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 Advantages1. 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

Factors

Main Competitors  

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 1700 900 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 presence

179 stores in Canada, 77 in Mexico and 11 in China

16 stores in Canada and 2 in Mexico opened in 2010 Canada, USA 

Home Depot Geographical Expansion

Canada, 1994-Number of store: 179 in 10 Canadian States

-Format of stores: 60,000-150,000 (retailer) and 15,000- 25,000 (garden center)

Mexico, 2001

-Number of store: 77

-Format: 66,000-77,000

-Mergers: Total HOME, Del Norte, 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

Technology

1.RFID retailing

2. Online retailing

Environmental

1. Label introduced on nearly 3000 products

2. Consumer preference of environmentally safe 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