Home Depot Expanding Distribution

By Alan Wolf, YSN

Inspired by Amazon’s one-, two- and same-day delivery capabilities — and an increasingly impatient consumer — fast fulfillment has become the new holy grail for online and traditional retailers.

The pandemic has added further impetus to distribution upgrades, as out-of-stocks and long delivery times, whether for toilet tissue or standalone freezers, has created a high degree of customer frustration.

None of this has been lost on No. 2 appliance chain The Home Depot. Back in 2017, the home improvement chain announced a $1.2 billion investment to expand its distribution network with about 150 new facilities across the country. The goal, the company said, was to expand its same- and next-day delivery options to 90 percent of the U.S. population, covering both small parcel packages and big and bulky products.

As CEO Craig Menear boasted on a fourth-quarter earnings call last March, “We’ve had a disruptive attitude in this space for a long time, and that continues to pay dividends as we take share.”

Continuing the initiative, Home Depot now plans to add three new distribution centers in Georgia over the next 18 months to provide customers with more flexible delivery and pick-up options.

One of the facilities is designed to accommodate local deliveries of appliances and other products carried by box trucks, such as vanities and cabinets. Another, the retailer’s second “flatbed delivery center,” will offer same- and next-day delivery of bulk and oversized orders directly to a job site. Both are expected to open next year.

The largest of the three is a 658,000-square-foot distribution center that will provide fast replenishment to Home Depot stores in the Southeast, the company said. That operation is slated to open within the next few months.

“Retail has changed more in the past four years than in our company’s 40-year history,” said Stephanie Smith, Home Depot’s Senior Vice President of Supply Chain Development and Delivery. “Customers expect to shop whenever, wherever and however they want … whether they’re at home, at their job sites or picking up in the store.”

On the March earnings call, CEO Menear acknowledged that the retailer isn’t alone in the delivery stakes, citing competition from local dealers and regional and multi-regional chains. Nonetheless, “We think there’s still lots of share out there,” he told analysts.