In the Amazon age, home improvement chains thrive
The Home Depot is expected to report its latest quarterly results Tuesday morning. Home improvement chains have been cashing in on the housing market rebound, as buyers – new and old – fix up their investments. Analysts said these stores also have figured out how to defend themselves against what’s known as “the Amazon effect.”
Even in the age of free two-day shipping, sometimes you just need to go to a store. Like when you’re picking out a new faucet or your doorknob breaks at 2 o’clock on a Saturday.
“It’s just a lot easier to walk in and say, ‘Hey I’ve got this thing I need to fix, can you show me where it is in the aisle?’” said analyst Joe Feldman with Telsey Advisory Group.
Home Depot has also invested heavily in its own online business. Even then, around 40 percent of online orders are picked up in the store, said analyst Seth Basham at Wedbush Securities. Once there, customers often buy something else.
Many shoppers order online from within the store, Basham said, through a kiosk or on their own phones.
“Essentially you have more of an endless aisle effect, where you can access a lot more merchandise than the store could actually hold,” he said.
Home Depot has said about a quarter of its business is more vulnerable to online competition – things like power tools and small appliances, which are easy to ship and to compare across different websites.
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