Rickel

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Rickel
Type 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

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[edit]

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. A friend contacted another friend, Summit, New Jersey plumber Bill Ryan, who inventoried the stock, sorted the supplies, and attached prices to them.

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 thought that if they hired Ryan to work for them, he could not only sell the supplies to the people but also explain what they needed to do in order to fix their own toilets, sinks, drains, and other plumbing needs, as well as ensuring that the customer bought the correct parts needed 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[edit]

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. 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.

Competition and Bankruptcy[edit]

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 was perhaps affected the most due to the cash flow problems at Supermarkets General.

Home Depot and Rickel's spat also nearly led to the cancellation of a long-running home repair television program. In 1989, This Old House host Bob Vila was signed by Rickel to endorse its stores. This angered Home Depot, who was one of This Old House's largest underwriters, as they did not want to fund a program where one of the participants endorsed a competing business. Home Depot, along with its lumber supplier Weyerhaeuser, pulled underwriting from This Old House. WGBH-TV, the PBS station that produced This Old House, responded by firing Vila and ending his ten year run as host of the program.[4] Vila later became famous as a pitchman for Sears and Craftsman Tools.

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's debt problems had continued to mount while Pathmark was continuing to lose business, and as such the already flagging Rickel was unable to receive enough capital from its parent to keep pace with the still-expanding Home Depot. Supermarkets General decided to reorganize its businesses and focus solely on Pathmark, changing its name to Pathmark Stores, Inc. and spinning off Rickel. On August 26, 1994, Pathmark announced the selling of Rickel to Eos Partners L.P., an investment group based in New York City.[5] On the same day, Eos Partners bought a controlling stake in the Channel chain from GE Capital and announced that Rickel and Channel would merge operations.[1][2] 59 of Channel's 60 stores were rebranded as Rickel stores after the merger. Channel's largest store, located in Totowa, New Jersey, was not included as part of the merger as it overlapped with a pre-existing Rickel store approximately a quarter-mile away. Rickel elected to keep its own store open and the much larger Channel store was liquidated and eventually subdivided.

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 to 92. 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.

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 over a spat regarding Rickel's opposition to Home Depot building a store in Bloomfield, New Jersey.[2] At the time, Home Depot was looking to build a large store on a plot of land situated on Orange Street near the Watsessing train station. Rickel, meanwhile, was the anchor of a shopping center located on Bloomfield Avenue at the intersection of Grove Street and had been for many years. The two stores would be located within minutes of each other, and with Rickel as a whole struggling to keep up the much larger Home Depot store would have taken away business that the store could not afford to lose.

Rickel's reaction, however, infuriated Home Depot as they called Rickel's efforts a "smear campaign" aimed at stalling their continued growth in the area. Specifically regarding the Bloomfield location, Home Depot said that Rickel attempted to deceive the public by posing as a community action group and putting out a report that a Home Depot store that opened in 1992 in Bloomfield's neighbor Clifton was responsible for a rash of auto thefts and an increase in overall crime.[6] It perhaps should be noted that Rickel and Home Depot had operated stores in the same towns before- including Clifton, where Home Depot had been entrenched for two years prior to Rickel's entry into the city with the Channel merger- but were far enough away from each other so as not to cause a large of a problem. By this point, however, Home Depot stores were becoming almost commonplace in New Jersey and the need for it to keep up with the demand for more stores resulted in the chain opening stores anywhere they saw fit (including near Rickel's Totowa store, where a newly constructed Home Depot store opened shortly after the Bloomfield store did in even closer proximity).

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, while Rickel typically did business in stores that were 40,000 square feet (3,700 m2) or less.[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 the smaller Rickel stores sold most of the same items as the warehouse-sized Home Depots, Rickel pushed themselves as a place where you could get what you were looking for easily without having to go through hassles at Home Depot. The attempt did little, if anything, to put a dent in sales for Home Depot and a still-in-bankruptcy Rickel's demise, which the company had tried its best to avoid, now appeared imminent.

After a last attempt in August to try and keep the stores open at least until the following February, on October 11, 1997, Rickel's vice president for marketing announced that the chain "ran out of cash" and would liquidate.[11] Going out of business sales continued for most of the next two months. Most of the Rickels closed by Thanksgiving 1997, but several continued to remain open as late as mid-December as merchandise was shuffled around to stores that hadn't closed. The final Rickel store to close was the Wayne, New Jersey store, which finally closed in early 1998. Later that year, office supply store chain Staples purchased leases at 41 of Rickel's 53 shuttered stores, including the aforementioned Bloomfield store that lost business when Home Depot moved in.[10] However, Staples only occupied 35 of those stores and handed the leases back to the remnants of the chain and its real estate developer.

Ten years after the chain the brothers founded went out of business, Al Rickel died on January 15, 2008.[3] On March 15, 2014, Bob Rickel died. Mort Rickel had died in 1980 at the age of 61; both Al and Bob lived until the age of ninety.

References[edit]

  1. ^ a b c Strunsky, Steve (October 12, 1997). "IN BRIEF; Rickel Home Centers Will Go Out of Business". The New York Times. Retrieved Sep 11, 2009. 
  2. ^ a b c d e f g h Roush, Chris, Inside Home Depot, pp.126-30 1999 ISBN 978-0-07-134095-3
  3. ^ a b "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. ^ a b c 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. 

See also[edit]