Home Depot Nails Down Omni-Commerce Fulfillment
By Hannah Ash, contributing writer
New Construction Fulfills Plans For Retailer’s Future Direction
In a move that indicates a clear direction for Home Depot, the leading home repair retailer has begun building new centers. Always a sign of growth, Home Depot’s current projects are also a sign of things to come for the retailer’s future. The new growth is going in a different direction. The newest Home Depot is ten times larger than its largest store. It will hold three times more stock than any other Home Depot. No customer will ever set foot inside. Over the next year, Home Depot plans to open two centers like this one and one regular store. It signals a change for the retailer — and for retail.
The two large centers it is opening won’t be stores at all — they will function as distribution centers for the retailer. Opening just one actual retail store is a big change for the retailer. Until 2008 when the economy took a downturn, the retailer had opened about 200 new retail stores each year. "The retail model forever was to increase sales through opening additional units, but as you added stores to a finite group of households, each store becomes less profitable, so the decision was made to stop opening additional boxes," says CEO Frank Blake.
In 2008, the focus shifted from retail square footage to online dominance. Last year, Home Depot’s online sales were responsible for 3.5 percent of overall sales for the year. With new omni-channel initiatives the retailer is rolling out, that number will likely continue to climb. By shifting to a strong online channel in addition to its other channels, Home Depot is able to widen its array of available products along with its ability to meet customer needs. From the distribution centers, orders will be filled and sent to customer homes, job sites, and stores.
This move to larger centers that aren’t focused on the customer is part of an omni-channel strategy to bring orders in through alternate methods. Other changes to the store format are in the works for both Target and Walmart, which are focusing on smaller stores in more convenient locations. Though Home Depot did branch into smaller concept stores located in strip malls back in 2007, it seems that the retailer has realigned its priorities to focus on seamless omni-channel ordering and delivery. While Home Depot stores each carry about 35,000 products, the new distribution centers will carry 100,000 products for fulfillment.
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