April 5, 2007
HD Takes Appliance Sales to a Higher Level
Home Depot is serious about building up its home appliance sales to a higher level and it’s adding a second floor inside 25 older stores by mid-June to help it achieve its goal.
“We are growing in the appliance business, and the one direction you can go (to add store space) is up,” Robert Baird, Home Depot divisional merchandising manager for appliances, told Reuters. Building a second floor, he said, “allows us to get 44 percent more units on display.”
Deutsche Bank analyst Mike Baker said Home Depot has begun adding second floors because it operates older stores where Lowe’s is building new and bigger units. Building up, he said, allows Home Depot to match the number of display models on the sales floor at Lowe’s.
Lowe’s and Home Depot are the number two and three retailers in the home appliance market. Sears Holdings is the leader but has watched its share slip to the DIY chains.
Appliances have been one of Home Depot’s strengths, even as it has faltered in other building product categories. The chain increased its share of U.S. appliance sales from 9.3 percent in December 2005 to 11 percent last year.
Discussion Questions: What are Home Depot and Lowe’s doing right in the home appliance business? How do you see the competitive picture shaping up?
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The real opportunity for them is if they can merge their in store experience with their online experience. Lowe’s is much better than Home Depot with regards to having a seamless cross channel experience. I recently tried to register for appliances for my upcoming wedding and after doing extensive in-store research, I found out that models that were in the store were not the same models online, nor could I register for large appliances online or in the store. With a generation of tech savvy people getting married and buying houses, they are missing a huge opportunity to make their stores a one stop shopping experience with an endless aisle. Home Depot should invest a lot more into the area of a seamless cross channel experience so that consumers can choose the way they want to purchase things like appliances and other large ticket items.
Looking at the blood bath going on in the CE category right now, Best Buy, Sears, and Home Depot had better hope that Wal-Mart doesn’t give a hoot about appliances! I see Lowe’s as continuing to have a big edge over Home Depot with a very important group of decision-makers: women. The stores are easier to shop, more aesthetically pleasing, and knowledgeable help is more available. Beyond that, Lowe’s has always turned delivery around within a day or two on my big-item purchases; making them my go-to store over Sears at this point. Best Buy, in my opinion, has an undeserved reputation for expertise and store-level assistance, particularly when it comes to facilitating high-tech or high-dollar sales with well-informed female customers (and I’m describing other women in retail with whom I have shopped more than I am myself)! How is Home Depot going to clean up its act and in the process, increase its appeal to female shoppers?
I do not see how Home Depot will be able to increase appliance sales without having plenty of knowledgeable sales associates available on the floor. Their appliance sales increase from 9.3 % to 11% is most likely based on the first-time buyers. The real profits come from repeat customers. Just last week I was in Home Depot and bought an item that rang up more than the price displayed on the shelf. The cashier called for price check and after waiting for 10 minutes for some one to come and help, I gave up and bought the item at the price that was rung up because I needed that item. The cashier’s attitude was she could care less, she was going to get paid! However, that left a very bad taste. I hope that the Chief Customer Officer that HD appointed recently reads this column. Over the past 30+ years we have bought appliances from Sears because every experience we have had with Sears so far has been far better than that with Home Depot. People get fooled with pricing only for so long.
It’s more of an issue as to what Sears is not doing. Going back 20 years Sears was the dominant retailer of household appliances, it was hard to find a home that did not have at least one appliance purchased from Sears. As Sears has become less of a factor on the retail landscape it only serves to reason for The Home Depot and Lowe’s to pick up the business. Mass merchants have struggled with how to sell this category due to the low turns of individual items. Again, this is something DIY retailers are experienced with.
HD and Lowe’s continue to reinforce that they are the home experts. Appliances are a significant investment for home owners and they are leveraging this brand expertise. I believe HD, Lowe’s, and Best Buy continue to take market share from the once dominant player, Sears. Sears has not changed the way it is approaching this business and their market share continues to erode.
Home Depot and Lowe’s growing appliance share makes things harder for Best Buy, and Sears. All 3 companies can get “exclusives” in an attempt to reduce direct price comparisons, but the “exclusives” are very similar to each other, regardless. The real question for HD isn’t whether they can sell more appliances. It’s whether the margins per square foot are better than expanding their other core categories. There’s a point where additional space devoted to any category has less and less return.
I wonder if Lowe’s and Home Depot know what their real advantage is in the appliance market. It isn’t price. It’s convenience. When you’re already remodeling your kitchen at HD, doesn’t it make more sense to buy your new fridge there too? If they can integrate their appliance sales into their “remodeling planning” strategy, they can do something that Sears can’t really match.
Yes, Home Depot will have a challenge.
When my mom purchased a new stainless steel cooktop 2 years ago, we both went to a Home Depot and got absolutely no help.
I researched what I needed to know and then she called her local Home Depot and had all the product information and ordered it by phone.
