SWOT Analysis Home Depot
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Brand Awareness – Home Depot is the world’s largest company in the home improvement retail industry with revenues exceeding $70 billion. Specifically, while Home Depot is the fourth largest retailer in the United States, it is the largest in both Canada and Mexico. In addition, it ranks 127th in Forbes Global list of the 2000 largest companies.
Home Depot should benefit from the projected growth in online sales. Online retail revenues for 2009 were projected to increase 4.1% from 2008 to $142.4 billion in sales. Despite an anticipated economic slowdown, online sales revenue is still estimated to increase by 9.5% in 2010 and 9.2% in 2011. Home Depot is positioned to capture its share of these online sales via its websites homedepot.com, homedepot.com.ca and homedepot.com.mx. Since these revenues can be obtained through online sales; Home Depot will benefit through a reduction in operating costs.
Recently, visitors to Home Depot have encountered employees who did not have a thorough understanding of store inventory or product utility. This apparent lack of training has contributed to a rise in customer complaints. According to the J.D. Power and Associates 2009 Home Improvement Retail Store Study approximately one-half of shoppers (51%) asked the sales staff for assistance during their most recent visit to a home improvement retail store–down from 61 percent in 2008. The two most common reasons customers ask for assistance are for help locating a product or for additional information about a product. If these encounters are negative they will no doubt have an adverse impact on company image and bottom line.
The Home Depot Brand image may also suffer from a number of government inquiries and investigations. For example, in 2008 the Environmental Protection Department of New Jersey alleged recordkeeping violations with respect to its use of generators. The department issued an Administrative Order and Notice of Civil Penalty Assessment.
The continuing economic doldrums gripping the United States has dampened consumer appetite for making major purchases. Spending on home improvement projects is expected to decline at an annual rate of 12.1% by the third quarter, according to a report by Harvard University’s Joint Center for Housing Studies. Home Depot joins competitors such as Lowes and Menards in taking a second look at expansion plans.
The Home Depot – We are the world’s largest home improvement specialty retailer with stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, 10 Canadian provinces, Mexico and China. More . . .
This case study has been compiled from information freely available from public sources. It is merely intended to be used for educational purposes only.
Such dominance boosts brand awareness for such private brands as Pegasus Faucets, Husky Hand Tools, and Vigoro Lawn Care Products. Such brand awareness is fortunate for Home Depot since recent studies show that 80% shoppers have a positive attitude about private brand labels and some even perceive their quality as being superior.
Rapid Deployment Centers -Home Depot plans on increasing its utilization of Rapid Deployment Centers (RDC). RDCs allow the use of a single purchase order to consolidate product needs and more rapidly replenish inventories to individual stores from the center locations. Home Depot currently employs five Rapid Deployment Centers and plans to open additional centers in 2010. The result of this implementation will be improved transportation, and reduced lead time from notification of needs to inventory replacement. It is anticipated that this method will increase efficiently substantially.
Product Recalls – A Home Depot practice of buying products from a large number of vendors makes it vulnerable when quality levels are insufficient; recently the company has found it necessary to announce several product recalls. In-wall electronic timers, patio umbrellas, and candle holders are among products recently deemed unsafe. These recalls join others initiated in 2004, 2005, and 2006 suggest poor quality control practices and negatively impact Home Depot’s brand image.