Home Depot
...ids at a building supply store? Children ages 4 to 12 will spend or influence more than $550 billion, or 20 percent, of retail spending. When Home Depot puts on special kid promotions, sales can jump as much as 30 percent, because families stay longer and return more often when children are content. In addition to boosting sales, the kid’s workshops have a long-term goal. "We're building the customers of the future," said Suzanne Apple, a Home Depot vice president. Home Depot understands it is never too early to build brand loyalty. One of the most important moves Home Depot has made is with its Internet strategy. The Web site has personalization features for visitors. The visitors can store favorite how-to projects and sign up to receive personalized e-mail newsletters containing advice and an announcement of events at their local store. Home Depot has launched e-commerce, which allows customers to buy Home Depot products directly from the Internet and have it delivered to their door. In preparation to compete with manufacturers already selling direct online, Home Depot sent a letter warning manufacturers not to compete with them for customers online. It’s up close and personal approach has been pivotal in Home Depot's success. Through strategic planning, Home Depot has worked its way to the top of the hardware industry. It is the number one company among a limited number of chains, including its main competitor, Lowe's. While Lowe's is constantly working to claim the industry's top spot, Home Depot uses the defender part of its analyzer strategy to always stay one step ahead. Home Depot has developed an effective strategy, which is a comprehensive action plan that identifies long-term direction and guides resource utilization to accomplish objectives and gain a competitive advantage. The company has been able to gain this competitive advantage, while other hardware stores follow its lead. E-commerce is its latest attempt to outdo the competition and bring in more profit. While e-commerce is Home Depot's most recent strategy to stay ahead, it also has developed new floor plans to keep people coming into the store. Home Depot and Ace Hardware launched a plan in January aimed to lure the female shopper. Four Home Depot stores will get an up-dated look, with a new layout and better lighting. The plan is to lower the noise level and place an emphasis on more decorative merchandise. This new look is also to appease contractors and professionals. For years, customers have shopped in the messy hardware store atmosphere, but Home Depot is testing ways to make this a more pleasant experience. Before expanding this idea to every location, they are testing the layout in a few stores. These stores will have showrooms, be brighter and offer more space. Home Depot is constantly experimenting with store designs as part of its strategy to increase profit and attract a larger customer base. These changes have been in the works for many years, and are partly in response to the claim that Lowe's has a more spacious, brighter atmosphere. While Home Depot is using corporate strategy to maintain its position, Lowe's is doing the same in an attempt to gain the advantage. Both are directing their efforts to reach this competitive advantage, and Lowe's is building between 20 and 30 stores in Chicago to compete with Home Depot. Chicago is the nation's largest hardware market, and Lowe's is ready to make its presence known. The hardware store plans to have stores adjacent from Home Depot, but the number one hardware store is ready for the competition. In a December investor’s conference, Home Depot revealed its strategy to increase its status. The hardware store planed to double in size over those next several years while it boosted sales. They planed to accomplish this by adding more tool rental centers inside the stores, developing new home improvement loans and offering major appliances. This expansion illustrates the growth strategy of business, when companies grow in size or expand current operations. That expansion affected more than just Home Depot's major competitors. Home Depot had also effected the operations of small, family-owned hardware stores. Although Home Depot tends to be an analyzer, this action is typical of a defender. It uses its power to get smaller hardware stores to fold, forcing more customers to head for the chain stores. Smaller stores, such as Seitz-Agin Hardware Co. in Cleveland Heights, have had to change the types of products they sell because of this. While many of these stores fail when larger stores come to town, Seitz-Agin was able to survive because they used a strategic management plan. By making the store more service orientated, they are able to compete with the chain stores, while most others fold. As a prospector, the hardware store is not afraid to add things to its product line, such as appliances and tool kit rental centers and rental trucks. Home Depot's personality of arrogance, innovation and ambition drives its motivation to succeed. Home Depot's carefully thought out strategies and methods to stay on top have kept them there, and have kept competitors waiting for what it will do next. SWOT Analysis Strengths - Rapid expansion - Establishing a brand name - Corporate structure: - training - Personal involvement of CEO - store managers - Bottom-up training - train the carry-out people first - Use of technology - Satellite communications - UPC scanning - 1989 - Customer service - Differentiation based on service - Human resource - Stock options - Reduced cost in shares (15% discount) - Authority Vs. responsibility - If a store manager wants to change the display or order more/less of a product they do not need to get authorization from headquarters - Cannibalization of sales of new stores to existing - Home Depot will open up new stores close to existing stores to: - Improve customer satisfaction - Reduce delays in shopping - Increase utilization by existing customers - Attract new customers to more convenient locations - organizational structure: - Decentralized management: - Casual working environment in the corporate offices, according to an Human Resource spokesperson - Regional managers - There are 20 regional managers - Each one is only responsible for six to eight stores Weaknesses - Rapid expansion - May be expanding too quickly and growing faster than corporate culture can handle - Corporate structure - Promoting from within - only will get an inside prospective - Advertising - Their strategy calls for aggressive adverting yet their sales are growing exponentially, yet advertising is stagnate - Only targeting on sub market - DIY - Suppliers - Purchasing from 1900 -...