HOME DEPOT Inc.

Sidorenko Natalia
Content
1. Background of the company
2. Key milestones
3. Key highlights
4. Company main features
5. Competitive advantage
6. Key competitors
7. Pestel analysis
8. 5 Forces analysis
9. Strategy of the company
Company Background

 ♦ Home Depot is the world's largest home improvement retailer (stores

in US, Puerto Rico, U.S. Virgin Islands, Canada, Mexico and China).

 ♦ Founded in 1978 by Bernie Marcus and Arthur Black in Atlanta,

Georgia.

 ♦ HQ in Atlanta Store Support Center

 ♦ DIY – the most strong categories (2010, www.nytimes.com, 02\24\10)

 ♦ Home Depot operates under four different business segments:

 Plumbing, Electrical and Kitchen Hardware
 Seasonal Building Materials, Lumber and Millwork
 Paint and Flooring

 ♦Strategic product alliances directly with industry-leading manufactures

Key milestones
 1978 – foundation of company by Bernie Marcus and Arthur Blank.
 1979 – first two stores are opened
 1981 – company went public on NASDAQ
 1984 - moved to the New York Exchange
 1986- reached $1 billion in sales
 1989 – opening of the 100th store
 1990 – entered Puerto Rico
 1994- entered Canada by acquisition of AIkenhead`s home
improvement center
 2001 – entered Mexico by acquisition of Total Home
 2006 – entered China by acquisition of The Home Way with 12 store
chain
Company main features
 « To help consumers create the home of their dreams whether
they want to do it themselves or have it done for them»
Company offer:
 Over 100,000 in-stock and special order products
 A large selection of facility maintenance and repair products
 Renovation services
 A full range of commercial grade construction products
 A complete line of flooring options
 A full array of landscape offerings
 Convenient store locations
 Wide ordering and delivery options

 -An average store generates $30 million in sales per year

 -Stores are supplied directly from manufacturers.
Competitive Advantages
1. Company size – number of stores gives a big advantage in
relations with the suppliers and pricing.
2. High brand awareness and customer loyalty – large number of
store throughout the world, 15 million customers per week.
3. Low pricing
4. High level of customer service
(Service Performance Improvement Program (SPI), which allows most
of inventory handling to be done after the stores are closed.)
Key Competitors
Main Competitors 
Factors  
HD Lowe`s True Value Sears

Market Capital 53,05 B (2008) 34,59B (2008) 64,2 M (2008) 50,7 B(2008)_

Number of stores 2242 1700900 1200

Employees 322000 228000 3000 314,000
Store Footage 60,000-150,000 80,000 50,000 92,000-166,000
Store stock 100,000 40,000 60,000
Cunsumers per week 15,000 million 14,000 million
Revenue 66,21 B (2009) 47,22B (2009) 2,01B 46,770 (2008)

Gross margin 34,09% 34,86%11.3%  27.1%

EBITDA 6,93B 4,85B   1,034 B
Geographical 179 stores in 16 stores in Canada, USA 
presence Canada, 77 in Canada and 2
Mexico and 11 in in Mexico
China opened in 2010
Home Depot Geographical Expansion
Canada, 1994 Mexico, 2001
-Number of store: 179 in 10 Canadian -Number of store: 77
States -Format: 66,000-77,000
-Format of stores: 60,000-150,000
-Mergers: Total HOME, Del Norte,
(retailer) and 15,000- 25,000 (garden Home Mart
center)

China,2006 (source product more United Kingdom and South Africa

than 10 years) (Chili, Argentina)
-Number of store: 11 in 5 cities
-Format: 90,000
-Mergers: The Home Way
 Pestel analysis
Legal Factors Economical Factor
1. The Occupational Safety and Health 1. Crisis in USA Economy
Act of 1970
2. Decrease of housing construction
2. the Consumer Product Safety Act of market
1972
Technology
Environmental
1. Label introduced on nearly 3000 products
1.RFID retailing

2. Consumer preference of environmentally safe 2. Online retailing

products

Social:
1. Constantly changing consumer tastes,
preferences, spending patterns and home
improvement needs
5 Forces analysis
 Rivals:
 -Home Depot has more than 10 competitors: Sears, Ace Hardware, Frank’s
Nursery, and Lowe's. Lowe’s Companies is Home Depot’s largest competitor. No
equal competitors.
 Suppliers:
 -large number of suppliers both local and international
 -by having a large amount of stores, HD can enjoy increased buying power vs
suppliers that gives them clout in making demands on manufacturers, such as
volume discounts, co-operative advertising, and merchandise pricing and
ticketing prior to shipment.
 Buyers:
 -HD has 3 distinct customer segments: DIY (do-it-yourself) BIY (buy-it-yourself)
Professional customer
 -customers are always with increasing needs and expectations – it’s easy to lose
them, unless you meet their expectations
 Substitutes: Home Depot doesn't have many substitutes. A substitute to Home
Depot’s in store home improvement - Internet.
 New Entrants:
 The barriers to entry: large product selection, highly trained employees, large
startup capital, prime real estate, strong regional recognition, and unwavering
customer loyalty.
Company's Strategy
 Operating strategy
 -focused on the shift from new square footage growth to maximizing the
productivity of the existing store base.
 -optimize capital allocation, concentrate efforts on core business, (2008 - 15
stores are closed, 50 stores are removed from new store pipeline, exit our EXPO,
THD Design Center, Yardbirds and HD Bath businesses)
 Long term strategy:
 – geographical expansion of store network through acqisition and
openning new stores.
 -IT development - to improve customer service and develop e-
commerce business.
 -Global Sourcing and Distribution