About The Author

Home Depot launches interior design service

Dive Insight:

Home improvement retailers have been on a short list of companies in the retail sector that have been turning in solid sales at a rather dark and dismal time for the rest of the sector. Home Depot earlier this year said its first quarter earnings grew by 5% to almost $24 billion, while its net earnings jumped about 12%.

The addition of interior design services helps the retailer expand its appeal to consumers already willing to spend when it comes to their homes. Moody’s Investors Service recently called home improvement one of the retail industry’s “bright spots for ongoing growth,” predicting 7.5% operating profit growth this year for the sector, just behind dollar stores’ 10% growth.

The reasons for that are both psychological and practical. The psychological: Many home owners don’t see spending on their homes as a luxury or discretionary purchase, but as an investment. The practical: Shoppers still see a need to run to a home improvement store to browse and buy colors of paint, for example. Add to that the fact that about two thirds of homes in the U.S. are older, requiring more upkeep, and that low interest rates and rising home values are making such spending highly palatable.

This kind of initiative also gives Home Depot an advantage over Amazon, whose sales in the category are growing more than five times as bricks-and-mortar sales, according to research from One Click Retail. Amazon’s share of the American tools and home improvement market remains relatively low, but its 35% growth is handily outpacing overall sector growth of 6%.

“Though often seen as an Amazon-proof industry, the old-fashioned American hardware store is not untouchable,” One Click Retail partner Nathan Rigby wrote in a March blog post. “Amazon has all the same advantages in the Tools & Home Improvement sector that it has in Grocery, Beauty Products and Health Care — and we’ve seen plenty of evidence of those industries feeling the Amazon Effect. As more uber-connected millennials enter home ownership, Amazon’s share of this product group, like many others, will continue to grow at a disruptive rate.”

The parntership with Laurel & Wolf is helpful not just for Home Depot customers, but also for the retailer itself, considering that the design company already incorporates shopping guidance as part of its post-design to-do advice.

[source:-.retaildive]