Home Depot Joins the Shale Rush

By Shelly Banjo 

When most retailers look for places to open new stores, they take into account economic indicators like job growth and new home building. Now, some retailers are considering another data point: drilling permits.

Home Depot Inc. has all but given up on opening new stores in the U.S., but the home-improvement retailer made an exception in January to open a store in an area it said it couldn't pass up: Minot, N.D., in the heart of the American shale oil and gas boom.

"If you had said to me seven years ago, you'll be opening a store in Minot, North Dakota, I would have asked, Why?" Chief Executive Frank Blake said in an interview. "One of the great stories of the U.S. is the shale oil development, and it's happening in areas where we don't have a lot of stores now."

The 100,000 square-foot store is more than a four-hour drive from Home Depot's nearest location and is the only U.S. store Home Depot opened in the fiscal year ended Feb. 2.

Home Depot is among a number of retailers including Wal-Mart Stores Inc. and GameStop Corp. targeting oil and gas towns in North Dakota, Texas and Louisiana, in an otherwise dour environment for retail real estate. The rise in online shopping and decline in foot traffic has led a number of retailers to scale back store construction and the size of the stores they do build.

Simply Mac, a subsidiary of GameStop Corp. that resells and repairs Apple Inc. products, targeted two store openings last fall in the oil and gas boomtowns in the West Texas cities of Midland and Lubbock.

In one Wal-Mart store in Williston, N.D., hourlong lines led the retailer to raise wages for cashiers and stock clerks to $17 an hour and bring in staff from nearby stores and other states. Wal-Mart said it has since caught up to demand with local hires.

"We don't have any stores in North Dakota, but I sure wish we did," said Michael Glazer, CEO of Stage Stores Inc., which operates around 900 U.S. department stores under the names Bealls, Goody's, Peebles, Palais Royal and Stage.

Still, Stage is benefiting from the 250 stores it has in Texas, as well as dozens of outposts in Louisiana and Oklahoma. Stage said those stores outperformed the rest of its store base in 2012 and 2013, though sales slowed during the winter after a spate of ice storms blanketed the region.

The department store chain said it monitors employment levels county by county and uses those numbers to decide where to put new stores.

"There's a correlation between the energy boom and county employment rates," Mr. Glazer said. "And wherever energy comes in, jobs follow and people spend more at our stores."

Write to Shelly Banjo at [e-mail]

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