Rickel

Rickel
Private 1953-1969
Stock Corporation 1969-1994
Private 1994-1997
Originally, "Do It Yourself" Home Center
Then, Home improvement
Industry Retail Home improvement
Founded 1953, defunct: October, 1997
Headquarters South Plainfield, NJ
Key people
 Al Rickel, Mort Rickel, Bob Rickel
Products Plumbing, heating, electrical supplies & hardware.
Parent Supermarkets General Corporation (now Pathmark): 1969-1994; Eos Partners L.P.: 1994-1998
Slogan Do It Better With Rickel

Rickel (known as Rickel Brothers in its early years, Rickel Supermarts in the 1960s, and Rickel Home Centers in later years) was a chain of home-improvement centers based in northern New Jersey. The Rickels' first store opened in 1953 and for three decades Rickel was the leading hardware, plumbing, heating and electrical retailer in its region. At its peak Rickel operated over 90 stores, but competition from Home Depot and money problems resulting from both a merger with Channel Home Centers and debt problems with its former parent led to a 1996 bankruptcy filing and eventually the closure of the entire Rickel chain in 1997.[1]

Founding

The origins of the company date back to 1946 when brothers Al, Mort, and Bob Rickel went into business for themselves in Newark, New Jersey.[2] The brothers formed their own heating business, continuing a family tradition.

An anecdotal story says that a few years later, the brothers purchased a warehouse full of plumbing supplies for "next to nothing". Since the Rickel brothers were in the heating business and not the plumbing business, and therefore unfamiliar with what they purchased, they sought help to figure out what to do with it. The brothers found it with Bill Ryan, a plumber from Summit, New Jersey who had a mutual friend with the three men.

After Ryan was done pricing the supplies, the brothers quickly realized that it would take years to sell the supplies to local plumbers wholesale. Instead, they came up with an idea to sell them at retail cost to the general public. They also believed that if they could convince Ryan to work for them, he could not only sell the supplies to the people but pass along his plumbing knowledge also, advising customers on how to fix their own toilets, sinks, drains, etc., and making sure they had the correct parts to perform the repair.

So, in 1953 Al, Mort, and Bob opened up the first Rickel Brothers store in Union, New Jersey,[1][2] and Ryan was warmly referred to as "employee number one" for his entire 35 year stint with the Rickel store chain. Rickel was one of the first "do-it-yourself" home improvement stores, expanding beyond plumbing supplies and selling heating and electrical supplies and tools in addition.[2] An early slogan and jingle of the Rickel chain, which lasted in some degree to its 1997 closure, was "Rickel Helps You Do it Better- Do it Better With Rickel"- a reflection of the Rickel brothers' focus which included employees who could explain to customers how to perform their own home repairs. At the time, this was a new concept and it enabled 'Rickels' (as the store came to be known locally) to develop a loyal customer base.

Growth

The Rickels began expanding quickly after their first store became a success and by the early 1960s were operating three locations, all in New Jersey: Succasunna, Paramus, East Brunswick, and a new location in Union. By 1967 the "Rickel Supermarts" chain (as the stores were now known) had six stores, all in New Jersey, opening in Menlo Park and Wayne. The Rickels then began expanding at a more rapid pace, opening more stores in New Jersey and entering the New York and Pennsylvania markets for the first time. During this time a corporate headquarters was established in South Plainfield, New Jersey, which also served as Rickel's primary distribution center.

Classic Rickel logo on a box of soda syphon chargers.

The Rickel brothers sold the still-growing chain of Rickel Supermarts to Supermarkets General Corporation, the parent company of the Pathmark supermarket chain, in 1969.[3] After the sale SGC renamed the chain "Rickel Home Centers", which lasted until Rickel's closure.[2] In 1975, the Rickel division of SGC recorded $80 million in sales and was the dominant home improvement retailer in the region, far outselling its larger competitors Channel Lumber and Pergament. The subsequent decade was a time of continued expansion as the Rickel chain grew to over 30 stores by the mid-eighties.

