Why isn't Home Depot exposed to Amazon's threat?

Amazon is a very threat to fashion retailers and department stores, but it seems to be different for Home Depot, a retail chain of housing renovation, construction materials, and services.While many retail businesses are closed, Home Depot has shown record sales this year.

Home Depot, which has 2,200 stores in the United States, Canada and Mexico, reported that last month had a sales of about $ 28 billion (about 3.1 trillion yen).This is 6 compared to the same period of the previous year.It has increased by 2%.And the same store sales are 6 compared to last year.It is said that it is increasing by 3%.Nevertheless, investors who fear that the impact of Amazon will expand to the whole retail industry has reduced the value of home depot by 3%.

Compared to other retail industries, the housing renovation industry seems to be a bit out of the influence of Amazon.According to the retail industry experts, this is because consumers are seeking expensive products in the store and touching them.But that's not the only reason for Home Depot's success.They are also contributing to their successful digital operations and focusing on contractors (architects, real estate managers, and owners of apartments).

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30-40 % of the main customers are traders

Jason Goldberg, a senior vice president of the SapientRazorfish, Agency SapientRazorfish, said:"Even if you look at the history so far, products such as boards are difficult to deliver, and it is difficult to make profits in online sales, so Home Depot has escaped the influence of Amazon, and they have a digital and good job.I do it. For example, I have been working online content such as how -to tutorials from an early stage. I can also receive products purchased online at stores. "

If you need a house repair, you need to respond immediately.But online orders can't achieve it, but Jim Casson, a president of theory House, a retail agency."If I want to buy a tap of a tap, I would like to see if I can actually hold it in my hand and understand the size," he explains.The experience inside the Home Depot store is intentionally made with specialized traders such as electric technicians and architects.Working lighting, mass sales of materials, and building materials are also available.Lowe's, on the other hand, is targeting general consumers.

According to Laura Kennedy, director of Kantar Retail, Director Laura Kennedy, 30-40%of the sales of Home Depot are due to traders.On the other hand, Rowes is 25-30%.Home Depot's CEO and President, Craig Menia, reported in the May balance report in the first quarter that sales were higher than DIY consumers.

Quick response to digital

Home Depot has launched a delivery program at the end of 2016 to deliver at 2-4 hours, which is also a form that meets the needs of the trader.In 2015, he acquired Interline, a nationwide distribution company for maintenance, repair, and operations (called MRO) products.Menia says that customers from the interline will be able to shop at home depot using swipe cards using an interline account.

"Home Depot has started the MRO model first, and now Rowes is doing it," says Kennedy.

There are few retail chains who can understand mobile, but Home Depot is also showing his strengths there.For example, you can easily check which products are in which store using the app on the map.In addition, the AR (augmented reality) function has been added to the app.If you use this, you can see how large items such as doors and mirror stand look like at home.

Digital is now more than half of the total marketing budget of Home Depot, said Ted Decker, the merchandise department executive vice president in the last month's income and expenditure.He announced last week that he will also work on services that allow you to order home renovation products through Google Home.

But Amazon's threat is alive

On the other hand, you can also see the reason for the good results of Home Depot.Matt Surgent, Senior Vice President of Magid Associate Company Magid Associates, is the recovery of the housing market and an increase in new housing buyers.Say."The economy is recovering. Other retailers, such as the target of major mass retailers and Target, are also gaining a lot of growth," he said.

However, according to the retailed executive, the fact that the home electrical category has been protected from Amazon's threats does not mean that Home Depot is in a safe position forever.In July, Sears, a major US department store, signed a contract to sell Kenmore electronics, a label, through Amazon.Sears is also launching a smart home appliance lineup that can control voice through Alexa.

Kennedy said, "I don't think the (Sears) contract will affect the home depot immediately, but Amazon has invaded in collaboration with a brand that has the trust of consumers.It has become a field that must be done. "

Yuyu Chen (Original / Translation: Konobu Tsukamoto) IMAGE COURTESY OF HOME DEPOT