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The Home Depot is an American retailer of home improvement and construction products and services. Headquartered in Vinings, just outside Atlanta in unincorporated Cobb County, Georgia, the Home Depot employs more than 355,000 people and operates 2,141 big-box format stores across the United States (including the 50 U.S. states, the District of Columbia, Puerto Rico, the Virgin Islands and Guam), Canada (ten provinces), Mexico and China. Currently, the world's second largest Home Depot opened on November 14, 2007 on the island of Guam.
Established in 1978 by Bernie Marcus and Arthur Blank, the Home Depot Corporation opened its first store in Atlanta, becoming the world’s largest home improvement retailer. They are now the second largest retailer in the United States, offering 40,000 to 50,000 different types of home improvement supplies, building materials, and lawn and garden products. They carry a wide assortment of low-cost products, and offer expert advice and exceptional customer service. As an innovator of the home improvement industry, Home Depot has expanded into Canada, Mexico, Argentina, Chile, and Puerto Rico. Currently there are 1,459 stores including fifty EXPO Design Centers, one Floor Store, and three Home Depot Landscape Supply stores. Home Depot caters to Do-It-Yourself customers, as well as home
improvement, construction and building maintenance professionals. Home Depot’s stock went public in 1981 and is traded in the New York Stock Exchange under the ticker symbol, "HD". It is included in the Dow Jones Industrial Average and the Standard and Poor's 500 Index.
The Home Improvement sector in general is in the growth stage of its life cycle. Even in the weak economic environment, low interest rates have allowed the real estate sector to survive. As a result, home ownership has reached new highs, and the housing industry thrived. In August 2002, Home Depot was ranked first in "Quality of Earnings" by Merrill Lynch in a study of large, publicly traded companies. Home Depot reported net sales for fiscal 2001 of $53.6 billion and employs approximately 280,000 people. Fortune Magazine has ranked them as “America’s Most Admired Specialty Retailer”. Business Week cited Home Depot as “Ten Best Boards in the U.S.” In October 10, 2002, Home Depot announced they are opening two sourcing offices in Shanghai and Shenzhen. According to Vice President of Global Sourcing, Duane
Goodwin, this will allow Home Depot to enhance their opportunities to purchase more goods directly from their manufacturers, as well as rapidly expand their purchasing throughout China and Asia.
HISTORY OF HOME DEPOT:
The Home Depot was formed in 1979 by Bernie Marcus and Arthur Blank in Atlanta, Georgia. Home Depot virtually revolutionized the do-it-yourself home improvement industry in the United States almost overnight. The two entrepreneurs opened their stores which
were no frills warehouses. In 1998 the average Home Depot carried 35,000 products. Products varied from well known national brands to propriety Home Depot brands.
Home Depot held its IPO in 1981 and listed on the New York Stock Exchange three years later under the ticker – ‘HD’. Home Depot reached $1 billion in sales in 1986. Sales of $20 billion were reached
in 1997 making them the fastest growing home improvement retailer with an average annual growth in sales of 119% during said period.
• • • • • • • • • • • • • • The Home Depot carries several exclusive brands, including: Hampton Bay (lighting, ceiling fans & patio furniture) Pegasus (kitchen and bath items) Glacier Bay (faucets and bath) RIDGID (power tools) Husky (tools) Vigoro (fertilizer) Ryobi (power tools) Millstead Mill's Pride Workforce Thomasville cabinetry Behr (paint) Ralph Lauren paint
Home Depot’s Values and Vision
Associates are central to Home Depot’s success and their values are part of the fabric of the company. Values are beliefs that do not change over time. They are what they believe in, they do, and they govern their decisions on a day-to-day basis. They are the principles and standards for the framework upon which Home Depot is built. Home Depot’s unique culture is built on associate dedication and a commitment to an “orange-blooded” entrepreneurial spirit. Taking care of our people: The key to their success is treating people well. They do this by encouraging associates to speak up and take risks, by recognizing and rewarding good performance and by leading and developing people so they may grow. Giving back to our communities: An important part of the fabric of The Home Depot is giving their time, talents, energy and resources to worthwhile causes in our communities and society. Doing the right thing: They exercise good judgement by "doing the right thing" instead of just "doing things right." We strive to understand the impact of our decisions, and we accept responsibility for our actions. 4
Excellent customer service: Along with their quality products, service, price and selection, they must go the extra mile to give customers knowledgeable advice about merchandise and to help them use those products to their maximum benefit. Creating shareholder value: The investors who provide the capital necessary to allow the company to grow need and expect a return on their investment. They are committed to providing it. Building strong relationships: Strong relationships are built on trust, honesty and integrity. They listen and respond to the needs of customers, associates, communities and vendors, treating them as partners. Entrepreneurial spirit: Home Depot associates are encouraged to initiate creative and innovative ways of serving our customers and improving the business and to spread best practices throughout the company. Respect for all people: In order to remain successful, our associates must work in an environment of mutual respect, free of discrimination and harassment where each associate is regarded as a part of the Home Depot team.
