Home Depot Shows Growing Share Sometimes Requires Adding Capabilities
It happens a lot in business. You have a traditional segment (say the consumer/SMB). Now you have a fast-growing segment (the professional/Enterprise). While growth in this new segment might continue for a while, sometimes unlocking the next phase of growth requires doing business differently.
In Home Depot's case, the traditional organization can offer stores and digital tools, but if you are an independent professional building contractor, you need improved and deeper selection, and improved fulfillment and service options.
In it's announcement, Home Depot mentioned being able to serve "a complex project purchase occasion". This means buying many different items, with dependencies and fit concerns, over a number of months, sometimes across multiple job sites. Home Depot realized there was an adjacent network of independent distributors and service locations that it could grow into, and so it did.
In the eCommerce software world there is not an exact analogy but this would be like Adobe or Oracle acquiring someone like Accenture. Owning the sale, configuration, and distribution into large accounts.
Could it happen? Sure. Will it happen? Not likely. Most software companies want to stick to their lane.
The retail world, on the other hand is changing. Building service, fulfillment and distribution is becoming table stakes. What's likely to happen in a case like this is Home Depot will make further similar acquisitions, perhaps across other verticals, and its competitors and partners in private equity will take notice too.
More value chain verticalization seems on the horizon in this environment.
