Reason for that, as was explained to me, is one of volume and economies of scale. Your average Home Depot/Lowes is about 150,000 sq. ft (13935.456 M[SUP]2[/SUP]) of floor space. As I understand it, the floor space for European stores is smaller, often quite rationally so, given that many European urban centers have a number of historic buildings or otherwise constricted paces - just plopping down a pattern store is a bit more involved (Note: There are only 3 types of Home Depot Store, Left, Right, and Tool Rental). I can still find my way by memory through all three by memory.
Regardless, the way the HD model works is that you have a bunch of stores in a region. Each of these stores has a projected throughput of materials - how much the data metrics say you should be selling in a given month. As you get more and more data - meaning as the store stays open and viable - that projection, combined with good management and inventory control practices (Which is what I did), and how closely your store performs to those projections - and thus how “Just in time” your restocking is, will improve, which reduces inefficiences in terms of product decay, lost value (Keeping something in stock after buying it at one value and having it sit for years loses value dramatically - you’d think that for the larger items, but its really the bulk medium value stuff that really eats it - things like 19.99 sprinkler solenoids, etc.), which decreases markups.
That stocking system is lynchpinned on the RDC, the regional distribution center. Thats where all the primary freight comes in, before being shipped back out to the stores. Having all that product in one place for distribution is where the real magic happens - using smartphones, the RDC theoretically knows what every store needs in semi-realtime (Tracking through the register, and by hand). This creates an economy of scale in terms of storage and freight costs - everything needed arrives twice a day on 18 wheelers - sometimes more than that for high traffic stores.
So you need lots of square footage, but also dedicated supply chains for everything to go to the RDC. Some of those chains are national - you can pull water heaters, air conditioners, etc from everywhere. But a lot more of them are regional - concrete, lumber, bricks, topsoil, all the stuff thats really expensive to ship - is local or regional, which requires dealing with regional companies. This can cause a proliferation of contracts that have to be setup BEFORE you can start stocking the bulk construction items.
So until you do that, you’ll lose business from contractors and homebuilders - after all, if they can’t pick it all up in one go, why bother going anywhere but the supply house they normally use?
Expanding into Europe would require pre-arranging all of that, and popping up that supply chain and then sustaining it financially at a loss until it becomes viable and the model gains traction in region. All the while, you can’t achieve economies of scale without having a large presence, which means your prices won’t be competitive. Since HD started in the US, it was able to leapfrog around and then rapidly expand. Bridging onto a new continent, one that happens to have a lot of people who live in apartments/walkups/condos, just isn’t a solid ROI.
They were interested in China because the market is massive, labor, land, and construction costs were cheap compared to Europe, and because the homeownership rates had jumped massively in recent years. Issue is: The Chinese just weren’t interested in DIY. There was no real homeownership tradition there.
Note: What got most customers in DIY projects, in terms of costs, was materials wastage and unknown tools. Classic example is a tile project. Customer comes in, tells me they’re doing a small bathroom. I get them the tile, advise them they’ll need extra, and show them the tile saws. They buy exactly as much tile as they need per the math, and then get the cheapest off-brand saw they can get.
They’re back next weekend, for the extra 10% they ought to have gotten, and to return the tile saw because they didn’t buy the one that does the cuts they wanted. This wastage can equalize the costs with that of a contractor, if the customer had bid it out a bit.