Brookfield Wannabe

One has to wonder why these competing stores build right on top of one another?  The new Menard's right across the street from Home Depot in Waukesha can't be good for either of them.  I like Woodman's philosophy.  They don't build in an area where someone else has the market sewed up.  

I've wondered the same thing about gas stations.  Like on the Corner of Lilly and Capitol.  There are three gas stations around that intersection, although the BP hasn't been selling gas lately, and the prices are usually the same.  Although I have to admit, that if one of them is one or two cents cheaper, I will go to that one.

It's classic retail competition.  Build where your competitors are and steal their market share, as long as you believe yourself to be a superior product.  50% of Bed, Bath and Beyond's stores are within 3 miles of a Linen and Things, I don't think that's a coincidence, although I don't know if either had a strategy to co-locate with the other.  BB&B's predicting a 18% sales increase because of the 120 stores Linens and Things is closing.  I remember not too long ago reading a story that Dave Thomas of Wendy's for the longest time did not have a real estate arm for the firm.  They just waited for a McDonald's to build and built as close to it as possible.  The Menards/Home Depot is going to be real interesting.  Home Depot isn't doing well, and I would suspect Menards is in the same boat with the downturn in home remodeling and construction.  I have to admit, I stopped shopping at the Bluemound Menards (unless they had something specific that no one else carried), since their prices were similar and I thought the store had become really run down.  I like the Menards up on Capitol, so I'll probably give this new one a chance when it opens.  Gas stations is a completely different story.  They don't make all that much money on gas, they make it on the food shops and other services.  That BP probably is just fine with doing AAMCO transmission work and not worrying about the gas.  The inventory carrying cost for the gas nearly wipes out the small margin they get on it.   Woodman's is awesome, but I also think they are a 'destination' store, so they'll build where ever and people will drive to them (I know I will).  The Oak Creek store is kind of out there, but in Kenosha and LaCrosse they are butting heads right up against major competitors like Wal-Mart Supercenters and other grocery retailers.  But if I need a gallon of milk and nothing else, Pick 'n Save here I come.

WI has a minimum markup law, so contrary to what they say, gas stations are making money on gas, especially now that the prices are so high.  9.18% of $3.00 is more than the same percentage of $1.50!  I believe the law may not be being enforced now on ethanol-blended fuels.  The price of crude has decreased by about $1.75 a gallon and the price of gas has not decreased by that amount, especially in our area, so I think the retailers are making a dandy profit at the consumers' expense.  Like OPEC, they found out people will still have to buy the product regardless of the price.  It's better to make a much higher profit on what you sell even if you lose 10% of your sales.  Do the math!