When it comes to home improvement projects, the one-stop shop, Home Depot should come to mind. As one of the world’s largest home improvement specialty retailers, Home Depot operates over 2,256 stores throughout the U.S., Canada and Mexico. The home improvement store offers a variety of products, ranging from lumber to appliances, to name a few. Geared towards the DIY marketing demographic, Home Depot was founded by Bernie Marcus and Arthur Blank in 1978. The first formal stores opened June 1979 in Atlanta, Georgia.
Seamlessly overshadowing the competition, Home Depot prided itself on offering the best customer service the industry had seen. Store associates were trained to guide customers in an array of do-it-yourself (DIY) projects. Being able to offer such expertise at affordable prices revolutionized the industry of home improvement. The decentralized business model Home Depot
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operated with was the means of their early success. Stores were independently managed and housed knowledgeable staff with backgrounds in related industries and trades. Before inventory management was automated, it was up to the regional and store managers to determine what merchandise the stores would carry as well as the quantity to be kept in stock.
The merchandise would be shipped directly to the stores and distributed from there, seeing as the stores were also their distribution center. With all of the early success, Home Depot remained a low tech company. Following the same business model and information systems strategy, Home Depot was able to maintain it for the initial 25 years. Management’s focus was more directed towards growth and expansion of the company rather than technological advancement.
With this push to saturate the market with the Home Depot franchise, there came trouble. The expansion into smaller stores of the secondary market led to smaller stores not being equipped to house all of the merchandise, which led to merchandise not being available in store when customers came. This also caused delivery trucks to only transport half of the inventory and store associates having to spend more time stocking shelves than helping
customers. By the time the founders, Marcus and Blanks retired in 2000, Home Depot had lost the competitive edge it held in the industry for so many years, to a new store, Lowes. Lowes offered a more modern take on home improvement with more upscale goods geared towards the female demographic. New chairman, president and CEO, Robert Nardelli attempted to run the company more efficiently. Initially, Nardelli’s practices had benefits for the company by doubling earnings and lowering expenses. However, they eventually came at a cost. The homegrown systems had become too expensive to run and modify. Billions of dollars were invested in an IT infrastructure overhaul. Nardelli worked to lower operating cost and raise shareholder’s returns. However, all these strategies did nothing to bridge the gap that Lowes had created. Lowes was still making the customer the number one priority. A strategy Home Depot seemed to have steered away from. It wasn’t until Frank Blake took over in 2007, that Home Depot went back to serving the customers as the primary motive of the business. With help from other Home Depot Executives, Matt Carey and Mark Holifield, the establishment of Rapid Deployment Centers and automated inventory management systems would soon follow. By automating the inventory management systems, general stock level decisions that were initially the responsibility of the local managers were now taken care of. Managers could now focus on the specific needs of specific locations. The design makeover that Home Depot’s website underwent also rendered some profitable outcomes once they began selling the same merchandise as the stores and then some.
Established as the older company of the two, Lowe’s ranks forty-second as a Fortune 500 company. Established in 1946 as a small hardware business, Lowe’s has grown into a 40,000 product, global market enterprise that consist of 1,710 stores nationwide expanding into the countries of Canada, Mexico and Australia (Lowe's Internal, 2010) Home Depot, founded in 1978, is the fastest growing retailer in the United States. Ranked twenty-ninth as a Fortune 500 company, Home Depot continues to remain the number one do-it-yourself retail store in America. These two companies may sell products of the same nature, but comparing their Code of Ethics is their way of setting themselves apart. (Home Depot Internal, 2009)
Home Depot is the brainchild of Bernard Marcus and Arthur Blank and came about after both men lost their job in the home improvement industry in 1978 (Parnell, 2014). Home Depot has acquired several smaller home improvement stores in both the U.S. and abroad through the years which enabled it to position itself as the world’s largest home improvement chain (Parnell, 2014). Home Depot focuses on the do-it-yourself segment of the market and sells sells tools, construction products and services. Marketing is a strong point for the company. They are able to maintain a competitive advantage by keeping themselves available to their customers at all times. Home Depot has been using both online and offline marketing efforts. The internet has become a very useful tool for the company and part of the reason that they are leading the market in DIY stores. Home Depot currently provides DIY videos on YouTube and Vine that cover current topics that consumers are likely to be interested in. They also have social media pages on Facebook and Twitter, where they have a huge following. They provide online communities where actual employees answer consumer’s questions and provide assistance on
Opening its doors for the first time in 1946, Lowe’s is now the second largest home improvement chain in the world, operating over 1,800 stores in the United States, generating $56.2 billion in sales and $2.6 billion in net income for 2014 (Lowes Newsroom, 2015). Employing around 265,000 personal making them one of the top employers in the nation, there is no question that Lowe’s must be doing something right. According to Lowes Newsroom, “Lowe’s professional customers represent approximately 30 percent of total sales, approximately 16 million retail and professional customers are served each week. (2015, para 3) “Never Stop Improving”, is Lowe’s slogan; encouraging employees and customers to work together to maximize their in store
In the early 2000’s Lowe’s was rapidly intensifying its presence nationwide. The company carried a varied assortment of home improvement products and catered to the needs of retail as well as commercial business customers. Lowe’s expanded their reach by acquiring a 41-store chain, Eagle Hardware and Garden, and engaging in a strategic alliance with HGTV to obtain a more profound existence in their market (Rouse, 2005). By 2004, Lowe’s operated almost 1,000 stores with plans to continue expansion across the nation (Rouse, 2005). The company has a core competency in helping customers meet their home improvement needs at a low price. In order to use this core competency to gain a competitive advantage, the company has focused on key functional strategies. To continue their success, Lowe’s must specifically focus on marketing, logistics, and human resource management strategies.
