Home Depot to Test Larger and Smaller Stores

Atlanta, GA, March 23, 2007--Home Depot is rolling out two new store formats - a supersized store and a mini-store – according to the Atlanta Journal-Constitution.

The newspaper reported that the company is building a 225,000 square-foot store, which will be its biggest ever,  in Union, N.J. It said the new store will be built on the site of an old Home Depot Expo Design Center.

"The superstore concept is a test. We're trying to bring the best of both worlds from the Expo concept and a regular Home Depot under one roof," said Mike LaFerle, vice president of real estate at Home Depot.

LaFerle said Home Depot is still working out details of the product mix at the store, set to open in April or May of next year. But, at twice the size of a typical Home Depot, there's clearly room for a lot more items.

"It'll be a combination of new merchandise and expanded selections in our existing categories," LaFerle said.

Current plans call for an expanded appliance showroom, for example, and a "specialty store" that may focus on home electronics.

Home Depot has tested various store formats for years, but the decision to go big at a time when it has generally cut back on square footage expansion is notable.

LaFerle indicated that the large format is just one test in a bigger playbook as Home Depot deals with stiffer regional competition. Menards, a large Midwest home improvement chain, typically opens stores topping 200,000 square feet.

If successful, the superstore concept could roll out to the top 50 markets across the country, LaFerle said.

In the meantime, Home Depot is about to debut a small-store format, roughly half the size of a typical Home Depot, in California.

The stores, ranging from 35,000 to 50,000 square feet, are designed to offer an "intimate" neighborhood hardware store setting, according to Home Depot. They'll be geared toward small markets such as vacation areas that can't support a full-size store.

Home Depot has tried a neighborhood hardware store format before in the form of Villager's Hardware, which it tested in New Jersey. The stores, which carried products such as gifts and tableware along with tools and paint, never gained any traction, though.

This time around, Home Depot seems to be concentrating on making the stores a miniature version of its warehouse stores rather than dabbling in new product areas.