A Strategic Analysis of Home Depot
A Strategic Analysis of Home Depot
The Home Depot (NYSE: HD) is a home improvement, construction products and services retailer operating over 2,000 big-box stores in the United States and abroad. The Home Depot was founded in 1978 by Bernie Marcus and Arthur Blank with the vision of one-stop shopping for do-it-yourself (DIY) customers, installation services for do-it-for-me (DIFM) customers and competitive products for the professional market. Their DIFM installation programs include products such as carpeting, flooring, cabinets, countertops, and water heaters. In addition, the company provides installation of various professional products like generators and HVAC systems. The Home Depot developed strategic product alliances directly with industry-leading manufacturers to deliver the most exclusive assortments to customers. Through a combination of national brands and proprietary products The Home Depot exclusively carries several major brands, including: BEHR Paint, G.E., Martha Stewart Living and Thomasville, which sets the standard for the do-it-yourselfer and the professional contractor. The Home Depot revolutionized the home improvement industry by bringing the know-how and the tools to the consumer and by saving them money. According to the founders, the customer has a bill of rights at The Home Depot, and this entitles the customer to the right assortment, quantities and price, along with trained associates on the sales floor who are there to help customers (The Home Depot, 2011). Their philosophy of customer service – “whatever it takes” – means cultivating a relationship with customers rather than merely completing a transaction. The founders initially viewed the structure of the company as an inverted pyramid, with stores and customers at the top and senior management on the bottom. They demanded that associates take risks to succeed, saying, “It is your business, your division, your market, your store, your aisle and your customer.” According to The Home Depot Annual Report (2010), their business strategy is to deliver sustainable and profitable growth by enhancing, extending, and expanding the overall business. The Home Depot wants to enhance the core base of the business by making their existing stores the “best they can be” while extending their business by adding adjacent businesses where they deem appropriate. The Home Depot also wants to expand their markets by opening new stores, new formats and new markets (The Home Depot, 2011). The Home Depot has remained focused on providing every day values in their stores. They have continually invested in their business by introducing new technologies, updating their supply chain and cultivating their on-line presence to provide a more interconnected retail experience for their customers. The Home Depot has reduced as well as eliminated tasks to give store associates more time with customers and provided an overall enhanced customer service experience. They are extremely focused on offering every day values in the stores to their customers. The Home Depot stores serve three primary customer groups: 1. Do-It-Yourself (DIY) Customers: These customers are typically home owners who purchase products and complete their own projects and installations. 2. Do-It-For-Me (DIFM) Customers: These customers are typically homeowners who purchase materials themselves and hire third parties to complete the project or installation. The Home Depot arranges for the installation of a variety of their products through qualified independent contractors. 3. Professional Customers: These customers are primarily professional remodelers, general contractors, repairmen, small business owners, and tradesmen. In many stores, the Home Depot offers a variety of programs to these customers, including delivery and will-call services, dedicated staff and expanded credit programs, all of which increase sales to these...
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