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Executive Summary
The Home Depot, Inc. is not only the largest home improvement retailer in the world, with 1 Home Depot® stores and 15 Expo Design Center® stores, it is also the third largest retailer in the United States. Home Depots focus on delivering low prices with customer service has done well and has been one of the fastest growing retailers over the past years.
Home Depot has an excellent marketing strategy covering form the Do-It-Your-selfer to the industrial contractor. This includes the direct sales from their retail stores and through their direct marketing subsidiaries Maintenance Warehouse® for direct mail marketing of maintenance products and National Blinds Wallpaper(SM) telephone / mail order service.
Some of the marketing strategies Home Depot may wish to consider the following. An in house web directory to point customers directly to the good or services they are inquiring about, and a more personal touch with a real person to meet and greet and direct you as you enter the store. These would enhance the High Levels of customer service that is part of the Home Depot image.Pay for essay on Home Depot
Mission Statement
· The Home Depot gives you the lowest prices and the highest levels of customer service.
Corporate Goals
· Taking Care of Our People
· Excellent Customer Service
· Entrepreneurial Spirit
· Respect for All People
· Building Strong Relationships
· Doing The Right Thing
· Giving Back
· Creating Shareholder Value
Industry Characteristics
001 home improvement industry forecasts
Operating over 00 store in the United States, Canada, and Latin America, Home Depot is anticipating opening approximately 00 new stores with a plan of having over 1,00 stores by end of fiscal year 00, with most of these stores being located in the United States.
· Home Depot one-year sales growth 1.00%.
Difference from the average for the Home Improvement Stores group 18.70 pct. pts.
· Home Depot one-year income growth 11.0%.
Difference from the average for the Home Improvement Stores group 10.80 pct. pts.
Sales Income Growth (past 1 months) Company Industry
Sales Growth 1.00% 0.0%
Income Growth 11.0% 0.50%
http//moneycentral.msn.com/investor/research
Industry at a glance
The home improvement retailing industry is highly competitive, based on price, location of retail outlets, customer service and selection. Dominated by a few large warehouse stores that offer lower prices than traditional hardware stores with a selection of high volume products. These stores are staffed with well-trained personnel who are often licensed building contractors themselves. However, these warehouse stores only encompass 1% of the total building and hardware retail environment. Therefore, despite their wide presence, the industry is still very fragmented. Many hardware stores belong to wholesale co-ops which allows them to buy products from suppliers at a similar discount from manufacturers that large chains can buy.
http//www.activemedia-guide.com/specialtyretailing_industry.htm#bldg
Highlights
Percentages of Sales for Fiscal Year Ended
Jan. 0, Jan. 1, Feb. 1.
Product Group 000 1 18
Building materials,
Lumber and millwork……………….4.7% 4.4% 4.8%
Plumbing, electrical, and Kitchen…..6.6% 6.8% 7.0%
Hardware and seasonal……………….8.5% 8.5% 8.%
Paint, flooring and wall coverings……0.% 0.% 1.%
Total……………………………….. 100.0% 100.0% 100.0%
Home Depot Jan 00 annual Report (SEC form 10-k)
1st Century Customer
The customers that Home Depot is marketing to covers three fundamental groups
· DO-IT-YOURSELF (D-I-Y) Customers These are the weekend handy men looking to improve or repair their home for a minimal cost. They repair, install, and upgrade by Doing It Themselves.
BUY-IT-YOURSELF (B-I-Y) Customers These customers know what they want, they don’t want to spend a lot of money to make the addition or repair to their homes but they will have a third party do the work.
· PROFESSIONAL CUSTOMERS These are the contractors and professional handy men tradesmen that do the work and want to use quality products for the best price that they can offer their customers.
Home improvement industry outlook
The future prospect of the home building supply retailing is dependent on home ownership, interest rates, and housing starts. However, we do not believe that the industry is that vulnerable to a downturn in the economy. Often, when people cannot buy houses, they often spend money upgrading and remodeling their existing houses.
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Operational Trends
Offering an ample variety of high-quality home improvement products at competitive prices coupled with experienced customer oriented sales staff and aggressive advertising, is Home Depots Operating strategy. The training and experience of their people in the products and processes of home improvement are key to their marketing approach and customer satisfaction. And with an eye on the competitor’s prices, they maintain the low warehouse prices in each market area.
