Home Depot's Hughes Move Highlights Need for Differentiation - Modern Distribution Management

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Home Depot’s Hughes Move Highlights Need for Differentiation


The sky is not falling with the purchase of Hughes Supply by The Home Depot, as the lead article in this issue illustrates with perspective by competitors and a look at the numbers. The landscape does shift significantly in terms of Hughes’s strategic options against primary competitors, particularly European powerhouse Wolseley and its North American portfolio of Ferguson and Stock Building Supply.

The shoe is still dangling on how aggressively HD plans to pursue more traditional industrial MRO channels, either to compete with Grainger and other large core players in this market, or perhaps acquire one of the larger players in order to build a platform.

While rebounding nicely in the short term, North American industrial markets still pose some long-term questions regarding growth potential that are currently murky to answer for any acquirer coming in from “outside” the industry. There are a lot of mixed signals in the midst of a broad range of diverse customer and product segments.

For most independent distributors across the broad swath of product channels that Home Depot continues to expand into, the pending Hughes acquisition only highlights a battle that most have been fighting in one form or another with other competitors, whether it be traditional or new threats, including the Internet, retail channels, other channels or shrinking market size.

For many independent distributors, Home Depot’s recent moves will simply clarify the real difference in the value offered in the marketplace and create some profitable growth opportunities for those positioned to capitalize on what their competitors can’t offer. And that differentiation will likely get clearer as the integration process continues in a company the size of Home Depot.

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