Fortunes of home improvement companies are correlated to the
health of the economy. Thus, there remains no surprise that the
companies operating in this sector are striving to add diverse
revenue streams to hedge against economic cycles.
Building on the strategy, home improvement chain store
Home Depot Inc
. (
HD
) is planning to come up with a 1-million-square-foot e-commerce
distribution center in McDonough, Georgia,
Business Journal
reported.
Moreover, the new distribution center is expected to generate
about 300 jobs in the region.
Why E-commerce?
The technological advancement in marketing, including e-commerce
and online business, provides a win-win situation for both the
retailers and shoppers. This situation enables the companies to
generate additional sales while broadening the company's existing
customer base globally. Moreover, it also enhances the visibility
and reputation of the retailer as a global firm offering great
fashion and value at the same time.
On the other side, shoppers get the benefit of purchasing
researched products at the best prices, as they can compare the
prices with various companies.
Home Depot is a leading player in the highly-fragmented home
improvement industry. The company has reinvigorated itself with a
shift in focus from new square footage growth to maximization of
productivity through its existing store base.
In addition, the company has implemented significant changes to
its store operations to make them simpler and more customer
friendly. We believe these initiatives will induce more customer
traffic to its stores, while boosting its top line.
Home improvement retailing business is highly competitive and
the company faces stiff competition from
Lowe's Companies Inc
. (
LOW
) and other home supply retailers on attributes such as location,
price and quality of merchandise, in-stock consistency, merchandise
assortments and customer service. This might weigh upon the
company's results.
Currently, Home Depot has a Zacks #2 Rank, implying a short-term
Buy rating. Also, we retain our long-term Neutral recommendation on
the stock.
HOME DEPOT (
HD
): Free Stock Analysis Report
LOWES COS (
LOW
): Free Stock Analysis Report
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