PRINCIPLES OF THE HOME DEPOT
• • Committed to operating a safe environment for our customers and associates. Never walk by a customer or fellow associate without speaking.
• • •
Don’t spend money on a fancy environment; that would make our prices higher. Train our associates so they can pass knowledge on to our customers. Want associates to build relationships with customers, to educate the customers, and to give the customers the confidence to complete their projects.
Stay flexible and make changes based on the customer needs and wants. Make an effort to never lose a sale.
Objectives and Strategies
In 2002, Home Depot maintained its long-term objectives for continuous growth and expansion. CEO, Robert Nardelli, plans on the opening of 200 new Home Depot stores in the U.S. in 2003. In
addition, Home Depot will increase investments in technology and store modernization, as well as sustain its control through its vertical growth strategy in its value chain (Home Depot). With a strategy to enhance its core retail network through innovative and unique merchandise, Home Depot is committed to the changing needs of the home improvement market (Home Depot). The company began to tap the residential homebuilders’ market with the 2002 acquisition of three of the top 10 turnkey providers of installed flooring. Using a “customer-back” initiative in decision-making, Home Depot is dedicated to building relationships with the customers, whether they are the “do-it-yourselfers (DIY), the do-it-for-me (DIFM), the 6
professional, or one of many emerging customer segments” (Annual Report). Home Depot is pledges to provide service and products
“second to none” (Home Depot) (Annual Report).
Bob Nardinelli Chairman, President & CEO
Diane Dayhoff Vice President Investor Relations
Joe DeAngelo Executive VP & President THD Supply
Dennis Donovan Executive VP Human Resources
Frank Fernandez Executive VP Secretary & General Counsel
Frank Blake Executive VP Business Development & Corporate Operations
Harvey Seegers President Home Depot Direct
Bob DeRodes Executive VP Chief Information Officer
Brad Shaw Senior VP Corporate Communications & External Affairs
Five Forces Model of Competition
Tom Taylor Rivals Executive VP As Marketing Merchandising & the world’s Carol Tome Executive VP largest home improvement & Chief Financial Officer Annette Verschuren Regional President Canada retailer, Home Depot’s & Division President EXPO
competition runs the gamut of lumber yards, specialty interior stores that concentrate on one aspect of the home, i.e. kitchens, lighting, flooring, etc. Home Depot’s competition is also embodied in other such retailers as: Sears, Ace Hardware, Frank’s Nursery, and Lowes. Home Depot’s competition (except Lowes) primarily focus on one aspect of their expansive product offerings. For example, Sears would
specialize in selling Craftsman tools to Home Depot’s offering; likewise Frank’s Nursery competes directly with Home Depot’s garden center. Lowe’s Companies is Home Depot’s largest competitor. Home Depot and Lowes have very similar product offerings and large warehouse formats. In many major markets Lowes and Home Depot stores go head to head both vying for the patronage of the do-ityourself customer.
Home Depot maintains relationships with many suppliers that stock Home Depot stores with over 30,000 different products. Although Home Depot has a significant amount of suppliers they are still able to force them into offering price concessions due to the fact that Home Depot makes up a large portion of the supplier’s sales. These concessions have gone a long way in driving down the cost of home improvement as well as further increasing Home Depot’s margins and competitiveness with Lowes and others in hotly contested markets.
