HomeBase diversifies, adds home decor megastore - Brief Article

DSN Retailing Today, Sept 18, 2000 by Mike Duff

WEST LAS VEGAS, NEV. -- It's easy to get the wrong impression about HomeBase's new retail concept House2Home. After all, one would assume that any concept to come from a parent company with such strong roots in home center retailing would naturally have a strong home center flair itself. But Todd Peirson, general manager of the West Las Vegas store, will straighten you out right away: "This isn't home improvement. This is home decoration," he says.

House2Home made its official debut nine days ago, with five initial stores celebrating their grand openings in the Las Vegas and Southern California markets. But in late August, before the store's soft opening, the new concept was generating a lot of local interest, Peirson said. Even though the store was being completed, a visitor could see that HomeBase wasn't only about home decoration, but home decoration on an unusually large scale. Essentially, parent company HomeBase has created in House2Home a home specialty concept on the scale of a home center facility, covering about 100,000 sq. ft. Still, it's easy to misinterpret the function of all that space. Unlike Home Depot's Villager's Hardware, House2Home isn't a hybrid operation. Home decor products don't share space with monkey wrenches, junction boxes or sheet rock.

"We have little things like cosmetic plumbing, faucets and such, but we're not going into the stuff behind the walls," said Ginger Silverman, vp and director of advertising and marketing.

House2Home goes both broad and deep in its product assortment instead of just mixing in home improvement products. Each store offers about 30,000 skus, about a third fewer than HomeBase units, which carry about 45,000 skus. The HomeBase total includes items like screws and nails that just aren't on the same scale as home decor products.

The West Las Vegas store includes about 94,000 sq. ft. of selling space, an 8,000 sq. ft. pick-and-pull backroom set-up and 15,000 sq. ft. of outdoor lawn and garden displays. The floor is laid out in a general racetrack configuration with bed and bath, furniture, candles and other interior decorative items, seasonal and party in the middle island. Along the walls: patio/barbecue/fireplace, garden and the entrance to a nursery, paint, floor/wall/window, storage, cookware/tabletop/kitchenware and a Jitters cafe, with snacks and beverages.

As may be discerned from the department listings, size isn't all that divides House2Home from other home specialists. The concept wasn't developed as a hybrid. Rather, it was developed to expand the definition of just what a home specialist might be--thus establishing its very own niche.

"The primary point of differentiation is the fact that we provide everything needed for decoration inside and outside of the home. Linens 'n Things and Bed Bath & Beyond provide linens and kitchenware, but they don't have patio furniture as we do nor a nursery with living plants. We carry bedding to candles to custom framing to custom carpets to high-end rugs to garden fountains," Silverman said.

The initial stores are officially designated as test locations. While HomeBase has honed the concept carefully, Silverman said the company expects the process of refinement to continue as data from operations emerge.

The House2Home target customers are women between 25 and 54. The competition is just about anybody who sells anything with an aesthetic relationship to the home from the mom-and-pop nurseries to Target to Sears to department stores, not to mention the conventional home specialist.

To take on that range of competition, House2Home counts on being able to match any competitor department for department. "The store doesn't have competition, the departments have competition, Silverman said. "Target can't match our depth of assortment, and it also doesn't have barbecues, carpeting or flooring. Our lighting department is equivalent to Lamp Plus. A woman or anybody can go to the store and get everything they need at one stop."

The genesis ofHouse2Home began last November when key HomeBase executives worked with Deloitte & Touche consultants to develop new ideas for revenue generation. The basic concept for House2Home came out of their brainstorming sessions. The idea behind the store was clear-cut. It would be an extension of HomeBase at exactly the point where the home center operation ended. HomeBase offers everything consumers need to build and renovate their houses, said Silverman.

The home decor business was attractive to HomeBase both from the perspective of size--about $125 billion by the company's reckoning and growth--with advances of five to seven percent per year.

For a Western regional home center operator struggling with Home Depot and envisioning more competition coming from the westward advance of Lowes, growth vehicles must be attractive, said Howard Rosencranz, an analyst with H.D. Brouse.

"The concept is exciting. I think it could have merit given the boom in home focus. It takes HomeBase into a different niche. Clearly they aren't winning in the niche they're in. They have to do something sooner rather than later," Rosencranz added.