Home De­pot plans price cuts to bring shop­pers back to store

The Covington News - - Local news eddie webb jr. -

CHICAGO — At a time when shop­pers are fork­ing over more money for ev­ery­thing from gro­ceries to gas, The Home De­pot Inc. is plan­ning to put some prices in re­verse.

The hard­ware chain is set to start cut­ting prices this week on as many as 1,200 items from trash bags to toi­lets as it kicks off its lat­est ef­fort to boost ane­mic sales and win back cus­tomers who’ve ditched the home im­prove­ment re­tailer for its com­peti­tors.

Prices will be cut be­tween 5 per­cent and 50 per­cent — al­though the com­pany couldn’t say what the av­er­age re­duc­tion will be — on about one out of ev­ery 25 items found on store shelves.

The dis­counts will be­gin show­ing up in stores this week and will last at least through the next quar­ter as the At­lanta- based chain tries to re­tain its top spot in the sec­tor by strik­ing back at com­peti­tors such as Lowe’s Cos. Inc. and Wal- Mart Stores Inc.

“ We’re try­ing to gain mar­ket share in the process,” Craig Me­n­ear, Home De­pot’s ex­ec­u­tive vice pres­i­dent of mer­chan­dis­ing, told The As­so­ci­ated Press. “Ab­so­lutely, we’re try­ing to drive sales and pro­duc­tiv­ity.”

The marked- down items also in­clude en­ergy- sav­ing de­vices such as in­su­la­tion and ther­mostats and prod­ucts deemed “ project starters” such as paint and toi­lets that are the build­ing blocks for do- it- your­self tasks.

But the ef­fort comes as the home im­prove­ment in­dus­try is be­sieged by a sour­ing econ­omy and an even worse hous­ing mar­ket.

Dur­ing the sec­ond quar­ter alone, Home De­pot’s same- store sales, an im­por­tant re­tail in­dus­try met­ric of sales at stores open at least a year, fell 7.9 per­cent. Com­pa­ra­ble- store sales slid 5 per­cent at Mooresville, N. C.- based Lowe’s.

An­a­lysts said the dis­counts will likely bring more shop­pers into stores, but whether the ef­fort is enough of a rem­edy to the chain’s woes is any­one’s guess.

“ Every­one’s try­ing to drive traf­fic,” said Cowen & Co. an­a­lyst Laura Champine. “ I think in gen­eral, there’s a rea­son con­sumers aren’t in stores.”

Home De­pot is al­ready work­ing to change its mer­chan­dis­ing ef­forts, elim­i­nat­ing prod­ucts such as cloth­ing that ex­ec­u­tives feel aren’t re­lated to the com­pany’s core busi­ness lines.

It’s also scal­ing back re­dun­dan­cies in some ar­eas by elim­i­nat­ing mul­ti­ple types of the same prod­ucts that are stocked on shelves.

At the same time, the com­pany is try­ing to re­vamp its sup­ply chain by cre­at­ing as many as 20 re­gional dis­tri­bu­tion cen­ters. So far, three are open.

And last Au­gust, it sold its whole­sale dis­tri­bu­tion busi­ness, HD Sup­ply, to a group of pri­vate eq­uity firms for $ 8.5 bil­lion.

Ob­servers said the price cuts should boost sales — at least tem­po­rar­ily as the com­pany con­tin­ues to get ham­mered by the econ­omy.

“ I think they need some­thing to stim­u­late sales growth and I think that would be one way to do it,” said Morn­ingstar an­a­lyst Brady Le­mos. “ I think that’s the most im­por­tant thing right now in this poor en­vi­ron­ment.”

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