Home Depot Doubles Comp. Sale Growth Rate in Q2 Due to Remodeling Amid COVID
Atlanta, GA, August 17, 2020-The Wall Street Journal reports on how the coronavirus has altered business models and strategies at the nationa's largest home center, in an article called “Home Depot Braced for COVID Pain-Then Americans Remodeled.”
"Until this year, its growth closely mirrored the U.S. economy and housing market. When the U.S. economy froze early in the pandemic, though, Home Depot grew. Its comparable sales-including stores and digital channels operating for at least a year-rose 6.4% in the quarter ended May 3, more than double the growth in the year-ago quarter.
“This year, as the coronavirus pandemic started to spread through the U.S., Home Depot canceled its spring sale events. Staff cleared aisles of discounted goods to make room for social distancing, abandoning the linchpin of the retailer’s peak season.
“‘It’s a really interesting time when you tell your field leadership team that right now our job isn’t to focus on driving sales,’ said Home Depot Chief Executive Craig Menear. ‘We said, ‘We can’t do things normally and drive huge amounts of traffic to the stores.’
“The abnormal times drove traffic anyway. Americans, stuck at home without much to do, started painting, building, fixing and decorating. Government stimulus checks buoyed long-delayed home improvements, as did less money spent on restaurants and summer travel.
“Daily foot traffic to Home Depot stores since April has been running at least 35% above last year’s, according to Unacast Inc., which tracks location data from 25 million cellphones on any given day. In 26 states, traffic doubled following a surge in late May.
“While the coronavirus pandemic has battered parts of the U.S. retail landscape and forced long-struggling chains like J.C. Penney Co. into bankruptcy, it has given a boost to others. “Restrictions meant to slow the virus’s spread squeezed many small businesses and accelerated the yearslong shift to online shopping allowing Amazon.com Inc. and Walmart Inc. to flourish. It also strengthened giants like Home Depot and Lowes, which largely remained open earning sales as customers came to stores.
“Even the winners, though, have had to quickly abandon pre-pandemic business models and instincts. Old systems can’t forecast demand for products and services or track consumer trends. Companies staff differently with health in mind, and many are spending heavily to manage the crisis.
“‘All of the historical benchmarks that we’ve used to think about the business and what the growth in the business would be, like GDP and housing...none of that has a correlation anymore,’ Mr. Menear, 63, said in a July interview.”