Home Depot comes to town

Australian Hardware Journal

The Home Depot has just landed in Bob Vereen’s home town of Indianapolis. Here is what he had to say about large orange signs began to infiltrate the neighbourhood.

Indianapolis, Indiana, may be one of the last of the top 100 markets in the United States in which Home Depot has opened stores. Why? Who knows, but Depot finally entered the market this month with a simultaneous opening of four stores. Two more are set to open in April.

Along with Depot’s four units, plus five each for Lowes and Menards, this city of one million people in the urban area now has plenty of chain home centre competition, plus some independent lumber-building material yards and hardware stores. Both Lowes and Menards are effective competitors of Depot in other markets, especially Menards in the Chicago suburban area and Lowes just about everywhere the two chains compete.

Small signs like these throughout the store remind professionals/contractors that they can save time (money) by notifying Depot ahead of time of their needs

Critical research

Since Indianapolis is where this industry observer lives, it gave us an opportunity to do some firsthand research. For example:

 

  • We cruised the sales floor of the west side Depot twice, once on opening day and a second time on the second day.
  • We took pictures of the parking lots of all three firms within minutes of each other on Depot’s opening day. Depot is just four blocks from one Menard store and four miles for the closest Lowes unit.
  • We took some “spy” pictures in the Depot store (and almost got caught).Depot’s parking lot was jammed on the opening day and quite full on both the second and third days of grand opening week. In fact, parking spots were very hard to find. The nearby Menards’ lot was fairly empty on the morning of the Depot store opening, but still had about 30 vehicles. Lowes, about four miles away, seemed the least affected, with perhaps 50 or more cars at about 10am. We drove from one store to the other to be sure our “research” was pure.

    We also analysed Depot’s grand opening circular and compared it to the pricing in the Menard circular, which appeared in the newspaper four days later. This was not a special “anti-Depot” Menard circular, but its regular weekly tabloid for the store’s customers.

    Depot Tips are signs to help consumers decide which size, etc., they might need in certain departments.

    Depot used several pages for institutional messages (ie. list of services, clinics, special appeals to pros and contractors, etc.) and also featured an extensive assortment of faucets and other plumbing items, which were missing entirely in that particular weekly Menard ad.

    One thing we realised as we analysed the two circulars was that with each store carrying tens of thousands of items, there are many opportunities to promote individual items and brands which not be likely to be promoted by a competitor. Depot’s reliance on some exclusive brand names makes comparisons even more difficult.

 

Generally though, from a list of about 17 products, Menards provide more savings than Home Depot.

New look Depot

Whether it is the influence of its new CEO, Bob Nardelli, who has stated he wants to soften the warehouse image of Depot or Depot management’s recognition of the competitive effectiveness of Lowes and Menards, who have less of a warehouse look, one thing is certain – the new Depot units in Indianapolis are brighter, more imaginatively merchandised and less warehouse-intimidating than older Depot designs. Ceilings are painted white and light levels are much greater than in earlier Depots.

In many ways, these Depots remind one of a Lowes layout, if you can substitute blue in your imagination wherever one sees Depot’s orange.

There is a large, open area in the centre of the store for kitchen layouts; and another open area for paints, wall coverings and window shades, etc. There are also smaller, imaginatively presented pockets of products brightening up the rows of warehouse shelving. Tie-in item displays encourage impulse sales. Tell-all signing is better and more widely used.

Depot is also now promoting major appliances, and these were featured in its opening ad circular. Lowes has always been big in appliances and is said to be second only to Sears. In addition, Menards is now stocking majors. Neither Depot or Menards, however, has the assortment or the experience of Lowes in this category, and the slimmer assortments are noticeable.

Depot also is aggressively courting the professional and contractor business, with separate loading docks for them, and early opening hours to let them load and leave and get to their own job sites early. Strong signing also promotes a tool rental department.

During its opening, sales floors were absolutely flooded with orange-clad employees and vendor representatives (who also wore orange aprons). Some employees were brought in from the Chicago stores to assist during the opening. It is obvious this staffing level will not be maintained.

One couldn’t walk 10-20 feet without an employee or vendor rep offering to help. Many vendor reps were conducting small demos of their products, to further entice customers into thinking Depot is different.

This pick-up area is another way Depot is trying to better serve contractors

One Depot employee, a regional manager, is especially familiar with the Indianapolis marketplace. His name is Chris Hedlund, and his family once owned an Ace Hardware store in the northeast part of the city, which now competes with a Lowes store in a major shopping centre, located just blocks away.

Who will benefit from the addition of Depot to the retail scene? Consumers, of course, as they now have one more store from which to choose; employees, who have another place of possible employment in these tougher times; but probably most of all, newspaper, radio and TV media will benefit as the three chains concentrate on courting local customers.