Folks, I couldn’t believe this when I saw it…
My local Home Depot (HD) in north Florida has replaced all of its regular checkout lanes with self-checkout.
The only two registers left were in the “Pro” section of the store. That’s the department that caters to professionals and contractors.
The first time I saw the change, the store wasn’t particularly busy. But I could picture the disastrous line this would create on a busy day…
Imagine being a professional on a job. You need an extra pipe fitting or an electrical box, so you run to your local Home Depot… only for a 20-minute line to ruin your “quick trip.”
To add to the absurdity, the store I was in had two employes working the self-checkout area. And they were manually scanning merchandise for customers.
It was awkward. It was strange. And most importantly, the line took longer than it should have.
But a few days later, I had to go back to a hardware store. And my curiosity got the best of me…
You see, my local Lowe’s (LOW) was just a few blocks further away. But I went back to Home Depot to see how things were going.
Boy, I made the wrong choice…
The day I returned, the store was busy. And the line to the self-checkout area was long.
People were swearing… they were sighing… and they were complaining to the air. It was a negative experience. And to put it simply, next time I’ll go to Lowe’s.
But there’s something particularly odd about Home Depot’s move here…
You see, many companies are pivoting on self-checkout. They see it as something of a failed experiment.
Discount-retail titans Walmart (WMT) and Target (TGT) are both in the process of scaling back their self-checkout setups. The primary problem seems to be theft.
It turns out that even higher-income folks feel comfortable stealing when they’re using self-checkout. In fact, one survey found that those making more than $100,000 were the most comfortable admitting that they stole items when using the self-checkout system.
Meanwhile, other customers are just outright frustrated with having to do the checkout work themselves. And if they run into a problem, they’ll still need help from an employee anyway.
That makes Home Depot’s late move into the space an odd choice. After all, these stores are packed with small-yet-high-priced items. The company’s inventory is a perfect target for theft.
It’s a recipe for disaster. And it surely won’t help Home Depot’s struggling share price.
So far this year, the company’s stock is roughly flat. That’s terrible performance considering the broad market S&P 500 Index is up about 15% in 2024.
Earlier this year, the stock dipped below its long-term trend line. And as you can see, Home Depot has been stuck in “neutral” or “bearish” territory in recent months…
I would expect that to get worse in the coming quarters. Home Depot has failed to learn from its retail peers.
Now, the company is going to pay for that. It’ll pay to install this self-checkout hardware. It’ll pay when theft soars. It’ll also pay when the time comes to change course.
And considering the Power Gauge’s outlook, Home Depot’s stock doesn’t look like a good place to put money to work right now.
Good investing,
Vic Lederman
