Atlanta, GA, October 11--It's been more than a year since Home Depot opened a new Expo Design Center, and there are no plans to build any more, according to the Atlanta Journal-Constitution
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Does that mean the upscale Expo concept, launched in 1991, has outlived its usefulness for the home improvement giant?
"Growth is in a holding pattern," acknowledged Annette Verschuren, president of Home Depot Canada and also president of the Expo chain for the past 16 months. But she says the concept is far from dead.
"What we can't do is walk away from a customer segment," Verschuren said. "It's not the death of Expo, it's just the beginning."
Home Depot executives once talked of as many as 200 of the Expo stores, which are smaller and more refined than the chain's big boxes. They specialize in sales and installation of pricier home furnishings than those found at regular Home Depot stores.
The chain halted growth last year at 54 Expo locations while executives try to recharge the product line and store design and hammer out kinks in installation services, which account for 70 percent of Expo sales.
Some analysts wonder about the future.
"At some point you have to bite the bullet and redeploy your resources," said home improvement analyst Barbara Allen of Natexis Bleichroeder. "My sense of it is that it's not working and if Verschuren thought it was a great concept, she would bet her career on it -- and she hasn't."
The first few Expo stores, in San Diego and Atlanta, won rave reviews from shoppers who liked a selection of high-end kitchens, bathroom fixtures, lighting, flooring, appliances and home accessories under one roof. The stores cater mostly to customers with incomes above $75,000 who are doing five- and six-figure remodeling projects.
But by the end of the decade, Expo still wasn't profitable, Verschuren said. And to date, there's still no proven success story for the niche in a national format.
Dekor, launched in Atlanta by two former Expo executives, opened in 2000. But within a year, the cash-strapped chain closed for good.
Expo's biggest rival, Sears, is also pondering the future of its 17 Great Indoors stores, which offer kitchen and bathroom remodeling services, bedding, flooring and home decor items. Great Indoors, which has no metro Atlanta locations, closed three stores last year and converted a fourth to an outlet as it revamped products and marketing.
Home Depot does not break out sales or profits for Expo. But Chief Financial Officer Carol Tome says the stores became profitable last year and were "marginally" so in 2002.
Attempts to lure shoppers with cheaper imports haven't brought more shoppers, however. And mounting problems with installation service have plagued the chain, said analyst Bill Sims with Smith Barney.
"Compared to their strategy a year or two ago, they got off-point," Sims said. "I want to see more traffic in stores, and I want to see them sharpen their merchandising."
While Home Depot assesses the future of Expo, it's borrowing some of the concept for use in small-scale urban Home Depot stores and remodeled suburban outlets.
New urban stores -- so far in Chicago, Manhattan and Vancouver, British Columbia -- blend Expo-like kitchen and bath vignettes with the practical, do-it-yourself appeal of a regular Home Depot.
The hybrid approach could spread, said Bob Nardelli, Home Depot's chairman, president and chief executive officer.
"As we look strategically, we're now seeing opportunities we would not have otherwise seen," Nardelli said at the recent Manhattan store opening. "As they prove themselves, they'll become part of the standard profile and format of stores going forward, whether metropolitan or traditional stores."
Home Depot is spending $1 billion this year on store modernization, including at Expos.
In February, Expo opened the first of several planned call centers to track orders from start to finish. One goal is to better manage t
