You don’t put up a building without spending a few bucks on materials: a few thousand dollars here, a few tens of thousands of dollars there, a million dollars now and then.
So, like any other Pacific Point Realty project, the 15-townhome development in Atlanta’s Poncey-Highland neighborhood requires truckloads of lumber, dry wall, doors, flooring and plumbing fixtures — as well as a lot of planning.
“If it comes in ahead of time, we won’t have a place to store it, and if it comes in late, we will have wasted time waiting for it,” said Karim Shariff, the firm’s managing partner.
Making sure building supplies get into the hands of builders exactly when they need it — that’s the logic behind a $1.2 billion investment Home Depot has been making in its supply chain, developing 150 distribution centers that will cater to professionals and do-it-yourselfers. One of the first to open that is aimed primarily at the pros is in Stonecrest in DeKalb County.
Think of them as giant fulfillment centers like those run by Amazon, Walmart and, well, Home Depot. But instead of dropping off packages at the front doors of consumers, Home Depot’s new flatbed distribution centers are mostly for pros are shipping bricks, drywall and bath fixtures by the ton.
Credit: Miguel Martinez
Credit: Miguel Martinez
The homebuilding and remodeling industry has been disrupted by supply chain shocks amid a ramp-up in housing demand. The crunch has sometimes led to delays for renovations and construction of homes. This new network is part of Home Depot’s answer to get product to its customers, and outfox competitors, like archrival Lowe’s, that is sharpening its own strategy.
And people like Shariff are not simply walk-into-Home-Depot-for-a-hammer-and-nails kind of customers. So Pacific Point calls its account rep at the company, talks through its construction needs and puts in an order. Where the materials come from is a mystery, but also irrelevant.
“It just shows up in the truck, that’s the beauty of it,” Shariff said.
For Home Depot, the beauty might be somewhat different, like finding better ways to handle what is now half of its $150 billion-a-year business, the orders from contractors and developers — the professionals. Home improvement was already big business in the United States, and the pandemic fueled a renewed and continuing wave of demand from both do-it-yourselfers and pros.
The Vinings-based company may be the world’s largest home improvement retailer, but it isn’t close to cornering that burgeoning market, said Hector Padilla, a Home Depot executive vice president.
“Our pros are telling us that their backlog is full,” he said. “Obviously the housing market is still very strong.”
Home Depot wants that pro market. And that’s where the national network of distribution centers comes in.
Large enough for flat-bed trucks to drive through for loading and unloading, the buildings are central hubs that combine a range of items needed by a pro into a single delivery.
The idea is to avoid having to pull together a large order from various Home Depot stores, which might mean giving the customer less than what he ordered or delivering it piecemeal.
Instead, Home Depot uses the pro centers to stock large quantities of the big items that a builder needs, but also the smaller things that naturally go with the order: For an order of doors, for example, throw in hinges and locks. It saves the contractor an extra trip.
“This is not item selling, this is project selling,” Padilla said. “They think of us as a convenience store, like a 7-11.”
Only this convenience store delivers.
Credit: Miguel Martinez
Credit: Miguel Martinez
So far, eight “flat-bed centers” are open, including the facility in Stonecrest, which has nearly 900,000 square feet of space, counting an outdoor storage area. With 46 trucks — some making more than one sortie a day — the Stonecrest center supplies deliveries in a roughly 200-mile radius.
Which is the answer to Shariff’s mystery: the materials arriving at the Poncey-Highland townhome project come from Stonecrest.
At the flat-bed center on a recent Monday morning, an 18-wheeler parked in the main aisle looked small between the racks of roofing, mulch and drywall reaching up toward the 40-foot ceiling. Not far away, a Home Depot worker counted items to be loaded on a truck.
Forklifts scurried along, yellow flights flashing, blue lights glowing, horns honking frequently in warnings to each other. Some of the 25 truck bays around the building were open, the scent of a spring rain drifting inside.
At one end of the 1,086 foot-long building workers on break could shoot baskets. At the other end, a rail spur stood empty, awaiting a shipment.
The rail was long enough to park seven boxcars, each of which would arrive holding as much as four or five flat-bed trucks. About 40% of the items in the center come in by rail, general manager Rob Albert said.
Credit: Miguel Martinez
Credit: Miguel Martinez
Home Depot’s focus on the pro contractors is attuned to the growth of the housing and improvement market, said Ken Leon, research director for industry and equities at CFRA Research.
“It is smart for Home Depot to focus on the pro here, because that is where the business will be,” he said.
Central hubs save money for the company. And by making things easier for customer, it makes contractors more likely to buy more from Home Depot, Leon said. “The distribution center is going to give them a lot of leverage.”
For the pro, that kind of packaging is especially valuable, Leon said. “There’s so many construction materials and it is a pain in the neck to go to the store each time you need something. And then there’s the money you save.”
North Carolina-based Lowe’s has made some similar moves toward the pros. Lowe’s did not respond to a request for comment.
Editor’s note: This story has been updated to clarify that Home Depot’s supply chain investment also includes improvements for consumers.
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