Home Depot to close its big-box stores in China
The Home Depot will close its remaining seven big-box stores in China, the company announced late yesterday, in order to shift its focus to specialty stores and online offerings in that market.
No date was given for when the Atlanta retailer would begin the closures. Although it is abandoning the big-box format, Home Depot said it is maintaining a new formats team to continue research and development activities in China. In addition, the company will continue to operate two recently opened specialty stores, a paint and flooring store and a Home Decorators Collection store, both of which are located in Tianjin. Home Depot is also in the beginning stages of developing relationships with several of China’s leading e-commerce websites, a combination which the company believes is more tailored to Chinese customers’ needs and shopping preferences.
"We’ve learned a great deal over the last six years in China, and our new approach leverages that experience and reflects our continuing interest in providing value to Chinese customers, as well as our shareholders," said president and CEO Frank Blake in a statement released by the company.
Home Depot entered China with the purchase of the Home Way, a Tianjin-based chain of DIY warehouses, at the end of 2006. The Atlanta retailer spent the next year remodeling and rebranding 12 stores in six cities in a region southeast of Beijing. Home Depot expanded its presence, at one time operating a store in Beijing, but then ran into many of the same challenges as European retailers like OBI and B&Q. For a number of reasons, the Chinese home-improvement market never measured up to its initial retail promise. Home Depot began consolidating in 2009 and continued to close underperforming stores.
The closing will affect approximately 850 people.
“China has been a journey,” Blake told a group of investors in December of 2010. “I don’t think we’re alone in having it take some time to figure out how to build a profitable business model. We’ve said from the start that we’re not there to drive square footage growth. We’re there to figure out a profitable business model and then move.”
Emerging global industry will help grow plumbing sales
Global demand for plumbing fixtures and fittings is forecast to increase 6.2% annually over the next five years, according to a report from the Freedonia Group, a Cleveland-based market research firm.
The increase in demand, which will reach $80 billion in the year 2016, is expected to be driven by two main factors. In industrializing countries of the Asia/Pacific and Africa/Mideast regions, rising per capita incomes will fuel desire for more and beter plumbing products. In developed countries such as the United States, Canada and those in Western Europe, an expected recovery in construction spending will generate demand.
The Asia/Pacific region will see the most rapid growth in demand, primarily fueled by China’s increasing, albeit decelerating, rate of industrialization. China alone is forecast to account for one-half of the increase in global plumbing demand generated between 2011 and 2016. The country’s vast population makes infrastructure and sewage system development a necessity, supporting demand by households that previously did not have a piped water supply. Other industrializing countries in Asia, such as India and Indonesia, and in the Africa/Mideast region, will also contribute to overall plumbing product demand.
North America is forecast to post the second fastest regional growth in plumbing product demand through 2016, primarily driven by the rebound in the U.S. construction market after the downturn during the global financial crisis. Canada and Mexico are also expected to post healthy gains.
The slowest plumbing product demand growth is anticipated in Western Europe, primarily due to the region’s mature building infrastructure and slow population growth, which combine to limit building construction activity. However, the pace is expected to accelerate from what was registered between 2006 and 2011. While construction expenditures in this region are predicted to grow at the slowest rate globally, they will reflect a recovery from a low 2011 base.
Menards is expanding in Missouri
Menards is planning to open a 162,320-sq.-ft. store in St. Peters, Mo., this spring, according to an article in the Granite City Press Record.
St. Peter will be the first Menards store in St. Charles County, although the Eau Claire, Wis.-based home-improvement chain is also building units in nearby Manchester and O’Fallon, Ill., according to the article.
"We think very highly of this area and believe it’s a wonderful market with Midwestern folks and values," company spokesman Jeff Abbott wrote in an email to the newspaper. "We’re a small, family-run Midwestern company that shares these same beliefs and values. We felt the great people of (St. Peters) desperately need a better choice for home improvement products."
Menards stores are nearly double in size and offer 40% more products in-store compared with Home Depot and Lowe’s, Abbott said. Construction has already begun on the St. Peters store, which is situated on a 26.7-acre parcel. Menards also owns four other lots, ranging from 1.6 acres to 2.2 acres, within the development site and hopes to sell those to other businesses.