However, Supermarkets General's fortunes were starting to turn as the company entered a financial downturn that it stayed locked in, in various forms, for the next two decades. While Rickel was doing well, its corporate sibling Pathmark was losing business and dragging the company's finances down with it. In 1987, the Dart Group made a hostile takeover bid to acquire SGC. In a move to avoid the takeover, management took the company private by engineering a $2.1 billion leveraged buyout. Merrill Lynch Capital Markets Inc. received 55 percent of the shares, Equitable Life Assurance received 30 percent and SGC management retained ten percent. The company's debt grew to $1.6 billion by early 1990, half of it in junk bonds, primarily as a result of the buyout. Servicing the debt became SGC's primary objective and largest problem.

Home Depot competition

Around the time of Supermarkets General's cash flow problems, the Atlanta, Georgia-based home improvement chain Home Depot began to open stores in the New York/New Jersey metropolitan area. Although Rickel, Channel, Pergament, and local hardware stores all felt the effects of Home Depot's entry and quick expansion into their market area, Rickel's problems were made worse by its parent company's financial state. This helped lead to a somewhat contentious relationship between Rickel and Home Depot over the next few years.

An early example of the consequences of the rivalry between Rickel and Home Depot can be seen in an incident surrounding PBS' long running home improvement series This Old House. For many years, Home Depot has been one of the largest sources of financial support for the noncommercial program. In 1989, however, this relationship nearly came to an end. This Old House host Bob Vila, who had been with the show since its 1979 debut, signed an endorsement deal with Rickel and did a series of commercials for them. Home Depot was angered by this and, citing Vila's work for a competing business, pulled its backing from This Old House and its lumber supplier, Weyerhaeuser, followed. WGBH, the producer of This Old House, responded by firing Vila from the show and replacing him with Steve Thomas in an attempt to convince Home Depot to return, which they did.[4](Vila eventually launched his own television series, Bob Vila's Home Again, the following year and hosted it for sixteen seasons. His relationship with Rickel did not last long, as he would become more famous as a spokesman for Craftsman Tools and Sears in the 1990s.)

Combined with Home Depot's expansion and its parent company's debt problems, not only did Rickel find itself unable to compete with the rapidly growing Home Depot, but it also began to lose market share to its local competitors who were on more secure financial footing. By fall 1993 it became apparent that Rickel's future was beginning to look grim. Supermarkets General was still in serious financial trouble as Pathmark's sales continued to slide, and the company chose to keep its focus on trying to bring its primary brand out of decline. As a consequence of this, Rickel was unable to receive the funding it needed to properly compete with the juggernaut that Home Depot was becoming. In 1994, Supermarkets General reorganized. The company changed its name to Pathmark Stores, Inc. and began looking for ways to divest itself of its varied retail properties including Rickel. In the summer of 1994, they found a solution.

Merger

Eos Partners L.P., a venture capital firm based in New York, made a bid for Rickel that Pathmark accepted on August 26, 1994. After that, Eos struck a second agreement with GE Capital, another venture capital firm which owned Rickel's competitor Channel, later that day. When the entirety of both deals were revealed, Eos announced that its new acquisitions would merge and do business under the Rickel name.[1][2][5] This was Rickel's first large wave of expansion since the 1960s and the chain's overall largest, as Rickel's locations nearly tripled and it had opened stores in many new cities and towns it had not served before. After the merger was finalized Rickel temporarily rebranded itself as "The New Rickel" and added the slogan "Bringing it all closer to home" to reflect its new acquisitions, which brought its store count from 33 to 92 when the 59 Channel stores were converted (Channel was operating 60 stores at the time of the merger; the Totowa, New Jersey store, Channel's largest, overlapped with a nearby Rickel and was liquidated). Despite the expansion Rickel's already tense situation was not improving and instead only got worse as the company ran into legal troubles in addition to their financial issues.

Home Depot sues Rickel

The ongoing spat with Home Depot finally came to a head in July 1995, when Rickel was sued by Home Depot in a New Jersey state court.[2] At the time of the dispute, Home Depot was looking to build a large store on a plot of land situated on Orange Street in Bloomfield, New Jersey near the Watsessing train station. This was located less than a mile from a shopping center on Bloomfield Avenue, one of the township's main roads, where Rickel was the long-entrenched anchor store.

