the Big Box stores are all about population density and demographics. I have 2 HD's and 2 Walmarts within 5 miles of each other ON THE SAME ROAD. The nearest one of each is within a mile of my house. Also have a Lowes within a mile on that road as well. Our subdivision (one of many in the area) has 1140 homes. Probably 10,000 homes withing spitting distance.
Nearest Ace hardware is about 3 miles away. I DO shop there for paint and if I think of something while I'm at THAT strip mall. But by and large my first stop is at HD or Lowes. They're open at least the same hours as Ace, prices on commodity type things is less.
I think you are smart in finding things that the Big Box stores don't offer (i.e., making hydraulic hoses). That will give you a niche and while I'm waiting for my hose, I'll browse the aisles and maybe pick up a light bulb or 2 rather than make the extra trip to HD which may be farther away but cheaper. Your idea may not work for the next guy but the core concept is you're trying to satisfy a local need.
My point is that small hardware stores will prosper where they are economically viable. If not enough folks shop there because a HD or Lowes or whatever is close enough than bye-bye small store. Many business types are gone because someone came up with a better idea or technology made them obsolete. Just the economic nature of things.
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