New York retail circles are buzzing with news that Home Depot may build two new Manhattan stores -- one at 23rd Street in Chelsea and another at the proposed Pier 40 development near Greenwich Village. And today in Chicago, the Atlanta-based retailer opens the doors of its new "urbanized" Lincoln Park store, a two-level space just south of Diversey. Is the home improvement giant abandoning its traditional one-level suburban greenfield prototype for new citified digs?
Don't count on it. In 2002, the chain doubled its number of traditional stores in secondary markets such as Cedar Rapids, Iowa and Yolo, Calif. In fact, 32 percent of Home Depot's stores are in such secondary markets, according to company reports. The typical Home Depot is 115,000 square feet on a 10-acre lot, with customers driving in from a wide trade area. But as it seeks avenues of growth, Home Depot is increasingly looking to enter dense urban markets, where real estate prices are high, but sales are even higher. The retailer's only existing New York store, a Brooklyn location that heavily stocks building supplies, has been clocking sales high enough to offset the expensive location costs, the company says.
Home Depot's new breed of urban stores, as exemplified by the 80,000-square-foot Lincoln Square location, will be different, offering a higher concentration of home decor merchandise targeted more at the "do it for me" urban set than the "do-it-yourself" suburbanites, says Jim Warrington, Home Depot's director of urban projects. "The ownership to rental rate is much lower in urban areas," he says. "So our Lincoln Park store features more portable merchandise. These customers are more likely to move and want smaller items for their smaller condos and apartments."
Warrington is mum as to how many of the 200 stores Home Depot is expected to open in the next year will be urban locations. "We'll be monitoring the Lincoln Park store over the next year to determine the success of the two-level format." He won't comment on Home Depot's expansion in Manhattan, saying "it's not official until we announce something." According to the Chicago Tribune, Dallas, Washington, D.C., and Boston are other urban markets Home Depot is said to be considering.