Ritzy Home Depots

Stores: Home Depot's new glossy Expo Design Centers are aimed at baby boomers who can afford to pay $20,000 for a Schonbek chandelier and who don't want to lift anything heavier than a credit card.

August 08, 1999|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Home Depot Inc. is going upscale -- and offering to do it for you.

In a departure from its stripped-down warehouses that have all but defined the do-it-yourself market, the home improvement giant is rolling out a new division that does away with lumber piled to the rafters, PVC pipe by the foot and salespeople in utilitarian orange aprons.

At the company's new Expo Design Centers, such as one that opened last month in Fairfax, Va., shoppers may instead feel transported into the glossy pages of a home decor magazine.

At Expo, custom-designed kitchen and bath "vignettes" showcase the latest in luxury appliances and fixtures. Separate showrooms highlight tile and marble and designer appliances. In other room settings, antiques dress up displays of chandeliers and Dale Tiffany lamps.

Don't worry if coordinating rugs with draperies and counter tops with cabinets seems a daunting task.

For a $750 retainer that applies to final costs of $5,000 or more, an Expo interior designer will pull together an entire room or project. The stores also try to appeal to consumers who don't want paint on their clothes and plaster in their hair.

The store sells no installation materials, but will arrange to have subcontractors do the work. Consumers are required to lift nothing heavier than a credit card.

"It's an idea factory, with eight showrooms under one roof," said Don Harrison, a Home Depot spokesman. "Expo picks up where Depot leaves off."

Harrison and others at Home Depot flinch at hearing Expo labeled "upscale," saying the store offers a range of prices that are competitive. But there's no shortage of high-end items that shoppers would never see at Home Depot, such as a $20,000 Schonbek chandelier, a $9,000 hand-knotted rug, a $2,000 chrome-and-glass bathroom vanity or a $3,999 refrigerator with a cigar humidor and compartments to chill red and white wine. One could easily spend $50,000 on an Expo-designed kitchen.

Over the next five years, the company plans to open about 200 Expos nationwide, targeting middle- and upper-middle-class suburbs. Baltimore is a possible Expo site but the retailer has yet to begin a site search, Harrison said.

Home Depot is joining other retailers in seeking a niche among affluent consumers, one largely unserved by national chains. The timing couldn't be better, as newly rich baby boomers age -- and indulge a mania for decorating, analysts said.

Demographics -- even more than pressure from Wall Street to maintain corporate growth -- are driving Home Depot's plans, said Kenneth Gassman, an analyst who follows home improvement retailing for Davenport & Co. of Richmond, Va.

"Those baby boomers are entering a new spending phase in their life, because the second mortgage on the house is paid, the car is paid off, the kid's college bill is paid off," Gassman said. "They are at peak earning power, but they also have the propensity to buy luxury goods. Baby boomers were always big spenders.

"Expo is clearly targeting wealthier consumers, who have large homes, older homes and high discretionary incomes," he said. "That's what we're playing to between now and 2009."

Home Depot has opened a dozen Expos in Texas, Florida, Virginia, New York, Georgia and California, and considers those hugely successful. They perform at least as well, on average, as the average Home Depot, which generates $40 million in annual sales, Harrison said.

In a field of mostly regional specialty stores, tile suppliers, rug shops, kitchen design showrooms, only Sears, Roebuck and Co. is trying a similar concept nationally, analysts said. Sears opened the Great Indoors home decoration and remodeling store in Denver last year and will open one in Scottsdale, Ariz., in November -- the start, the chain hopes, of a 200-superstore chain.

"There really is a void in the marketplace, and Home Depot is basically trying to fill that void," said Asma Usmani, a retail analyst with Edward Jones in St. Louis. "It's another source of growth for Home Depot, but the bulk of the revenue and earnings will be derived from the traditional Home Depot stores."

Arthur M. Blank, the chain's chief executive officer, has said he has no intention of neglecting those core, do-it-yourself warehouses, which he expects to double over the next three years to 1,600. But it's clear that the Atlanta chain, which led home improvement retailing last year with $30.2 billion in sales, also has no intention of leaving niche retailing to competitors.

Another of Home Depot's experiments is Villager's Hardware, which Home Depot is promoting as a re-creation of the hardware store. But at a third of the size of a Home Depot, Villager's hardly resembles a neighborhood hardware shop.

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