The Home Depot is opening a new distribution centre in the Greater Toronto Area that will help the company cater to its biggest customers.
The home improvement retailer announced the center on Thursday, stating that it will open in the first half of the year in Mississauga, near the Pearson airport.
The facility will focus on serving professional customers such as homebuilders, contractors, and remodelers who require large quantities of materials for their complex projects.
Michael Rowe, president of The Home Depot Canada, mentioned that serving these customers through its retail stores has sometimes been suboptimal.
He explained that they sometimes struggled to fulfill big orders due to insufficient stock and logistics.
When the Home Depot managed to handle such orders, the products these customers sought were often too large or required high quantities, leading to challenges for store staff to retrieve them from storage.
This often resulted in a less than ideal customer experience, with aisles being blocked off to fetch the products.
The Home Depot believes that the new center, along with three others in Detroit, southern Los Angeles, and San Antonio, will significantly improve this situation.
The centers will reduce the struggle to fulfill large orders and enable the company to stock additional products that were previously too large for stores.
Rowe emphasized that stores lack the space to carry large pieces of lumber, so the new center will allow professionals to order such items specifically for their needs.
The company aims to supply special orders and other materials needed for a job, eliminating the need for customers to visit multiple shops for supplies.
Through the new center, customers can request their orders to be shipped directly to job sites on flatbed trucks, reducing store congestion.
According to Rowe, the facility will be approximately 600,000 square feet, with half dedicated to flatbed delivery and the other half as a distribution center for large items like lumber, insulation, and roofing materials.
Approximately 20 workers have already started at the center, with the team expected to grow to 30 in the upcoming weeks.
Rowe sees the center as part of the Home Depot’s new focus on professional customers, marking the third phase of its evolution.
The third phase involves a deeper focus on the professional side of the business, catering to planned purchases made by big customers weeks or even months in advance.
He noted that these purchases often amount to substantial orders of $10,000, $20,000, or even $50,000.
However, TD Cowen analyst Max Rakhlenko cautioned that the transition to focus on professionals will not be simple, as indicated in a note to investors following a recent homebuilders conference in Las Vegas.
The company will need to expand its order management system and overcome established relationships between professionals and independent workers.
“There was a healthy amount of doubt that (Home Depot) could succeed in the complicated professional market,” he said in the message to investors.
“But representatives admitted that if anyone could accomplish it, it would be the Home Depot, considering their access to funds, connections, IT, and existing work with these professionals on a smaller scale.”
