Home Depot Expands Online Categories to Meet Demand

New decor and furnishing categories will only be available online, catering to the retailer's 80% increase in e-commerce.

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Need to Know

  • The hardware retailer is expanding its home decor and furnishing categories online.
  • Home Depot aims to position itself as a one-stop-shop for home improvement projects as more consumers work on their home spaces during the pandemic.
  • Most of Home Depot’s new decor categories will be online-only.
  • During Home Depot’s most recent quarter, online sales rose by 80%.

Analysis

As consumers continue to take on a variety of home-improvement projects due to the stay-at-home orders of COVID-19, Home Depot is diversifying its online inventory to include more decor and furniture offerings.

Home Depot has long offered items in the home-decor categories, including paint and lighting. But in recent months, the retailer has expanded its decor offerings to include more furniture, plus housewares such as bathroom linens and glassware, to position itself as a one-stop-shop—from hardware to finishing touches—for customers who are taking on ambitious home improvement projects.

“We’ve been involved [in home improvement projects] the tune of billions of dollars. Why wouldn’t we extend what we’re doing in … helping a customer complete their project?” Home Depot president and COO Ted Decker said in an interview with USA Today. “Consumers were going to fewer and fewer retailers even pre-COVID and now, even more so. Why do you want to ask a customer to make two or three stops to finish their project?”

Richard McPhail, Home Depot’s CFO, said the retailer is responding to a “nesting instinct” that many consumers have displayed during the pandemic, as home offices and home learning spaces suddenly became necessary spaces, while an increase in time spent at home for many led to the desire to create more comfortable, engaging living spaces. “What we’ve seen is the emergence of the true project—the multi-item, more complex home improvement project that our customer decides to take on themselves,” McPhail said.

The majority of Home Depot’s new decor and furnishing items will be available online-only.

Indeed, Home Depot has seen a spike in revenue during the pandemic: In its third quarter, Home Depot’s net sales rose 23% to $33.54 billion, from $27.22 billion reported a year ago. The company’s digital sales, meanwhile. have risen by 80% year-over-year; in May, Home Depot reported it was seeing “Black Friday-level” digital engagement every day.

The company’s rise in revenue may be due to an increase in home-improvement projects, but Home Depot has stepped up to the plate to meet an increase in digital demand with improvements to its website and mobile app. In October, for instance, the company made tweaks to its app to focus on its loyalty program, Pro Xtra. Home Depot has also investigated unconventional routes toward customer loyalty and engagement, launching Virtual Field Trips—a series of DIY videos targeted at school-aged children—in October.

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