* Still in search of right business model in China
* Sees "phenomenal" opportunity in India
* Says ownership requirements in India a damper
* Not likely to enter mature markets such as Europe
* A deal with Britain's Kingfisher not on the horizon
(Adds background, difficulties in overseas markets, quotes)
By Dhanya Skariachan
ATLANTA, Oct 18 Home Depot Inc (HD.N) thinks
home is the best place to improve sales in the near-term, the
retailer's chief executive said on Monday.
The home-improvement retailer will focus on the United
States for growth for now as it has yet to find the right model
to expand in China and other markets have either been tapped
out or are not yet ripe for entry, CEO Frank Blake told Reuters
in an exclusive interview.
Despite the vagaries of the U.S. economy and the stubbornly
high unemployment rates plaguing its largest market, the
company said it was very mindful of opportunities in the United
States when a recovery takes hold.
"The U.S. market for housing-related activity particularly
is under a lot of stress. As that stress relieves, that's the
growth opportunity for us," Blake told Reuters.
Atlanta-based Home Depot, which faces tough competition
from arch-rival Lowe's Cos Inc (LOW.N) and small private
players, entered the Canadian market through its acquisition of
Aikenhead's home improvement centers in 1994 and expanded in
Mexico in 2001 through the acquisition of Total Home.
The focus on the United States comes as the company faces
difficulty in other markets, such as China, which does not have
the type of project-oriented customer Home Depot has found in
"Do-it-yourself is not as strong (in China) culturally,"
Blake said. "The dynamics are quite different there than in the
U.S. or Mexico or Canada."
Adapting Home Depot, a retailer focused on being a
destination for do-it-yourselfers in the United States to a
market such as China where consumers want the remodeling and
repair projects to be done for them has been challenging.
The world's largest home improvement chain made its first
foray into the rapidly-growing Chinese market in late 2006
through its acquisition of a 12-store Chinese chain called The
Home Way. But the company has struggled to expand further and
even closed a few China stores.
Home Depot was a late entrant to the Chinese market. Other
international chains such as Britain's Kingfisher Plc (KGF.L)
ventured into the world's most populous country as early as the
late 1990s to take advantage of the rising population and home
On Monday, CEO Blake also addressed long-time rumors that
Home Depot would acquire Kingfisher, which runs B&Q stores in
China and other chains elsewhere.
"There is nothing in my contemplation that we do with
Kingfisher," Blake said. "That's just not on the horizon."
HOME SWEET HOME
Home Depot currently operates 1976 stores in the United
States, 179 stores in Canada, 80 stores in Mexico and 9 stores
The world's largest home improvement chain also said it was
"not so likely" to enter saturated markets such as Europe as
the country already had a lot of home improvement retailers.
"We might wake up and go 'Gee, Poland, that's a new idea,'
but it really isn't," Blake, who has led the retailer since
2007, said at the company's Atlanta headquarters.
While Hone Depot sees a market such as India, powered by
the purchasing power of a burgeoning middle class, as a
potential area of expansion, he worries the country is not
ready yet for the company.
"India is a phenomenal opportunity," he said, but added
that ownership requirements and the way the retailing industry
was structured there were limiting factors.
India limits foreign holdings in single-brand retailers to
51 percent. Moreover, foreign players are not allowed into
His comments on India echoed those from Ian Cheshire, chief
executive of Europe's biggest home improvement retailer,
"Indian retailers are still in quite early stages. Until we
see hypermarkets successful there, things like home improvement
probably aren't going to be coming along any time soon ... It
is a few years away," Cheshire told Reuters earlier this year.
Many U.S. based retailers have looked abroad to cope with
weak demand at home. For example, Wal-Mart is looking at
sub-Saharan Africa and is in talks to buy South
African-retailer Massmart in a $4 billion deal.
But many retailers often state challenges ranging from
dealing with uncertainty over property rights to clearing
bureaucratic hurdles and fighting local competition.
When asked what changes were needed in India, Marvin
Ellison, executive vice president of Home Depot's U.S. stores
said: "Wal-Mart is going to figure it out for a lot of us. We
will just step back and see how that plays out."
(Editing by Andre Grenon)
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