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What Made Home Depot's Huge Stores Pay Off?

Ben Gilbert says bigger Home Depot stores beat Lowe's because extra size and extra products brought far more transactions, and the return on the extra space and inventory rose as the stores got larger.

In 1980, Home Depot stores were twice as large as Lowe's and carried three times as many products. They also had four times as many transactions as the smaller Lowe's stores. Word of mouth, one-stop shopping, and a buying frenzy more than paid for the extra inventory and square footage. The hunch was in place before the first store opened, and it was right. Returns on the investment increased once a store got past a certain product count and a certain square footage.

Home improvement has no cap on what a customer can spend. Purchases can include $100,000 kitchens and home remodels. The same model is what takes Home Depot to a $350 billion market cap.

Grokipedia·Home Depot·Lowe

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The Home Depot ·

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  5. Did Ken Langone Want to Sell Handy Dan?David Rosenthal says Ken Langone had no intention of selling his close to 19% stake in Handy Dan.
  6. How Did Getting Fired From Handy Dan Create Home Depot?Ben Gilbert says getting fired from Handy Dan is what created Home Depot.
  7. What Did Home Depot Learn From Sol Price?Ben Gilbert says Home Depot learned the warehouse store from Sol Price, then changed it for hardware.
  8. Who Blew Up Ross Perot's Home Depot Deal?Ben Gilbert and David Rosenthal say Bernie Marcus blew up a deal for Ross Perot to put $2 million into Home Depot in return for 70% of the company.
  9. Who Was Pat Farrah at Home Depot?Ben Gilbert says Pat Farrah was the merchandiser Home Depot was missing, so the founders hired him instead of buying his store.
  10. Why Did Home Depot Choose Atlanta?David Rosenthal says Home Depot chose Atlanta for two reasons.
  11. Why Did Home Depot Stack Empty Paint Cans?Ben Gilbert says the first Home Depot stores stacked empty paint cans because they could not afford a full warehouse and still needed to look like one.
  12. How Did Home Depot Go Public in 1981?David Rosenthal says Home Depot went public in 1981 because four Atlanta stores did not have the cash to take the Florida leases in front of them.
  13. How Did Home Depot Get Suppliers With No Sales Proof?Ben Gilbert and David Rosenthal say Home Depot convinced manufacturers to supply a company that still had no proof it could sell in volume.
  14. How Much Do Home Depot Pros Spend Each Year?Ben Gilbert says the average Home Depot professional customer interacts with the company 66 times a year and spends $6,500, while the average DIY customer…
  15. Why Did Local Buying Raise Home Depot Sales?Ben Gilbert thinks Bernie Marcus estimated 15% to 20% higher sales per store because the regions were making their own decisions.
  16. Why Didn't Jamie Dimon Run Home Depot?David Rosenthal says Jamie Dimon did not run Home Depot because a long courtship never became a hire.
  17. What Happened to Home Depot Customer Satisfaction?David Rosenthal says customer satisfaction among Home Depot shoppers falls to the lowest level of any major U.S.
  18. Why Did Home Depot Stock Stay Flat Under Nardelli?David Rosenthal says Home Depot's stock stayed flat under Nardelli even though revenue and profits doubled, because the gains came mostly from doubling the…
  19. When Did Home Depot Revenue Return to 2007 Levels?David Rosenthal says Home Depot revenue started falling in 2007, bottomed in 2010, and did not get back to 2007 levels until 2014.
  20. Why Did Frank Blake Call Bernie Marcus?Ben Gilbert says Frank Blake called Bernie Marcus first because the stores had lost the culture Bernie built.
  21. How Does Home Depot Deliver Project Supplies So Fast?Ben Gilbert says Home Depot gets project supplies out fast because dense store clusters and a specialty distribution network put over a million SKUs at a…
  22. What Was Home Depot's Largest Acquisition?David Rosenthal says Home Depot's largest acquisition was SRS in 2024, an $18.25 billion deal and the biggest in company history.
  23. How Fast Does Home Depot Turn Inventory?Ben Gilbert and David Rosenthal say Home Depot turns inventory four and a half times a year, a pace they call totally unbelievable for high-dollar specialty…
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  25. Why Did Home Depot Work So Uniquely Well?Ben Gilbert's takeaway is that Home Depot worked uniquely well because shoppers will buy in a no-frills warehouse, the U.S.
  26. Why Does Older Housing Help Home Depot?Ben Gilbert says older houses are one reason Home Depot became so large.

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