Home Depot launches new Yardbirds format

CONCORD, CALIF. —The Home Depot is testing a smaller store model that could give it a vehicle to enter new markets and compete head-to-head with chains like True Value and Ace Hardware. The new format, dubbed Home Depot Yardbirds, debuted in April at two stores in the Bay Area with three more opening this month.

The first store opened April 19 in Concord, Calif., in a 56,000-square-foot building that was formerly one of 10 Yardbird Hardware stores that Home Depot purchased in 2005. The outlet has been remodeled and fitted with Home Depot colors and signs and is about half the size of a typical store with an emphasis on tools, hardware and accessories.

“The merchandise in the stores is more targeted to the neighborhoods they’re in than a typical Home Depot,” said Jason Feldman, senior director of merchandising for Home Depot. “We spent a lot of time talking to customers to find out what they needed and tailored the merchandise mix to fit those needs.” Four of the five stores don’t carry lumber and all feature an expanded line of appliances, bathroom fixtures and paint. The company describes the Yardbird model as an “infill retail format” for “densely populated urban and suburban markets.”

The first thing that customers see when they walk into the store is a high-end bathroom display, a large kitchen showcase and a home appliance section that stocks more than 200 different products. The store also has a lower ceiling, a racetrack floor layout and a Design Services desk in the center with home decor products on one side of the store and hardware on the other.

The format also features a smaller paint department with an emphasis on interior paint. And it has an exclusive program that offers customers the option of buying 8-ounce paint samples through its exclusive Behr and Glidden brands.

While the Yardbird stores carry most merchandise categories found in a standard Home Depot, the variety of product is limited, which is why several catalog kiosks are scattered around the floor for special orders. The stores have a garden center with outdoor patio sets, mowers and chippers, a full line of gardening tools and a nursery. And they carry hard-surface flooring but no carpeting.

Home Depot will open three more Yardbird stores in early May in the Bay Area cities of Alamo, San Pablo and San Rafael. The Concord store is the largest at 56,000 square feet and the Alamo store the smallest at 34,000 square feet. The San Pablo store is the only one that carries lumber and the only one without a garden center.

Analysts consider the store model one of the better ones Home Depot has tried in recent years. “I give them credit for trying different things because a lot of retailers don’t,” said Frank Dell, president of Dell-mart & Co. in Stamford, Conn. “There’s a need for community hardware stores and if they can bring Home Depot’s line of products and buying power into a neighborhood market, it definitely could work.”

Dell said the store concept makes sense since it gives Home Depot something it doesn’t have: a vehicle to compete with rivals like Ace and True Value on their own turf. But he said it would take some time for Home Depot to determine whether the concept works well enough to roll out to other markets. “The strategy makes sense but the devil is always in the execution,” he said.

Home Depot has plenty of incentive to make it work, since it estimates small neighborhood stores represent an untapped market worth up to $30 billion in annual sales.