If you know what you want, then HD is fine. Otherwise, Kmart and Sears would be the best places to buy new appliances.
I am surprised by the various Kmarts which have helpful staff and you can shop conveniently for fine quality appliances at attractive prices. This is the future of appliance retailing.
I retired from Sears as an appliance associate and went to work at Home Depot selling appliances. My fellow associates are knowledgeable and we give good customer service. The HD is improving its share in the appliance business. We have next day delivery and will price match (plus 10%) both Sears and Lowe’s. I wish we had a larger showroom to display additional appliances.
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The real opportunity for them is if they can merge their in store experience with their online experience. Lowe’s is much better than Home Depot with regards to having a seamless cross channel experience. I recently tried to register for appliances for my upcoming wedding and after doing extensive in-store research, I found out that models that were in the store were not the same models online, nor could I register for large appliances online or in the store. With a generation of tech savvy people getting married and buying houses, they are missing a huge opportunity to make their stores a one stop shopping experience with an endless aisle. Home Depot should invest a lot more into the area of a seamless cross channel experience so that consumers can choose the way they want to purchase things like appliances and other large ticket items.
Looking at the blood bath going on in the CE category right now, Best Buy, Sears, and Home Depot had better hope that Wal-Mart doesn’t give a hoot about appliances! I see Lowe’s as continuing to have a big edge over Home Depot with a very important group of decision-makers: women. The stores are easier to shop, more aesthetically pleasing, and knowledgeable help is more available. Beyond that, Lowe’s has always turned delivery around within a day or two on my big-item purchases; making them my go-to store over Sears at this point. Best Buy, in my opinion, has an undeserved reputation for expertise and store-level assistance, particularly when it comes to facilitating high-tech or high-dollar sales with well-informed female customers (and I’m describing other women in retail with whom I have shopped more than I am myself)! How is Home Depot going to clean up its act and in the process, increase its appeal to female shoppers?
I do not see how Home Depot will be able to increase appliance sales without having plenty of knowledgeable sales associates available on the floor. Their appliance sales increase from 9.3 % to 11% is most likely based on the first-time buyers. The real profits come from repeat customers. Just last week I was in Home Depot and bought an item that rang up more than the price displayed on the shelf. The cashier called for price check and after waiting for 10 minutes for some one to come and help, I gave up and bought the item at the price that was rung up because I needed that item. The cashier’s attitude was she could care less, she was going to get paid! However, that left a very bad taste. I hope that the Chief Customer Officer that HD appointed recently reads this column. Over the past 30+ years we have bought appliances from Sears because every experience we have had with Sears so far has been far better than that with Home Depot. People get fooled with pricing only for so long.
It’s more of an issue as to what Sears is not doing. Going back 20 years Sears was the dominant retailer of household appliances, it was hard to find a home that did not have at least one appliance purchased from Sears. As Sears has become less of a factor on the retail landscape it only serves to reason for The Home Depot and Lowe’s to pick up the business. Mass merchants have struggled with how to sell this category due to the low turns of individual items. Again, this is something DIY retailers are experienced with.
HD and Lowe’s continue to reinforce that they are the home experts. Appliances are a significant investment for home owners and they are leveraging this brand expertise. I believe HD, Lowe’s, and Best Buy continue to take market share from the once dominant player, Sears. Sears has not changed the way it is approaching this business and their market share continues to erode.
Home Depot and Lowe’s growing appliance share makes things harder for Best Buy, and Sears. All 3 companies can get “exclusives” in an attempt to reduce direct price comparisons, but the “exclusives” are very similar to each other, regardless. The real question for HD isn’t whether they can sell more appliances. It’s whether the margins per square foot are better than expanding their other core categories. There’s a point where additional space devoted to any category has less and less return.
I wonder if Lowe’s and Home Depot know what their real advantage is in the appliance market. It isn’t price. It’s convenience. When you’re already remodeling your kitchen at HD, doesn’t it make more sense to buy your new fridge there too? If they can integrate their appliance sales into their “remodeling planning” strategy, they can do something that Sears can’t really match.
Yes, Home Depot will have a challenge.
When my mom purchased a new stainless steel cooktop 2 years ago, we both went to a Home Depot and got absolutely no help.
I researched what I needed to know and then she called her local Home Depot and had all the product information and ordered it by phone.
If you know what you want, then HD is fine. Otherwise, Kmart and Sears would be the best places to buy new appliances.
I am surprised by the various Kmarts which have helpful staff and you can shop conveniently for fine quality appliances at attractive prices. This is the future of appliance retailing.
I retired from Sears as an appliance associate and went to work at Home Depot selling appliances. My fellow associates are knowledgeable and we give good customer service. The HD is improving its share in the appliance business. We have next day delivery and will price match (plus 10%) both Sears and Lowe’s. I wish we had a larger showroom to display additional appliances.