• Andrea Lillo

Home Depot improves focus with urban stores

Brooklyn, NY — Home Depot is looking to expand by getting smaller. Recognizing that American cities represent a large and untapped consumer base, the retailer premiered its first urban store format here last week in a box roughly half the size of a typical Home Depot.

"This concept allows us to go deeper into the market and service the local customer," John Wicks, division president, mid-Atlantic, told HTT.

The format, which will range from 50,000 square feet to 80,000 square feet, is 61,000 square feet in this location, though the format is adaptable to any neighborhood, the company said.

New York is a market that Home Depot wants to expand in during the next few years. Including the new urban format store and the recently opened Expo in Queens, the chain has 12 locations within the five boroughs. Simley said that the company plans to grow that number to 20 locations by the end of 2004.

The urban format is in the Brooklyn neighborhood of Mill Basin, an area with many family-owned homes, which can range from apartments to million-dollar residences. Brooklyn, which will have four traditional Home Depot stores by the end of the year, also has the distinction of having the busiest location in the chain worldwide, on Hamilton Avenue.

This new urban format still offers all of the categories of a typical Home Depot, but its smaller size prevents it from stocking every sku. Home Depot said that there are 30 percent fewer skus at the new format, for a total of approximately 30,000 skus. However, the company stressed that what is missing in stock at this store will still be easily attainable. The traditional Home Depot store on Cropsey Avenue, six miles away, will be able to supplement the product offerings, which can then be delivered to the Mill Basin store or the customer's home either within hours or the next day.

"We may not be able to stock all of the categories, but we can obtain all categories quickly," Wicks said.

The lack of a cookie-cutter layout for the store means that this format can be adapted to a wide range of real estate options, a necessity in urban communities where space can be tight and not "ideally shaped." This particular location has its own challenges with its L-shape. Future stores may be two-level spaces, 50,000 square feet or 80,000 square feet, Wicks said. However, "we're not backing off from any size store," Wicks said.

Each of these urban formats will cater to the local community. In the Mill Basin area where the Brooklyn store is located, for example, the company learned that many households of the large Jewish population require two sinks, one for kosher use only.

The smaller space resulted in smaller aisles, which made the chain rethink some of the fixturing. In a typical Home Depot, for example, customers can pull out the fixtures holding area rugs. The smaller aisles prevented that in this store, and so the company developed a new fixture on which smaller area rugs hang on a door that can be swung open to view the selection.

Some of the format's features are new for the chain. The mezzanine level for the store is a new feature, and in this location it will house the design center. Home Depot's first kiosk will also be located in close proximity to the registers. And the company will soon be installing another kiosk in the area rug section in the design center, where customers will be able to scan all of the rug offerings from Nourison, which can then be shipped directly to the customer's house.

Area rugs occupy two bays in this location, as well as a section in the design center on the mezzanine. The typical Home Depot has between two and five bays of area rugs, the company said. Custom window treatments are found in the mezzanine design center as well.

And though many aspects of the stores are different in this new format, some aspects will remain the same. The distribution and the price points will be the same as in other stores, Wicks said.

"We're committed to everyday low prices. All prices remain the same in both formats," Wicks said.

Home Depot also incorporated some of what it learned from the Villager's Hardware format in New Jersey, which resulted in several category expansions, such as storage and cleaning products.

The company has decided that the Villager's Hardware stores, which are smaller in size than the urban format, will transition to Home Depots as of April 18. "We don't need to build another brand," said spokesman John Simley. The merchandise assortment in Villager's has undergone some tweaking and will result in additional fashion decor brought together in a design area, he said.

Two other urban stores are slated to open within a year: a Staten Island location this fall, which will hit the larger end of the urban format scale at 80,000 square feet, and a Lincoln Park, IL, store (in Chicago) early in 2003. Unlike the Mill Basin store, both will be built from the ground up.

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