By George Anderson
Home Depot has built its business on helping consumers fix up their homes and gardens, and now it is taking its DIY approach to the garage with a 10 store pilot test of automotive supplies.
The chain decided to test the sale of products such as motor oil, fuel additives, spark plugs, floor mats and other items in stores in the Jacksonville, Fla. area.
A spokesperson for Home Depot, Jerry Shields, said the company decided to test the departments because, "We've noticed customer interest in this area."
This is not the first time Home Depot has expanded beyond its building supplies retailing profile. The chain is looking at adding convenience stores and gas pumps at a number of store locations, with as many as 300 projected to be in operation by 2010.
Matt Nemer, an analyst with Thomas Weisel Partners LLC, said Home Depot is selling its auto supplies at up to a 22 percent discount on similar items sold at auto-parts chains such as AutoZone, Pep Boys and others.
While analysts such as Mr. Nemer do not see Home Depot making an immediate impact on other businesses that sell auto supplies, the potential does exist for that to happen.
"We are somewhat concerned for auto-parts retailers given that Home Depot already targets the appropriate customer base, the male do-it-yourselfer," wrote Mr. Nemer in a letter to investors.
Moderator's Comment: What is your reaction to Home Depot testing auto supply sales? Do you see this as a concept that can be rolled out chain-wide? Should there be concerns that the chain is taking its eye off its core business with tests of convenience stores, gas pumps, auto supplies and other products and services? - George Anderson - Moderator