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Expectations run high at Home Depot’s pro desk

BY Ken Clark

The Home Depot is planning (conservatively, it says) to be a $100 billion retailer in 2018 – growing by $13 billion, or the equivalent of 357 stores, without any major change of its footprint.

Where’s growth going to come from? A lot of it from the pro customer, who currently makes up only 4% of Home Depot’s customers, but account for about 35% of total sales. Clearly, this is a customer with clout.

Leading the charge to get closer to this customer is J.T. Rieves, Home Depot’s VP of pro business. And in a recent interview, he expressed confidence in the retailer’s ability to answer the bell. One reason: the acquisition of Jacksonville, Florida-based distributor Interline Brands provides a powerful boost to the MRO business. Another reason: Home Depot is already interacting with a ton of pros on a daily basis.

Rieves spoke with HBSDealer during the recent International Builders’ Show in Las Vegas. Here are some of his edited comments on key topics.

The potential of the pro business:
"We spend a lot of time trying to show people how compelling the pro opportunity is. [CFO Carol Tome] has stated publicly, if you get the average Home Depot pro customer to come three more times a year, that's over a billion dollars a year in additional revenue. Or if I get each pro to spend $5 more in the store, that's another $1.2 billion."

If I just get pros to come a little more often because they see us in a slightly different way. Or if we get them to buy a little more because they realize we do something that they didn't perhaps realize that we did, those are both billion-dollar opportunity. That's the wonderful scale that we have."

On becoming a destination for the pro:
“I think we all would say that we are the convenience store for the pro. It's a fabulous business, but in my opinion, it should offend us that the number one reason pros shop us is convenience and location. My goal is to move the perception from the convenience store of the pro to the destination store of the pro. Let's demonstrate to them why they shouldn't leave us and go elsewhere. Our paint is just as highly regarded, our pricing is just as good. And we have other things in the store that we can do for you."

On adding value:
“I tell people all the time, give me two minutes, and I can save you 15 minutes. And some pro's will say, “absolutely,” and some will say "I don't have 2 minutes.

"Whether it's the Home Depot app, whether it's buy online and pick up in store and let us pull your order, there are other opportunities: the Home Depot quote center, and the ability for us to do truss packages. On and on goes the list, and all of those are things that I'm not sure people realize that we provide.”

On Interline Brands:
Culturally, [Interline’s people] are a perfect fit for us. They bring same day or next day delivery, high fill rates, and a service model that they do really well. Why not partner with the guys who do MRO better than anybody? That's exactly what we've done. So I do think it's a game changer.
For example, now I can talk to many of our pros that remodel apartment complexes. In the past, they would spend all of their remodeling spend with us, but the minute that they hand this business over and it becomes a rental facility, they pivot that [MRO] spending somewhere else.

"They went elsewhere because it wasn’t a core competency of ours. Now it is, because we just acquired it.We have some work to do to make those two businesses work perfectly in tandem. But if you just said to the pro, ‘I'm going to bring two people to the table, Home Depot and Interline,’ then that's a much better conversation than ‘Home Depot and Home Depot trying to act like Interline.’"

On new construction vs. remodeling:
“New construction is an area that we don't really do well. It's a different time line of business, a different method of operation. We recognized that and dialed that back in a little bit as we focus on the renovator and remodeler. Instead of trying to be everything to everybody, let's admit that there some businesses that we don’t play well in, and there are other businesses where we can really help and we can be really good at it.”

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Dick’s Sporting Goods delivers Super Bowl with UberRush

BY Mike Troy

A first-of-it-kinds promotion involving Dick’s Sporting Goods and highlighting the capabilities of the UbeRush delivery service vows to have championship T-shirts in the hands of Carolina Panthers or Denver Broncos fans less than two hours after the Super Bowl ends.

The promotion, which includes free delivery, is billed as a way for displaced Panther and Bronco fans in Chicago and Manhattan to savor their team’s Super Bowl win. The promotion is limited to the two markets for logistical reason related to how quickly T-shirts can be created following the game and the availability of the UberRush service.

“Partnering with Uber to bring this exclusive experience to displaced fans of the Broncos or Panthers living in Chicago and New York City is really exciting for us,” said Ryan Eckel, VP of brand marketing at Dick’s Sporting Goods. “Sports provide a crucial sense of community, particularly for those living far from home, so we wanted to find a way to create a ‘home-field’ celebration for the winning team’s fans. On Sunday, they can be wearing an official championship t-shirt hours after their team wins the big game.”

While Dick’s is covering the delivery fee, the big winner in the promotion could be UberRush as the relatively new service from Uber looks to gain traction with retail partners looking for a same day delivery solution.

"Our partnership with Dick’s Sporting Goods is a great example of creative ways that businesses of all sizes can leverage on demand delivery enabled by UberRush to engage with their customers,” said Michael Conti, general manager, UberEverything NYC. “We are excited about the many possibilities."

The promotion last for roughly two hours after the game or while inventory remains. If there are any T-shirts left after the two hour window lapses, deliveries will resume the following morning at 9 a.m.

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JCPenney considering sale of headquarters

BY CSA STAFF

JCPenney is pursuing a possible sale and partial leaseback of its headquarters building in Plano, Texas, as part of an ongoing effort to reduce debt and manage expenses.

The company announced Friday that a combination of favorable market conditions and a surplus of available square footage within the building make this an attractive real estate opportunity.

"With the tremendous growth and development currently taking place within Plano and North Texas, there's no better time to take advantage of this lucrative market by pursuing a sale of our Home Office real estate," said Marvin R. Ellison, chief executive officer for JCPenney. "Even as we continue to deliver positive financial results across all aspects of our business, including delivering year over year gross margin increase in the fourth quarter, this presents an ideal opportunity to reduce outstanding debt and create long-term savings for the Company."

It is expected that the cost of leasing space within the building would be offset by a reduction in maintenance costs, property taxes and interest expense as a result of paying down debt with proceeds from the transaction. CBRE Capital Markets has been selected to market the 1.8 million-square-foot, Class A office campus located in Legacy Business Park in Plano. The new owner will have the opportunity to market over 650,000 square feet of contiguous space within the coveted Legacy West submarket. These actions follow a decision in 2014 to contribute a significant portion of fringe land around the Home Office to a joint venture with a team of developers.

JCPenney has occupied the three-story office building as its global headquarters since its completion in 1992. Situated on a 64-acre site near the intersection of Dallas North Tollway and State Highway 121, the Legacy corridor is home to corporate and regional headquarters for numerous Fortune 500 companies.

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