The e-commerce revolution has significantly changed the way investors view bricks and mortar retailers, as it should. The way in which consumers buy products is changing, and companies simply need to keep pace with the way technology is changing shopping habits, or perish.
North American retail powerhouse The Home Depot, Inc. (NYSE:HD) is one company which is doing all the right things, in my opinion, to remain relevant in an ever-changing world. The company has announced its intention to spend approximately $1.2 billion over the next five years to upgrade the company’s e-commerce capabilities, a move which stands in the face of other retailers which appear to continue to fight the e-commerce revolution and reject the innovation companies like Home Depot are embracing.
As part of this investment, Home Depot is looking at adding on as many as 170 distribution facilities in a bid to reach 90% of its consumer base within one day, a move which would allow Home Depot to compete aggressively with any e-commerce company which would attempt to beat Home Depot on delivery metrics, bolstering this firm’s competitive position in its niche.
Home Depot’s relatively wide moat within the home improvement space is one reason I like this company as a solid long-term play. While Home Depot is currently trading at a valuation multiple which is not cheap (approximately 27 times earnings currently), as Warren Buffett said, "it is better to buy an amazing company at a fair price than a fair company at an amazing price."
Invest wisely, my friends.
