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The Home Depot Ramps Up Efforts to Sell 'Complex Projects' to Pros

Home Depot President and CEO Ted Decker reveals the dealer's plans during June 13 presentation to analysts. The $950 billion total addressable market covers total opportunities in the U.S., Canada, and Mexico. (Source: Online screen shot from THD's broadcast of its Investor and Analyst Conference)

Even as it forecasts a sales decline this fiscal year, The Home Depot (THD) plans in multiple ways to sell more and bigger projects to pros, above all by touting itself as the supply industry's only one-stop source for everything a pro needs.

The world's biggest home improvement store now estimates it gets 50% of its revenues from pros. It's hiring more outside sales people, improving its order management software, bringing in product specialists, and enhancing its trade credit programs as it expands pro-oriented programs in its Top 40 markets, THD senior executives told stock analysts on June 13 during the company's Investor and Analyst Conference.

THD is targeting an estimated $200 billion sales category that it calls the "complex" pro project. These are jobs that require many types of products, multiple days, and a variety of skills. For instance, replacing wallboard that had suffered water damage get rated by THD as a "simple" project because it usually involves a quick visit to a THD store to pick up a few materials that are always in stock. In contrast, building an addition is considered an "complex" project because it involves a sales rep's help, timed deliveries to the site, large volumes of materials (a framing package, for instance), customized prices, and trade credit. It's the latter category that THD increasingly is targeting.

Chip Devine, THD's SVP for Outside Sales, said pros typically rely on at least 10 suppliers to get all the products they need. "We'll go across multiple categories," he said, "Nobody else is a cross-category seller."

Slide from The Home Depot's Investor and Analyst Day Conference, June 13

This push comes as THD reaffirmed June 13 its guidance to analysts that the company's over sales and same-store sales would drop between 2% and 5% compared to the fiscal year ended Jan. 31, 2023. It's operating margin rate is forecast to be between 14.3% and 14.0%.

THD executives stressed that the drive to win more pro customers will be cautious and calculated--''we're really, really early [on this]," Devine said--with lots of opportunities to explore which initiatives did and didn't work before rolling out the program to more cities. It's most advanced pro market is Dallas, and there The Home Depot says it is seeing faster growth in pro sales than in other markets.

That said, it's important to note that The Home Depot's definition of a "pro" extends beyond home builders and full-service remodelers to include maintenance managers, repair crews at institutions, and a lot of commercial painters. When THD showed attendees a video of pro customers in Dallas praising the company, it showed men from an investment property company, a roofing and construction contractor who bought 1,000 windows in one fell swoop, a property services company, and a developer of low-income housing. Devine said the sales team is pursuing business from repair and remodel firms, property management companies, and property investors. Small production builders also have been targeted.

"It takes time to build confidence with our pros," Devine said. "But we're seeing pros get engaged. They're spending more as the relationship deepens."

And while much of the Investor and Analyst Day presentation highlighted efforts to serve a pro audience that Decker estimated is in the "ten-ish of millions," Decker said he would like to see the 50-50 pro-DIY split continue at that ratio, with both branches of the business growing--and helping the other branch grow as well. As part of that effort, THD plans to open 80 new stores in the next few years. Of those, 13 will open this year.

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