Home Depot Builds Mega DCs, Halts New Store Expansion

Home Depot will open two new distribution centers in 2014, yet only one new brick-and-mortar location. The new direction is in stark contrast to the 200 new-stores-a-year pace the home improvement giant enjoyed before the economic collapse in 2008. New store expansion has been essentially halted in favor of increasing its fulfillment center base to bolster the brand's commitment to growing its e-commerce business.

In late 2013 Home Depot opened its first of three new DCs that are set to go live before the end of 2014. The new mega DCs are each the size of 20 football fields and are being built to support the retailer's e-commerce business including online and mobile.

"To support our interconnected retail efforts we recently opened our first of three new direct fulfillment centers," CEO Frank Blake said. "Each facility will have capacity to hold as many as 100,000 SKUs for direct ship to customers. We already have the convenience of 2,000 locations throughout the country for buying online and returning or picking up in-store. These facilities will now expand our capabilities to ship most orders the same day they are received."

Home Depot is all in on omnichannel and is focused on improving its mobile offerings, updating its apps and in-store kiosks to bridge the online and in-store experiences. The head of online for Home Depot refers to the smartphone as a store in a pocket, dedicating time and budget to necessary improvements. Unlike the physical store, the virtual store requires constant upgrades. "We've made significant progress over the past 18 months, but the process will never end, the ongoing objectives to keep improving the ease of use, personalization and connectedness of our online experience," said Ted Decker, SVP, U.S. retail finance.
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