The Home Depot learned the hard way that you must hire a leader that will stay true to the core values. The leader’s ethics and values will play a huge role in determining if the company will succeed or fail. The founders of The Home Depot built a culture on the foundation of respect, integrity, and compassion. The culture and customer service under the influence of the admired founders prospered.
Lowe’s employs more than 260,000 people in more than 1830 stores; these employees are trained to provide exceptional customer service as well as receiving up-to-date product knowledge to assist customers with their improvement needs. In addition, Lowe’s has upgraded store information technology infrastructure to assist employees in accessing product data faster and easier. This is accomplished by providing the sales team with computers that have Internet access, and Ipad’s and Iphone’s loaded with specialized apps (Lowes, 2014).
Home Depot was started in 1978 as a one-stop shopping for do-it-yourselfers. As the fastest growing retailer in U.S. History, Home Depot went public on NASDAQ in 1981, and moved to the New York Stock Exchange in 1984. By 1989, Home Depot had opened its 100th store. In 1994, Home Depot moved into Canada with the acquisition of Aikenhead’s, in 2001, they moved into Mexico with the acquisition of Total Home. Home Depot acquired The Home Way in China in 2006.
The Article, "Renovating Home Depot," describes how, since the arrival of the new Chief Executive, Robert Nardelli, the business strategy has shifted to a more militaristic style. In the beginning, Home Depot was a "decentralized, entrepreneurial" business, and now is switching to a different management style. Nardelli loves to hire ex-soldiers, and is perhaps using the armed services as a role model for the new business structure. Under Nardelli's leadership, Home Depot is becoming more centralized and the good financial reports following this are signs that it a good strategy (Grow 50).
Lowe’s Companies, Inc. is averaging the opening of about two stores per week. This is part of an unprecedented two billion dollar store expansion, which is the most aggressive expansion in the company’s fifty-five year history; thus, magnifying Lowe’s locality and customer convenience in the United Sates home improvement marketplace. Lowe’s new superstores are currently the largest in the home improvement marketplace, averaging a retail space of about 150,000 square feet. (http://www.lowes.com)
Second, the rapid development of the Home centers such as The Home Depot, with prices 30% less than the traditional hardware store made Black & Decker to lose market share to Makita. As per Exhibit 2 we could notice that in the home center channel that represent 25%of the trades...
Sears has seen many different changes in business and has had to adjust to t...
After each order is made, the product is either picked from the store or ordered from one of the central hubs. If a product is ordered from a hub, an employee needs to track down the part, count out the correct amount of pieces, and ship the product. Once the product is shipped to the store, employees need to receive the parts and then deliver them to the customer. Behind every part bought, there is an extensive amount of labor time put into getting that product to the customer. Not only do the companies need to have labor to produce and distribute products, they need high-end technology to develop and distribute their products.
Bianchi, C. (2006). Home Depot in Chile: Case study. Retrieved January 10, 2011, from http://www.carlospitta.com/Courses/Gestion%20Financiera%20Internacional/Cases/Home%20Depot%20Case.pdf
The inventory issue also ties in with transportation problems where accurate lead and delivery times are non-existent. The inventory turnover is not at its full potential because if the DC has merchandise yet the stores are stocked out, the inventory is frozen and will become obsolete.
From the manufacturers’ warehouse to the shelves, the business must orchestrate a symphony of the right products to the right places at the right times. Walmart serves customers and members more than 200 million times per week in retail outlets, online and on mobile devices. The company is able to offer a vast range of products at the lowest costs in the shortest possible time (Chandran, 2001). The main reason for this incredible growth of Walmart is because its distribution centers are highly automated.