Home Depot experiments with full service to pros Stores in Austin, Las Vegas cater to contractors, craftsmen

Retailing

July 05, 1998|By DALLAS MORNING NEWS

AUSTIN, Texas -- The city is buzzing over the Metropolis apartment complex. Oh-so-hip even for eclectic Austin, the just-completed 308-unit complex has concrete floors, colorful murals, exposed iron rafters and stucco walls. And, yes, there's a computer room in a resort-quality clubhouse.

Besides being the new cool place to live, Metropolis has a lesser-known distinction: It's the first large-scale commercial development to be built with materials off the shelves of a Home Depot store.

The timing of developer Justin Hilton's project coincided with a test started last fall at four Austin Home Depot stores.

Hilton, 32, says he's been buying in bulk from Home Depot since DTC he started fixing and reselling houses when he was in his early 20s. "Running around town trying to find stuff is hard. I was just saving time and staff costs," he says. But Metropolis was his biggest project ever, and the staff at Home Depot was ready.

The nation's largest home-improvement retailer has grown into a $24.2 billion-a-year company mostly by catering to homeowners. Home Depot has the biggest slice of the $100 billion-a-year do-it-yourself market. But there's an additional $215 billion spent annually by professional business customers -- contractors, electricians, landscapers, plumbers, remodelers and property maintenance managers.

Atlanta-based Home Depot decided to go after it.

Last fall, managers of the four Home Depot stores in Austin each hired 23 additional people to staff Pro Service Desks in their stores. Local professionals were sent free Sports Illustrated subscriptions and an issue of the magazine with a fold-out, wrap-around advertisement explaining the pro business. An almost 2-inch-thick catalog of professional equipment and supplies was also distributed.

Phone lines were added for contractors' use only. And if a professional customer is calling in on his or her cellular, the charges are reversed and billed to Home Depot. A GE Credit representative floats among the stores to extend credit on site. And J. B. Hunt was hired to truck the huge loads to construction sites.

That sounds like a big investment, but the test paid for itself six months earlier than expected, said Gary Grant, district manager over the Central Texas region: "We thought we'd be reaching the break-even point in July, and we reached it in January."

In June, Home Depot extended the test to Las Vegas. No plans have been made to expand the test to other markets.

Over the past several months, Hilton estimates that he spent about $6 million at the store on Austin's Research Boulevard for supplies used in building Metropolis. That's equivalent to almost two months' sales for the average big orange warehouse.

"It was great. Twice a day a Home Depot truck would arrive. We were always calling and saying we needed an outrageous amount of something, and they'd get it," Hilton said.

The idea to aggressively court professional builders is a grass-roots one at Home Depot.

"We've wanted this for a long time, and it's been a bottom-up idea. We knew we could do it without alienating the do-it-yourself customer," says Don Christopher, manager of an Austin store in the program.

"We're not after someone building a major office building, a skyscraper or a shopping mall," Grant says. "This is about the small custom builder who builds 10 houses a year and the electricians, plumbers, carpenters and roofers that he subs out the work to."

Mark Springer, manager of the Home Depot in suburban Round Rock, Texas, said many of these target customers are in Home Depot stores already. "But we're not in their wallets."

Pub Date: 7/05/98

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