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             The two largest players in this industry, Home Depot and Lowe's, are nearing optimal growth. Everyone knows that when a retail brand puts stores too close together, they start to cannibalize the customer base. For the past decade, Home Depot has been building both its phenomenal success and enormous valuation -- its market capitalization is $84 billion despite the bad news -- on rapid expansion. The company usually increases the number of its stores by 20% a year, growing to 1,011 stores by June, 2000, from 846 in June, 1999. Now in 2001, this Home Depot has reached 1,208 stores internationally.
             Lowe's, which has essentially copied Home Depot's retail model of mammoth, warehouse-like stores with vast selections of products at slightly discounted prices, is also expanding rapidly. It had 589 stores as of June of this year, compared with 519 stores a year earlier. As of 2001, Lowe's has reached 685 stores nationally.
             Another worrisome problem for Home Depot involves the interest rate policies of the Federal Reserve. With higher rates and the tightest labor market in three decades, Home Depot is faced with fewer homes being built, which means fewer hammers and nails to be sold. Meanwhile, the cost of keeping a semiskilled labor force is rising. It's simply a tougher economy, and that presents all kinds of problems to their business models. Home Depot has long prided itself on hiring former plumbers, carpenters, and housepainters to man its aisles and advise customers. But that has turned into an expensive endeavor in an era of nearly full employment. The wage for a union carpenter, is much higher than that of the stock boys Lowe's hires.
             Home Depot calls its sales staff "associates." In other organizations, that might be nothing more than hot air. But this culture is built from the inside out--more than 90% of non-entry-level jobs are filled internally, and only 12 of the company's 400 department heads came ...