anjalicutek
Anjali Khurana
The Home Depot (NYSE: HD) is an American retailer of home improvement and construction products and services. The Home Depot operates 2,242 big-box format stores across the United States (including all 50 U.S. states, the District of Columbia, Puerto Rico, the Virgin Islands and Guam), Canada (all ten provinces), Mexico and China.[6] (12 store chain). The Home Depot is headquartered from the Atlanta Store Support Center in unincorporated Cobb County, Georgia.[7]
In terms of overall revenue reported to the U.S. Securities and Exchange Commission, The Home Depot is the largest home improvement retailer in the United States, ahead of rival Lowe's, and the fourth largest general retailer.[8] The store operates out of large warehouse style buildings averaging 105,000 ft² (9,755 m²) with megastores operating in larger facilities (the company's largest store, located in Union, New Jersey is 225,000 ft²).[9]
The Home Depot Reinforces Its Strong Channel Strategy
ot growth? North America's number one horne retailer, The Horne Depot,
is always looking for profitable growth. The company has 1,700 stores
and $58 billion in annual sales, giving it a commanding lead over
competitor Lowe's Companies, which rings up $26 billion annually and
operates 1,000 stores. Horne Depot built its reputation with
category-killer stores that sell tens of thousands of horne improvement
products, from lumber and locks to faucets and flashlights. Consumers
tackling do-it-yourself projects, as well as building contractors, corne
for the large selection and the low prices. Nobody minds the
warehouselike ambiance.
Despite its industry dominance, Horne Depot remains committed to growth
by opening hundreds of new category-killer stores every year in the
United States, Mexico, and Canada. The company also is opening new types
of stores, adapting stores to local needs, moving deeper into the
service business, and buying complementary firms with highcgrowth
potential.
Going Upscale with Expo In 1991, Horne Depot launched an upscale chain,
called Expo Design Center, to attract affluent consumers planning to
remodel or redecorate their homes. Each Expo showcases a carefully
chosen assortment of high-end products for
kitchens, bathrooms, and every other room in the house, from
professional-quality stoves and handpainted ceramic tiles to high-tech
lighting and colorful carpeting. The convenience of one-stop shopping is
as important as the merchandise mix. Lowe's has no stores of this type,
and Sears is not making its chain of horne decorating stores, The Great
Indoors, a priority.
Although the 54-store Expo chain is profitable, it has undergone a
number of changes as management refines the retail strategy. The first
Expo store was not a big hit because many of its products were already
available in nearby Horne Depot stores. Moreover, the store looked too
much like any Horne Depot outlet. The company decided to differentiate
Expo by stocking more exclusive, higher-priced merchandise and
rearranging the showrooms to create a new layout.
In a second change, the retailer conducted marketing research with an
eye toward broadening the target market and boosting sales. Expo
originally targeted homeowners with annual household incomes of $75,000
or more and was considering lowering the annual income threshold to
$50,000. After months of research, however, the company discovered that
the typical Expo customer's household income was $100,000. These
customers were spending, on average, $40,000 to renovate a kitchen and
$15,000 to redo a bathroom with products from Expo. This convinced
management to raise rather than lower its income target and replace more
of the lower-priced products with higher-priced offerings.
Part Six Distribution Decisions
Adapting Stor.es for Different Markets By studying each area's buying
patterns, the company has developed ways to adapt its Home Depot stores
to local needs. For . example, when a housing boom was increasing
consumer and contractor demand in Anaheim Hills, California, the company
replaced a much smaller Home Depot with a well-stocked store the size of
four football fields. Landscaping is big business here, so the garden
center is twice the size of those in most Home Depots, complete with a
drive-through checkout for customers buying in bulk. Instead of 3
display areas of bathroom fixtures, the new store has 21 such displays.
Moreover, products for consumers are shelved separately from products
for contractors. This means consumers don't have to walk through aisles
of cement and lumber to find household glue or lawn mowers, and
contractors can readily find what they want and check out quickly.
Home Depot has opened several stand-alone Landscape Supply stores in
markets where demand for such products is especially high. It has also
developed a smaller type of Home Depot store for city locations,
carrying only items appropriate to urban custOmers. Meanwhile the
company is investing nearly $2 billion to make all of its stores more
attractive through neW lighting, new signs, upgraded flooring, and other
improvements.
