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Baby Boomers: Do-It-For-Me generation
Home Depot, Best Buy shift to selling services to aging customers; unleashing the 'Geek Squad.'
May 11, 2005: 4:27 PM EDT
By Parija Bhatnagar, CNN/Money staff writer
Home Depot currently offers 24 home services (left). Rival Lowe's (right) last year raked in $1.9 billion from its installation services business.
Home Depot currently offers 24 home services (left). Rival Lowe's (right) last year raked in $1.9 billion from its installation services business.
Best Buy recently announced that it's giving its in-home Geek Squad service team their own stores.
Best Buy recently announced that it's giving its in-home Geek Squad service team their own stores.

NEW YORK (CNN/Money) - Best Buy, Home Depot and Lowe's all have a new sales pitch for aging baby boomers: don't do it yourself -- let us do it for you.

It makes sense if you think about it. For years the retailers have reaped profits helping Americans hell bent on the DIY craze. But now, with more and more Boomers creeping past 50, the retailers are betting on the Do It For Me model -- that instead of climbing a ladder to install a new ceiling fan, homeowners would rather pay someone else to do it.

Morningstar analyst Anthony Chukumba said he's not surprised. With the first baby boomers turning 60 next year, Chukumba said the appeal of DIY projects is fading.

"They're still buying the materials at a Home Depot but they're more likely to want to hire someone" to do things like redo the driveway, install new windows, change the carpeting or repaint the house, he said. Rather than pick a "no-name" contractor, he said, "they would much rather go with a brand they already know and trust."

So Home Depot (Research) and Lowe's (Research), the No. 1 and No. 2 players in the do-it-yourself home improvement arena, as well as a few other retailers, are all selling services aimed at the do-it-for-me market.

Industry observers point out that the 77 million baby boomers in the country represent a lucrative market for big-box retailers like Home Depot and Lowe's to tap into as they strive to keep growing their profits and sales.

But in order to get to them, it's not enough for retailers to simply sell a product. "They need to market an experience," Ed Kerschner, chief investment officer with Smith Barney Citigroup, told reporters at a media luncheon earlier this month.

To that purpose, Atlanta-based Home Depot has rapidly expanded the breadth of installation services offered to customers over the past five years.

"Right now we have 24 services. We recently added painting to the list," said Jerry Shields, spokesman for Home Depot.

The retailer's services business caters to individual customers as well as small businesses, Shields said, offering things like cabinet resurfacing, window treatments, roofing, siding and deck installation.

Home Depot doesn't break out the figures for each segment, but in its last quarterly report, the retailer said the company's do-it-for-me services business grew 20.4 percent in the fourth quarter and 28 percent last year. And it expects that type of growth to continue, easily outpacing the 9 to 12 percent annual growth in sales of core products.

Shields declined to say how much revenue the retailer drew in last year from home services. But he estimated that the total market for such services could be huge, about a $110 billion market.

Mooresville, N.C.-based Lowe's currently offers 40 categories of home services and expects home installation sales to reach $2.5 billion by the end of its current fiscal year, up from $1.5 billion in 2003.

"This area has twice the rate of sales growth compared to our traditional business," said spokeswoman Chris Ahearn. Services also typically are a higher margin business for retailers.

Other retailers, such as electronics seller Best Buy have jumped on the service bandwagon as well.

Last month, Best Buy (Research), the No. 1 electronics chains, said it would expand its in-home technical support service, dubbed the "Geek Squad" into stand-alone service centers, opening 20 to 50 such stores by early next year.

"We've found that our women clients typically want a technical problem solved as quickly as possible," said Sean Skelley, senior vice president of services with Best Buy. "It's slightly different with baby boomers. They want to spend time with the technicians and get an education."

Aging Amercians aren't the only ones seeking more services, said Bill Sims, analyst with Smith Barney.

"The do-it-yourself market is maturing and reaching saturation," he said. "In order for Home Depot, Lowe's and Best But to continue to improve sales, they have to look to new markets."

Morningstar's Chukumba agreed. "New growth drivers are more of an issue for Home Depot than Lowe's. Lowe's domestically still has about half the sales of Home Depot. To some extent, Home Depot's growth opportunity is limited in the U.S. where it already has nearly 2,000 stores."

So is it time to say RIP (Rest in Peace) to D-I-Y?

Not so fast, said Lowe's Ahearn.

"We're not replacing DIY with DIFM by any means," Ahearn said. "What we're doing is broadening our DIY model to include the do-it-for-me category."

But regardless of age, some consumers will always opt to go DIY, either for financial reasons or because they enjoy the hands-on experience, said Candace Corlett, retail analyst with retail consultancy WSL Strategic Retail.

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