There is a new store concept in Manhattan called, Story. It’s a far out concept in that every few weeks the theme of the store and the inventory changes. It’s also far out in that it has two revenue streams: selling products and sponsorships.
The interesting thing about this for building material manufacturers is that Home Depot is working with Story. I really like to see that Home Depot is exploring innovative ideas like this.
What’s in it for building material manufacturers?
1. More Traffic and More Sales. Rather than simply being a destination to purchase what I already know I need, Home Depot could become a source for inspiration. Right now, you know what they have in store, so there’s no reason to just shop as you would at a mall or online.
Just like people go to Home & Garden shows and Parade of Homes events to get ideas and see what’s new, Home Depot could use the Story concept to attract more shoppers for your products.
2. Sponsorship Fees. I’ve always wondered why big boxes don’t charge slotting fees to manufacturers, at least in some categories. Just like grocery stores, big boxes invest a lot of money in stores, staff and advertising to draw large numbers of people to your products. I’m sure they have considered it and have some good reasons for not charging them, but this may open the door to charging manufacturers sponsorship fees.
3. Combat Amazon. Giving people a reason to visit Home Depot more often will keep more sales in store instead of online. It also helps to keep the online sales with Home Depot rather than Amazon or other online sources.
4. Differentiate from Lowe’s. If Home Depot were thought of as the store to stop by and see what’s new, that would be a great and profitable way for them to differentiate themselves from Lowe’s.
5. Looks Good to Wall Street. I have always felt that Wall Street sees the building material industry as a business that is not in control of its own destiny. They see it as controlled by a few outside factors, such as housing starts. An idea like Story is innovative and could draw more interest from Wall Street. It may have them start to look at both big boxes and manufacturers in a new and more favorable light.
I’m sure most building material manufacturers are totally unaware that Home Depot is looking into Story. If you want to grow with big boxes, you need to be aware of what they are doing. Don’t wait for them to tell you.
I would look into Story, visit the store and then think about what this could mean to you and big boxes. How could you help Home Depot be more successful with this concept?