At the time of the case, Home Depot has 3 distinct customer segments. Since the company’s incorporation, they have been primarily focused with the do-it-yourself (DIY) customers. These customers are non-professional consumers interested in doing their own home improvement projects.
More recently, Home Depot has also begun to redefine the market in which they operate. This redefinition has opened up the buyit-yourself and professional customer segments to Home Depot. Specifically the buy-it-yourself customer segment are those consumers that like to pick out the materials being used in their homes, but want a professional to install them. Moreover the professional customer segment that Home Depot now associates itself with are contractors, electricians, plumbers, landscapers, etc. This group has been able to get Home Depot to offer products in larger quantities due to their larger scale projects.
Substitute products pose a grave threat to many companies. However, Home Depot does not have many substitutes. People will always be houses and the desire to improve one’s home is one that is ageless. A substitute to Home Depot’s in store home improvement classes is the vast resources of the internet. With a few clicks of a button, a customer can find “How To” instructions as well as plans for various types of projects. Another substitute that the Home Depot should be aware of is the purchase of new homes. With new homes people will have a much lower need to purchase home improvement supplies.
New entrants to the home improvement will find it very difficult to compete directly with Home Depot and or Lowes. A company that is new to the market will face a vast difference in economies of scale that they may not necessarily be able to overcome. Also new entrants will be faced with trying to compete head to head with Lowes and the Home Depot or they will be forced to specialize in a certain product category. The barriers to entry include the following considerations: large product selection, highly trained employees, large startup capital, prime real estate, strong regional recognition, and unwavering customer loyalty.
Home Depot has many competitive strengths that make them a very difficult company to compete against. Home Depot’s strengths include: • • • • Business model Well known brand name Extensive product offerings Ability to grow
Home Depot’s business model, the first of its kind in the home improvement industry has revolutionized the way customers shop for home improvement products. Their business model is simple. Sell home improvement products and services to DIY, BIY, and professional
customers in huge spacious warehouses that boast a wide variety of products with sales associates that are educated and knowledgeable about home improvement (case). This is all done with low prices as the primary driver. The Home Depot name has become synonymous with home improvement. This association has been forged over a long time of being number one in customer’s minds when it comes to home improvement. Home Depot’s orange aprons, low prices, knowledgeable associates, and warehouse like stores have all contributed to a very strong brand image. It is no secret that if you want anything having to do with home improvement the first place to go is Home Depot. Home Depot has distinguished itself as the home improvement warehouse that has what you are looking for when it comes to home improvement. Their extensive product lines have made Home Depot the one stop shopping in home improvement. Since the beginning, Home Depot has demonstrated its desire to become the largest home improvement retailer in the world. Home Depot has planned on growth rates of 21%-22% growth rates in the number of stores over the next several years. By 2003 Home Depot plans on having over 1900 stores (case).
Counterbalancing the strengths of Home Depot, it also has a couple of key weaknesses that need to be addressed. 11
Growth has both a blessing and a headache for Home Depot. As the have expanded aggressively into new markets, they have seen their operating expenses rise in direct proportion with their growth in revenue. While this is would be expected in most instances. This means that Home Depot is not capitalizing on economies of scale in logistics and distribution provided to them by their market saturation strategy.
Home Depot has been known for creating opportunity through community awareness and charitable contributions. They have made strenuous efforts to make an impact in the community. By being
involved in the community they are able to give themselves a good image. They might claim they are doing this out of the goodness of the “company’s heart”, but everyone knows it is only dollars signs corporations see. Home Depot claims they have a social obligation to help out.
During a recession it is said that Home Depot maintains constant business because customers are more likely to pay cheap prices for materials and fix problems themselves. This is a definite opportunity because this puts Home Depot at an advantage over other competitors and industries. During the years of 2000-2002, Home Depot constantly increased earnings. This is quite amazing during a recession. They also benefited from 2002’s building and real estate expansion. This 12
was caused by the steep decrease in interest rates. Homeowners were able to refinance their homes, save money on a monthly basis, and put money back into their homes (Home Channel News Newsfax.) Some of this money was spent at Home Depot stores across the country.
