Boston, MA 04/17/2014 (wallstreetpr) – The home improvement retailer Home Depot, Inc. (NYSE:HD) has a plan, but it could also be a dream. The company is sure about what is going to happen to the traditional brick and mortar stores in the long run. For that reasons, the company is transitioning.
In the past, Home Depot grew revenue by blanketing the U.S. with stores. But the idea does not seem to work now that shopper-habit has changed considerable in the age of the Internet. Today it happens that opening new stores only leads to decline in profits in the stores, and that does not bode well for the company’s future and investors. On that note, The Home Depot, Inc. (NYSE:HD) expects to invest a lot of money this year to bolster its online presence.
Big online spending
The Home Depot, Inc. (NYSE:HD) expects to spend about $1.5 billion this year to improve its supply chain and technology to link its business to the Internet. The company recently acquired a number of e-commerce websites including Blind.com in efforts to expand its online footprint.
The company generated about 3.5 percent of its $79 billion sales in 2013 from online operations. Although online sales currently account for a small portion of the company’s annual sales, significant online presence bears the promise to the future.
As traditional stores become less profitable, Home Depot has been closing several stores in efforts to limit financial losses from operations. However, it has also been able to open new stores in selected locations to take advantage of the recovery in the housing industry.
The Home Depot, Inc. (NYSE:HD) expects to make big investments expand its online marketplace. However, the benefits from the expansion to the Internet are expected to be limitless. The company will be able to reduce its overhead costs and significantly cut its expenses budget.
However, Home Depot, Inc. (NYSE:HD) will have to face the logistical challenges that come with retailing bulky items online. Nonetheless, the company is expected to fix the logistic challenges quick enough as it grows online and learns how other retailers of bulky materials do it.