I have received a couple of messages these past few weeks, from readers and followers asking about Home Depot stores dropping Dewalt tools.
Why would Home Depot drop Dewalt? This doesn’t sound right.
Anything is possible. Two years ago Home Depot discontinued EGO cordless outdoor power tools just as Lowe’s and EGO announced a new exclusive partnership.
Dewalt has a huge presence at Home Depot stores, and I suppose that any brand is replaceable, but there’s no real indication of what’s going on here.
Retailers had mediocre showings for Father’s Day 2022, leading me to wonder whether they were saving up inventory for the upcoming holiday season that’s set to kick off this fall.
Home Depot always offers significant Dewalt cordless power tool promotions during holiday shopping seasons, as well as decent hand tool and accessory deals.
That’s the litmus test to see how strong retailer and brand relationships are. Come November – or October if last year’s early launch trend continues – how much floorspace will Home Depot give to Dewalt tools, accessories, and equipment?
Where is this rumor or speculation coming from? A few weeks ago, a reader commented:
I’ve seen a couple Instagram videos from other tool reviewers stating that Home Depot is losing their “deal” with Dewalt, and that is why there are not many Dewalt deals. That their contract ends next year…(!?!???!) Have you seen or heard this?
I have not heard this, but a couple of more readers brought it up in messages. I know nothing about Stanley Black & Decker and Home Depot’s contract, deals, or arrangements, but even if it is expiring next year, I’m sure it will be renewed.
There’s no Dewalt end cap at Home Depot stores right now? If you ask me, that’s not a big deal. Or, maybe there’s significance behind this, but it’s not something I’m at all concerned about.
I went to my local Home Depot store, and there was a floor display in the seasonal section, as shown here. Although there weren’t any Dewalt tools along the wall, there were still plenty of tools reaching out towards the main racetrack footpath.
This doesn’t look like the end of a relationship to me.
There’s no Dewalt promotional endcap display. So what?
When Home Depot parted with EGO, they moved fast to remove tools from stores and their website.
Walking around my Home Depot store, all of their Dewalt products were where they usually are. There was a side-cap display with screwdriver bit sets, hammers, tape measures, utility knives, power tools, accessories, and so forth.
The store was FULL of Dewalt tools in their usual locations. It certainly doesn’t look like Home Depot is dropping Dewalt.
Dewalt had what looked to have been a hugely successful 20V Max PowerStack promotion earlier this year, and their Home Depot endcaps seemed to move a lot of tools.
Looking at the photos I took at local Home Depot stores last year, they had so many more promotional displays for Father’s Day, and not just Dewalt. We’ve seen much less of a showing this year from all brands.
Is something unusual going on? Definitely.
Maybe Dewalt is being affected or are responding differently.
But I haven’t seen anything to even remotely suggest that Dewalt is leaving Home Depot, or that Home Depot is dropping Dewalt.
The two companies are very strong partners, and with numerous retail exclusivity arrangements, such as Dewalt 20V Max Atomic, 20V Max FlexVolt Advantage, and FlexVolt.
Stanley Black & Decker, Dewalt’s parent company, also has a Stanley FatMax exclusivity arrangement with Home Depot.
Last year, Home Depot stores had promotional displays with Troy-Bilt outdoor power tools. In case you missed it, Troy-Bilt is now a Stanley Black & Decker brand.
Every brand had better in-store promotions last year. Every brand had a mediocre Father’s Day and early summer promotional presence this year, except maybe Ryobi.
Back in 2018, Home Depot contributed around 14% of Stanley Black & Decker’s tools and storage segment revenue. Checking their 2021 numbers, Home Depot contributed around 15% of Stanley Black & Decker’s net sales last year.
If we apply this percentage to Stanley Black & Decker’s tools and storage revenue segment, assuming net sales is close enough to reported revenue, that’s 15% of $12.8 billion, or $1.92 billion. Close to two billion dollars!
Home Depot had $151 billion in net sales in 2021.
Can Home Depot stand to lose close to $2 billion in Stanley Black & Decker sales? Perhaps, but dropping Dewalt would do much more damage than that. Which brands could step up to replace Dewalt’s presence?
Lowe’s contribution towards Stanley Black & Decker’s bottom line was smaller in 2021 than in previous years – 15% compared to 17%.
Dewalt seems to have a far smaller partnership with Lowe’s than they do with Home Depot. Although there are some exclusive Dewalt products at Lowe’s, Lowe’s also carries Stanley Black & Decker’s Craftsman, Irwin, and Lenox brands.
Back in 2017, Lowe’s contributed 11.7% of Stanley Black & Decker’s net sales, and no other customer exceeded 10% in 2017, 2016, or 2015.
In other words, Home Depot drives a higher percentage of sales for Dewalt and Stanley Black & Decker than in previous years.
But Stanley Black & Decker and Dewalt are also strong partners with Lowe’s. Lowe’s might benefit greatly from Home Depot dropping Dewalt, and although Stanley Black & Decker might suffer, I would think Home Depot has more to lose.
So why would Dewalt or Home Depot put the kibosh on a good thing?
Here’s the little we know: Dewalt occupies less promotional floor space at (some) Home Depot stores right now, and there is no racetrack-facing endcap display at the moment. Is this the same at many stores? Most? All?
What’s more likely, that a smaller promotional display presence is an indication Home Depot is dropping Dewalt (or Dewalt is leaving Home Depot), or that this indicates a responsive measure – strategic or unavoidable – resulting from different factors?
Maybe Dewalt competitors came to more lucrative arrangements with Home Depot. Or maybe Dewalt (and possibly Home Depot) ran some numbers and thought it would be better for Dewalt to save inventory and promotional efforts for the upcoming holiday shopping season.
The idea that Home Depot is dropping Dewalt is pure speculation, as is my idea that Dewalt could be enduring shortages or hoarding inventory for the upcoming holiday shopping season.
The fact of the matter is that only executives at both companies know the full details, and we’re never going to be privy to their private arrangements.
What do you think is going on here? Is this a temporary measure (strategic or involuntary), or the start of a permanent separation?
Home Depot describes itself as the world’s largest home improvement retailer, and Stanley Black & Decker describes itself as the world’s largest tool company.
Everything I understand about the tool industry very strongly suggests that, without any convincing evidence, the world’s largest home improvement retailer and world’s largest tool company are not parting ways anytime soon.
And if they were parting ways, there would be much greater indication of such, than simply the absence of promotional endcap or seasonal wall shelf space in these conspicuously anomalous times.
Remember, this is all speculation as well. Barring any surprise announcements or indicators, Home Depot’s holiday season “gift center” and promotional displays will be a good measure of the strength of their tool brand partnerships.