Sidorenko Natalia

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Background of the company Key milestones Key highlights Company main features Competitive advantage Key competitors Pestel analysis 5 Forces analysis 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.

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♦ 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
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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
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-An average store generates $30 million in sales per year -Stores are supplied directly from manufacturers.

Competitive Advantages
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
Market Capital Number of stores Employees Store Footage Store stock Cunsumers per week Revenue Gross margin EBITDA Geographical presence 6,93B 100,000 15,000 million 66,21 B (2009) Main Competitors    HD 53,05 B (2008) 2242 322000 60,000-150,000 80,000 40,000 14,000 million 47,22B (2009) 2,01B 34,86%11.3%   46,770 (2008)  27.1% 1,034 B Canada, USA  Lowe`s True Value Sears 50,7 B(2008)_ 1200 3000 314,000 34,59B (2008) 64,2 M (2008) 1700900 228000 50,000 60,000 92,000-166,000

34,09% 4,85B

179 stores in 16 stores in 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 center) Home Mart

China,2006 (source product more than 10 years) -Number of store: 11 in 5 cities -Format: 90,000 -Mergers: The Home Way

United Kingdom and South Africa (Chili, Argentina)

Pestel analysis
Legal Factors 1. The Occupational Safety and Health Act of 1970 2. the Consumer Product Safety Act of 1972 Economical Factor 1. Crisis in USA Economy 2. Decrease of housing construction market

1. Label introduced on nearly 3000 products 2. Consumer preference of environmentally safe products

Technology 1.RFID retailing 2. Online retailing

1. Constantly changing consumer tastes, preferences, spending patterns and home improvement needs

5 Forces analysis


-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

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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)

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Long term strategy: – geographical expansion of store network through acqisition and openning new stores. -IT development - to improve customer service and develop ecommerce business. -Global Sourcing and Distribution