1. Business Model According to Don Debelak of entrepreneur.com “A great business models depend on developing three "green lights," or qualities that help the business succeed: finding high-value customers, offering significant value to customers, and delivering significant margins. Great business models also avoid three "red lights" that can derail a business: difficulties in satisfying customers, trouble maintaining market position, and problems generating funding for growth.”(entrepreneur.com, 2007) The Company operates retail stores and call centers, and conducts online retail operations. Home Depot is considered a service based business. Home depot depends on people and the client experience and it also targets different markets in general. 1.1Market Model A market model states the return generated by a security is dependent on that generated by the market portfolio and the degree to which the security responds .Market model basically outlines the customer’s position in the industry and net worth. Home Depot has witnessed phenomenal growth with the stock price growing by over 270% in the last five years according to Forbes magazine. Home depot is currently the leader among competitors like Lowes with a ~27% share. (www.forbes.com, 2015) 1.2 Financial Model The main source of revenue for Home Depot is the sale of home improvement goods and services. Home depot caters to three main types of retail customers DIY (Do It Yourself Customers), DIFM (Do It for Me Customers)
Financially, Home Depot has had a strong fiscal year with “ reported sales of $24.9 billion for the second quarter of fiscal 2015, a 4.3 percent increase from the second quarter 2014” (The Home
Home Depot is the fastest growing retailer in the U.S. by some accounts. It has a fascinating history of innovation and entrepreneurship. The company had some difficulties in the mid-2000s that some attribute to cultural clashes. However, during this period the company was able to take full advantage of the housing boom. Yet when the bubble burst, Home Depot was forced to claim substantial losses. Despite these loses Home Depot has weathered the storm fairly well and is in prime position to take advantage of an economic recovery; if it ever comes.
Home Depot caters to the three categories of customers. Do-It-Yourself Customers (DIY): These customers are typically home owners who purchase products and complete their own projects and installations. Do-It-For-Me Customers (DIFM): These customers are typically home owners who purchase materials themselves and hire third parties to complete the project or installation, or both. Home Depot arranges for the installation of a variety of The Home Depot products through qualified independent contractors. Professional Customers: These customers are professional remodelers, general contractors, repairmen, small business owners and
Home Depot and Lowe's believe in big warehouse space, an informal atmosphere and low prices. They are able to offer the lower prices to consumers due to their purchasing power. Inventory differs depending on the story type, home centers typically sock more lumber and building supplies, as their biggest customers are contractors. They pay their floor employees minimum wage, and keep overall costs down by keeping them as part time employees.
Home Depot’s corporate-level strategy is one of internal growth. This conclusion was reached based on the increased focus that Home Depot has placed on growing its existing online and traditional retail operations. Between 2016 and 2018, Home Depot is expected to invest approximately four billion dollars into improvements in its online and physical retail locations in order to make both work more synergistically and grow sales (Petro, 2016). Home Depot hopes that these investments will continue to increase sales at both its physical and digital retail locations, thereby growing the company without adding significant numbers of physical locations.
Home Depot (HD) is a home improvement retailer specializing in a high volume and low cost strategy. HD offers a variety of products spanning from lawn and garden to home improvement. Table 1 compares Home Depot to Lowes. HD overall market cap is more than 2 times Lowes. HD tends to be more affected by movement in the market than Lowes as demonstrated by their Beta values.
The Home Depot’s two main customers are at home “do-it-yourselfers” and contractors. The main products and services offered help solve the wants and needs of customers involved with home construction and maintenance,
The Home Depot (NYSE: HD) is a home improvement, construction products and services retailer operating over 2,000 big-box stores in the United States and abroad. The Home Depot was founded in 1978 by Bernie Marcus and Arthur Blank with the vision of one-stop shopping for do-it-yourself (DIY) customers, installation services for do-it-for-me (DIFM) customers and competitive products for the professional market. Their DIFM installation programs include products such as carpeting, flooring, cabinets, countertops, and water heaters. In addition, the company provides installation of various professional products like generators and HVAC systems.
SWOTT AnalysisStrengths (internal)The Home Depot is a large organization that focuses on two major buying segments. The self employed general contractor who can go to The Home Depot for all their buying needs and secondly the weekend warriors. Those would be the average working person who likes to do things and build things themselves. This has been a strength and staple for The Home Depot from its infancy as an organization.
Home Depot competitors are primarily in the home improvement and hardware retail industry, but also compete in the building materials retail and distribution, consumer electronics and appliances retail, and convenience stores and truck stops sectors. Some of Home Depot’s main competitors include: Lowe’s, True Value, and Ace Hardware. Now, these competitors are the main competition of Home Depot and all three stores carry about 75% if not more of what Home Depot sells. Keep in mind, that there are also smaller companies, often family-owned lumberyards or hardware stores that compete with Home Depot and the other large chain stores. However, Home Depot’s biggest competition is Lowe’s. “Home Depot and Lowe’s are home
Home Depot is the world's largest home improvement retailer operating in 45 states, Canada, Chili and Puerto Rico. Home Depot stores aim to serve both do-it-yourselfers and professional contractors with home improvement superstores carrying between 40,000 and 50,000 different products. Home Depot has also been listed as one of Fortune's most admired specialty retailers for the past six years. In order for companies to succeed in the competitive current marketplace they must consider not only the bottom line and their investors but also their impacts on the community, their employees, and their customers. Home Depot was founded on the idea that treating employees well is an important responsibility. Home Depot believes employees that are
HD Supply serves customers in the Infrastructure & Energy market which includes services in building and maintaining water systems, oil refineries and petrochemical plants, and for the generation, transmission and distribution of electrical power. Home Depot identified HD on their Consolidated Statement of Earning for discontinued operations.
Home Depot 's target market is individual homeowners/small contractors. Even though the traditional ideology is that cost leadership and product differentiation business strategies are mutually exclusive, Home Depot was successful at using a combination strategy. First, Home Depot optimized the cost leadership strategy by offering low and competitive prices to its customers by emphasizing higher sales volumes with lower margins, while instituting a high inventory turnover. Home Depot successfully offered a warehouse product strategy to the individual consumer for the first time. Previously, this type of price discounting was only available to professional contractors who earned product price
The Home Depot Inc. was founded in 1978 and is the world’s largest home improvement retailer and the second largest retailer in the United States. The sales for the fiscal year 2000 were $45.7 billion, compared to $38.4 billion in fiscal 1999. As of January 2001, the company was operating 1,134 retail stores in forty-seven states, six Canadian provinces, Puerto Rico, Chile and Argentina.
Starting with their products their focus is “retail service”. Followed by independent contract services. Furthermore, home depo products focus on home improvement products from 3rd parties and home depot house brands. Next, Home Depot focuses on “Place”. Their main