A customer wears a protective mask while unloading purchases off a cart outside a Home Depot Inc. store in Reston, Virginia, on Thursday, May 21, 2020.
Andew Harrer | Bloomberg | Getty Images
Like many other shoppers, Home Depot customers have little patience for long waits and shipping delays.
The home improvement retailer announced Tuesday it will open three distribution centers in the Atlanta area over the next 18 months to keep up with those expectations, which have only been amplified since the pandemic.
“We like to say that retail has changed more in the past four years than in our 40-year history,” said Stephanie Smith, senior vice president of supply chain. “Covid has even brought this more to light. Customers expect to shop whenever, wherever, however they want.”
Smith said the pandemic has underscored the importance of a strong and flexible supply chain. During the spread of the coronavirus, customers have gravitated even more to online shopping.
Home Depot has raced to meet customers’ demand for speed and convenience. It began rolling out curbside pickup in late March, and the service is now available at most stores. Before late March, customers had to go inside to pick up online purchases.
Home Depot online sales grew by about 80% year over year in the first quarter, which ended May 3. About $4.2 billion — or roughly 15% — of its net sales came from online. More than 60% of the time, customers picked up those online orders at a store.
Its online sales were already accelerating before the pandemic. Starting in 2018, Home Depot kicked off a $1.2 billion investment to open about 150 supply-chain facilities over five years. It is building different kinds of distribution centers to handle its wide range of products, from small drill bits to bulky items like pallets of lumber, and serve its mix of do-it-yourself and home professional customers.
Home Depot wants to offer same-day and next-day delivery to 90% of the U.S. population. At the company’s analyst conference in December, it said about 50% of the U.S. population had one-day delivery options.
The retailer has 2,293 stores and over 400,000 employees in the U.S., Canada and Mexico. Nearly half of its sales — about 45% — comes from home professionals, even though they make up less than 5% of its customer base. Those electricians, contractors, plumbers and other pros are one of the reasons why Home Depot is focused on figuring out ways to quickly move unwieldy or heavy items like cabinet doors or concrete.
“It’s a very strategic, important customer where we see a lot of growth coming from,” Smith said. “And generally, in our history as a company, if we develop something for our contractor or pro customers and get it right, then it works really well for our DIY customer as well.”
One of Home Depot’s new facilities in Georgia will be a 657,600-square-foot distribution center that will open by end of year. It will help with rapid replenishment of stores in the Southeast, so the products that customers want are more likely to be in stock.
Another new facility is geared toward products carried by box trucks, such as local deliveries of vanities, cabinets and appliances.
The third is a flatbed delivery center, which will open next year. It will help fulfill same-day and next-day delivery for oversized building materials like roofing, fencing or drywall. Some deliveries will go to stores and others will go directly to the job sites of home professionals or DIY customers.
Home Depot opened the first flatbed delivery center in Dallas earlier this year. It has since opened another in Baltimore and has plans for about 30 to 35 in major U.S. markets, Smith said. The large buildings can fit flatbed trucks or rail cars.