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Home Depot wants to win home professionals’ bigger orders

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On Monday, February 22, 2021, a customer in Pleasanton (California) loads lumber with a mask.

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Home DepotTed Decker is the next CEO. He said that home professionals should think about it as much more than a convenience shop.

The retailer wants to win contractors’ larger, planned orders, like thousands of feet of flooring — not just last-minute purchases when they scramble to find a tool or finish a job. This shift is part Home Depot’s strategy to grow beyond the current pandemic. It aims to reach $200 billion annually in sales and maintain its momentum.

“We’re sort of the 7-Eleven for pros — convenience, value, tremendous product and brands — but what we’re building now is something completely different and revolutionary to get the pro planned purchase,” said Decker, the company’s chief operating officer, Tuesday on the company’s earnings call.

Home Depot announced Tuesday that it had increased its sales grew 11%The fiscal fourth quarter was a significant improvement on the same period last year. Retailer gave a cautious outlook for next fiscal year. Sales trends were “slightly optimistic” while earnings per share grew at a low single digit rate.

Home Depot executives have not yet stated when it expects to achieve the $200 billion target, but they did say that this would represent a $50 billion increase in its annual sales for fiscal 2021.

Home Depot sales have increased by $40 billion due to the pandemic. This is roughly the same sales growth Home Depot experienced between 2009 and 2018.

Richard McPhail Chief Financial Officer stated that approximately half of Home Depot’s total sales comes from homeowners. McPhail estimated that Home Depot’s North American total market is over $900 billion during the earnings call.

Its rival, Lowe’sIt is also looking for more trustworthy and profitable pro customers. It historically has had a lower share of professionals, with close to 75%-80% of its business being from customers who do it themselves.

Home Depot has invested in its supply chain hubs over the last several years to better serve pros. Home Depot is in the middle, in five years, of an investment of $1.2 million in its supply chain. It also plans to build large flatbed distribution centers that can store larger orders and transport them. The company built its first in Dallas, and now has 40 more across the major U.S. cities. It has fulfilled orders for pros out of its stores.

Decker explained that Home Depot has been able to stock a larger variety of products and have given professionals more confidence in getting the quantities they require. He said, for example, that in the past, stores might carry only 3,000 sq feet of flooring. This is not enough to do three different jobs.

He said that Home Depot has received orders from 150 customers for 150 doors and 7,000 sq feet of flooring through its flatbed distribution centers.

Scot Ciccarelli, a retail analyst at Truist Securities, said Home Depot wants to change the thought process for pros.

A saw blade broke in the past and a professional might go to Home Depot.

Imagine if they were able to persuade the contractor that you don’t need your saw blade. “Why don’t your doors and millwork be here?” He replied. He said, “If you are able to do a large multifamily project that gains traction quickly, it becomes a huge deal.”

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