Bernie Marcus, who came up with a revolutionary business idea in the late 1970s — create a do-it-yourself, big-box suburban outlet that would seem more warehouse than store — and, with a partner, turned it into the Home Depot, the world’s largest home-improvement retailer — died on Monday in Boca Raton, Fla. He was 95.
His death was announced on his Facebook page.
Mr. Marcus had just been fired as chief executive of a California-based hardware chain in 1978 when he hit on the idea of a store — nothing fancy — that would appeal mainly to the weekend warrior doing repairs and making improvements around the house and yard on weekends. The formula was simple: Stock the shelves to the ceiling with a vast selection of every conceivable home-improvement product at discount prices, and hire knowledgeable salespeople to double as customer advisers.
He and his partner, Arthur Blank, a former colleague at the California chain, Handy Dan, launched Home Depot that year, opening its first outlet in Atlanta with the backing of the Wall Street financier Ken Langone. Today, Home Depot boasts more than 2,300 stores across North America, with more than $150 billion in annual revenue. .
Mr. Marcus oversaw the company’s explosive growth as chief executive for its first 19 years and chairman until 2002. Along the way he and his partners became billionaires, while lining the pockets of legions of Home Depot employees who had received generous stock options.
“He was an inspiring visionary,” Mr. Blank, who succeeded Mr. Marcus as chief executive in 1997, said in an interview. “He was a retailer who was often able to see around corners that others couldn’t see.”
Mr. Marcus’s Home Depot concept challenged conventional industry wisdom about a number of things, beginning with square footage. Competitors like Handy Dan operated stores no bigger than 35,000 square feet. But as he and Mr. Blank wrote, with Bob Andelman, in “Built From Scratch: How a Couple of Regular Guys Grew the Home Depot From Nothing to $30 Billion” (1999), Mr. Marcus envisioned warehouse-style outlets of 55,000 to 75,000 square feet. He insisted on buying merchandise directly from manufacturers, eliminating the middlemen and, indeed, actual warehouses, so that, as the partners wrote, “we could give their profit back to our customers in price reductions.”
The founders projected annual sales of $7 million to $9 million per store, with profit margins of 29 to 31 percent — “unheard of in an industry that banked on profit margins of 42 to 47 percent,” they wrote. The anticipated high volume would offset the lower margins.
Mr. Blank was skeptical at first. “When I did our first five-year plan,” he said, “before we had any stores and were trying to find potential investors, I called him and said, ‘Bernie, based on the parameters we set up, these numbers don’t work. There’s not enough volume in these stores to support the inventory levels, the payroll and the margins. The math doesn’t work.’ Bernie said, ‘Just change the numbers.’ We had no idea what the store volumes would be, but his optimism turned out to be true.”
Mr. Langone, the Wall Street investor, arranged $2 million in financing for the first Home Depot outlet, in Atlanta. As an investor in the Handy Dan chain, he had gotten to know and admire Mr. Marcus when Mr. Marcus was its chief executive. When Mr. Marcus and Mr. Blank were fired in 1978 by Handy Dan’s chairman, Sanford C. Sigoloff, a despondent Mr. Marcus contacted Mr. Langone with the news. At 49, he was out of work and depressed about his prospects.
“That’s the greatest news I ever heard,” Mr. Langone told him. “You have just been kicked in the ass with a golden horseshoe.” Having once discussed Mr. Marcus’s vision for a home improvement superstore, Mr. Langone suggested that day that they go into business together.
Aghast at what he perceived as Mr. Sigoloff’s dismissive attitude toward employees, Mr. Marcus vowed to treat his employees better. Home Depot employees were called “associates” and were not only paid more than the minimum wage but received stock options as well. According to Mr. Langone, more than 3,000 of the company’s original employees — including former secretaries and sales associates who never reached management level — became millionaires as the company’s fortunes soared.
A complete obituary will be published shortly.
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