Housing Crunch Delivers Final Blow to Home Depot's Expo

(MoneyWatch)  Home Depot's decision to shutter its 34 Expo Design Centers is being lumped in with other signals of larger economic distress, but it's something that was probably inevitable anyway.

Launched in the early 1990s, Expo was to provide consumers with a place they could go as an alternative to the showrooms they might shop with an interior designer. The idea was to help affluent but not necessarily wealthy consumers simplify the process of finding the stuff of home redecoration projects, while saving them time by providing multiple shops under one big-box roof.

Restoration Hardware and Sears, with a store called The Great Indoors, tried to develop the niche between do-it-yourself stores and specialty interior design shops as well. Like Home Depot, they discovered the market was limited. Mall-based Restoration Hardware has suffered ups and downs for years and was privately acquired last year. The Great Indoors launched in 1998 with a single Denver location and spread to select cities throughout the United States. Yet it struggled to find a following and plans to expand it into a major chain were shelved. Sears recently decided to close four of the 16 Great Indoor stores that it has been operating. Expo had similar problems. Although the chain once numbered more then 50 stores, Home Depot shuttered 20 in 2005 and recorded a $91 million charge for its trouble. In a statement announcing the chain's demise, Home Depot conceded that Expo wasn't a strong business for the company even during the housing boom. Naturally enough, call for its services shriveled as demand for major design and decor projects declined in the recession.

Frank Blake, Home Depot's chairman and CEO, called the Expo closing "a necessary decision that will strengthen our core Home Depot business." The move is part of a larger initiative of Blake's to simplify and streamline the company's overall operations, which also includes the shuttering of other ancillary store concepts -- its five YardBIRDS, two Design Centers and seven HD Baths ?€" and a cut back in administrative jobs.

Certainly, the Home Depot moves are a blow to the 7,000 employees who are losing their jobs. The recession is forcing a lot of painful changes in retailing and companies involved in home furnishings or repair are being hit particularly. Home starts hit a new post-war low in December at a seasonally adjusted annual rate of about a 550,000 or about a third of what might be typical. Analyst looking at the home building market don't expect a rebound until 2010, so retailers like Home Depot have to streamline to make it through 2009. Expo was a borderline business at best, one that Blake might have been phased out at other times, but the recession forced a more severe solution.