Major Market outlook
q Home Depot Stores Sales
q Expo Design Center Stores Sales
q Villagers Hardware Stores
q Georgia Lighting
q Apex Supply Company
q Installed Sales Services
q Internet
q Direct Marketing Sales
· Maintenance Warehouse
· National Blinds Wallpaper
q Instore Initiatives
· Professional Business Customer Initiative
· Appliance sales
· Credit Services
· Tool Rental
· Special Order Center
· Customer Education Programs
q Store Growth
· United States
· Canada
· Latin America
Competitive Market Forces (SWOT Analysis)
Strengths
Home Depot’s primary inherent strength is its years of operation its management expertise, and consistent approach through dynamic corporate level strategy commersate to its ability to sustain rapid expansion. Other major strengths for Home Depot include
· Consistent approach across company owned stores
· Moderately priced, innovative items
· Atmosphere engineered for easiness
· to 0% growth rate
· Increasing range of products for the consumers
· Promotes from “within”
· World’s largest home improvement retailer
· Is well prepared when CEO’s leave
· Has a clear corporate strategy
· Most admired Speciality Retailer by Fortune
· How-to clinics
· Strong historical growth
Weaknesses
Shopping at a home improvement store where management or employees are not paying attention becomes quickly obvious. Through visits to a local Home Depot establishment, we reported similar experiences to those reported nationally less than satisfactory experience in various areas.
· Stores are huge (over 105,000 sqaure feet) can be overwhelming
· Numerous products but different brands can be confusing (lots of items over 50,000)
· Have expanded to Latin America but no Vice President has been assigned should not be controlled by an American management
· They have been nicknamed the “Big Orange” such as Walmart being nickamed the “Big Box”
· Sales ties in with home growth if home growth sputters, so does Home Depot’s sales and revenues
· Inability to recruit and train new staff in a timely manner
· Environmental groups are after Home Depot for using old growth wood this is a major issue with Home Depot
Opportunities
The strengths and weaknesses lead way for opportunities for Home Depot. In addition to opportunities for inovative marketing solutions, the following should be considered as well.
· Continue in with appliance sales have seen major growth in this area
· Expo Design Center continue expansion with this store
· Market themselves more to contractors and builders
· Keep the promise of phasing out old growth wood in their stores
Threats
Factors creating threats for Home Depot include the following
· Lowe’s major competitor they are catching up
· Women customers are being lost due to Lowe’s
· Bad environmental record
· Lack of available experienced mature employees ; high turnover of personnel
· Economic downturn
· Stock market fluctuations may decrease cash flow and investment opportunities while costs increase due to economic downturns
· Stockholders may demand change
Market Share
Home Depot is by far the leader in market share with a whopping 64% share of the home improvement market.
http//yahoo.marketguide.com/mgi/Mg.asp?rt=ratioticker=hd
Home Depot 45.74 billion
Lowes 15. billion
Blue Circle Industries 4 billion
Payless Cashways 1.5 billion
Home Base 1.4 billion
Building Materials Holding 1 billion
Wickes Inc. - 1 billion
Tractor Supply Company 75 million
Wolohan Lumber Company 14 million
AG Services of America 8 million
Value Holdings 114 million
National Home Centers 77 million
Griffin Land and Nursery 71 million
Calloways Nursery 11 million
Sales History
The company has shown quite an impressive sales growth since their inception in 178, from $7 million in sales their first year to 45.74 billion in the year 000. Their current growth rate was 1% for the fiscal year 000.
http//www.homedepot.com/prel80/HDUS/EN_US/diy_main/pg_diy.jsp?CNTTYPE=NAVIGATIONCNTKEY=compinfo/index.jsp
178 - $0
17 - 7 million
180 million
181 51 million
18 118 million
18 50 million
184 40 million
185 700 million
186 1 billion
187 1.45 billion
188 billion
18 .7 billion
10 - .8 billion
11 5.1 billion
1 7.1 billion
1 . billion
14 1.5 billion
15 15.5 billion
16 1.5 billion
17 4. billion
18 - 0. billion
1 8.4 billion
000 45.74 billion
Current Opportunities
Current Marketing Approach
Home Depot caters to do-it-yourselfers, as well as home improvement, construction, and building maintenance professionals. They market their large selection of products, 40,000 to 50,000 in each of their stores, guaranteed lowest prices, as well as exceptional customer service. To insure a high level of customer service, they employ professionals in every department, so that the customer can always get knowledgeable advice from a professional. In addition, they also offer hassle free returns on every item they sell. A unique marketing approach is their Home Depot University. These in store clinics instruct customers on how to complete projects ranging from installing ceramic tile to designing and installing sprinkler systems. This is a very good approach as they increase customers’ confidence in their own skills to tackle large projects, and purchase every item needed for the job right there in the store, whereas the customer might not do the project if they had to pay someone else.
http//www.homedepot.com/prel80/HDUS/EN_US/diy_main/pg_diy.jsp?CNTTYPE=NAVIGATIONCNTKEY=compinfo/index.jsp
Marketing Strategies
Home Depot applies a venture capitalist approach to marketing. By sharing the fluidity and discipline of venture capitalists, they identify opportunities early, swiftly allocate resources to those with the highest payback, set rigorous performance hurdles, and ruthlessly prune losers to cut their losses. The VMO approach has paid off for Home Depot because they continue to outperform their competitors.
