As Wal-Mart thinks small, this retailer says bigger is better

September 14, 2014, 4:02 PM UTC
Photo courtesy of At Home

With traffic falling at physical stores and e-commerce sales continuing to shine, brick-and-mortar retailers have been soul searching as they plot their future in an increasingly digital world.

Some, such as Sears Holdings and J.C. Penney, are scaling back by closing underperforming stores. Others, including Wal-Mart, have nimbly responded by opening smaller stores. Nearly all talk about their “omnichannel” initiatives — a term meant to highlight sales generated through the mix of brick-and-mortar, online and mobile channels.

But home décor retailer At Home is sticking with a more traditional method: big-box retailing. It operates 75 stores with an average of 120,000 square feet and hopes to expand to 600 locations across the U.S. The bet on big physical stores is for now an all-in strategy, as At Home doesn’t operate an online store.

“We win on assortment,” At Home Chief Executive Lee Bird said. “We need the size to do that.”

Bird believes the retailer’s massive stores give customers plenty of options to peruse for the two hours (on average) they spend in the stores. For example, At Home stocks roughly 600 rugs in its stores, while primary competitors carry 60.

“When other people are editing and editing and editing and customers are getting less choices, we are going the other way–more choices,” Bird said.

At Home stocks a variety of styles, ranging from classic to modern, and sells pretty much every home item imaginable–furniture, patio and garden items, housewares. Formerly known as Garden Ridge, the Dallas-based retail chain is in the process of a $20 million renovation to clean up its own home by adding fresh paint, new signage and bathrooms.

That effort, which the company started in January, will be completed in September and moves away from a name (people thought it was exclusively a garden store) and color scheme (the orange in the old signage was the same as Home Depot) that confused customers.

At Home says store traffic and sales have risen at stores that have undergone a facelift, bucking a trend among some national competitors that have struggled to lure customers into their stores. The privately held company declined to provide annual sales figures, but Bird said all stores are profitable and new stores being built are profitable in their first year.

The retailer is expanding into a multi-billion industry with a variety of well-established competitors, battling against Wal-Mart, Target, Bed Bath & Beyond and HomeGoods and many others. But At Homes is also well positioned on a number of fronts. Like Home Depot and Lowe’s, it is highly exposed to the rebounding housing sector. That segment also faces less pressure from online competitors, as customers like to see furniture and other home items in person to get a better sense of sizing and coloring.

At Home also utilizes an “everyday low price” strategy so a vast majority of goods are sold at their original marked price. At Home competes on pricing by keeping a lid on a variety of costs. Rents are low, it doesnt spend a lot on advertising, and physical stores are used as warehouses to stock merchandise.

At Home’s second-generation big-box strategy is particularly unique. It scoops up old stores from Target, Sears, Sam’s Club and other retailers and repurposes them for its own use.

“The economics of going into somebody else’s box when they’ve decided to leave works out well for us,” said Bird.

At Home is planning to open 20 new stores next year, accelerating from the 16 that should open in 2014. E-commerce also presents a potential growth opportunity.

But for now, At Home is busy stocking its massive stores to help inspire long visits.

“Our focus is making sure we have something for everybody,” Bird said.