NEW YORK–In a presentation last week to investors and analysts, Home Depot unveiled its growth targets for 2010. Over the next five years, the company expects to open up to 500 more stores. But it also plans to become America’s largest diversified wholesale distributor and become number one in services. It also intends to increase dramatically.

The news, delivered by Home Depot CEO Bob Nardelli, underscores what Hardlines has identified in recent months: increasing maturation of the big box home improvement market has Home Depot turning to other channels to maintain growth. The openings, at fewer than 100 per year, are considerably less than the rate of openings Home Depot has maintained in recent years–usually 175-200. In fact, during Nardelli’s first five years with Home Depot, 941 stores were opened. (At the peak of its growth curve in the early ’90s, the world’s number-two retailer was opening a new store every 36 hours.)

So scaling back its anticipated openings makes sense. No surprise then, that the emphasis is turning to Home Depot’s wholesale business, including its commercial and industrial side. That, plus at-home services and its direct-to-consumer channels, will provide the most dynamic growth over the next five years. Nardelli said this strategy would enable the company to maintain growth of 9-12% annually, continuing the strong growth of the past five years, which totaled 76% from the time he took over the company.

"Over the next five years, The Home Depot expects to maintain and grow its leadership position in home improvement retail worldwide," said Nardelli. "At the same time, we expect to become the nation's largest diversified wholesale distributor, become number one in services and will dramatically increase our direct-to-consumer channels. Our 2006 initiatives demonstrate that we are well on our way to accomplishing our 2010 goals."

The increasing do-it-for-me trend continues to drive double-digit growth in Home Depot’s services business. By 2010, the company expects that 5-6% of its sales will come from services, considered a $110 billion market opportunity.

Home Depot is also banking on its “direct-to-consumer channels”, namely its online initiatives. Leading the charge is homedepot.com, but its high-end Expo concept, which is losing ground as a retail entity, is gaining momentum through two specialty high-end sites, 10 Crescent Lane, which focuses on furnishings and décor items, and Paces Trading Company, (PacesTrading.com), a specialty site focused on high-end lighting products for more affluent consumers. These enterprises are generating impressive results, says Home Depot. The online business attracts much larger average transactions than in-store, as shoppers can enjoy low- or no-cost delivery on large items such as snow blowers. Online sales doubled last year, and more than three million shoppers visited the company's online properties each week company wide. Home Depot believes that its direct-to-consumer division has the potential to grow into a billion-dollar business by 2010.

SPECIAL REPORT–Advances in lithium ion (Li-Ion) batteries–which provide better energy-per-weight ratios than conventional rechargeables–are fuelling competition among manufacturers who want to capture the lucrative professional and high-end consumer market for cordless tools.

Milwaukee has been touting the benefits of Li-Ion batteries in its 28-volt cordless tools for about a year. Now it’s adding four new tools to the line-up: a rotary hammer, right-angle drill, job-site radio, and metal cutting saw.

Milwaukee will be up against DeWalt’s new line of 36-volt cordless tools,. DeWalt partnered with A123Systems to develop a new generation of lithium ion batteries, which, it says, will increase productivity and efficiency on the job-site. The new line will include a hammer drill, reciprocating saw, circular saw, impact wrench, rotary hammer, jigsaw, flashlight, and combo kits.

Orlando, Fla.–The International Builder Show solidified its ranking as one of the nation’s largest trade shows last week, when the four-day event drew 105,263 attendees, a 3.3% increase over 2005, and a record total for this convention.

According to data released by the National Association of Home Builders, which sponsors the show, this year’s event also cracked records for net exhibit space sold (967,000 sq.ft.), and total space used (1.5 million sq.ft.). The Orlando/Orange County Convention & Visitors Bureau estimated the economic benefits to the community from the show would top $122 million.

This was also the most people the Orange County Convention Center has ever drawn for a trade show, which was a double-edged sword because this facility did not have anywhere near enough parking to accommodate both this show and another event for surfing equipment that was occurring simultaneously in another hall.

Several exhibitors said that traffic on the floor during the first morning of the show was unexpectedly light. But as the convention progressed, most booths and aisles were jammed with builders, distributors, dealers, manufacturers and other industry officials. Several manufacturers–including Kohler, Whirlpool, and Andersen Window–took gargantuan booths that tested attendees’ tolerance for sound and commotion.

This was the first year that Ohio-based pro dealer Carter Lumber exhibited at IBS, and its COO, Jeff Donley, said the booth served to emphasize his 70-year-old company’s commitment to builders. 84 Lumber brought a total of 80 people to staff its booth. 84’s marketing manager Bill Runco said that one of his company’s goals at IBS “is to talk to builders who may not know who we are.”

Several dealers turned their exhibit space into showcases for their suppliers’ products: both Lowe’s and Home Depot had enormous exhibits swarming with visitors, in which a wide range of preferred vendors made presentations about their products at different times during the day. This was the second year that Ace Hardware’s LBM division allowed vendors to show product in its booth. Amy Pellerito, who runs this division for Ace, said exhibiting at IBS “is all about the brand, to tell people that we have a network of over 800 lumber dealers.” She noted that Ace’s percentage increase in sales in 2005 was its highest since 1999, and she attributed that partly to the co-op’s re-entry into commodities distribution.

