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Oh, Give Me a Home


5/1/2006
By Brian Cruickshank

Should anyone be worried that Home Depot has announced it will test market automotive products at its stores?
 

Did the aftermarket earth shudder last month when Home Depot announced it would begin testing the sale of automotive products?

For some, perhaps. We've already gotten at least one worried phone call from a reader in Ohio about it. But for most, it was a sort of ho-hum announcement. After all, this is just a test program for the mega home-improvement retailer, and will only be in a relatively small spot (500 square feet) in a limited number of Jacksonville, FL, stores.

Considering the nature of the products Home Depot intends to test-sell, this all makes a certain level of sense to me. Home Depot already understands the power of automotive-related marketing through its high-profile relationship with NASCAR and Tony Stewart. This seems like a logical extension of that.

The company has indicated that it will limit the range of products to the kinds of stuff you sell in front of your own parts counter: automotive chemicals, motor oil and the like. I think it will be a lot like the kinds of automotive products your local grocery store carries. Are you intimidated by them? I didn't think so. Are they intimidated because AutoZone sells Slim Jims. Again, I didn't think so.

In case you missed the Home Depot announcement, you can read it in this month's issue on page 57.The only thing that bothered me about the report was this: According to Bloomberg, Home Depot will sell the auto supplies for as much as 22 percent lower than auto parts retailers, specifically naming AutoZone, Pep Boys and Advance Auto. Does Home Depot have as much leverage with suppliers as AutoZone or Advance? No way. It will certainly be interesting to see which brands appear on Home Depot shelves, and at what price points.

Considering all this, if I were a parts store, I wouldn't care one bit. Why? For the same reason that Wal-Mart's limited foray into automotive parts shouldn't concern you. Neither Home Depot nor Wal-Mart will ever devote enough shelf space (or product mix) to make a dent in the traditional aftermarket. Your main concern should be the well-run auto parts store down the street, not a national hardware store that has suddenly decided to sell washer fluid.

Besides, automotive purchases at places like Wal-Mart or Home Depot are incidental, impulse buys. Home Depot has carved out a nice niche for itself: home improvement. People go to Home Depot to buy nails, tools, lumber and caulk. They don't go there to buy fuel injector treatment.

If - and it's a big if - Home Depot rolls this automotive program out nationally, will your store lose sales? No more than when a new grocery store opens around the corner.













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