Atlanta, GA, Dec. 4--Home Depot thinks that Americans are ready to spend more on their bathrooms, so the retailer is packing its store aisles with $1,000 whirlpools and higher-priced sinks and toilets to capture sales from style-conscious homeowners.
The strategy, which comes as consumers look to boost their home values with pricey upgrades, marks a shift from the company's past focus on primarily lower-priced merchandise.
Home Depot Inc. is revamping its stores as chief rival Lowe's Cos. expands in large U.S. markets.
"When you look at the bath programs, we've really kind of changed gears," Mike Hogenmiller, the retailer's global merchant for bath, said in an interview. "We're showing a lot more design. We're showing a lot more price points that are in the middle of the road."
For instance, Home Depot now displays items such as a $1,900 black jetted tub to give consumers a taste of what's available if they spend more.
"You used to walk in a Home Depot and in that category you'd find a $299 tub," Hogenmiller said. "Now you find that we've concentrated more on the $600, $700, $800 categories and are not just trying to sell the least expensive product."
He also said Home Depot was looking to showcase technological advances by offering products such as a $249 toilet made by American Standard Cos. that doesn't clog or overflow.
At Home Depot, the merchandise changes are boosting sales, analysts said.
"At this point in the economic cycle, when existing home sales are so strong, it's very important that Home Depot is on target with the products in their stores," said Nancy Aversa, an analyst at Victory Capital Management.
"The key to the improvement we've seen in their sales is related to better merchandising and marketing," she said. "That's kind of been the area where Home Depot hasn't had any focus."
Other analysts said Home Depot is taking on an initiative that has proven successful for Lowe's, whose strategy of stocking both low-cost and premium items has boosted average selling prices.
At Lowe's, bath offerings range from a $44 toilet to a $1,400 Jacuzzi-brand jetted tub.
"The strategy makes sense for Home Depot," said Mark Mandel, an analyst at Blaylock & Partners. "There are some examples where they've already had success in strengthening their product line," such as John Deere mowers, he added.
Mandel said Home Depot's biggest challenge, however, was making sure knowledgeable staff is on hand to sell the new products.
Customer service, though improving, can be good or deficient depending on the store, he said.
U.S. bath spending rose to $20.4 billion in 2002 from $19.5 billion in 2000, according to Kitchen & Bath Business magazine, a trade publication.
Inspired by television programs and magazines that showcase spacious baths with fancy accents, consumers are undertaking pricier renovations. Upgrades of more than $2,000 now account for 34 percent of all bath remodels, up from 25 percent ten years ago, the magazine says.
"The options in the bath industry have provided people with enough alternatives where they are spending more because they can get what they want, in finish or look," said Peter Bourget, an Atlanta remodeler who said aging baby boomers are pampering themselves with spacious showers and heated tile floors.
"There's such a range of products available to fill every budget and/or extravagant whim," Bourget added.
