EXPO-NENTIAL growth in Depot's decor format

Home Channel News, August 7, 2000 by Monica Toriello

WAREHOUSE GIANT EXPECTS TO BE OPERATING 200 DESIGN CENTERS BY THE END OF 2005

every two weeks until the end of the year, a new Expo Design Center will be opening somewhere in the United States. Home Depot is preparing to wow residents of Detroit, Boston, San Francisco and a handful of other markets with the elaborate displays that have made Expo's units distinct from the warehouse home centers of its parent company, Home Depot. If all goes according to plan, the Expo store base will expand by between 50 percent and 80 percent every year until 2005, by which time there should be 200 Expos.

In 2001, Home Depot expects to open as many as five Expos in Chicago alone. Steve Smith, senior vp-merchandising for Expo, said at a recent analyst conference that the company's original plan called for a slower expansion in the Windy City.

"But opportunities were there and we've taken advantage of available real estate," said Smith, referring to the former Hechinger/Builders Square stores that emptied out when the retailer went bankrupt last year.

Aggressive as the Expo rollout may be, Depot officials are quick to point out that the rollout of the company's warehouse home centers took place at an equally ambitious pace. Home Depot grew from three Atlanta units in 1979 to more than 200 stores in only 13 years.

Just as the big boxes stomped many independent hardware stores and regional home center chains to death, Expo Design Centers have specialty retailers across the country bracing for the impact that the format's rollout will have on their business.

But Expo spokeswoman Melissa Watkins said that Expo -- far from stealing the customers of specialty dealers -- actually creates new market share (which was precisely the words used by Depot officials as the company's warehouse stores rampaged across the United States). Visitors to Expo, Watkins said, are often inspired to undertake a project they never even considered before.

"When they see our displays, it opens up the possibilities to them," Watkins said. "We've found that lots of customers start their projects with us and then shop around at specialty stores. Expo is expanding the market."

Kitchen appliance manufacturer Thermador, for example, doubled its business in Atlanta after Expo opened its store there. Like most high-end suppliers, Thermador traditionally sells its products only through specialty retailers.

"Our business dramatically increased because the Expo stores generate a lot of traffic," said Harry Gianetti, Thermador's senior vp-sales. "All of a sudden, we were tapping into a customer base that previously had no exposure to Thermador products." Gianetti added that Expo not only expands the market, but it forces specialty retailers to become better merchants and trainers. "Home Depot is very committed to product display and employee training, so Expo raises the bar for other retailers, who find that they need to do their job better. It's a good thing."

LIFESTYLE AND DOMINANCE

Expo began as a "laboratory store" for home decor in 1991, when Home Depot was "struggling with how to merchandise that category in a warehouse environment," Smith said. The company soon found that it had hit upon something that could flourish as a standalone concept. But the first few Expos, including the initial store in San Diego, still pretty much looked like warehouses. They were 140,000 square feet, had 29-foot-high ceilings and carried mostly in-stock items on racks. The latest prototype has been downsized to slightly more than 90,000 square feet of mostly showroom displays with lower ceilings and sleeker signage to create a more "intimate" environment.

Expo's merchants have managed to get Expo "some measure of exclusivity from most of its vendors for introducing new products," Smith said. It's a win-win situation, he contended: Expo has first strike on new products, and vendors get a good testing ground for their latest introductions. "Basically, if a product doesn't sell at Expo, the vendor shouldn't make it," he said.

Expo's merchandising techniques are meant not just to elicit "oohs" and "ahhhs" from customers, but to have them forgo their planned European vacation and spend the money on a remodeling project instead. The stores have two types of presentations: lifestyle vignettes, designed to give ideas and inspiration to the shopper, and dominance displays, which showcase Expo's vast selection of a single product category.

The lifestyle presentations in each store include 50 to 60 full kitchen and bath vignettes, all fully accessorized and tiled, painted or wallpapered. Ten to 12 lighting galleries each showcase a different style of lighting, complete with matching furniture. The dominance displays work at convincing the customer that no other store has a larger selection than Expo: 48 tile alcoves, a rug gallery thick with all manner of carpet, row after row of all the major brands of built-in appliances, an overwhelming showcase of 2,000 faucets and drapery hardware galore.