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Home Depot to Pour $1.2 Billion into National Supply Chain

Retailer will Create New Direct Fulfillment Centers to Cut Delivery Times
July 9, 2018
Home Depot plans to invest $1.2 billion in its supply chain in the next five years, expanding its commercial real estate spending as it seeks to speed delivery times to customers across the United States.


As part of the initiative, the Atlanta-based home improvement chain will add new direct fulfillment centers, with same-day or next-day delivery, stocked with additional merchandise.

Mark Holifield, Home Depot’s executive vice president of supply chain and product development, said at a recent investor’s conference that the company’s direct fulfillment centers currently "aren’t close enough to provide one-day parcel service to 70 percent of our customers."

The new fulfillment centers will probably be a combination of ground-up development and repurposed urban warehouses, said Annie McFarland, a Home Depot communications manager.

Companies across the country are increasingly rehabbing urban warehouses to more quickly deliver goods and cut transportation costs. Seattle-based Amazon, for example, which is considered a leader in that type of business, operates 322 U.S. distribution centers and delivery stations, mostly in urban locations.

Scott Mushkin, managing director at Wolfe Research in New York City, wrote in a recent report that Home Depot’s move is a way to "defend itself from a home improvement market share grab by Amazon."

Home Depot’s $1.2 billion investment is part of a larger $11 billion investment in its operations, including $5.4 billion in store upgrades. Forty-five percent of online orders are picked up in the store, "so we must invest in them to keep them relevant," said Ann-Marie Campbell, the company’s executive vice president of U.S. stores, at the investor’s conference.
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