Big Box Stores Keep Trying, Then Abandoning, Home Integration

Today, at virtually the same time, first Home Depot announced that they were giving up on home integration, then Wal-mart said they were going to take a kick at the cat.

Home Depot Abandons Security, Smart Home Installations

So many big-box retailers have tried to do "smart home" installations, and so many have failed. Add Home Depot to that list, which includes Sears and Best Buy.The Wall Street Journal reports that Home Depot Inc. is abandoning installation initiatives in many categories, including home security, previously offered by ADT.Home Depot's Smart Home installation business was abolished before it even got off the ground. In 2005, the company hired Best Buy veteran Nancy Kielty as senior merchant for the Smart Home category. Kielty left the company for Wal-Mart in December 2007.

Wal-Mart Eyes Installation Business

According to an article on CBS MarketWatch, Wal-Mart Stores Inc. is "very interested in expanding into installation and repair services in its fast-growing electronics segment."
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I, for one, did not believe Wal-Mart would enter the installation business because I don't see how they can make money at it. A recent NPD study shows consumers aren't getting installs from retailers.And HomeDepot just pulled out of the security and smart home installation business.But the shear volume Wal-Mart would produce could keep integrators busy as subs for a long time, especially with the upcoming DTV transition.

While, as CE Pro's Jason Knott said, this move by Wal-mart is clearly a shot across the bow of Best Buy, I have my doubts about it.

For a start, I doubt Wal-mart's ability to manage dozens of regional subcontractors across their marketplaces.

Secondly, given Wal-mart's reputation for squeezing their vendors on terms, I have trouble imagining a small install contractor being able to survive on the crumbs that Wal-mart is likely to pay them.

Lastly, and related to my second point, I have grave doubts about the quality of the install work that would be done by anybody hard-up enough to take on Wal-mart as a client.

On the bright side, there are potential revenue opportunities for installers in the markets Wal-mart enters. There's a couple of companies here and in Calgary that have made decent coin in the last couple of years cleaning up botched jobs left behind by the clowns at Best Buy and a couple of local dealers who bit off more than they could chew. I foresee great labour opportunities coming in and un-FUBAR'ing Wal-mart AV installs.

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Breaking News: Home Depot Still Sucking

Dealbreaker: Home Depot Is Hurt By Weak Housing Market

A rough quarter for Home Depot, as net income fell by 27 percent in the face of a weak housing market. Sort of takes the wind out of the bull argument, that when people aren't spending their money on buying new homes, they're spending their money on renovation, so Home Depot wins either way.

I've got a question: How does Home Depot determine a quarter where they were hurt by a weak housing market versus a quarter where they were hurt by every other excuse factor that they like to blame for their perennial non-performance?

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Nardelli tapped to renovate Chrysler's fortunes

Cerberus Capital has chosen former Home Depot front man Bob Nardelli to head Chrysler.

The Guardian reported in Dealbreaker's Opening Bell
The appointment of the controversial Nardelli caught industry observers on the hop this morning, as Cerberus chairman John Snow said only last week Chrysler's management would stay intact.
It is the second time an outsider has been appointed to lead a major US car-maker in the past year after Ford hired Alan Mulally as chief executive from Boeing.
Mr Nardelli is a former General Electric executive who lost out to Jeffrey Immelt in the contest to succeed Jack Welch as chief executive. He is credited with overhauling Home Depot's purchasing and technology systems, but left at a time when the share price was stagnating alongside worsening customer service, and was seen as arrogant towards shareholders.

After Nardelli's dissapointing results with Home Depot, the jokes that can be made at his expense are all too obvious, so I'm going to play this one straight.

Given Cerberus' choice of Chief Executive for their new carmaker, this reinforces my previously stated opinion that Chrysler's rebirth will be particularly Phoenix-like: there's going to be a lot of fire and ashes. I'm not saying that the conflict between Chrysler managment and the United Auto Workers will compare with the bloody union-busting conflicts of the late 19th and early 20th centuries, but it's tempting mental picture, isn't it?

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Speaking of Home Depot

A source of mine in the heirarchy of Home Depot Canada reports that the rumors circulating internally regarding Bob Nardelli's resignation are both colorfully slanderous, and extremely consistent.

