Home Depot experimental with new stores

The days of cookie-cutter expansion for Home Depot are over…

Under CEO Bob Nardelli, the world’s largest home centre chain is adjusting and experimenting in an almost endless series of variations of sizes and strength of departments — tailoring each new store to market potential, building limitations and demographic potential.

Stylish fixtures and signing, coupled with hundreds of carpeting samples, offer consumers and contractors lots of choices in an upgraded setting

New stores now range from as little as 60,000 sq. ft. to as much as 205,000 sq. ft. The company also is taking advantage of existing vacant retail locations, using all the space, in some instances, and subletting excess space when research indicates the space is more than the company needs for that area.

Three recent examples of this new expansion policy are to be found in southern California, where stores in West Hills and Brea incorporate a number of elements of Expo Design Centers and other upgraded presentation changes.

In the Anaheim Hills store, the company took advantage of a market opportunity and an existing facility (an ex-Super Kmart building) to open its largest-ever store at 205,000 sq. ft.

Depot’s policy now is to be flexible, with different floor plans and store sizes depending on competition, customer base, etc. Instead of just a single prototype for its planned 175 stores this coming year, the chain has, as one spokesman put it,“ about three and a half prototypes.”

Each new store’s size, inventory assortment and configuration is based on a demand-analysis of products to fit that trading area.

The two stores in West Hills and Brea are focused more heavily on installed sales than the typical Home Depot. The area devoted to kitchen and bath setups, as well as the Design & Décor area, is approximately double those of a typical Home Depot.

Method behind madness
There’s method behind this expanded design freedom.

By using wood panelling and lighting, Home Depot’s paint department emphasizes colour matching and quality. Depot has become a very dominant factor with an impressive market share of paint and sundries

As experiments prove themselves, they are being rolled out to other existing stores — quickly incorporated into stores soon to be opened and also into stores in the process of remodelling and refitting. And, with many of its 1,500 stores a decade or more old, Home Depot has greatly accelerated its remodelling program. It cut back on new store openings this year to funnel more money into renovating older stores. Its remodelling budget for 2003 is $1 billion, double what it was in 2003. Since January 2001, the company invested nearly $10 billion in new stores, remodellings and acquisitions to take advantage of opportunities.

In the last 3 years, Depot’s sales have increased by 41% and earnings per share by 66%. In fact, the retrofitting budget is so substantial that it is one reason why the number of new units to be opened has slipped below the 200-unit mark for the first time in several years. It plans 175 new stores this year, about half of which will be in new markets and the others will supplement existing Home Depot units.

New signing emphases wallpaper in remodelled storesusnews4march04

Other examples of the new Depot philosophy are to be found in Glenview, Illinois, where size was limited to 80,000 sq. ft. by local regulations, and in the Lincoln Park area of Chicago, where Depot built a two-story building (40,000 sq. ft. on each floor), plus rooftop parking for this urban location. The Lincoln Park store benefited from lessons learned in Depot’s first metro stores opened earlier in Brooklyn, NY.

In some cases, departments are relocated as well as being re-sized. With its new emphasis on major appliances and Design & Décor, these departments are getting more up-front and visible positioning. And in the Anaheim Hills store, with more space available, the size of its garden section — at 65,000 sq. ft., is about double the normal garden section. It also incorporates some features borrowed from Depot’s Landscape Supply division. The garden centre features a drive-through pickup for large, bulky items.

Because outdoor living is such a mainstay of the California lifestyle, the store features 3,000 sq. ft. devoted to patio sets, BBQ grills, hearths and outdoor kitchens, a larger space allocation than is typical for Home Depot.

Anaheim Hills also features high-end kitchen appliances, numerous bath vignettes and a “will-call” service at the rear of the store.

Clinics range from faux painting to gardening, and are promoted in advertising, on store entrances and inside the store

Depot continues to emphasize its educational activities, with better promotion of its ongoing “clinics.” It is also allocating substantial sums to install more self-checkouts, “freeing up employees to provide more customer service,” Nardelli told shareholders at its recent annual meeting.

Perhaps nowhere are the upgrade efforts more noticeable than in the paint department, where its new colour centre is the most stylish of any major retailer, including that of Sears, whose Weatherbeater paint has been a sales leader for decades.

With its upgraded paint department, Design and Décor and Wallpaper and carpeting sections, Depot’s warehouse look has been softened to an amazing degree.

From Bob Vereen

Home Depot links with AARP Group
Home Depot, always seeking qualified, capable employees to man its 1,700 stores, is now formally linking up with America’s huge association comprising men and women aged over 50 – the American Association of Retired Persons (AARP).

AARP membership includes retired and non-retired men and women.

The company has always employed a percentage of older employees, especially among its part-timers. Now, by formalizing this relationship, CEO Bob Nardelli is taking another step to improve its public relations and assure consumers that its employees will provide the knowledge and experience consumers seek when planning major DIY projects or making large DIY purchases.

Wages will range from $7 to $20 an hour, depending on the skill level required.

From Bob Vereen