Dive Brief:
- The Home Depot will add three distribution centers in the Atlanta area to meet growing demand as consumers embrace do-it-yourself (DIY) projects, the retailer said in a Tuesday morning press release.
- Each facility will serve a different purpose. The largest one, at 658,000 square feet, will replenish stores in the southeastern U.S. Another will be a "flatbed delivery center," providing same- and next-day delivery of bulky orders. The third fulfillment center will provide same- and next-day delivery of maintenance, repair and operations products for B2B customers.
- The retailer will open the facilities over the next 18 months, furthering its 2017 announcement to invest $1.2 billion in an expanded distribution network.
Dive Insight:
The pandemic has shifted consumer behavior and buying patterns, but it hasn't deterred Home Depot from its plan to invest in its distribution network. "Through all of this, for the most part, we've been able to maintain the continued development of the supply chain," CEO Craig Menear said at Bernstein's Annual Strategic Decisions Conference in late May. "You'll see us move forward through 2020 pretty much as planned."
The retailer said in February it planned to open a dozen last-mile facilities in 2020, after opening 12 in 2019. Three years ago, Home Depot committed to adding 150 supply chain facilities across the country. The goal was to expand same and next-day delivery to 90% of the U.S. population. Executives said in December 2019 that about half of the U.S. population had access to one-day delivery, CNBC reported.
The disruption from COVID-19 has furthered Home Depot's omnichannel strategy. "We made a lot of change in a short period of time," Menear said. "We implemented curbside pickup. And we did that basically in 48 hours."
Many retailers hit fast forward on omnichannel adoption during the pandemic, at times out of necessity as mandates forced store closures and left the companies with a choice: Do business through curbside pickup and last-mile delivery, or don't do business at all.
Home Depot has not faced the same adversity as many retailers have in the form of store closures and tumbling demand, in part due its status as an essential business. Business dipped slightly in the early days of the pandemic, Menear said, but overall sales in the first quarter, which ran from February through April, rose 7% year over year.
"Then as customers kind of got bored of being home and things starting to ease up, we saw a strong takeoff of the business again," Menear said at the Bernstein conference. "When you're stuck in your home for 11 or 12 weeks, you see all the things that need to be fixed."
Menear described a "resurgence" of consumer interest in DIY projects and expected continued momentum and interest in the segment of its business.
Supply chain and warehousing in general have gained prominence during the pandemic with stores closed and e-commerce the preferred option for many consumers. Prologis and CBRE anticipate a surge in demand for warehouse space given the trend.
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