Home Depot bases store locations on demographic studies. It was demographic research as an ongoing opportunity. In 2002, Home
Depot increased their number of stores to over 1000. Its stores are located in populated areas and are close together to some other competitors. Home Depot also put stores in areas that are populated with “Do It Yourselfers,” such as many southern areas. These
Southern customers have a strong sense of cultural appreciation for quality. Home Depot has also recently (2000-2002) explored the They have started opening stores in Mexico and
Canada, and opened resource stores in China.
Because of Home Depot’s size they have some interesting opportunities available to them. With a solid foothold in North America, Home Depot will set its sights on other world markets to further expand and spread its business risk across many diverse world markets. Expansion will be the primary focus for growth into the year 2000.
Home Depot has an opportunity in the global sourcing of their products as their scope and reach becomes global. Sourcing from other countries may significantly grow their gross margin. Home Depot’s Service Performance Improvement (SPI) program is due to deliver huge paybacks in productivity of night team workers. Other IT projects pose great opportunities to increase efficiency, decrease costs and further increase margins.
Some major threats came about from the years 2000-2002. September 11, 2001 and Enron crashing created a downward spiral for the United States economy. This affected almost every industry. Even though Home Depot maintained constant numbers during this time, they always had to worry about how fast to expand. At this time there were many Americans leaving the country going off to war, and most Americans wanted to protect every penny not knowing what was to come. During a time of recession, companies have to be wary of
Another major threat to Home Depot is its competition, specially with Lowes. Lowes is Home Depot’s only competitor that competes on a consistent basis at the national level. During 2000-2002 they have expanded almost equally with Home Depot(curan). This is a threat
because Home Depot does not want a company with almost the same resources selling goods at almost the same prices. Lowes should 14
continue to grow at the same pace as Home Depot, so this will be something to watch out for.
Because of the competitive nature of the retail industry, Home Depot’s success depends on price, store location, customer service, and wide product selections. In each market that Home Depot serves there is a plethora of specialty home improvement stores that have the potential to cutting into Home Depot’s market share. Home Depot’s overlap with primary competitor, Lowes, poses a potential threat. In the minds of consumers, Home Depot may be seen as interchangeable with Lowes which would in turn decrease customer loyalty. Also when a Lowes enters a market that is only served by Home Depot, Home Depot’s sales have a tendency to decrease by up to 15%. As Home Depot and Lowes continue to compete head to head in primary markets and both continue their strategy of market saturation, the awareness of US market saturation becomes a very real possibility. According to Datamonitor, “The US home center potential is valued at approximately 3,500 stores. With Home Depot and Lowes opening a combined 300 stores a year, the industry could reach saturation in the next few years.” Threats can be divided in following categories: Threat of New Entrants The threat of new entrants is very unlikely. mature and whenever a 15
This industry if very
new competitor tries entering the market, Home Depot or Lowes puts up a store right next to the new store knowing they will take most of its business. There is no way a new competitor can compete with the big companies of this industry. These companies have already made a
name for themselves and customers are going to go there instead of anywhere else. Also, these new companies do not have the capital to Home Depot has been consistently
compete with Home Depot.
reducing costs. This has helped them sell their products at lower costs than its competitors.
Rivalry Among Existing Firms Home Depot has about 10 true competitors, and of those Lowes Cos Inc is the only Competitor that really competes on the national level. Other Competitors include: Ace Hardware, Homebase Inc., Hughes
Supply, Woloham Lumber, and True Value Company. This just shows that Home Depot’s competition is far off the pace they are setting for the industry. Home Depot has no equal competition. This industry has not shown signs of growth with regards to up and coming competitors. No other competitor has the sheer size of Home Depot and this allows the company to sell their goods at lower prices than companies of smaller sizes. Home Depot is also able to sell a
more diversified line of products because of their corporate size and resources. Customers usually know exactly where the nearest Home
Depot is and will search for their wanted products there instead of going to an “Ace Hardware” which has a smaller selection. This is
almost always the case except for instances where customers have store loyalty and refuse to shop anywhere else. There are not many fixed costs associated with this industry. Home Depot and its competitors do not have set schedules to which they are restricted. Home Depot has the option to buy goods and resources
when they need them. Through logistics they are able to decide the when, where and how much questions linked to the supply and demand of their products.
