’t have a price advantage over smaller local competitors when you consider the total cost of something (product, service, support, etc.). It may seem the big box retailers are less expensive on the showroom floor, but I’m finding more and more that once you really dig into it, the big box stores end up costing me more, not less. Let me explain using my latest experience with Nebraska Furniture Mart.
We’re in the midst of preparing to sell our house, so you can imagine the number of trips we’ve been making to various big box retailers (your welcome, Lowe’s). Last weekend, we went out to Nebraska Furniture Mart because several of our friends had commented they felt they received the best deal on good carpet and the company really pushes in their marketing that they can offer the best price due to their size. So, we headed out, confident we’d find a good carpet at a great price. And we did, or so we thought. We found a carpet we liked, at 20% off no less, with a 20-year warranty and free pad to boot! So we were pretty excited, until we received the call I’m starting to expect every time I’ve tried to purchase a service or expensive item from a big box retailer. “Well, as I was writing this up I discovered a few things that I wanted to let you know about…” In this case:
- 1900 square carpet needed for a 2200 sq foot home house with most of the first floor area covered with wood and tile (this seemed waaaay high and we hand-measured. It was really high). They reiterated they felt this measure was accurate.
- The carpet we wanted was actually a 15-year warranty (a mistake on the sign)
- A $7 per stair charge rather than $5 she had quoted (a mistake on her part)
- A $50 per room fee for moving any medium or small furniture. They wouldn’t move large furniture.
- A per sq foot charge for taking up carpet
- A $500 carpet disposal fee
OK, we thought. This is typical - there’s always the hidden costs they don’t tell you to get you to buy. In this case, the net of it all was it basically ate up any of the 20% off the carpet. This was happening every time we bought something from a big chain, so my spouse decided to make a few calls to some local carpet companies. And, true to what you hear, none of them had the “exact” same carpet that NFM did (all carpet is made at the same place - they just call it different things at different stores so there isn’t a direct comparison). The local places confirmed this and lo and behold, the price for the carpet was higher than NFM. BUT, where the big box nickel-and-dimed everything, all these areas noted above were included in the smaller company’s overall price. Even better was the service and experience at these smaller firms. They really worked with my wife to make sure everything was accounted for. They would hand measure rather than using the high-tech laser gadget NFM used to make sure the sq footage was accurate. We’re likely going to end up going with one of these smaller local stores.
I’m finding this over and over again with big box retailers - the “myth” that the cost will be lower because of their scale. That’s probably true when just buying a basic home product, but I believe it’s a myth with more expensive items like appliances or services like flooring, windows, doors, etc. They price the product low then nickel and dime, making the total cost of ownership as high or even higher than when going through a smaller, local firm. Not always, mind you, but if you do a little legwork you can find that excellent, local shop that will at least match price but provides service and support head and shoulders above the big box stores.
I think what’s happening is that the big box stores know that we’re lazy. Through their marketing, they’ve established a reputation for a low product price (marketing sale prices, claiming lowest prices, etc.) because they realize that most people won’t compare fees and extras. We wouldn’t have, if not for other recent experiences. The implication for smaller retailers is that you have to market to counter the big box reach advantage. I know that directly impacts your income statement short-term, but you have a clear advantage here. Communicating your service and support superiority that is generally at the same total cost of the big box stores is important and not many consumers realize it. This would be marketing well spent, not just noise, and I believe you’d see a great return off this investment.