For many of us in the retail industry, “distribution centers” are not so easily definable.
These warehouses can range from tens of thousands to over a million square feet, be comprised of one or multiple buildings, and can hold any number or type of products. The advantage of this lies in these centers’ (commonly called DCs) abilities to fit any need that a retailer may have. Titans in the industry such as Amazon, Walmart, and Target have used this to their advantage in more ways than we could count. But this year, The Home Depot stepped ahead and created a brand-new type of DC, changing the game forever.
In a press release dated January 28, 2020, The Home Depot welcomed a new type of DC they called a “Flatbed Distribution Center” (or FDC). This particular FDC opened in January in Dallas, TX to help deliver construction and building materials directly to the customer, increasing the accessibility and speed of deliveries.
“[The Flatbed Distribution Center] is one of several new types of delivery centers that are part of the company’s $1.2 billion investment to build approximately 150 new facilities across the country to reach 90 percent of U.S. customers with same-day and next-day delivery.” [i]
So, what does this mean for the retail industry?
Well… a lot. First and foremost – no one else has created an FDC. This means that The Home Depot has not only ventured into unchartered territory, but they have found the hypothetical jungle to be quite welcoming, and they see great success in it. (The mega-retailer will open 40 more FDCs in the 40 largest markets). This is certainly a strategically and carefully thought out win; while professional customers make up just 4% of the company’s customer base, they represent 45% of total sales. In other words – THD has found a way to speed up bulk orders for the customers that account for almost HALF of their yearly revenue sales.
Additionally, this puts The Home Depot in direct competition with one of the other major players in the game – Amazon.
Many retailers have realized the importance of fast, efficient, convenient delivery (Walmart’s grocery delivery service will extend to half of their 5,400 stores by the end of 2020[ii] and Target Shipt improved same-day delivery services in 2019 with app integration[iii]), and this could be a game-changer for every one of them.
Finally, for the service companies like us… well, we’re ecstatic.
Out of all the services that Rogers provides and industries we work in, one of our biggest is electrical work in retail and distribution facilities. And believe us – the distribution industry is booming because of retail! In 2018, an estimated 1.8 billion people worldwide purchased goods online and global e-retail sales amounted to $2.8 trillion. That number is expected to double to 4.8 trillion in 2021. Clearly, it isn’t slowing down. And guess what retailers all over the globe are using to fulfill every single order? (HINT: it starts with “distribution” and ends with “center”). Needless to say, there are a few things that every single one of these companies will need to keep up with this growth:
For companies like Rogers, this is our greatest moment.
It is what we pride ourselves on; it is what we love to do… and trust me, we do it well. We aren’t just excited for these distribution center innovations… we are ready to partner with the retailers to make sure that for the rest of that center’s lifetime, everyday operations run smoothly. After all, we have the power to get the job done.
[i] https://corporate.homedepot.com/newsroom/supply-chain-unveils-first-flatbed-distribution-center-fdc[ii] https://talkbusiness.net/2020/02/walmart-u-s-working-to-improve-shopping-experience-expand-delivery-service/[iii] https://techcrunch.com/2019/11/14/target-integrates-shipts-same-day-delivery-service-into-its-mobile-app/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAJmWieNd2Uo3sCDtrZ8DefF4jHU3I-VXI-WWKmEb8tJZh97yNKHgUV8xL9IZRNzVNYu6KbquehT_k_jLzvlPLbCHjK9s3Vm15w1cryGNFfHitbPNBgZ_H78V8AMuL4D91vnIILxCBV2meJrlqz41SC5VaDONZbOAf145QbARAmOV[iv] https://ir.homedepot.com/~/media/Files/H/HomeDepot-IR/2019_Proxy_Updates/HDAnnualReport2018.pdf[v] https://chainstoreage.com/new-type-distribution-center-first-home-depot[vi] https://www.statista.com/statistics/272391/us-retail-e-commerce-sales-forecast/[vii] https://www.statista.com/statistics/646030/united-states-top-online-stores-united-states-ecommercedb/