Home Depot fights for contractor market
By John J Keough -- Industrial Distribution, 2/1/1998
Home Depot is taking another step in its attempt to capture a larger share of the contractor's market. The biggest of the big boxes is planning a new lab store in Colma, Calif. tentatively called the Pro Store, according to Supply House Times a sister publication to Industrial Distribution. Styled after a conventional supply house, the prototype will feature a different selection of product than the typical consumer oriented Home Depot.The Pro Store will include a deeper mix of supplies for the professional tradesman, more inventory, bulk packaging, and a broader assortment of tools. Also planned is a rental facility for tools and equipment, hitting directly at many construction-type distributors.
The magazine quoted a source close to the project as saying: "Home Depot is intent on getting the contractor's market. Its goal is to have a 25 percent market share of contractor's products by the year 2000 or beyond." The Colma Store will be adjacent to a regular Home Depot on the same property.
As many of you are aware, Home Depot also publishes a 1,000-page catalog called the Pro Book aimed at commercial and construction distributors. The catalog contains some 15,000 items. And last year, Home Depot acquired Maintenance Warehouse aimed at the janitorial market. It seems obvious that the chain is segmenting its consumer and professional markets.
Meanwhile, Home Depot says it intends to open 61 more warehouse home improvement centers in California through fiscal year 2000, bringing its total in the state to 150. In December, two of those improvement centers in Southern California began operating 24 hours a day. Based on the results, other stores may also follow that pattern.
And in Florida, Home Depot plans 32 additional stores in the next three years. Does this all mean gloom and doom for the industrial/construction distributor? Absolutely not.
There are a number of ways that the distributor can fight back against Home Depot. The home improvement centers simply offer convenience and low prices. A distributor can't-and shouldn't-have price as his strong suit. In fact, price should be the last consideration. Use the strengths you have developed as a distributor, including your customer relationships. Promote and strengthen that relationship as well as the relationships with your key manufacturers.
Offer loaner tools, repair service and technical expertise. Ask yourself why a customer should want to do business with your company. What makes your company unique and an invaluable resource for your customers? If you can't answer that question, all you have to focus on is price. And you can't win that battle.
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