Home Depot has been able to increase their market share by opening up more stores across the country. By 2002 they had 1,050 stores open across the United States and Canada. This is 170 percent more than Lowes, which is its closest competitor. This increase allows them to lower prices. There really are only a few exit barriers in this industry. There are not many companies selling in this market and
most of these companies have their set market share. With the real estate market and new property, these companies are going to grow over the coming years. The only thing these smaller companies have to worry about is Home Depot taking more of the market share by opening up a store near them (Home Depot).
Threat of Substitute Products or Services There are really no substitute services that can be created in this industry. The only substitute services are companies that only sell
lumber and would deliver that lumber at cheap costs to the customers. These places are not very well known so this hurts them. This makes it hard to create a substitute service that can compete with the low costs Home Depot offers. Bargaining Power of the Buyer The buyer always has power in deciding the price of the product that is for sale. This buyer is taken from the general population and then the prices are based on supply and demand. Home Depot sells thousands of products at very low costs compared to the competition. When you sell you goods at low costs there is not much lower the product’s selling price can go. For the most part the buyer is very satisfied when buying a product from Home Depot. They go to Home Depot because they know what they want and make the purchase. There are not
negotiations on the floor to lower the price of the product. Bargaining Power of the Supplier The supplier also has power in the price they sell their products at. They want to keep their products at a price that they will make profits on while not going over a threshold in which buyers won’t want to purchase the different items. Home Depot sets its prices at levels to beat out the competition. Even if Home Depot does not make that
much profit on one product, the company will make it up with the quantity of products they sell compared to their competitors. This is a major advantage big suppliers have, because they can keep customers from the competition. Relative Power of Other Stakeholders Other stakeholders are always going influence the industry. These
stakeholders have invested money into the company, so they are going to influence final decisions. When Home Depot goes into
contracts with other companies to sell their products in their stores, these companies have a say in how their product will be sold. Communities also have a say, because there are city and state regulations in which Home Depot must abide. The shareholders have
some say in the decision process. Most shareholders hold a very little share so they will not have much of a say compared to the bigger shareholders. This is very common with Home Depot, because of the size of the company and that it is publicly traded.
Industry Key Success Factors
In the competitive home improvement industry there are several key success factors to be considered: • • • • Relative Price of Products Brand Image/Reputation Executive Management Use of Technology 19
• Distribution Network • Financial Resources The price a company charges for its products and services is vital to the successfully competing. If a company prices itself way below the competition in order to undercut the existing prices in the industry and is unable to recoup lost margins, then it will suffer as much as it would have if they priced their products way out of the reach of their target customer. Brand image in the home improvement industry is vitally important because you do not want to lose customers to your competition. Home Depot has positioned its brand more towards men and professionals as Lowes targets the women of the family with their cleaner, better lit stores. The strength of a company’s distribution network is of utmost importance in the home improvement industry. The company that has the most stores and can get the most product out to the customer (profitably) is the industry winner. The financial might of a particular competitor allows them to invest in programs that would potentially save them money, or grow their sales. A financially stable company is critical in an industry where growth is the name of the game.
Competitive Strength Assessment
In the competitive strength assessment, the industry key success factors were used to analyze the competitive strengths of Home Depot, Lowes and Ace Hardware. Please see exhibit 1 for the actual strength assessment. From the competitive strength assessment we have learned that Home Depot is the best positioned company in the home improvement industry. Lowes is not far behind Home Depot. The major difference between Home Depot and Lowes was Home Depot’s advantage in financial strength and possessing a powerful brand. Ace Hardware is a non-contender; however they had far more stores than Home Depot in 2000. The main difference is the fact that one Home Depot store has a much higher volume of sales than a typical Ace Hardware Store. Most of the other points were a wash, as Home Depot won in all but one of the most important categories.
