What will The Company Store do for Home Depot?
Extending its position as the one-stop solution for the home, Home Depot acquired The Company Store, the online seller of bedding, bath and related categories. Terms were not disclosed.
Since 1911, The Company Store has been manufacturing down and bedding essentials in its own factory in La Crosse, WI and primarily sells through its catalog and online. The five stores it operates weren’t included in the purchase. The seller was Hanover Direct.
“The acquisition of The Company Store provides product development and sourcing capabilities to help us expand our online decor business into broader categories across the entire home,” Home Depot’s CEO Craig Menear said in a statement.
According to Credit Suisse, décor -oriented merchandise such as flooring, lighting and window treatments account for approximately 25 percent of Home Depot’s sales, but décor alone makes up only three percent.
“Our quick analysis highlights The Company Store’s different customer base, including heavier skew to females, higher income and older, overall most comparable to Bed Bath & Beyond,” wrote Credit Suisse analyst Seth Sigman in a note, according to USA Today.
At its Investor and Analyst Conference on December 6, Ted Decker, EVP of merchandising, said Home Depot’s early success with décor items started with Christmas trees and holiday decorations and has led to items around Halloween, summer outdoor living and household organization.
The acquisition is also expected to help Home Depot more closely link its stores with online services and home delivery.
Online accounts for 6.4 percent of Home Depot’s sales, about double Lowe’s levels, and has contributed 20 percent of the company’s total growth. More importantly, Home Depot expects to surpass 1.8 billion digital visits this year, rivaling its physical store transactions. Sixty percent of all sales in-store or online are influenced by a digital visit, 45 percent of online orders are picked up in stores and 85 percent of online returns are completed in stores.
Said Mr. Menear at the meeting, “Customers are moving online to begin the shopping experience in this space, and we will invest to connect our services business to the digital world.”
- The Home Depot Expands Capabilities To Finish The Whole Room – Home Depot
- Home Depot goes ‘soft,’ buys decor retailer The Company Store – USA Today
- Home Depot Investor & Analyst Conference – Home Depot
DISCUSSION QUESTIONS: In what ways do you see Home Depot benefitting from its acquisition of The Company Store? To what extent should Home Depot broaden its décor offerings? What will the deal mean for Home Depot’s competitors?