MRO

Home Depot vs Lowe's

I have to be honest – this particular story came as a shock to me, and I’ve been digesting it and trying to figure out what to write since it broke.  Last week, multiple news outlets reported that HD Supply was being purchased by Home Depot for $8.7 Billion.

On the surface, Home Depot is getting a good deal, considering they sold most of their stake in HD Supply in 2007 for $10.3 billion.  Home Depot kept 12.5% of HD Supply stock as a passive investment until 2015, selling it just prior to purchasing Interline Brands.

So, what does this mean for the MRO supply market? What does this mean for current customers of HD Supply? What about customers of Interline Brands (now Home Depot Pro)? How will this impact Lowe’s and their turnaround efforts led by Home Depot alum Marvin Ellison?  Well, I have some opinions – and many of them won’t be popular.

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shopping basket of building materials
Starting out

When people start a business, they go in guns blazing with business plans, market research, networking and advertising.  They find vendors, open lines of credit, and start closing jobs. After a few months and some success, all those things seem to get shelved for “more pressing” needs.

Owners wear lots of hats, and the things that drive immediate income take precedence over everything else.  When you only spend $30,000 in a year on materials, leaving 10-20% on the table isn’t as painful as when you spend $300,000 or $3,000,000.

Businesses evolve and change over time and their needs change, but purchasing seems to get neglected.  As long as product shows up and complaints from the field are minimal, all is well.

But is it? When was the last time an owner, partner, or C-level executive took a hard look at the market (or markets) they are working in to compare vendors?

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