The following presentation addresses a case study of Home
Depot using data from 2005. Home Depot’s problems of military-style managing and HR practices lead to static stock prices in 2005, while Lowe’s saw extreme growth. After analyzing Home Depot’s history, research was performed on
Home Depot’s current situation. From those results, a threepart marketing recommendation was proposed.

More saving. More Doing.

Case Background
Situational Analysis
Industry Analysis
Financial Analysis
Research
Recommendations

 CEO: Bob Nardelli
 Company “being run with military-style precision”
 Culture=militaresque
 13% of employees have military experience
 4 th largest retailer in the nation

 Biggest problem :
Suffering with customer service
 No stock price increase
 Cutting experienced employees (HR)
 Bob Nardelli – CEO
 Started Home Depot
Supply
 Getting away from retail
 Problem : managerial style
 Ousted in 2007

• Hired more than 60,000 veterans since 2004
• Employ current and retired members of the military
• “Top 25 Military Employers” by G.I. Jobs
• Provide same opportunities for spouses
• Project Homefront: repair homes while they defend the country

Create the Home of Your Dreams
Services
Stores and Products
Home
Services
Serving
Professional
Customers
Free How-To
Clinics
Kids
Workshops
Home improvement supplies
Appliances
Lawn and
Garden
Needs

1978 : Founded by Bernie Marcus and Arthur Blank
4 th Largest
Retailer in the
U.S.
1979 : 2 stores open in Atlanta,
GA
More than
300,000 associates
2,200 stores; in
US, China,
Canada &
Mexico
2004 : Military programs begin
2007 : Frank
Blake became
CEO
2009: Housing bubble hit bottom line. Recovery?

“Fastest growing retailer in US
History”

 Values make up their competitive advantage
 Associates part of the
Home Depot Team
 “orangeblooded” entrepreneurial spirit
 All comes down to providing best customer service

trengths eaknesses
• Brand Recognition • Customer Service
• Reputation
• Inventory
• Military Support
• Number of Locations
• Not geared towards women like Lowe’s
• Stagnate culture pportunities
• Targeted Marketing
• Eco-friendly home improvement materials
• International Expansion hreats
• Lowe’s growth
• Poor economy
• Smaller home improvement shops

Home Improvement Industry
 Recovering from recession and lack of spending on home improvement
 High growth expected as economy recovers
2011 2012 2013 2014 2015 2016
Billion
Dollars
269.4 283.0 296.1 313.5 331.9 345.5
%
Change
3.8 5.0 4.6 5.9 5.9 4.1

 1,710 Stores
 Expansion to Australia
 Based out of
North Carolina

 4,444 Stores
 Owned as Co-Ops
 Each store different
 Same Key Product Lines

 4,500 Independent Stores  Lower Price Point
 Individually Owned / Smaller  Lower Quality

 Success in Rural areas
 4,468 strong
 Logistical King
 Pricing Point

Home Depot
 Sales rose from $46 billion in ‘00 to
$81.5 billion in ’05
 12% growth rate
 Profits rose to $5.8 billion.
 1.1 billion investment technology
 Self checkout aisles, in-store Web kiosks.
 Gross margins rose from 30%-33.5%
 Split-adjusted share price down 7%
Lowe’s
 Sales growth of 19%.
 Closed gap with gross margins with
Home Depot.
 Split-adjusted share price rose 210%

Home Depot
 3.9 billion net earnings ( up from 3.3 billion previous year)
 Net sales increased 3.5% to
$70.4 billion
 25% share of market
 24.3 billion gross profit (rose
4.1%)
Lowe’s
 1.8 billion net earnings
(declined by 8.5%)
 Net sales increased 2.8% to
$50.2 billion
 Gross margin declined slightly.
 Stock only up 5% in past 5 years

 Buy Online Pick-Up In Store
 3 rd quarter 2011
 Increase online business
 International Expansion
 Current presence in Mexico and China
 Pursuing opportunities in Great Britain and
South America
 Eco Options-continuation
 Energy saving tools
 Partnered with the US Green Building
Council
 Recycled batteries and cardboard through a recycling program in the U.S.

What store do you go to the most for home improvement needs?
188 Respondents
3%
8%
7%
19%
27%
36%
Lowes
Home Depot
Wal-Mart
Ace Hardware
Local stores
Other

Rank what you look for when shopping at home improvement stores.
Men Women
Loyalty Location
Customer service Customer service
Price
Location
Price
Loyalty

Compare your customer service experiences between
Lowe’s and Home Depot.
 “Home Depot makes it convenient to get in and out fast.” – Dad
 “Both stores seem to be outgoing in helping me find everything I would need for a project.” - Boss
 “I feel calmer and happier when I walk into a
Lowe’s, Home Depot is a little overwhelming and grim.” – Mom
 “I really value the one on one help, I don’t feel I get that when I go to WalMart for the cheaper price.”
–Student

Looking at Home Depot
From the Inside…
 “One area we want to dominate our competitors in is customer service” – Home Depot Store Manager
 “We could definitely do more with our loyal customers. There is a lot of potential.”
- Home Depot Marketing Manager

 Implement a “Raving Fans” Culture
 Stresses giving the customer a “plus one” experience
 Ravings Fan Board
 Target stores saw significant results with implementation of this approach

 Improve loyalty program
 Discounts
 Special Workshops & Events
 Contests

 Many new markets to target
 Women
 College Students
 Kids

 www.homedepot.com
 www.lowes.com
 Mintel Reports
 Home Improvement Research Institute
 Annual Reports
 Employee Interviews