Home Improvement With A Twist, Or Maybe A Bag of Chips

ATLANTA — How does the nation’s largest home improvement retailer weather the worst housing market in a decade?

With a pack of cigarettes, a cup of coffee and an inflatable Halloween decoration.

As Home Depot grapples with an economy that is stacked against it — the number of new building permits plunged by 6.3 percent in September alone — executives here are rushing to renovate the company’s strategy by selling more than just home improvement products.

The shelves are still jammed with nails, drills and light switches, but Home Depot is displaying a growing willingness to stray from the single-minded focus on kitchen renovations and roof repair that turned the chain into the nation’s second largest retailer, after Wal-Mart.

A new convenience store, being tested in the parking lots of Home Depot stores in Tennessee and Georgia, dispenses gas, washes cars and sells Camel Lights.

Inside the main stores, space for seasonal decorations, once an afterthought for the chain, has doubled, resulting in $60 mummies at the end of the paint aisle.

If that was not enough, there are candy bars at the checkout counter — anathema to company founders, who zealously protected the chain from products that did not, as the chain’s motto intones, improve home improvement.

The experiment with everyday products — and a $350 million program to overhaul the look of 500 stores — exemplifies the belief of the chief executive, Robert L. Nardelli, that Home Depot can not only survive a downturn in the housing market, but can exploit the situation by plowing money into the chain.

Nardelli, a former General Electric executive who owes no loyalty to the retailer’s founders, is unapologetic about the changes. "You’ve got to make sure your intellectual arrogance doesn’t get in the way of selling something," he said recently at a store outside Atlanta.

But even company insiders concede that the flurry of witches and Snickers bars has left them uneasy. "I lose some sleep over that," said Tom Taylor, the former executive vice president for merchandising who now consults for the company.


(c)2006 New York Times News Service