Home Depot Continues Run For Professional Customers
The company is adding two more pro stores this year in Milpitas, Calif., and Highland Ranch, Colo., to its existing stores in Phoenix and Colma, Calif.
"We continue to be encouraged by the results of these prototypes, which are providing products and services tailored specifically to commercial and professional contractors," said Lynn Martineau, division president of new growth businesses.
Home Depot needs to expand beyond the do-it-yourself home improvement market to grow, according to Reuters. The retailer has scaled back store openings and is trying to make existing stores more efficient.
An analyst at A.G. Edwards, Brian Postol, told Reuters that a potential hurdle for customers at the Home Depot Supply stores could be payment terms. This is especially true for smaller contractors who are likely to provide the bulk of the business; they typically have arrangements with their local wholesale distributors allowing them to receive products and pay them off once a job is completed. The pro stores would require these contractors to pay in full upfront or charge a credit card.
Because of its ability to obtain better prices from manufacturers, Home Depot will be more than competitive and lower in terms of individual pricing on goods, Postal said.
"The question is, do these contractors have the capital to be able to put up a large quantity of money to buy the goods upfront without having the payment from the end user?" he asked.