Online and Beyond Online retailing is an important part of Home Depot's
growth strategy. The website HYPERLINK"http://www.homedepot.com"
(www.homedepot.com) acts as an online catalog for consumers and
business customers to browse before buying via the Internet or visiting
a neighborhood Home Depot store. It also contains extensive educational
material to help consumers plan and implement home improvement projects
and explains how the company works with building professionals.
Internet sales are increasing, but the stores remain the company's main
focus. To enhance its differentiation, Home Depot is increasing its
inventory of product lines not available elsewhere, such as Ridgid
professional tools, and expanding its tool rental program. In addition,
it is gearing up to become a major player in home improvement services.
On the consumer side, Home Depot wants to offer services for many
materials installation and home repair projects. On the business side,
it wants to provide floor installation and other services to
construction professionals. To accomplish this, Home Depot will be
making more acquisitions such as its recent purchase of Creative Touch
Interiors, a company that contractors hire to install flooring and
counters.
Behind the Scenes Home Depot constantly reevaluates its physical
distribution system to find ways to eliminate inefficiencies and give
the stores
more support. At one time, it required suppliers to deliver ordered
merchandise directly to
individual Home Depot stores. Today
the company
has gained more control over the timing of inventory replenishment by
having suppliers
ship merchandise to its
regional distribution centers. Once a ship-
ment arrives, it is sorted and repacked according. to each store's
order, then loaded onto trucks forimmediate delivery. This system allows
Home Depot to restock sold-out merchandise within 24 hours.
The company· has also found a solution for the potentially expensive
problem of storing huge quantities of seasonal inventory. Rather than
building warehouses that will stand empty when not storing snow blowers
in the winter and grills in the· spring, Home Depot rents space in
public warehouses near its storeS. Each company that rents space in this
kind of warehouse has its own entrance and is responsible for managing
the goods in its part of the building.
If Home Depot had thousands.ofsmall or perishable items to store in
different quantities for different periods, it would need highly
automated warehouses. However, because it holds a narrower range of
large products for a limited time, the company can make do without the
sophisticated technology and equipment that keep its distribution
centers humming. Each store manager uses special PC software to check on
what is available in the shared warehouses and place orders as needed.
The company then arranges a speedy transfer of merchandise from the
appropriate warehouse to the individual store. Now the distribution
centers can concentrate on getting year-round goods to the stores as
quickly as possible, and Home Depot can free up funds to fuel its
ongoing growth.
In terms of overall revenue reported to the U.S. Securities and Exchange Commission, The Home Depot is the largest home improvement retailer in the United States, ahead of rival Lowe's, and the fourth largest general retailer.[8] The store operates out of large warehouse style buildings averaging 105,000 ft² (9,755 m²) with megastores operating in larger facilities (the company's largest store, located in Union, New Jersey is 225,000 ft²).[9]
The Home Depot Reinforces Its Strong Channel Strategy
ot growth? North America's number one horne retailer, The Horne Depot,
is always looking for profitable growth. The company has 1,700 stores
and $58 billion in annual sales, giving it a commanding lead over
competitor Lowe's Companies, which rings up $26 billion annually and
operates 1,000 stores. Horne Depot built its reputation with
category-killer stores that sell tens of thousands of horne improvement
products, from lumber and locks to faucets and flashlights. Consumers
tackling do-it-yourself projects, as well as building contractors, corne
for the large selection and the low prices. Nobody minds the
warehouselike ambiance.
Despite its industry dominance, Horne Depot remains committed to growth
by opening hundreds of new category-killer stores every year in the
United States, Mexico, and Canada. The company also is opening new types
of stores, adapting stores to local needs, moving deeper into the
service business, and buying complementary firms with highcgrowth
potential.
Going Upscale with Expo In 1991, Horne Depot launched an upscale chain,
called Expo Design Center, to attract affluent consumers planning to
remodel or redecorate their homes. Each Expo showcases a carefully
chosen assortment of high-end products for
kitchens, bathrooms, and every other room in the house, from
professional-quality stoves and handpainted ceramic tiles to high-tech
lighting and colorful carpeting. The convenience of one-stop shopping is
as important as the merchandise mix. Lowe's has no stores of this type,
and Sears is not making its chain of horne decorating stores, The Great
Indoors, a priority.
