Home Depot to open first Manhattan site

DSN Retailing Today, Sept 22, 2003 by Debbie Howell

NEW YORK -- Six years of searching for the right site came to fruition recently when The Home Depot announced a location for its first Manhattan store, bringing the latest version of the retailer's small-format urban concept to one of the most sought after but difficult markets to penetrate for big-box retailers.

Opening next summer, the 108,000-square-foot store in a historic building in the Flatiron District will give Home Depot a presence in all five of New York City's boroughs. Renovations are currently under way to adapt two levels of the building for this store that will have a mix tailored to urban life.

"Manhattan is as different a market as we have ever entered before. The product mix by necessity has to be adjusted away from the typical suburban store," said Home Depot spokesman John Simley.

Simley said each of the three urban stares that Depot has opened since 2002 in Brooklyn and Staten Island, New York, and the Lincoln Park section of Chicago is unique in mix and design as Manhattan will be to cater to neighborhood needs. The strategy behind the smaller format is to target dense urban areas that don't have sufficient land to support a prototypical store.

"What's appealing is the customers--an intense concentration of customers who have an intense amount of money to spend on home improvement," Simley said.

Home Depot has become quite creative in exploring new formats as it approaches saturation in the United States with its signature orange-box warehouse stores. In recent years, the company has launched Expo Design Center, Landscape Supply, The Floor Store and the pro-oriented Home Depot Supply. The urban store is the latest alternative format and an evolution from the Villager's Hardware test in New Jersey that was evaluated and then dropped.

The urban concept, which had ranged in size from 61,000 to 80,000 square feet, is about half the size of a typical suburban Depot. Villager's was even smaller, in the 30,000-square-foot range, and now Manhattan will inch upward in size to that of a prototype store but lacking an outdoor garden center.

The Flatiron store, located at 23rd Street between Fifth and Sixth Avenues, will feature a street-level showroom mezzanine and lower-level retail floor. There will be no parking, but the store will offer delivery services.

The exact merchandise mix is still in development, though Simley said it would not feature an outdoor garden center or extensive lumber assortment. Items of interest for urban living would be emphasized, such as container gardening and home improvement products geared for small-space living. A significant amount of space will be dedicated to kitchen and bath vignettes.

Simley said the company has gained valuable insight from each urban store opening since the first debuted in Brooklyn in April 2002. The second opened in late 2002 in Staten Island, while the Chicago-area store launched in May.

"Every one of them is a quantum leap from the previous one," Simley said, with each slightly different in mix and look to fit the neighborhood.

The experiment has also allowed Home Depot to explore new merchandise categories. For example, sales of cleaning products such as laundry detergent and bleach have been a huge hit in the urban stores, Simley said.

While Simley could not comment on specific performance of the format, he did say its sales per square foot were higher than in a regular store and that "they haven't really provided us with too many surprises, which is a good thing."

Simley said Home Depot was evaluating other locations for urban stores, including in New York, though he could not be more specific as to expansion plans.

Home Depot opened its first New York City store in 1991 and currently operates 15 stores in sections of the city outside of Manhattan. In Manhattan, competition includes some specialty hardware retailers and small hardware stores, but nothing comparable to the size and format of a Home Depot.