Home Depot is looking to build stores to suit its customers and that means it is constructing locations that are bigger and smaller than any units the home improvement chain currently operates.
"The marketplace for the traditional home improvement store is shrinking, and there's only so much we can do within that [realm]," Mike LaFerle, vice president of real estate at Home Depot, told The Atlanta Journal-Constitution. "We said we're going to open 400 to 500 stores by 2010, so we have to look at multiple new designs as part of that."
On the big side, Home Depot is building a 225,000-square-foot superstore in Union, New Jersey, one of the most heavily trafficked areas of the state. The new unit is going up on a site that previously housed an Expo Design Center.
"The superstore concept is a test. We're trying to bring the best of both worlds from the Expo concept and a regular Home Depot under one roof," said Mr. LaFerle.
As to what is going into the store, Mr. LaFerle said it would include "a combination of new merchandise and expanded selections in our existing categories." Among these would be an expanded home appliance area. Home Depot believes as many as 50 markets in the U.S. can support superstores such as the one being built in New Jersey.
The DIY chain is going small at the same time it tests the superstore concept. The company is in the process of building stores in the range of 35,000 to 50,000-square-feet.
The smaller units, which are looking to have more of a neighborhood hardware store atmosphere, are being targeted to smaller markets and vacation areas.
Home Depot has tested smaller concepts before. In 2001, the company abandoned its Villager's Hardware format, also tested in New Jersey.
Apparently, the company has reversed its position.
"We think there's a tremendous opportunity in smaller markets where it's harder to find land for a full-size store, and where they don't need a full-size store," said Mr. LaFerle.
Discussion Questions: What is your reaction to Home Depot's strategy of building both superstores and smaller neighborhood stores? Do you see greater potential in one format versus the other?