SHELBY, Iowa–Menards, the industry’s third-largest home improvement retailer, is proposing to build a 735,000-sq.ft. facility here that would make pre-hung doors and distribute them to the dealer’s stores throughout the Midwest.

The Harlan (Iowa) Tribune reports that Menards’ Midwest Manufacturing division has received approval for the project from Iowa’s Transportation Commission, and the state will provide up to $593,611 to improve two roads near the proposed site, for which Menards will invest an estimated $32.7 million. The manufacturing and distribution facility will create 200 jobs, the newspaper reports.

WILMINGTON, Del.–Do DIYers need yet another credit card in their wallets? Chase and Reader’s Digest Association think so. They’ve joined forces to launch the “Chase Home Improvement Rewards Card,” through which cardholders can earn three points for every dollar of home improvement merchandise purchased with the card, and another one point for each dollar spent on anything else.

When they accumulate 2,500 points, cardholders can redeem a $25 gift card at participating retail outlets that include Home Depot, Sears, Snap-On, Circuit City, Amazon.com, and Best Buy, according to the website that Chase has set up for this program. That site also states that cardholders will be eligible for a new-home giveaway sweepstakes.

Those who sign up receive a Zircon laser level, valued at $39.95, and can make purchases with zero percent interest for up to 12 months. The card has no annual fee.

Heather Philp, senior vice-president with Chase Card Services, says her company is in partnership with Reader’s Digest to capitalize on that magazine’s 40 million-plus readership base.

The median price of a home in the six-county area was $460,000, which was up 16.5% on an annual basis, but trailed the 23% growth in prices for 2004. According to Data Quick Information Systems, which tracks purchases, home sales in December were off 4.5% to 28,952 units, the fewest homes sold since December 2001.

This isn’t just a California phenomenon, either. The Home Builders Association in Grand Rapids, Mich., reported that housing starts in 2005 were off 6%. In Greater Milwaukee, Wis., homebuilding fell 19%, even as the average price rose 7%. For the first time since 2000, the number of permits issued in Chatham, Mass., fell, to 65 from 107 in the previous year.

LINCOLN, Neb. — Ace Hardware Corp., the dealer-owned buying group, says it will close its 34-year-old distribution center here, which employs around 80 people. Paula Erickson, Ace’s spokesperson, told the Associated Press that this DC, which serves 200 dealer stores, was one of Ace’s oldest and smallest (at 345,400 sq.ft.). The lease on this DC expires on Dec. 31, 2006, and Ace plans to close the facility this June. It was not immediately clear which of Ace’s other DCs would pick up these dealers; nearest the Nebraska DC are the co-op’s warehouses in Arkansas, Texas, and Colorado.

LONDON, England–At the Argos Retail Group in the quarter ended Jan. 7, total sales at its 297-store DIY division, Homebase, grew by 1%. New stores contributed 4% to sales growth. Despite an increase in promotional activity compared to last year, same-store sales declined by 3% in the period. Homebase’s performance in the quarter was, however, helped by good growth in big-ticket items, driven by initiatives such as new mezzanines and the national roll-out of the Furniture Extra catalogue in Autumn 2005.

NEWTON, Iowa & HOFFMAN ESTATES–Maytag and Sears Holdings Corp. have teamed up to donate more than 700 new refrigerators to Hurricane Katrina victims in an effort to help those affected replace appliances damaged in the storm. The donation is being valued at nearly $800,000. Maytag manufactured the Kenmore branded refrigerators and Sears has agreed to honor the full warranty on the side-by-side refrigerators. The units are being donated through Gifts in Kind International, a tax-exempt organization that partners with businesses and non-profit groups.

Julie Roehm, 35, director of marketing communications at Chrysler Group, is moving over to Wal-Mart Corp. in the newly created position of senior vice-president–global marketing communications. According to Ad Age, she’s expected to start Feb. 8.

At Kronopol Marketing, John Austin has been named sales manager for Michigan, Ohio, Indiana and some locations in Illinois, as well as the Windsor, Chatham and Sarnia regions in Canada. He was formerly with Kronotex and Steven’s Dufour. (519-200-1790)

Housing starts in December 2005 reached 1,933,000. That’s down 8.9% from November 2005 and down 5.7% from December 2004, says the Commerce Department. Permits were 2,068,000, down 4.4% from last month and down 0.6% from one year ago. For the full year in 2005, starts were up 5.6% from 2004 and permits rose 3.4%.

Bev’s been in London, England all week at the DIY Show and Worldwide DIY Council’s AGM and Conference there, so we’ll have lots to report from across the pond in next week’s issue.–Michael

“We are working on the consolidation of the Canadian market. We are going to realize the goal we set for ourselves two years ago to double our sales by the year 2007.”–Robert Dutton, president and CEO of RONA inc., speaking recently to a group of investment analysts (and a few unwashed journalists) in Montreal.