By "colorfully slanderous" I mean that I can't tell you what they told me.

And by "extremely consistent" I mean that the story is the same on every level of the Home Depot totem pole.

Very interesting...

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Back in the saddle

I'm finally back, after a full dance card of work and family commitments.

Let's catch up:

Home Depot's Bob Nardelli suddenly resigned yesterday, throwing retail watchers and analysts into a tizzy. HD isn't doing too poorly, and the reasons for Nardelli's departure are unclear, although it's hard to feel too bad for a guy getting a US$210 million severance package.

Pioneering canadian retailer John Forzani has retired as chairman of the $1.3 billion dollar sporting goods empire that he created. He is 59. Through agressive expansion and aquisition, Forzani created a retail giant, with 14 banners and ubiquitous market presence. Now that, like Alexander, there is nothing left to conquor, he appears to be giving up the reins, and there is idle gossip that Forzani Group Ltd is a potential takeover target for either a large american retailer, or an agressive Private Equity group.

A disturbing trend I noticed in Christmas advertising was starting Boxing Day sales the week before Christmas. Chief amongst the offenders where struggling retailers like HBC, whose pre-Christmas Boxing Day ads whiffed of desperation, but even strong performers like Best Buy/Future Shop got in the game also. If we push the official start of the holiday shopping season back from Hallowe'en to Labour Day, then we can start the Boxing Week sales right after Canadian Thanksgiving!

Always contrarian in their outlook, Long or Short Capital.com's analysts have determined that nerdiness in a CEO has serious downside. This comes at a time when nerds are enjoying greater public popularity than ever.

There's been an amazing amount of whining and hand wringing in the Old Media about wealth: from executive compensation to Wall Street bonuses, and so on. Most of it reeks of jealosy, so I'll offer journalists and aldermen a helpful tip: if you want to make more money, do something that generates more revenue and profit than you already do.

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Home Depot horning in on TV sales

CE Pro: Home Depot Begins Selling Plasmas

And for those whose ADD prohibits reading to the bottom of the page, here's the comment I posted there this morning:


I was in the appliance business when Home Depot first rolled out their major appliance department. As expected, there was the usual kvetching and bellyaching from traditional MajAp retailers. And yet, HomeDepot has failed to gain major traction in MajAp anywhere that I am aware of. Their square footage devoted to MajAp is miniscule, their merchandising and cleanliness is *meh* and good luck finding someone in an orange apron who knows jack squat for product knowledge. Fast forward ~five years and the players in MajAp are still doing what they do. Ask a buyer for any of the big MajAp dealers about HomeDepot and he will snort and wave his hand in the air as if to say "Pfft." I would seriously doubt that any traditional CE retailers, from regional chains to the Big Blue Box will feel the heat from this move, let alone anybody in a boutique firm who is reading this website

Expanding further upon that, I do believe that non-traditional CE outlets present a challenge for the more traditional dealers. In my last Christmas in retail, I found myself price matching Toshiba and Sony televisions from Superstore, one of Canada's major grocery store chains.

"Good Lord" I thought at the time "Everybody wants to get in on the act!"

Of course, since that time Wal-mart has become North America's 2nd biggest CE retailer, and is now breathing down Best Buy's neck.

So what do these new entrants into the retail marketplace offer consumers?

• no-name products from China and Korea with poor durability.
• apathetic, underpaid, and uninformed sales associates.
• because the products suck, and the staff don't know anything, the sole marketing plan requires buying the consumer's business by selling mediocre products for cheap, cheap, cheap.
• because of the prevailing mentality, and lack of skill at selling value, recognized brands end up getting flogged on price, tarnishing once valuable brand images

Sign me up.

Helpful hint to salesmen, business managers, and owners: if you sell high quality gear, present value to the customer (and value can exist at every price point), build relationships so that you have clients rather than just customers, and know what you are talking about, then you can prosper. The minute you start to try to slut yourself out on price alone, you are sunk. If your company is very large, it may take longer for your ship to capsize, but if you are a small boutique, it can happen quickly. Sell based on trust, and on value, and you won't have to care what Home Depot, Superstore, Walmart, or anybody like that is doing.

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