The “Home Improvement” market remains in transition. Demand for construction materials and supplies continues to slide. Additionally, the threat of increasing costs due to tariffs and labor shortages at home depot and Lowe’s weighs heavily on the ability of the home improvement market to sustain a positive growth environment. Despite these headwinds, the home improvement market is still growing. Growth for the home improvement market is expected to be around 2.5% annually over the next five years.
HD Supply Home Improvement Solutions – Introduction
“HD Supply Home Improvement Solutions” is a company that is able to leverage their huge network of distributors to a new segment of the industry that is experiencing increasing growth. Home improvement products are sold in the front end, or DIY, segment of the market. Much of the growth for these products comes from millennials. The millennials are the largest segment of the population. They have very different needs than previous generations in the home improvement market.
Products Offered By HD Supply Home Improvement Solutions
Many products are offered by hd supply home improvement solutions for home improvement projects. These products include hardware products, lighting, building materials, tools, garage doors, windows, paint, and some specialty hardware and windows for commercial buildings and homes. The demand for all of these products is a direct result of a continuing trend toward living in cities. It is hard to go to the store and buy a piece of lumber when you don’t have a driveway or a garage. Instead, you can go online and shop for lumber, insulation, paints, and so on.
“Our goal is to deliver quality in the field, eliminate the need for handling inventory and last-mile delivery, improve inventory processes, and become the trusted solution for our customers.” Said CEO.
HD Supply Home Improvement Solutions is able to leverage their network of thousands of distributors to sell these products. These distributors represent all segments of the supply chain and they are able to fulfill the increased demand for this new niche. It is hard to estimate how large this new niche is, because it is still in the early stages of its growth cycle. HD Supply is able to supply products that many customers in this segment of the market cannot source from their traditional suppliers.
The Biggest Market in the World
At the end of the day, it’s hard to know exactly what to make of HD Supply Home Improvement Solutions. The company has a strong focus on customer service and maximizing their manufacturing efficiency. However, they remain heavily dependent on the markets for these products that are under pressure. HD Supply has an extremely large customer base and a number of channels they can sell through. Thus, the success of HD Supply is largely dependent on their ability to successfully compete in a rapidly changing market.
It will be important to watch this new segment of the market. If HD Supply succeeds at the rate they say they will, this is a potential growth catalyst for the company in the coming years. It is the large addressable market that makes this stock interesting and worth keeping an eye on. The number of home improvement projects are only increasing over time and are supported by higher spending and a growing millennial population.
Warehouse and Distributions Centers – HD Supply
The company’s warehouse and distribution centers have not performed as well as we would like them to. A distribution center is not a strength of the company and the volume of sales from these facilities has fallen short of projections. According to the most recent 10-K filing, the distribution centers delivered $61 million in sales in 2015, and the company is planning to invest $175 million in 2017 to support the growth of these operations. These investment plans should provide a boost to the company’s sales during the next several quarters.
We will have to wait and see how that plan plays out in the coming quarters. Warehouse and distribution centers of HD Supply Home Improvement Solutions were a large drag on the company’s overall profitability. The company attributed the decline to changes in the retail landscape. While growth in the tools and hardware sub-segment will help improve the company’s margins, it is difficult to ignore the revenue decline caused by the reduction in sales at these distribution centers.
HD Supply Home Improvement Solutions Locations
More than 50 countries , territories and waterways provide access to the industrial, energy and commercial markets in the Americas, Europe, the Middle East, Africa and Asia for HD Supply Home Improvement Solutions. The locations provide access to their operations in North America, Europe, the Middle East, Africa and Asia. The largest part of their product range is considered ‘other’ and includes U.S. products that are marketed abroad under different brands. These products are made by third-party producers.