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Case Analysis Home Depot

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HOME DEPOT

Home Depot is the world’s largest home improvement chain and second largest retailer after Wal-Mart. The giant home improvement retailer leads the DIY industry that is followed by Lowe’s. Stores are located in the U.S, Mexico and Canada.

Is it necessary for home depot to emphasize both the DIY and contractor markets to build and maintain economies of scale?

Home depot continues to focus on the DIY customer. Meanwhile, contractor sales comprise one-third of the total sales. It is necessary to pay attention both markets since there are some people, who don’t have time to do the work themselves. These people want a service that will do all the installation for them. Providing this service will lead the company to differentiate themselves among their competitors. Moreover, it will maintain a strong cash flow by selling high volume of units to the contractors. However, the service provided by the contractors must fulfill customer satisfaction. Therefore, Home Depot should also provide information to the contractors about the products and their installations. These key points will build and maintain economies of scale.

Is competitive pressure from Lowe’s causing Home Depot to modify its competitive strategy?

Competitive pressure by Lowe’s has caused Home Depot to aggressively upgrade its old stores. Lowe’s has a store layout strategy that focuses on women customers. They see women as a decision maker of a renovation of the houses. Hence, Home Depot has to modify their strategy to customer responsiveness rather than cost leadership. As a market leader, they are forced to shift their competitive strategy by their main competitor. The pressure from Lowe’s has also caused the company to replace the CEO in 2007.

Do international Opportunities exist for Home Depot beyond North and South America?

The main purpose of targeting DIY customers is providing goods without the cost of labor. Customers want to avoid the labor fee and lower the costs in countries, where labor fee is expensive. Therefore, Home Depot must particularly analyze and evaluate each market to enter. Europe seems to be a great opportunity for the company to expand beyond the West. International expansion will lead them to be one more step ahead of Lowe’s that still continues their growth in the U.S.

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