Merchandising maturity
The current home improvement projects under way at the Atlanta-area home of Craig Menear are siding installation and interior painting. The executive VP merchandising for the world’s largest home improvement retailer is doing the painting himself (but not the siding).
By reaching for the brush, Menear is aiding his own cause and contributing to the DIY movement that made paint a comparable-store sales gainer for the second quarter in a row, and the only one of the 13 with comp growth.
And then there are the categories that beat the company average: flooring, garden, kitchen and bath, and building materials.
Specific merchandise categories within departments saw comps improve—roofing, caulk, plumbing repair and chemicals. But with comps down 7.1% in the United States, there remains big room for improvement across the store, particularly in underperforming categories, identified as lumber, hardware, electrical and millwork.
Menear, arguably the most influential merchant in the home improvement business, described an organization that is rolling up its sleeves, learning from its past and leveraging new technologies to maximize performance.
“We’re very focused on being the customer’s advocate for value in the home improvement space, and I think we did a solid job of that in 2009,” he told Home Channel News during an interview in the company’s Atlanta headquarters.
Next year, the company will have a few more arrows in its quiver—Martha Stewart merchandise is working its way into stores in the outdoor living, and storage and organization areas. More categories will get the Martha treatment, but Menear declined to say which ones. “We believe that the addition of Martha gives us the opportunity to grab a larger share of wallet with our female shoppers,” he said.
Martha’s not the only exclusive—Owens Corning’s market-leading insulation is a recent exclusive that Menear described as a significant point of differentiation.
When asked point-blank what categories have the most exciting prospects in 2010, Menear looked outside the box: “I think we’ll have a great lineup for the spring and in all of our categories that revolve around the outdoors and outdoor projects,” he said.
In doors, paint is a category enjoying the combination of product innovation and DIY popularity. It’s the No. 1 do-it-yourself project, he said, and Behr, Glidden and Rust-Oleum are all generating interest in product innovation.
He gave particular attention to the Behr Ultra nanotechnology-bolstered paint and primer in one, which enjoys the distinction of generating growth in a high-end product, despite a tight spending environment. “Innovation comes in all forms, and innovation also can be successful at any segment of the line structure even in this economic environment,” Menear said.
The environment will play a role in the fourth quarter—and Home Depot hopes to help customers combine warm homes with low energy bills. In the company’s third-quarter conference call, Menear pointed to studies that show about 60% of U.S. homes are under-insulated in the attic. Home Depot is acting on that opportunity, lowering the prices on its home insulation products.
Menear told Home Channel News that the macroeconomic picture will keep home efficiency on the front burner for the foreseeable future. “Consumers are looking for ways to be more environmentally conscious and at the same time save costs in the operation of their homes,” he said. “So, we see continued strength in products that help the customer save cost within their home.”
The Big Orange is embracing green in other ways. The company’s own Eco Options program is approaching the 4,000-products-labeled milestone.
Behind the scenes, Home Depot has some new tools at its disposal. Take the holiday season, for example. Rather than lump stores together by geography, the company is warming up to assortment-maintenance tools that allow them to create clusters of stores by purchase habits. The result has already been better use of inventory dollars.
Today, a high percentage of products reach stores through the direct route. That’s changing as the company rolls out rapid deployment centers, which will bring the company into the 21st century of retail distribution. “It simplifies dramatically the back-end operations of our stores, because we’ll have fewer deliveries coming to the back end, along with more efficiently packed trucks.”
The full power of the tools is yet to be realized, and one of Menear’s objectives is for the team to get better at using them. “It will make us a more aggressive competitor in the marketplace,” he said.
For a company that has grown from one store to more than 2,000 in 30 years, that’s saying something.
