The Company You Keep

Feb. 1, 1999
For an independent rental center in Atlanta, it's always something.It could be that one of the ubiquitous national rental chains in the area just knocked

For an independent rental center in Atlanta, it's always something.

It could be that one of the ubiquitous national rental chains in the area just knocked a couple of your backhoes and a forklift off a big job with some cut-rate pricing. Or maybe The Home Depot has begun siphoning off some of your homeowner business with its new rental departments.

Whatever the case, there is no mistaking that all of northwest Georgia is a hyper-competitive market for rentals. Because of that, the Atlanta area provides some answers to the question of how independents everywhere might fare in the face of steady consolidation and increased competition.

Many of the national rental companies - and even a few regional players who were previously unfamiliar with the Southeast market - came to town several years ago to take advantage of the construction boom that coincided with preparation for the 1996 Summer Olympics. Once there, they never left.

"When the Olympic building started, companies were coming in from Chicago, Philadelphia, all over," says Lew Coker, Coker Equipment Co., Gainesville, Ga."When they got down here, they stayed. We are smothered in big rental outfits."

Says Jeff Wearing of Ready Rent-All, Decatur, Ga.: "Before the Olympics, the area had probably 200 rental stores. Now it seems like it is closer to 2,000."

And it's not just with big iron that Atlanta independents are feeling pressure. After a successful trial in Nashville, Tenn., Home Depot began rolling out its in-store rental departments - which target the homeowner and light contractor segments - in Atlanta about a year ago.

Even though Home Depot's program is in its early stages, the emergence of a do-it-yourself warehouse that has more floor traffic in a few hours than your typical rental center has in a good month isn't exactly a positive for the independent.

Despite the daunting challenges presented by increased competition, many of Atlanta's independents have stared it straight in the eyes and are facing it head on. Sure, some have sold. Others are sticking their heads in the sand waiting for the sky to fall in.

And then there are the rental people who are taking note of the changes going on around them, and adapting their business philosophies and operations to better take advantage of the developing market.

If there is one common theme - other than geography - among the business owners profiled in the pages that follow, it is the ability to be flexible.

For new problems, new solutions are needed. That's exactly what Atlanta's independent rental center owners have set out to find.

Last year, a group of eight formed their own mini-buying co-op. In a throwback to the days of the old-time rental industry - where noncompeting rental center owners were not just business associates, but friends - no lawyers were used to draw up the co-op's contract and covenants.

"These folks in the co-op we've all known for a long time," says co-op member Mike Frost of Aztec Rental Center, Douglasville, Ga. "Each one of us put down $2,000, but it was all on a handshake."

And in these increasingly litigious and competitive times, that's as good an indication as any about the nature of Atlanta rental people.