Since the much larger Home Depot store was located so close, the resulting loss of business would not be easy to overcome for either the smaller Rickel store or the company at large. The climate of competition had been changing for some time. Home Depot and Rickel had been doing business in the same towns and cities for some time prior to this, but there was little to no problem because the stores were far enough away from each other that there was hardly any overlap. By 1995, however, Home Depot had gained a much greater share of the New Jersey market. Thus, there was a demand for more stores to be built in newer areas and Home Depot was beginning to encroach even more on Rickel. A prime example involved the aforementioned Totowa, New Jersey Rickel store. Approximately half a mile up U.S. Route 46, Bradlees had vacated a space in a subdivided former Two Guys store in favor of moving to a newly constructed store located adjacent to the building; Home Depot purchased the space and demolished the entire section where Bradlees had been, building a new store from the ground up.

Rickel decided that they needed to try to turn local residents against Home Depot and took action against Home Depot's expansion, especially where the Bloomfield store was concerned. Those actions, in part, led to the lawsuit because Home Depot alleged that Rickel had engaged in a deceitful "smear campaign"; Rickel was accused of posing as a community action group that accused Home Depot of bringing an increase of car theft and violent crime everywhere they opened stores, specifically citing figures obtained from the police in Clifton, New Jersey, where Home Depot had constructed and opened a store in 1992 (Rickel had not been doing business in Clifton, a neighbor of Bloomfield, at the time Home Depot opened there but did after taking over Clifton's lone Channel location following the merger).[6]

Bankruptcy and liquidation

In addition to the damage the lawsuit may have caused to Rickel's image, it quickly became clear after the merger with Channel that Rickel had far overextended its tenuous financial state.[2][7] As 1995 ended Rickel began what would be the first of several rounds of store closures, as thirteen stores were shuttered. On January 10, 1996, nearly seventeen months after the merger with Channel, Rickel filed for Chapter 11 bankruptcy protection [8][9] and began another round of store closings shortly thereafter. Another thirteen stores were closed by July, leaving the chain with 66. The chain's reduction, however, did not fully help matters. Although Rickel was starting to show signs of recovery that met with positive reactions, the financial state of the chain was still in shambles. A third round of closings extended into early 1997, as Rickel closed thirteen more underperforming stores and left itself with 53.[10] Four more stores were closed as the year progressed, leaving the chain with 43 less stores than they had after the merger.

In 1997 Rickel decided to shift focus again and focus less on being a direct competitor to Home Depot, which had now established itself as the New York area market leader in retail home improvement.[2] Instead, Rickel decided to focus on things that made it unique compared to the larger, big-box chain. Although Rickel was one of the larger and more successful home improvement chains in the area prior to Home Depot's entry into its market, Rickel tended to operate in smaller facilities than Home Depot did even after its merger with Channel. For example, a typical Home Depot store was well over 100,000 square feet (9,300 m2) in size. Rickel stores, by comparison, averaged approximately 40,000 square feet (3,700 m2) with a handful of stores such as the Totowa, New Jersey store and the Wayne, New Jersey store being larger (the Wayne store was, in fact, the company's largest).[10]

Rickel decided, as they had tried once before, to use their size to their advantage and define themselves as more of a neighborhood home center. Since both Rickel and Home Depot sold many of the same items, Rickel's strategy was to portray the stores as much easier to shop at than the immense Home Depot stores. The attempt did little, if anything, to either take business from Home Depot or lure customers to Rickel and in August 1997, a plan to allow the chain to remain open until at least February 1998 was rejected. Despite its best efforts, it now seemed that it was no longer a matter of if the still-in-bankruptcy Rickel could reverse its fortunes and stave off its demise but instead a matter of how much time the former home improvement stalwart had left before it would be forced to close its doors for good.

On October 11, 1997, Rickel vice president for marketing Greg Hanselman made the announcement that the company "ran out of cash" to operate the remaining 49 stores and that the chain was to begin liquidating.[11] Most of the Rickels were closed by Thanksgiving 1997, with several more lasting until December as they received more merchandise from already shuttered stores. The last Rickel to close was its largest, with the Wayne store closing in early 1998.

