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Super stores threaten main street merchants

Doug Thompson keeps close track of office supply store casualties inTampa Bay, reciting the statistics almost automatically.

"To the best of my knowledge, we've lost 27 office supply stores in the Tampa Bay area in the past year," said Thompson, president of Pasco Office Systems and Supplies Inc. in New Port Richey. "Being a small, independent businessman, you've got to watch what you're doing, and if you kick back these guys will come in and push you out."

The "guys" Thompson refers to are warehouse retailers. Some, such as Office Depot and St. Petersburg-based Workplace, sell only office products, while others, such as Pace and Costco, offer a wide range of products, including office supplies.

Warehouse retailers are among the leaders in a new wave of national and regional chains invading Pasco, and dealing in hardware, office supplies, electronics, toys and even food. The new merchants are motivated by their own ambitious growth plans and attracted by a county population that within the last few years reached a level necessary to support a retail formula of heavy advertising, discount pricing and huge inventory.

Workplace, scheduled to open this month in The Piers shopping center on U.S. 19, is Thompson's newest headache, while other local merchants prepare to fend off Circuit City and Toys 'R' Us stores planned for the same shopping center. Home Depot, a warehouse home-improvement store, has already joined the Pasco fray, and outside of the retail segment The Olive Garden and Chili's with high profiles and slick advertising are giving fits to some local restaurateurs.

The irony in Thompson's case is that his 29-year-old business includes nearly as many stores as Office Mart Holdings Corp.'s Workplace chain, which consists of five stores and plans for 32 more.

But Thompson's four stores in New Port Richey, Port Richey, Crystal River and Tarpon Springs could all fit into about half of the space taken up by the 30,000-square-foot Workplace planned for Port Richey.

Big competition

Size is vital to Workplace and other "category killers" like Circuit City and Home Depot, which try to dominate a retail segment by offering huge selection and quick delivery, acting as both store and warehouse.

Circuit City, for example, offers 2,500 different electronics and appliance products in its stores and more than doubles industry averages by spending about 5 percent of sales on advertising.

Still, Stephen T. Westerfield, Office Mart president and chief executive, thinks smaller office supply stores should be able to coexist with Workplace. While the consumer electronics industry already has major retailers and may be reaching most potential customers, Westerfield said office supplies is a fast-growing retail category, just starting to reach most consumers, and Workplace stores help create awareness and demand for everyone in the business.

"There's enough volume out there for everybody," Westerfield said. "I think that you're not going to talk to many people in retailing who would not say that there was room for a discerning competitor in the office supply business."

Westerfield does acknowledge that smaller retailers may have to adapt to survive, and Thompson agrees.

Thompson labels a lot of the category killer aura as hype, and says he can compete on selection, and on price in some areas. But he knows the new store will cost him some customers, and be more damaging to some of his smaller competitors.

Thompson takes solace in the diversity of his business, which has grown to include complex computer systems, a private line of computers, and large office equipment that he said Workplace does not sell. In addition, he points to service as an inherent big-store weakness that he and other retailers can exploit to maintain market share.

That is exactly the formula preached with a grain of pessimism by Bill Manck, director of the Small Business Development Center at the University of South Florida.

"You can compete with them, but you've got to compete with them on your turf which is service, service, service," Manck said. "A lot of small businesses will feel an impact because they're used to it being easy, so a lot of them aren't aggressive enough in a marketing sense."

A narrow approach

Frank Lickliter does not expect the limited stock at his tiny hardware store to keep him from surviving in the shadow of home-improvement giant Home Depot.

Lickliter took over Richey Hardware and Trading Post in downtown New Port Richey last year and tries to keeps his customers happy with a good selection of basic hardware in the 60-year-old store.

"We are an old-time store, and we want to maintain it as that, with just the basics. . . . It's a matter of independence," Lickliter said.

The formula gives Lickliter several advantages, with the biggest being the low overhead of running a 2,600-square-foot store away from the high rents of local shopping centers and U.S. 19. At the same time, the store is very convenient to its community, and location is enough to attract a reasonable stream of customers, Lickliter said.

Finally, he points to service as a significant drawing card for his store.

Customers "like a little bit of one on one, a little bit of knowledge," Lickliter said. "If they want to ask a question they want someone around to at least attempt to give them an answer. They don't want to run all over the store."

Food fight

While the restaurant business differs from retailing in many ways, elements of the battle emerging between big and little retailers in Pasco are already in full effect in the local restaurant market.

Chili's set sales records for its 170-restaurant chain when it opened in June 1988 in the Embassy Crossing shopping center, and that impact was magnified last April when The Olive Garden opened on the other side of the same center.

Those restaurants and a few other national chains have forced changes at locally-owned restaurants all over West Pasco, according to Pat Aguis, owner of Penelope's and a Pasco restaurateur for 12 years.

After Chili's opened, Aguis began offering a happy hour and opened a volleyball court next to her restaurant in an effort to retain younger patrons attracted to Chili's.

She points to other restaurants that have added bars or changed formats during the past year as further evidence of the impact, and says that almost every restaurant has felt some pinch during the past few years because of the new big-name competition.

The response from local restaurants was anticipated by Jay Towers, Florida supervisor for the Dallas-based Chili's chain, and Towers said local retailers will probably make dramatic changes too, as their competition heats up.

Initially a new business takes market share because it is a novelty, Towers said, but it keeps those customers only if it can provide something they were not getting before.

"Whether it's burgers or TVs, the same principle applies," Towers said. "What will happen long-term is those that do a better job with service and product will survive."


Occupation: President, Pasco Office Systems and Supplies Inc. Born: March 25, 1947, in Middletown, Ohio. Grew up in Clearwater.

Family: Married, two children Residence: New Port Richey Hobbies: Water sports Last book read: Handbook on Understanding Networks (computer text) Latest accomplishment: Starting to manufacture a private line of computers under his own Computer Works trademark Drives: Nissan pickup

Retail sales Here is the amount of retail sales, by category, in Pasco County as of 1988.

Food store sales $386,343,000 Automotive dealers $317,004,000 General merchandise stores $172,245,000 Eating and drinking establishments $110,876,000 Gas service stations $97,440,000 Building materials and hardware $96,844,000 Furniture, home furnishings and appliances $73,800,000 Drug stores $65,054,000 Apparel and accessories stores $48,783,000 Source: St. Petersburg Times Research Department