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The days of cookie-cutter expansion for Home Depot are over. The company is proving to be more flexible and prepared to experiment
Under CEO Bob Nardelli the world's largest DIY chain, Home Depot, is experimenting in an almost endless series of new store concepts and departmental sizes. Each new outlet is being tailored to market potential, competitive situation, the demographic structure of the catchment area and local building limitations. As one spokesman put it, instead of just one prototype for its planned 175 new store openings this year there will be "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. New stores now range from as little as 5 500 m² to more than 19 000 m². The company is also taking advantage of vacant retail locations for new stores, subletting any space in excess of local requirements.
The paint department is proof of the efforts being made to upgrade the offer.
Upgraded signage with aisle number and product listing.Examples of the latest expansion policy are to be found in southern California. The stores in West Hills and Brea incorporate elements of Expo Design Centers, and there are other upgraded presentation changes. The area devoted to kitchen and bathroom set-ups, as well as the Design & Décor area, has been approximately doubled here. They also focus more heavily on installed sales. In some cases, departments are being expanded and relocated: there is a new emphasis on major appliances and Design & Décor, which are being positioned more visibly. The Anaheim Hills store has a garden section of around 6 000 m², about double the size of normal Home Depot garden departments. It also borrows some features from Depot's Landscape Supply stores, like the drive-in. Because outdoor living is such a mainstay of the California lifestyle, Home Depot is adapting stores to meet the demand and devoting an area of 300 m² to barbecues and outdoor kitchens.Home Depot continues to emphasise its educational activities. It is also installing more self-checkouts and "freeing up employees to provide more customer service", as Bob Nardelli told shareholders at its recent annual meeting.
Conspicuous signage for wallpaper.
Huge photomurals abolish the warehouse feel.
With its upgraded paint department, Design and Décor, and wallpaper and carpeting sections, Depot's warehouse look has been softened to a surprising degree. One of its newest prototypes, which opened in Crawfordsville, Illinois, demonstrates an innovative floor layout and new presentational ideas. There is extensive signage, which identifies aisles by number and lists the products to be found there. And customers are offered information about features and benefits adjacent to the products themselves. Products are "bundled", i.e. displayed together with related and necessary items, which encourages supplementary sales. Huge photomural graphics show people in home settings or actually using products, and in some departments there are specially made wooden fixtures for displaying products. Such features help Home Depot to create an atmosphere more often found in speciality shops, not in warehouses. These changes make the stores less intimidating to women in particular.
Lots of choice and stylish fixtures in the carpeting section.There is method behind this expanded design freedom. As experiments prove themselves, they are being transferred to other existing stores, quickly incorporated into stores soon to be opened and stores in the process of renovation. Many of the 1 500 outlets are a decade or more old, so that Home Depot has greatly accelerated its remodelling programme this year. As a result, the number of new store openings has been cut to less than 200 for the first time in several years. About half the 175 new stores will be in new markets and the others will supplement existing units. The remodelling budget for this year is US $ 1 billion, double what it was in 2003. Since 2001 the company has invested nearly US $ 10 bn in new stores, remodellings and acquisitions. Home Depot's sales have increased by 41 per cent in the last three years and earnings per share by 66 per cent.
A typical example of the display of related items.
Home appliances are highlighted.
The paint department is proof of the efforts being made to upgrade the offer.
Upgraded signage with aisle number and product listing.Examples of the latest expansion policy are to be found in southern California. The stores in West Hills and Brea incorporate elements of Expo Design Centers, and there are other upgraded presentation changes. The area devoted to kitchen and bathroom set-ups, as well as the Design & Décor area, has been approximately doubled here. They also focus more heavily on installed sales. In some cases, departments are being expanded and relocated: there is a new emphasis on major appliances and Design & Décor, which are being positioned more visibly. The Anaheim Hills store has a garden section of around 6 000 m², about double the size of normal Home Depot garden departments. It also borrows some features from Depot's Landscape Supply stores, like the drive-in. Because outdoor living is such a mainstay of the California lifestyle, Home Depot is adapting stores to meet the demand and devoting an area of 300 m² to barbecues and outdoor kitchens.Home Depot continues to emphasise its educational activities. It is also installing more self-checkouts and "freeing up employees to provide more customer service", as Bob Nardelli told shareholders at its recent annual meeting.
Conspicuous signage for wallpaper.
Huge photomurals abolish the warehouse feel.
With its upgraded paint department, Design and Décor, and wallpaper and carpeting sections, Depot's warehouse look has been softened to a surprising degree. One of its newest prototypes, which opened in Crawfordsville, Illinois, demonstrates an innovative floor layout and new presentational ideas. There is extensive signage, which identifies aisles by number and lists the products to be found there. And customers are offered information about features and benefits adjacent to the products themselves. Products are "bundled", i.e. displayed together with related and necessary items, which encourages supplementary sales. Huge photomural graphics show people in home settings or actually using products, and in some departments there are specially made wooden fixtures for displaying products. Such features help Home Depot to create an atmosphere more often found in speciality shops, not in warehouses. These changes make the stores less intimidating to women in particular.
Lots of choice and stylish fixtures in the carpeting section.There is method behind this expanded design freedom. As experiments prove themselves, they are being transferred to other existing stores, quickly incorporated into stores soon to be opened and stores in the process of renovation. Many of the 1 500 outlets are a decade or more old, so that Home Depot has greatly accelerated its remodelling programme this year. As a result, the number of new store openings has been cut to less than 200 for the first time in several years. About half the 175 new stores will be in new markets and the others will supplement existing units. The remodelling budget for this year is US $ 1 billion, double what it was in 2003. Since 2001 the company has invested nearly US $ 10 bn in new stores, remodellings and acquisitions. Home Depot's sales have increased by 41 per cent in the last three years and earnings per share by 66 per cent.
A typical example of the display of related items.
Home appliances are highlighted.
