Home Depot to lay off 1,000 workers, shutter three stores
Atlanta On the heels of Monday’s announcement that Sam’s Club would be slashing 11,000 jobs, Home Depot said Tuesday it is cutting 1,000 jobs and closing three underperforming pilot stores.
The stores, affecting about 100 jobs, include a small-format store in Wilson, N.C.; a temporary hurricane-recovery outlet in Waveland, Miss.; and a clearance outlet in Austell, Ga.
About 900 other jobs being cut relate to the company consolidating its human resources, finance, real estate and construction functions, including centralizing its human-resources structure back to Atlanta headquarters instead of having a field-team structure by districts, according to company spokesman Ron Defeo.
Defeo said that Home Depot no longer needs as big of a staff for real estate since it has slowed its store openings. As part of the restructuring, the company will add 200 jobs in Atlanta.
“This is not a case of the company cutting expenses in reaction to broader economic pressures or our business performance,” CEO Frank Blake wrote in a memo to employees. “Rather, we are making prudent structural changes where it makes business sense to consolidate some functions.”
Home Depot said it has no plans to close its big-box stores. The company has more than 300,000 employees and 2,245 stores worldwide, including 1,976 in the United States.
Home Depot and other home-improvement retailers have faced sales declines from the long-standing construction slowdown and consumers holding back on do-it-yourself projects amid worry over jobs and home values. Although the U.S. housing market is stabilizing after a nearly three-year decline, home prices remain far below their peak.
Home Depot’s profit is about even with last year for the first nine months of the fiscal year, a period that ended Nov. 1, while revenue is down about 9%.
Tiny Target coming soon
Before Target can experiment with a small-format store in the range of 60,000 to 100,000 square feet the company plans to carry out a different type of experiment intended to asses the concept’s viability. Three existing stores at undisclosed locations on the West coast, the Midwest and the Northeast will have their assortments pared by 50% in order to gauge consumer reaction to a streamlined product offering of a smaller store.
“We’ve made great progress in our efforts at SKU rationalization across our stores, reducing SKU’s by 10%, and this test is an effort to better understand how we can maximize the convenience and performance of a smaller urban format,” said Target chairman, CEO and president Gregg Steinhafel. The company didn’t say where or when the small stores would open, only that the experiment would take place in a handful of markets during the next several years.
The color of redemption
Target added four-color capability to its receipt marketing program and experienced a significant, but unspecified, lift in redemption compared with its earlier program, which relied on black-and-white printing technology. In addition to increasing redemption rates, the program is persuading customers to shop other areas of the stores. Now, the retailer is putting coupons in the hands of more shoppers, as it has added functionality that lets customers download and redeem coupons using their mobile phones.
Retailers have been talking about consumers increased usage of coupons for more than the past year, so it is not a big surprise then that data out this week shows that redemption activity was up last year. What is surprising is the magnitude of the increase, as there were 3.3 billion coupons redeemed last year, a 27% increase from the prior year when 2.6 billion coupons were redeemed, according to Inmar, the nation’s leading promotion transaction settlement provider. The surge in redemption activity was made possible by the fact that CPG manufacturers relied extensively on coupons, issuing 367 billion of them, as a means to maintain sales volumes as consumers were included to purchase store-brand alternatives.