Preliminary Statement of Strategic Issues Priority Matrix
Global Community Demographics High Expansion Awareness Studies Keep buying supplies from Strategic Joint Domestic Medium overseas Venture Alliance Threat Non-Domestic Low Threat Low Priority 21
Medium Priority High Priority Companies often try to predict future environmental trends that could possibly have an impact on their market. Home Depot and its competitors share these trends; and it is up to each company’s management to monitor its external environment. It is very hard to monitor all of the external factors. However, if conquered, this will be a benefit and a step up on the competition. Home Depot does have an advantage over its competitors because of their size. They are able to dedicate more employees and money predicting future environmental trends.
There are many trends in this industry that can effect what the different companies look like. One trend in this industry is getting
resources from overseas companies. Some of the companies in this industry stay loyal to American companies and buy all of their resources from them. Companies like Home Depot buy over 96
percent of wood overseas, because the wood is cheaper. This allows the company to sell products at lower prices.
Another trend in the United States is other companies and builders bypassing the retailers and buying supplies from the manufacturer or wholesaler. This could have an impact on Home Depot and the
market, if customers started buying supplies from wholesalers. This is unlikely, but it is something to definitely worry about.
A trend that will have low occurrence and probability is competition from a Non-Domestic Competitor. Americans appreciate domestic
companies and Home Depot is a proud American symbol that dominates the industry. It is very unlikely they will fall victim to a
foreign competitor in the near to distant future. Home Depot has to worry about Domestic threats but with little worry. Home Depot has captured a majority of the market share and it is also unlikely that any domestic company will catch them. Home Depot has made many joint ventures with companies to sell only their products in their stores. This is very common with retailers
because this secures big time contracts and large amounts of income. For example, in 2002 Home Depot and John Deere made an agreement that Home Depot will only sell John Deere’s in their stores. more of these joint ventures to come in the future. Strategic Group Map HIGH Expect
Ace Hardware True Value 23
I C E HomeBase Inc Hughes Supply Low es Woloham Lumber Home Depot
LOW Limited Selection Diversified Products Line of Diverse Selection
This strategic map shows that Home Depot has a more diversified product line and sells their products at lower prices. Companies such as Ace Hardware and True Vale cannot compete on the same level because they do not have the capital to compete. Woloham Lumber is very limited in its product line, but they do sell their wood as cheap as Home Depot.
It is important to note that as Home Depot has grown so quickly, it has been able to garner significant concessions in prices from suppliers. Home Depot has also been able to establish and successfully execute a market saturation strategy coupled with low prices and high
service. Being able to execute on these three pillars has been the hallmark of Home Depot’s strategy and will carry the company into the future. As Home Depot continues to expand, the cost of prime real estate will rise as they compete head to head with their main competitor, Lowes. Also tied to the market saturation strategy, Home Depot stores may realize a cannibalization of sales when a nearby store opens its doors. While expanding internationally, Home Depot will be careful to pay close attention to local building customs, laws, and regulations. Maintaining solid returns on investment and financial health will be a primary concern. More interestingly, Home Depot plans on investing significant amounts of money in their human capital to maintain their consistently high marks in customer service and knowledge of home improvement projects. Marketing Issues Home Depot, Inc. is big on customer service and providing expertise to the DIY consumer. To achieve this, only the most qualified and
knowledgeable associates are hired to provide the best customer service possible. Also, in order to attract the largest consumer
outreach possible, the company provides only the best quality products with everyday lowest prices because of direct purchasing from suppliers.
