Gas, Food & Lumber

Home Depot to test c-stores, fuel at four Nashville locations

NASHVILLE, Tenn. -- Home Depot Inc. has confirmed an Oil Express report that it is launching a pilot project in Nashville, Tenn., to test convenience stores and gas pumps in its parking lots. The test will begin in December at four stores, Paula Smith, spokesperson for Atlanta-based Home Depot, told The Dallas Morning News.

"Entering this market fits well with our strategy to grow the company by enhancing and extending our offerings to customers," Smith told the newspaper. "Market-backed research continues to show us that customers are time-starved and [image-nocss] want efficient and affordable solutions."

Home Depot's c-stores will offer "competitively priced fuel and quality merchandise and services," she added. Some locations will also have a car wash. An in-house team is developing the concept, and construction will begin in September.

"The convenience store industry is a $268 billion market. We see great potential in adding to our top-line growth while also driving incremental traffic to our retail stores," Smith said.

Home Depot executive vice president John Costello told investors last week that the company does notwant to be just the biggest home improvement retailer, stressing its goal is to give customers "more reasons to choose Home Depot," according to Oil Express.

Other big box chains, including Costco, Wal-Mart and Kroger, already have gas stations outside some stores, added a report by The Atlanta Journal-Constitution.

Smith Barney analyst Bill Sims told the paper that some retailers are using gasoline as a loss leader and a way to drive traffic into their stores. "If Costco's doing it, and Wal-Mart's doing it, why not Home Depot?" he said. "I would think it would be a great traffic driver and more of a one-stop-shop."

In recent years, Home Depot has tested small-scale McDonald's and Dunkin' Donuts inside a handful of stores, the report said. Lowe's once tested Krispy Kreme donut sales at its stores, but chose not to expand the idea.

Home Depot is not saying which sites could get c-stores if the program expands. "We have to look at congestion and whether there are other [c-store] offerings on site," Smith told the Journal-Constitution. "Until we evaluate the results and make some decisions about moving forward, it's too early to speculate."