Although the 54-store Expo chain is profitable, it has undergone a
number of changes as management refines the retail strategy. The first
Expo store was not a big hit because many of its products were already
available in nearby Horne Depot stores. Moreover, the store looked too
much like any Horne Depot outlet. The company decided to differentiate
Expo by stocking more exclusive, higher-priced merchandise and
rearranging the showrooms to create a new layout.
In a second change, the retailer conducted marketing research with an
eye toward broadening the target market and boosting sales. Expo
originally targeted homeowners with annual household incomes of $75,000
or more and was considering lowering the annual income threshold to
$50,000. After months of research, however, the company discovered that
the typical Expo customer's household income was $100,000. These
customers were spending, on average, $40,000 to renovate a kitchen and
$15,000 to redo a bathroom with products from Expo. This convinced
management to raise rather than lower its income target and replace more
of the lower-priced products with higher-priced offerings.
Part Six Distribution Decisions
Adapting Stor.es for Different Markets By studying each area's buying
patterns, the company has developed ways to adapt its Home Depot stores
to local needs. For . example, when a housing boom was increasing
consumer and contractor demand in Anaheim Hills, California, the company
replaced a much smaller Home Depot with a well-stocked store the size of
four football fields. Landscaping is big business here, so the garden
center is twice the size of those in most Home Depots, complete with a
drive-through checkout for customers buying in bulk. Instead of 3
display areas of bathroom fixtures, the new store has 21 such displays.
Moreover, products for consumers are shelved separately from products
for contractors. This means consumers don't have to walk through aisles
of cement and lumber to find household glue or lawn mowers, and
contractors can readily find what they want and check out quickly.
Home Depot has opened several stand-alone Landscape Supply stores in
markets where demand for such products is especially high. It has also
developed a smaller type of Home Depot store for city locations,
carrying only items appropriate to urban custOmers. Meanwhile the
company is investing nearly $2 billion to make all of its stores more
attractive through neW lighting, new signs, upgraded flooring, and other
improvements.
Online and Beyond Online retailing is an important part of Home Depot's
growth strategy. The website HYPERLINK"http://www.homedepot.com"
(www.homedepot.com) acts as an online catalog for consumers and
business customers to browse before buying via the Internet or visiting
a neighborhood Home Depot store. It also contains extensive educational
material to help consumers plan and implement home improvement projects
and explains how the company works with building professionals.
Internet sales are increasing, but the stores remain the company's main
focus. To enhance its differentiation, Home Depot is increasing its
inventory of product lines not available elsewhere, such as Ridgid
professional tools, and expanding its tool rental program. In addition,
it is gearing up to become a major player in home improvement services.
On the consumer side, Home Depot wants to offer services for many
materials installation and home repair projects. On the business side,
it wants to provide floor installation and other services to
construction professionals. To accomplish this, Home Depot will be
making more acquisitions such as its recent purchase of Creative Touch
Interiors, a company that contractors hire to install flooring and
counters.
Behind the Scenes Home Depot constantly reevaluates its physical
distribution system to find ways to eliminate inefficiencies and give
the stores
more support. At one time, it required suppliers to deliver ordered
merchandise directly to
individual Home Depot stores. Today
the company
has gained more control over the timing of inventory replenishment by
having suppliers
ship merchandise to its
regional distribution centers. Once a ship-
ment arrives, it is sorted and repacked according. to each store's
order, then loaded onto trucks forimmediate delivery. This system allows
Home Depot to restock sold-out merchandise within 24 hours.
The company· has also found a solution for the potentially expensive
problem of storing huge quantities of seasonal inventory. Rather than
building warehouses that will stand empty when not storing snow blowers
in the winter and grills in the· spring, Home Depot rents space in
public warehouses near its storeS. Each company that rents space in this
kind of warehouse has its own entrance and is responsible for managing
the goods in its part of the building.
If Home Depot had thousands.ofsmall or perishable items to store in
different quantities for different periods, it would need highly
automated warehouses. However, because it holds a narrower range of
large products for a limited time, the company can make do without the
sophisticated technology and equipment that keep its distribution
centers humming. Each store manager uses special PC software to check on
what is available in the shared warehouses and place orders as needed.
The company then arranges a speedy transfer of merchandise from the
appropriate warehouse to the individual store. Now the distribution
centers can concentrate on getting year-round goods to the stores as
quickly as possible, and Home Depot can free up funds to fuel its
ongoing growth.