Several years ago, I was reading an article about the tremendous success Linens N’ Things was experiencing. Just weeks before that I read about how well Bed Bath and Beyond was doing. I couldn’t think of ANY other home and bath-exclusive companies and both of these were thriving at the time. I thought about other retail categories and, for most, could think of only two truly dominant players. It was then that I decided I had a (not sure it’s been studied) theory that there are two big-time, dominant players in nearly every retail category. At that time – and in my mind, players lined up like this:
Home goods: Bed Bath and Beyond and Linens N’ Things
Electronics: Best Buy and Circuit City
Home improvement: Lowe’s and Home Depot
Toys: Toys R Us and KB Toys
Babies: Babies R Us and USA Baby
Big box: Target and Walmart
Pets: Petsmart and PETCO
Video: Blockbuster and Hollywood Video
I decided that if there are three very similar players in a category, watch out. Somebody was going down.
- Office Depot, Office Max and Staples;
- Borders, Barnes and Noble, and Books-A-Million;
- Dollar General, Family Dollar, Dollar Tree;
- AutoZone, Advance Auto, Pep Boys;
- CVS, Walgreens, and Rite Aid.
What annihilated my theory? Circuit City closed its doors. It was difficult to see hhgregg or Radio Shack stepping in as the second dominant player. My theory was hurting. Then Linens N’ Things closed its doors. Uh, oh. Not good for my theory.
However, when I read this week that the most likely takeover target in today’s market, according to a recent poll by the TheStreet, is Rite Aid, I was a bit rejuvenated. Perhaps my theory isn’t completely dead in the water – at least not yet.