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December 6, 2021

Home Depot Is Spending Big to Keep Lucrative Contractors Happy

Inside an expansive and noisy distribution center just east of Atlanta, Home Depot Inc. is trying to solve a problem that’s plaguing its stores: large orders from pro shoppers. 

Contractors’ needs are very different than the average customer’s, and while they make up only 5% of Home Depot’s shoppers, they account for 45% of its $132 billion in annual sales. They often buy bulky items in vast quantities and want — or rather demand — to receive the orders on a stringent timeline. That’s become an especially intense problem for Home Depot, as with other retailers, amid the supply-chain crunch that’s upended stocking and transport around the country and the world.

The new facility in Stonecrest, Georgia, which is called a flatbed distribution center, is designed with contractors in mind. During a recent visit, workers ferried goods around on red Raymond pacers and yellow Caterpillar forklifts. Stacks of plywood were piled up toward the ceiling and copper pipes sat atop high shelves. Large bags of mulch and potting mix were a prominent reminder that spring renovation season is on the horizon. 

The hub is the centerpiece of Home Depot’s plan to ease the complexity of direct-to-consumer sales — and win market share from both its main rival, Lowe’s Cos., and independent distributors. With growth from the do-it-yourself crowd now being outpaced by sales to contractors, the stakes are high to get it right.

Investors are betting on continued success for both Home Depot and Lowe’s, having sent their shares up more than 50% this year, well ahead of the 22% rise of the S&P 500 index. Home Depot’s market capitalization of $426 billion is more than $40 billion higher than that of Walmart Inc., despite the discount giant’s much greater revenue.

Keep reading on BNN Bloomberg


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