Venture Marketing Organizations (VMOs) are distinguished from traditional marketing organizations by their ability to
create fluid organizations that can quickly mobilize opportunity teams
hire people into roles, not jobs drive fast decision-making from the top while making opportunity identification everyones job
focus resources on the highest-payback opportunities and quickly prune losers.
Home Depot’s incredible distribution capabilities, along with its commitment to introducing new product lines and its focus on providing quality products at great value to its customers.
Home Depot strives to be the worlds leading one-stop source for all of the best design brands.
Home Depot is dedicated to provide the end customer with the best innovative service experience, with the broadest selection of quality material and labor at an exceptional value.
Home Depots Store Productivity Improvement (SPI) program provides a more favorable ratio of store associates to customers while increasing merchandise and customer throughput.
Home Depots’ is strengthens its ability to reach the professional trades, both residential and commercial. The pro market is a major growth opportunity that can provide capabilities and knowledge that could be integrated into the store, which then offers a variety of opportunities for the do-it-yourself market.
The Internet is an extension of Home Depots customer service commitment.
Home Depot online store is a virtual orange apron to help a customer complete a
project of any kind.
Business Emphasis
Along with our quality products, service, price and selection, we must go the extra mile to give customers knowledgeable advice about merchandise and to help them use those products to their maximum benefit.
Home Depot associates are encouraged to initiate creative and innovative ways of serving our customers and improving the business, as well as to adopt good ideas from others.
Home Depot builds relationships on trust, honesty mutual respect and integrity. They listen and respond to the needs of customers, associates, communities and vendors, treating them as valued partners.
Home Depot exercises good judgement by doing the right thing and strive to understand the impact of our decisions, and we accept responsibility for our actions along with giving part of their time, talent, energy and treasure to needs in our community and society.
Home Depot offers an ever-larger selection of products and quantities to be sold to the Do-It-Yourself consumer and small contractor. Internet online services offers another way of doing business on the customers terms by offering one more convenient way for customers -- pros and do-it-yourselfers to shop Home Depot.
Service at Home Depot begins with our helpful and knowledgeable associates in the orange aprons. Home Depot treats training their employees as a critical value by providing a week of classes for new hires to steep them in company history and customer service techniques then all employees including managers must undergo an hour of training each week.
New Products
Canadian Home Depot stores will be stocking Napiers Bio-Wash(R) brand wood restoration products.
Market Romala Stones Genuine Natural Granite precut, ready-to-install version of its stylish bathroom vanity counter tops exclusively through Home Depot stores.
Thomasville quality-crafted exquisitely kitchen and bath Cabinetry line will be available exclusively through Home Depots.
Home Depot the home improvement giant expands its offerings in major appliances. Maytag, GE, and Jenn-Air brand major appliances will be sold in Home Depot stores
Market Expansion
Expanding businesses in new markets by successfully localizing Home Depot’s stores in Quebec, Chile, Argentina and Puerto Rico.
The Allstate Insurance Company and The Home Depot have formed a unique alliance to make home insurance repairs available to Allstate customers with materials from Home Depot stores.
Home Depot Home Improvement Loan Account program, the first of its kind in the retail industry, offers Home Depot customers a solution for their home improvement needs by providing materials, design services, installation and financing under one roof.
Trane heating/air conditioning (HVAC) displays will be installed in Home Depot stores to generate consumer leads and build awareness for the program. Leads will then be assigned to Trane Comfort Specialist dealers, who will make in-home consultations on behalf of Home Depot. The HVAC pilot is essentially an expansion of Home Depots At-Home Services program. It puts the worlds largest home improvement retailer in the residential installed heating/air conditioning market for the first time.
Home Depot online store, www.homedepot.com , service allows customers to choose from the stores 40,000 products just as if they were walking down the aisle in their local Home Depot store. Home Depot has created a unique business model they took the time to meet their customers demand that their online experience is integrated with the experience they have shopping in our stores. Products can be picked up by the customer at the store, delivered to a job site or other location by Home Depot, or shipped by UPS.
Home Depot acquired Apex Supply with the intent to seriously pursue the contractor market, which will strengthen their ability to reach the professional trades, both residential and commercial.
Miscellaneous Strategies
Propose that Home Depot install computers within the front of the store for customer to conveniently use to search for merchandise availability and exact location. The software would provide interaction by touch, voice recognition or mouse to accommodate disabled customers.
Recommend that Home Depot have the most knowledgeable employees wear a type of Orange ball cap so customers can easily locate these specialists.
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