The Atlanta Journal Constitution reports that Home Depot is lowering its planned store construction schedule for 2004. The home improvement giant produced new stores at 12% below projections in 2003. Instead of cranking out 200 new sores in 2003, Home Depot claims it only opened 175. Even at the reduced level, that’s a new Home Depot opening up every 48 hours. The company did not say how many of the “lost” 25 stores were due to delays or outright denials due to opposition from grassroots citizen’s groups. But as the company forecasts another 175 stores for 2004, it is clear that many of these stores, perhaps as many as one-third, will be challenged by citizen’s groups. Such opposition can turn a three month permitting process at the local level into a two or three process, or longer. Home Depot claims that instead of opening more stores, they are going to invest more money into existing stores, giving them a paint job, new floors, etc. According to the newspaper, “The move to invest more in existing orange boxes and slow new-store construction comes as Wall Street analysts worry that the U.S. market is near the point of having too many warehouse-style home improvement stores. When a company such as Home Depot builds too many stores in a single market, they steal sales from each other.” To rennovate an existing store, Home Depot may spend as much as $5 million a year, one-third the cost of building a new one. Spiffing up existing stores might boost same store sales, but it won’t expand overall sales as much as the impact of 50 less stores over the 2003-2004 period. Part of Home Depot’s expansion includes adding 14 stores in Canada, which represents a 14% increase over its current level of 102 Canadian stores, and 9 more stores in Mexico, a 50% increase over its current level of 18.
I have no doubt that community resistence to Home Depot is partially responsible for the slow down in unit growth at Home Depot. When the company tried to build a distribution center in Sutton, Massachusetts, two years after their submission, the company was mired in court. Citizens won that battle when Home Depot announced it was moving to another location in the state. This kind of delay costs the company millions of dollars in lost sales. For more examples of how communities have slowed down the spread of Orange, search this data base by “Home Depot.”