Rickel still held leases on the 53 stores they were operating at the beginning of 1997, and office supply chain Staples picked up 41 of those leases, including Rickel's Bloomfield store that they had been sued trying to protect. Staples did not reopen all of the Rickel locations they purchased, however, as there were objections raised by some of the tenants and landlords involving six of the forty-one purchases. The company's distribution center, meanwhile, was retaken by Pathmark.[10]

As far as the other stores mentioned in this portion of the article are concerned, the Totowa store was repurposed as a clothing retailer, first being occupied by Filene's Basement's Aisle 3 concept and later by Forman Mills. The Clifton store, which was one of the six Staples purchases that were not converted to Staples, was subdivided after its closure, with space leased to Dollar Tree and Drug Fair; Dollar Tree has since expanded into the portion occupied by the former Drug Fair, which closed in 2009 following the company's sudden bankruptcy and liquidation. The Wayne store was downsized and partially demolished, with a bowling alley taking over the portion of the original building that was left standing and a Stop & Shop supermarket constructed on the remaining plot.[12]

The year after Rickel shut its doors for good, in a strange twist, Home Depot decided to try its own hand at a smaller, neighborhood home center concept and created Villager's Hardware, which were similar to Rickel stores in their size and setup and included some scaled back versions of Home Depot departments like its plant nursery. The first location, coincidentally, opened in the former East Brunswick, New Jersey store Rickel occupied for thirty-plus years.[13] Home Depot would open several more Villager's stores in the next year, but the company decided to discontinue the brand shortly thereafter in favor of rebranding the stores to the parent brand. In 2008, Home Depot closed the East Brunswick store and most of its fellow smaller stores, citing the bursting of the housing bubble as the reason why.[14]

Fate of the Rickels

All three Rickel brothers have since passed away. Mort was the first to die, in 1980 at the age of 61. Twenty-eight years later, 90-year-old Al Rickel passed.[3] Finally, in 2014, Bob Rickel lost his life; like Al, he reached 90 before passing away.

References

  1. 1 2 3 Strunsky, Steve (October 12, 1997). "IN BRIEF; Rickel Home Centers Will Go Out of Business". The New York Times. Retrieved Sep 11, 2009.
  2. 1 2 3 4 5 6 7 8 Roush, Chris, Inside Home Depot, pp.126-30 1999 ISBN 978-0-07-134095-3
  3. 1 2 "Paid Notice: Deaths RICKEL, ALVIN MILTON". The New York Times. Jan 18, 2008. Retrieved Sep 11, 2009.
  4. ↑ Beck, Barbara (April 4, 1989). "Was 'This Old House' host fired for wrong commercial endorsements?". Modesto Bee (Modesto, California: Knight-Rider Newspapers). Retrieved 2010-03-25.
  5. ↑ Levin, Doron P. (August 26, 1994). "Sale Set Of Channel And Rickel". The New York Times. Retrieved Sep 11, 2009.
  6. ↑ "Home Depot Sues Rickel, Charging Smear". The New York Times. July 6, 1995.
  7. ↑ Holusha, John (August 2, 1998). "Disposing of the Bankrupt Rickel Properties; Going to Sealed Bids to Get the Highest Return". The New York Times. Retrieved Sep 11, 2009.
  8. ↑ "Rickel Home Centers Seeks Chapter 11 Protection". The New York Times. Jan 11, 1996. Retrieved Sep 11, 2009.
  9. ↑ Business, Bloomberg (March 15, 1996). "Rickel Home Centers Plans To Close 13 More Stores". The New York Times. Retrieved Sep 11, 2009.
  10. 1 2 3 Holusha, John (August 2, 1998). "Commercial Property/Disposing of the Bankrupt Rickel Properties; Going to Sealed Bids to Get the Highest Return". The New York Times.
  11. ↑ Strunsky, Steve (October 12, 1997). "IN BRIEF; Rickel Home Centers Will Go Out of Business". The New York Times. Retrieved May 22, 2010.
  12. ↑ http://www.rbagroup.com/Project%20Sheet%20PDF's/.../Preakness%20Mall.pdf
  13. ↑ http://www.prnewswire.com/news-releases/villagers-hardware-opens-third-site-in-saddle-brook-this-thursday-72758802.html
  14. ↑ http://www.nj.com/business/index.ssf/2008/05/home_depot_shuts_15_stores.html

See also

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