Financial Issues Since the company was founded, revenues have significantly increased from year to year. Some major financials for 2002 are as follows: Revenue: $58.2B Gross Margin: 31% Net Earnings: $3.7B EPS: $1.56 While these numbers look good, some adjustments need to be made internally. price. Adjustments need to made to increase the stock
The chairman of Home Depot, Inc. said that he was
disappointed in the way the stock price performed which in return had a negative impact on employees and shareholders. R & D Issues The company is big on having only the most up to date technology implemented within each store. This year the company tripled the
amount spent on R&D to construct better systems, condense operations, and to implement a digital business system. Operation Issues In the past, the company would stock shelves during store hours. To make the shopping experience more enjoyable, they created a SPI (Service Performance Improvement). This means that stocking shelves will be done after hours to reduce clutter in the aisles. Home Depot, Inc. also opened four new Transit Facilities and built two new Import Distribution Centers. Another improvement to some stores includes 26
the self-checkout system. This reduces the time the customer has to spend waiting in line and allows a constant flow of people to be checked out of the store. HR Issues Home Depot, Inc. strives to achieve the highest company morale. During 2002, management surveyed associates and employees and found that 70% planned to further their careers at Home Depot, Inc. While this percentage is higher than some leading competitors, adjustments need to be made to raise the retention rate. During the year management also provided better pay and benefits to ensure satisfaction among employees. Aside from pleasing just workers, the company “gives back” to local communities. They participate in projects such as Habitat for Humanity and they have provided athletes jobs with full-time pay and benefits during their training for the Olympics. Home Depot also provides employees classes for aerobics, dieting, and to help them quit smoking.
Corporate Value Chain Analysis
Raw materials gathered from Texas and Ohio.
Raw materials manufactured in Baton Rouge, La.
Raw materials manufactured in Europe and the Far East.
Fiber glass yarns manufactured by Owens Corporation.
Plumbing products shipped to “YoW” (Your “other” Warehouse).
Yarns are then sent to New York for further construction.
“YoW” acts as a master distributor of the specialty plumbing items.
Shipments arrive via Muir’s Cartage Carrier to Port of Charleston or Savannah Harbor. Shipments also arrive by air freight.
Rolls of fiber glass are shipped to Saintgeobain in Dover, Ohio, where they are slit to retail size.
Products are shipped and distributed to Home Depot Retail Stores.
Shipments arrive at Home Depot Imports Distribution Center in Savannah, Georgia.
Home Depot then buys direct from Saintgobain.
Material, receiving, incoming product storage and order picking activities are conducted using conventional distribution techniques. 28
These three examples depicted in the value chain represent the flow of the product cycle. Home Depot is able to provide everyday AGV’s low prices due to their ability to eliminate distributors. Instead, (Automatic Guided Home Depot has their own line of distributors to reduce costs Vehicles) are used to relieve materials handling congestion.
Products are shipped to Home Depot Retail Stores.
The Home Depot internationally
The Home Depot® is the world's largest home improvement specialty retailer, with more than 2,200 retail stores in the United States, Puerto Rico, U.S. Virgin Islands, Canada, Mexico and China. As of the end of the third quarter of 2007, our 236 international operations represent 10.6 percent of our store base. The Company is already the largest home improvement retailer in both Canada and Mexico, in addition to the U.S. The Home Depot entered Canada in 1994 and Mexico in 2001 through a combination of acquisitions and organic growth. Both markets are examples of how 29
improvement industry with the needs, shopping trends and customs of each unique geography to best serve customers. In December 2006, The Home Depot acquired The Home Home Depot Canada is the Canadian unit of the Home Depot and one of Canada's top home improvement retailers. The Canadian operation consists of 159 stores and employs over 30,000 people in Canada. Home Depot Canada has stores in all ten Canadian provinces and serves territorial Nunavut, Northwest Territories, and Yukon through electronic means (Online and catalog sales). The Canadian unit was created with the purchase of Aikenhead Hardware. Home Depot management has an ambitious plan to overtake its biggest competitor, Rona, which has about four times as many stores. However, many of Rona's stores are smaller than the typical Home Depot store. In terms of big box stores, the Home Depot has many more stores than Rona. The Home Depot will also face competition from Lowe's as they move into the Canadian market in 2007; Lowe's first Canadian outlets will be located in Ontario. Since 1994, The Home Depot Canada has been offering its customers the ultimate home improvement shopping experience for do-it-yourselfers, do-it-for-me customers and home improvement construction and building maintenance professionals. The Home Depot Canada stores have design centres staffed by professionals who offer
