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Heads up on Home Depot

July 1, 2003
The home-center giant's interest in lighting is of interest to us all.The latest move by The Home Depot, Atlanta, Ga., passed unheralded in the general

The home-center giant's interest in lighting is of interest to us all.

The latest move by The Home Depot, Atlanta, Ga., passed unheralded in the general news media and caused nary a comment in the investment community. Yet to electrical distributors, especially those involved in lighting, that move had epic proportions.

The world's largest home improvement retailer, with $30.2 billion in 1998 sales and 805 stores, recently announced the acquisition of one of our industry's own, Georgia Lighting Supply Co., Inc., also of Atlanta. With eight locations in Georgia, around $40 million in sales and 200 employees, Georgia Lighting Supply ranks 136th on EW's listing of the 250 biggest electrical distributors published last month. With both wholesale electrical supplies business and retail lighting showrooms, Georgia Lighting will bring an insider's perspective to The Home Depot when it becomes a wholly-owned subsidiary at the completion of the transaction.

That expertise was obviously an attraction for The Home Depot, which approached Georgia Lighting's president, Harry Gilham, months ago. Gilham, along with general manager Ray Gardner "will be instrumental in expanding The Home Depot's lighting business," according that retailer's president and chief executive officer, Arthur M. Blank. "Georgia Lighting's professionals are recognized nationally for innovative designs, merchandising and training programs."

This acquisition marks The Home Depot's first move into electrical distribution outside its retail home centers. "With the acquisition of Georgia Lighting, we will acquire the industry's preeminent lighting expertise," according to a press statement by Blank. "Georgia Lighting offers us the opportunity to strengthen our sourcing, training and merchandising in lighting for both The Home Depot and EXPO Design Center stores."

The latter are showrooms that cater to the specialty lighting, kitchen and bath markets, and will stock some of Georgia Lighting's medium to high-end specialty lighting fixtures.

What does this mean for electrical distributors? The Home Depot gave us no specifics to go on, other than the material in a press release on its Web site. Certainly the little that has been said gives us all sufficient fodder for considerable speculation. The first thing that comes to mind is, "Can Lighting Depot be far behind?" There is one certainty, however-the camel has more than its nose in the tent now.

The Home Depot may sometimes seem as if it is targeting electrical distributors, but in truth, it is just a home improvement retailer with a penchant for innovation. Those new ideas end up producing ramifications that affect all types of distribution and construction trades, as well as numerous retailers, and all of us must adapt.

Some of the more recent moves by The Home Depot include its subsidiaries Maintenance Warehouse and National Blinds and Wallpaper, Inc.; an export operation opened in southern Florida; an At-Home Services program currently being tested that offers installation of roofing, siding and window products; and, here in my own backyard, a just-launched experiment called Villager's Hardware, a direct shot at the local hardware store. With test stores a third of the size of a typical Home Depot, it's billed as a one-stop destination for small home-improvement projects. According to a local newspaper report, "Shoppers won't find lumber, floor coverings or kitchen sinks, for example, but will find shelving, ready-to assemble furniture and lighting," plus housewares and decorator items.

Any of these moves by The Home Depot could strike at the business of electrical distributors-and their impact could well be magnified through the synergies gained in the Georgia Lighting acquisition.