Home Depot has been zeroing in on a plan to combat the low sales and high theft rates which have worsened since 2020. The lack of home improvement demand left the business in a vulnerable position but this new multi-billion dollar deal might just be enough to right the ship.
Home Depot sales have slid pretty consistently since the pandemic. Store sales fell between 3% and 4% in 2023, according to AP News. The inflation of the past few years has brought Home Depot to its knees in a way that it has not seen since the projected sales decline of 2009 during the housing bubble.
CEO Ted Decker spoke to this trend in 2023: “Similar to the second quarter, we saw continued customer engagement with smaller projects, and experienced pressure in certain big-ticket, discretionary categories”. This left the company knowing they would need to bring in more pro-customers into the store in order to make an impact on sales.
Home Depot decided to target pro-customers such as contractors, handymen, and builders in an effort to sell more of these “big ticket items”. To do so, they acquired SRS, a supplier that works with roofers, landscapers, pool contractors, and other professional builders.
The deal will match Home Depot with the pro-customers they need who will be buying larger items than just “do-it-yourself” home improvement projects. The company claims this deal could expand Home Depot’s market by $50 billion to $1 trillion, making the $18.25 billion price tag seem small.
Home Depot has more than 2,00 stores country-wide and SRS will provide a network of more than 2,500 sales professionals as well as B2B services and trade finance capabilities. In many ways, it appears to be a perfect match.
Home Depot CEO Ted Decker has made no secret of the fact that theft has also played a role in revenue dips. In one recent instance, police arrested 3 individuals in connection to organized retail theft from a Home Depot in Poughkeepsie, New York. The group had been using counterfeit money to purchase goods from the store.
Not to mention, Home Depot has not been immune to the increase in theft that crept into stores as a result of the self-checkout option. Major retailers such as Walmart and Target have been battling the same increase in crime. Home Depot found over $1 million in losses at a Florida location due to self-checkout theft. Decker said in reference to the theft, “This isn’t a random shoplifter anymore”.
The increase in crime and dip in sales in combination with an unprecedented housing market and wildly high inflation put the home improvement giant in a difficult position. However, now Decker feels confident that under the new deal Home Depot will be taking the next step in becoming a highly profitable business once again.
In Home Depot’s most recent annual report they outlined the improved customized experience that pro-customers can expect as a result of the partnership with SRS. The deal is set to be in effect in the summer of 2024.