free in-store consultation for home improvement projects, ranging from lighting to computer-assisted design for kitchens and decks, as well as on-site Tool Rental Centres. At-A-Glance Leadership: Annette M. Verschuren – President, The Home Depot Canada and Asia. Number of Stores:160 in 10 Canadian provinces (Alberta, British Columbia, Manitoba, NewBrunswick, Newfoundland, Nova Scotia, Ontario, Prince Edward Island,Québec and Saskatchewan) Number of Associates: More than 27,000 Format: 60,000 to 150,000 square foot retail facilities with 15,000 to 25,000 square foot garden centres Mexico Home Depot store in Mexico City, Mexico The Home Depot entered Mexico in 2001, and has since become one of the largest retailers in Mexico, operating more than 50 stores with over 6,600 employees. Most of the Home Depot stores are located in the same installations in which the extinct Home Marts were located. Border town Home Depots attract some American consumers to make their US dollar go further in purchases of mostly same home improvement products in Home Depots of Tijuana, Mexicali, Ciudad Juarez, Nuevo Laredo and Matamoros. In 2006, the Home Depot began
a program to offer Mexican employees to have "guest worker" incentives for Mexican nationals and Latin Americans to easily, but legally obtain employment in Home Depots across the US. In May 2001, The Home Depot entered the Mexico market through the acquisition of Total HOME, a four store home improvement chain, from Monterrey-based ALFA, S.A. In 2002, the company acquired Del Norte, a four-store home improvement chain. The Home Depot increased its presence in Mexico in May2004, with the acquisition of Home Mart, the second largest Mexican home improvement retailer. Under that transaction, The Home Depot acquired 20 Home Mart locations. The Home Depot Mexico is the No.1 home improvement retailer in Mexico. At-A-Glance Leadership: Ricardo Saldivar – President, The Home Depot Mexico Number of Stores: 64 (Q307) Number of Associates: approximately 7,144 Format: 54,000, 66,000 and 77,000 square-foot retail facilities with more than 20,000 products in each store China In December 2006, the Home Depot announced its acquisition of the Chinese home improvement retailer The Home Way. The
acquisition gave the Home Depot an immediate presence in China, with 12 stores in six cities. Although China is ruled by the communist party, the government allows the Home Depot to further deregulate its practices, decide on matters liberally on employee benefits and labor union membership in a socialist country. In December 2006, The Home Depot acquired The Home Way, China’s first “big box” home improvementretailer. Founded in 1996, The Home Way was the first “big box” home improvement retail chain in China. Its 12 stores, which average 90,000 square feet of selling space, are operated across six cities in China. The Home Way employs approximately 3,000 associates, of which about 260 are located at the corporate headquarters in Tianjin. Currently, The Home Depot has sourcing operations in China staffed by approximately 100 associates. The Company has been sourcing products in China, such as lighting fixtures, fans, flooring, bathaccessories, faucets, hardware and tools, for more than 10 years. At-A-Glance Leadership: Annette Verschuren, president, The Home Depot Asia Yves Chen, retail president, The Home Depot China
Number of Associates: Nearly 100 in sourcing offices; 3,000 in newly acquired retail operations
Number of Stores: 12
• http://www.homedepot.com/webapp/wcs/stores/servlet/HomeP ageView?storeId=10051&catalogId=10053&langId=1&orig_ref=http%3A%2F%2Fwww.google.co.in%2Fsearch %3Fhl%3Den%26q%3Dhome%2Bdepot%26btnG%3DGoogle %2BSearch%26meta%3D • • http://ir.homedepot.com/faq.cfm?FAQPage=FAQ http://www.datadirect.com/company/customers/docs/ 34
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http://www.homedepotfoundation.org/ http://www.microedge.com/products/casestudies/ http://www.prnewswire.com/mnr/homedepot/26373/docs/THD_ Canada_Mexico_China_Fact_Sheet.pdf
http://ir.homedepot.com/downloads/hd2007proxy-2182hd.pdf 220.127.116.11:81/Abha%20Rishi/RMM/Entry%20Strategies/Entry%20Strategies%20of %20Top%20Retailer.doc
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