Home Depot looking to age well
CEO calls home market a 'sweet spot' despite fears of a slowdown, thanks to aging boomers.
NEW YORK (CNNMoney.com) - Home Depot Inc. CEO Robert Nardelli said Tuesday that -- with help from the nation's aging baby boomers -- the home market is still an "absolute sweet spot" of retail despite growing concerns that the nation's housing boom has already peaked. "We think that as homes get older, consumers will move from discretionary spending to refurbishing of homes," Nardelli told the National Retail Federation's annual convention in New York. Nardelli's comments came on the heels of the NRF's cautious outlook for 2006 in which the group cited a housing slow down for a softer 4.7 percent gain in total retail sales this year versus a much stronger 6.1 percent gain in 2005. (Full story.) "On a macro level we are always sensitive to the economy and to interest rates but if you drilled down we're also focused on change," he said. "Change is the only constant in our business. We have to (constantly) address the evolving preferences of our customers." To that end, Nardelli listed an aging baby boomer population, a fast-growing ethnic market and technology as some of the top trends to define the future direction of Home Depot's (Research) business. "Baby boomers are aging, (so) this is an opportunity for modification in homes -- whether (it be) accessibility or enhancements in the home," said Nardelli. He also identified "do-it-for-me" services as a key growth area to address the needs of older customers. "The service market is a $110 billion market and we see it as another major trend," he said. "We average 1.3 billion in-store transactions we want to equal this out of stores." Regarding the ethnic market, Nardelli said that only 30 percent of those in this demographic own their own home. He said this was another opportunity that Home Depot could take advantage of, offering affordable homes for what he called the "fastest growing group in America." Cisco Systems Inc. (Research) CEO John Chambers joined Nardelli in a discussion about the evolving role of technology in retailing. As the No. 1 home improvement retailer with more than 2,000 stores, Nardelli said Home Depot will suffer the growing pains associated with a mature company. "So we now have to make sure that we get every ounce of productivity per square foot," he said. "In partnership with John's company we're setting a revolutionary course for Home Depot by leveraging technology more effectively." Home Depot customers in the future can look forward to shopping online and transmitting their online list directly to their PDA devices, he said. He added that the company is also exploring putting kiosks in stores that will offer live video services allowing customers to talk in real time with a customer service representative. ---------------------------- Looking for those older shoppers? Click here. |
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