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What started in Atlanta simply created more questions. Once the nation’s second-largest retailer opened three Home Depot Landscape Supply stores targeting the professional landscape industry in north Georgia, speculation ran rampant about the company’s long-term plans.
The company’s recent announcement of its plans to open five stores in the Dallas/Fort Worth area this year confirmed the expectations. “The vitality and sophistication of the Dallas/Fort Worth market is what brought Home Depot to Texas in 1984,” explained Todd Williams, president, Home Depot Landscape Supply (HDLS). “It would be hard to find a better place to showcase our new landscaping business.”
In an exclusive interview with Lawn & Landscape magazine, Williams noted that the plans for Dallas were already underway last year before the Atlanta stores’ performance could be evaluated, but he noted that those initial stores have reaffirmed the company’s belief that it can grow by supplying professionals. “If you talk to the customers we’re serving now, they feel that we’re meeting their needs, whether that’s providing product delivery or making sure the product mix is there with paving materials, live goods, landscape supplies and so on,” Williams asserted.
Williams is also excited about improving the model for this new business based on what they’ve learned in Atlanta. “Moving into Dallas is giving us a chance to refine the concept some,” he noted. “As you present a new concept to customers you’ve never served, you hope you hit on all cylinders, but you know you’re going to have to make some changes.”
Obviously, chief among these concerns is figuring out a business model that serves consumers and professionals equally well in these 5- to 7-acre facilities. “We’ve been able to make corrections to this concept,” Williams explained, pointing particularly to improvements that help the stores serve consumers and professional customers simultaneously. “A big concern we have for the trade is not alienating the landscape contractor by gearing too much toward the residential customers.”
But HDLS stores will continue to cater to both customer types. “If you believe the National Gardening Association, [gardening] is the fastest-growing leisure activity,” Williams pointed out. “These stores let us reach out to a customer that was a challenge because of how our Home Depot stores were set up. Now we have reach and breadth. Serving both customers also lets the contractor see products displayed that they wouldn’t normally see, and that lets them be as impulsive as consumers.”
Key to the company’s sales efforts is its wide range of offerings, such as power equipment along with nursery stock, fertilizers and irrigation supplies. “That gives us the advantage of being the one-stop source so that when landscape contractors buy the product they need to deliver to their customers they can also rent the tools they need,” Williams explained. “That adds a level of convenience that differentiates us in the market.”
On a tour of an HDLS facility in Duluth, Ga., last fall, a number of nursery rewholesalers selling primarily to landscape contractors dismissed the new store as being too consumer oriented and too small to satisfy contractors’ needs. Williams disputes those notions. “We’re not all about holding product on behalf of the grower,” he explained. “That’s not a good way to get return on our investment.
“Once a customer gets over the fact that we’re not as big with physical space as some other places, we think they’ll realize that doesn’t mean we can’t bring in the product they want and replenish it in our inventory the next day,” he continued. “So, inventory turn is a big issue here. The more space you have, the greater the tendency is to fill it up. This business is about turning what you need when you need it and not having excess inventory when you don’t need it.”
Clearly, Home Depot brings a proven inventory management history to the business, and that’s just one of the advantages Williams is counting on. “Our experience coupled with our buying power through 1,500 stores can really help us,” he pointed out. “Add to that our ability to create an instant delivery infrastructure that’s in concert with our stores, and we have some other advantages.”
Williams wouldn’t comment about future growth plans for HDLS other than to say, “We have real high expectations on the performance, but we’re refining the model before rolling out any more stores.”
He did say that Dallas was a logical expansion market for a number of reasons. “Dallas/Fort Worth has been a great growth market over the past decade, and I don’t think anyone thinks that is going to change,” Williams explained. “Plus, there are similarities in the climate there with Atlanta, so we can leverage our vendors and our experience in this market without changing a whole lot.”
Despite its certain big plans, Williams pointed out that the company is focused on doing things properly instead of doing them rapidly. “The consumer business is about transactions,” he noted. “With the trade, it’s about relationships, so we have to prove ourselves to the landscape trade and start to create the relationship and cement it over time so they can rely on us. That takes a little bit of time, and we think we can buy that time with the flow of retail customers.”
In addition, while these stores already include some equipment sales and rentals in their mix, Williams pointed to that as another area of business that takes time to master. “Anything is possible with equipment, and that’s an area we’re going to assess as we go through this spring,” he related. “Will our product mix in terms of the equipment we sell change? Definitely. But I can’t say how it will change.”
Servicing equipment is another possibility for HDLS stores, in good time. “Servicing equipment is something we’ll consider getting into when we know we can meet the customers’ needs,” Williams asserted. “The customer has an expectation that we have to meet, and we won’t do anything unless we can meet that need.”