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Home Depot pivots to pro builders as DIY market slows

The pandemic home-improvement boom is winding down, and Home Depot is leaning on pro customers to drive sales.
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3 min read

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As the DIY pandemic-era home improvement boom continues to wind down, Home Depot is relying more on professional customers to drive sales.

“During the third quarter, our pro customer outperformed our DIY customer,” CEO Ted Decker told investors during an earnings call on Tuesday. “While internal and external surveys suggest that pro backlogs are lower than they were a year ago, they are still healthy and elevated relative to historical norms.”

But relatively healthy demand from pro builders wasn’t enough to stop sales from declining 3% YoY. It also didn’t stop Home Depot from forecasting a 3%–4% drop in sales for the entire year. As Decker put it: “This year reflects a period of moderation.”

  • Reinforcing this narrative is new data from Placer.ai, which found that foot traffic at the home improvement store was down 7.4% YoY.

Pleasing the pros: Rather than waiting around for another DIY boom, Home Depot is doubling down on its pro customers with a restructuring plan designed to accommodate their needs. In October, the company promoted Ann-Marie Campbell to senior EVP to lead the initiative.

“Capturing a greater share of the pro’s wallet is one of our largest growth opportunities,” Campbell said during the earnings call. “It represents roughly $475 billion in addressable market, and today, we have relatively little share.”

For context, pro currently makes up about 50% of Home Depot’s business, but as Decker pointed out during the Goldman Sachs Global Retailing Conference in September, most of that business comes from “cash and carry” purchases. These transactions are mostly made up of smaller ticket orders that do not involve extending credit to purchasers.

Pro customers do patronize Home Depot, Decker said at the time, “but they are doing infill purchases coming to get the odd tool. They are not purchasing the principal material needed for these larger projects.”

Learning how to wholesale: He added that getting those bigger customers requires “wholesaler-like capabilities,” including a designated point of contact, a B2B sales force, order management allowing planned purchases, and billing upon shipment.

Home Depot is now building out some of these capabilities to serve what the company is calling “complex pro” customers.

“They are accustomed to interacting with their suppliers in a different way than our traditional business model,” Campbell said. “Pros working on complex projects want to reserve product, use trade credit, and have products delivered to their job site in a staged manner.”

Retail news that keeps industry pros in the know

Retail Brew delivers the latest retail industry news and insights surrounding marketing, DTC, and e-commerce to keep leaders and decision-makers up to date.