Image: Home Depot
Home Depot revealed plans to spend $1.2 billion adding distribution sites and shipping hubs over the next five years to speed delivery to most of the U.S. market within a day.
Beyond speed, the move is expected to reduce transportation costs, improve inventory alignment and further integrate its expanding online business.
Home Depot will add 170 distribution facilities, including 40 flatbed distribution centers to handle the delivery of building materials directly to job sites. Professional customers account for 40 percent of its sales.
The retailer will open another 100 market delivery operation centers to deliver bulky items like patio furniture, grills and appliances directly to homes through a delivery agent. A few "parcel plus big" direct fulfillment facilities will handle both smaller items and some bulk. Finally, local direct fulfillment centers will be added to deliver a smaller subset of products direct to homes or offices.
At Bernstein’s Annual Strategic Decisions Conference on May 31, Home Depot chairman and CEO Craig Menear said, “And when we're done with that, we'll basically end up with the same-day, next-day network for 90 percent of the population.”
Further, ninety percent of the U.S. population “lives, give or take” within 10 miles of a Home Depot store, according to Mr. Menear.
At the 3PL & Supply Chain Summit in early June, Mark Holifield, Home Depot’s EVP of supply chain and product development, also detailed the program and emphasized the importance of timely delivery.
“Sometimes they want it fast and are willing to pay for that. Sometimes they want it free, and they’re willing to wait for it,” he said, according to The Wall Street Journal. “We need to have the options right there.”
Fast delivery is also critical to its MRO (maintenance, repair and operations) segment that supports multifamily residential, hospitality and institutional complexes. Home Depot re-entered MRO with its 2015 acquisition of Interline Brands. At Bernstein’s conference, Mr. Menear said Home Depot’s “orange box” couldn’t address MRO effectively because “delivery is an important element of that in terms of same-day, next-day.”
The company's supply chain investment is part of the $11 billion “One Home Depot” program announced in December designed in part to merge online and offline.
- The Home Depot Updates Strategic Priorities; Confirms Fiscal Year 2017 Sales And Diluted Earnings-Per-Share Guidance; Outlines Long-Term Financial Targets; Announces Accelerated Business Investment Plan And $15 Billion Share Repurchase Authorization – Home Depot
- Home Depot Invests $1.2B To Speed Up Deliveries – PYMNTS.com
- Home Depot, Inc. (HD) CEO Craig Menear Presents at Bernstein 34th Annual Strategic Decisions Brokers Conference – Seeking Alpha
- Home Depot To Spend $1.2B On 170 Distribution Facilities By 2023 – Industrial Distribution
- Home Depot Sets $1.2 Billion Supply-Chain Overhaul – The Wall Street Journal