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Strategic analysis of home depot supply chain
Home depot competitive strategy
Home depot competitive strategy
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Company Background
Founded in 1978 by Bernie Marcus and Arthur Blank, The Home Depot is a one stop shop, do-it-yourself home improvement retail store. The first two Home Depot stores opened in Atlanta, Georgia in 1979 as warehouses, each occupying a space of 60,000 square feet (The Home Depot, 2013). When it opened, The Home Depot was the largest hardware store, selling over 25,000 different products and offering various home improvement services (The Home Depot, 2013). From its inception, The Home Depot has provided the best customer service in the industry, as associated guide customers through various facets of home improvement projects. The company is able to provide such service because its associates attend product training, and offers its customers various free home improvement clinics. The Home Depot has transformed the home improvement industry offering the customer its expertise while also providing significant customer savings. ONE TOO MANY SENTENCES!!!
Currently, The Home Depot operates over 2,200 stores throughout the United States, Canada, China, and Mexico with each store averaging 105,000 square feet. Each of its stores carries up to 40,000 different kinds of inventory, which include building materials, home improvement supplies, appliances and lawn and garden products, and offers 250,000 other products, which can be special ordered. The Home Depot also offers its signature “lowest price guarantee” that offers to beat the prices of any of its competitors.
Supply Chain Characteristics
Sourcing strategy. The Home Depot maintains a global sourcing strategy to acquire products directly from various manufacturers around the world. The company has a merchant team that identifies and purchases products directly f...
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Reuters. (2013). http://www.reuters.com/finance/stocks/companyProfile?symbol=HD.N
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Journal of Commerce (2010). Home improvements on the supply chain. Vol. 11 Issue 22 p.8A May31, 2010 https://ehis-ebscohost-com.csuglobal.idm.oclc.org/ehost/pdfviewer/pdfviewer?sid=52342ec7-8554-49a1-88b5-f7ab8125403b%40sessionmgr4001&vid=9&hid=4111
Bartholdi, J. & Gue, K. (2004). The best shape for a crossdock. Transportation Science. Vol. 38 No.2. pp.241 ISSN0041-1655 http://www2.isye.gatech.edu/~jjb/papers/crossdock-shape.pdf
Ramos (2010). http://www.ajc.com/news/business/home-depot-getting-better-handle-on-products/nQdkD/
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
Internally the strategy moving forward was unclear. The chance to address 25,000 dealers demanded the new leadership had a clear picture of their mission moving forward. With a very narrow scope of product offerings and the slowing sales of their high-end speakers, the decision to expand into additional products, or stay focused on their main revenue source would determine the future of the company. Offering their product in the large retailer market and pulling away from the independent installers had already damaged their brand equity. Furthermore, engaging with the production home builders, while generating the necessary revenues for survival, alienated the custom installer and their referral clients. (Kerin & Peterson, 2013). Considering the relatively small size of the company combined with the dangers associated with brand extension could overstress the resources necessary to launch and maintain a new line. One of the keys to a successful concentric diversification is close coordination with existing customers and distributors. Unfortunately, the dealers that had made them successful were not pleased with their recent brand dilution. (Gordon,
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.
Threat of Entry. Lowe’s is the second largest home improvement retailer in the U.S. and is expanding into other countries. Their stores carry a wide variety of major brands with “40,000 products in stock, 500,000 items available online at Lowes.com and more than 500,000 more products available by Special Order” (Lowe's, 2014).
Home Depot’s slogan, “More saving. More Doing.”, promotes Home Depot’s marketing strategy with more appeal for customers with less money to spend. Home Depot carries major brands but also carries Home Depot exclusives and proprietary brands which save customers money. Home Depot carries major brands like Dewalt, Hampton Bay, Homelite, and Martha Stewart Living. They also carry proprietary brands such as Ryobi, Rigid, Behr, LG and Toro.
Home Depot was founded in 1978 by Bernie Marcus and Arthur Blank in Atlanta, Georgia. With their store, Marcus and Blank revolutionized the do-it-yourself home improvement market in the United States. Home Depot began as a very basic store, operated in a large, no-frills warehouse. Home Depot carries over 35,000 products, with national brand names along with the Home Depot brand. At the start, Home Depot was able to offer exceptional customer service with knowledgeable employees who could guide customers through home renovation projects. Since its opening, Home Depot has experienced incredible growth, and today is North America's second largest retailer, and the largest home improvement retailer. Internationally, Home Depot has expanded into Canada, Mexico, and is beginning to operate stores in China. Home Depot's competition includes Sears, Ace Hardware and Lowes (the main competitor).
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)
Sears Holding Corporation is the fourth largest retailer in the United States and Canada. Their supplements include Sears, Roebuck and Co. as well as K-Mart. “The closing of the merger between Sears and K-Mart took place on March 24, 2005. Sears has more than 4,000 retail stores across the United States, Canada, Puerto Rico, and Guam. Sears offers products and services through over 2,700 branded and affiliated stores. Sears operates 894 broad-line stores and 1,354 specialty stores. Sears’ broad-line stores are mall-based locations. The specialty stores include Sears Hometown Stores that are mostly independently owned, Sears Home Appliance Showrooms, Sears Hardware Stores, Sears Auto Centers, and The Great Indoor Stores (Sears Holdings, 2011).”
Home Depot, well-known by its big, bright orange box logo, is a retailor of numerous popular brands of construction and home improvement products. Reach the Top® manufactures a popular brand of ladders and scaffolding already sold by Home Depot, and...
The Home Depot is one company, of many, in the home improvement industry. This market is relatively easy to enter, in fact many materials, previously only at home improvement facilities are now available at e-commerce sites, such as “Amazon.com”. There are multiple suppliers, but those in the industry attempt to negotiate contracts with suppliers, limiting them to whom they may supply. Buyers have a great deal of power as the products sold are easily able to be substituted by products at other organizations in the industry. However, the Home Depot has built its organization so that replication of their processes and systems would be extremely difficult to replicate. They value their employees, their customers, the environment, and finance
Conclusion: Given the current economic status the home improvement industry is in a low spot with sales. With the decrease in building new homes we have to focus mainly on home improvements. The three strong points we have against existing rivalries are our great locations, quantity of quality products, and convenient customer service. With these great qualities we can move ahead and stay ahead of our competitors during these times.
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