Company: Home Depot, Inc.
CEO: Craig Menear
Founders: Bernie Marcus and Arthur Blank
Year founded: 1978
Headquarter: Atlanta, Georgia, USA
Number of Employees (FY2019): 413,000
Ticker Symbol: HD
Annual Revenue (FY2019): $110.23 Billion
Profit | Net income (FY2019): $11.24 Billion
Products & Services: Tools | Equipment | Building Materials & Hardware | Garden & Lawn | Lumber | Plumbing | Electrical | Paint | Millwork | Flooring | Kitchens | Power Tools & Accessories | Patio Furniture | Bathroom Faucets | Door Hardware
Competitors: Amazon | Lowe’s | JC Penney | Menards | 84 Lumber | Ace Hardware | Target | Walmart | Best Buy | Staples | Kingfisher PLC.
Fun Fact: After getting fired from another hardware and opening the first Home Depot, Bernie Marcus and Arthur Blank filled up the first store with empty boxes and paint cans because they did not have enough stock.
The home improvement retail sector is highly competitive and consists of global giants such as Lowe’s, Ace hardware and Home Depot. Since its founding, Home Depot has adopted several effective plans that enabled the company to ascend to the world’s biggest home improvement store.
We can learn largely by analyzing how Home Depot conducts its operations and business.
Home Depot’s Mission Statement
“The Home Depot is in the home improvement business, and our goal is to provide the highest level of service, the broadest selection of products, and the most competitive prices.”
Here is our analysis of the mission statement for Home Depot;
This mission statement shows what Home Depot is doing to maintain its leadership in the home improvement sector. The statement consists of four elements:
- Home Improvement: Home Depot is committed to offering customers all the equipment, machines, materials, and tools they need to improve their homes. This mission goes beyond improving homes to include improvement of life evidenced by the programs that help veterans and other groups in the community to acquire the skills they need to better their lives.
- Commitment to Providing High-Quality Service: Home Depot’s mission is to provide high-quality service to its customers in every store. To enhance customer experience, the company has invested heavily in digital services such as e-commerce. Home Depot provides a wide variety of home goods and improvement services, equipment and tool rental, which means that it is also focused on enhancing the quality of these services.
- Broadest Variety of Products: From plumbing products, gardening tools, construction materials, to janitorial products, Home Depot has one of the broadest variety of products. With over 25,000 different products, the company’s commitment to catering to all the needs of customers for home improvement is undeniable.
- Competitive Prices: Home Depot offers some of the most competitive prices for products in the home improvement sector. The company’s obsession with the best prices prompted the introduction of the Match and Beat program that allows customers to match the prices with those offered by other retailers as they shop. If customer finds a lower price on an identical item from any local retailer, Home Depot will not only match the price of its products but also beat it by 10%.
Home Depot’s Values
According to the retailer’s Core Value statement, “Home Depot is a values-driven company.” The values are categorized into eight groups:
- Excellent customer service: Even though Home Depot offers a wide selection of quality products at a competitive price, the retailer goes the extra mile to give its customers insightful advice on how they can exploit maximum benefit from different tools, machines, and products that they buy from its stores. This ensures that positive experiences extend beyond the brick-and-mortar of the company into customers’ daily life.
- Taking Care of Employees: The key to success for giant retailers is the maximum retention of the best high performing employees who are adored by customers for their excellent service. Some customers are extremely loyal to Home Depot and visit the same store for years only because they know an attendee who will help them get the best tool or machine. To empower and advance employees’ creativity and selflessness, Home Depot encourages, recognizes, and rewards good and innovative performance.
- Giving Back: The Home Depot values giving its time, talent, and resources to critically important causes in communities through its foundations. Home Depot Foundation has invested more than $335 million in veteran causes. It has partnered with the Home Building Institute (HBI) through its Trades Training program to train retired military men and women and help them fill the talent gap in plumbing, carpentry, electrical engineering, and so on.
- Doing the Right Thing: At Home Depot, the bar has been raised from ‘doing things right’ to ‘doing the right thing.’ The retailer exercises caution and good judgment in every decision based on the understanding that customers, stakeholders, and communities can be adversely affected by its actions.
- Creating Shareholder Value: Capital is the foundation of any profit-seeking endeavor. To this end, Home Depot values and appreciates all the investors who provided the capital that catalyzed the company’s growth. It is committed to ensuring investors get a return on their investment.
- Respect for All People: As a retail business, Home Depot is innately aware of the value of respecting each person that walks into one of its stores. To maintain its leadership of the home improvement sector, the company ensures that employees work in a respectful environment and are free from discrimination and harassment. Ultimately, instilling the benefits of respect in employees’ lives will enable them to reciprocate by treating all customers with the respect they deserve.
- Entrepreneurial Spirit: Having been founded by the entrepreneurial spirit of Bernie Marcus and Arthur Blank, Home Depot continues to advance this critical value throughout the company. To enhance good practices and improve the business, the retailer encourages employees to initiate creative and innovative ways to fulfill and satisfy the needs of its esteemed customers.
- Building Strong Relationships: Without trust, honesty, and integrity, organizations cannot build strong, meaningful, and long-lasting relations. Home Depot values and promotes these three elements from top-level management to low-level staff and suppliers to build and nurture stronger relations with customers, community, and all other stakeholders. Also, the company treats customers, associates, communities, and vendors as partners and strives to listen and meet their needs.
Home Depot’s Philosophy
Home Depot’s philosophy can be traced back to the ideologies of its founders that not only catalyzed its ascension to the leadership of the home improvement sector but also drives the growth and success of the company today.
- Customer Centrism: From quality products and service to extensive selection to competitive prices, customer satisfaction is ingrained deep in the DNA of Home Depot.
The company’s customer-centric model goes beyond the stores to include ensuring that customers are satisfied as they use the products they acquired in daily life.
Some employees have gone as far as catering to customers’ needs that are not within the responsibilities of their occupation to offer the highest level of customer experience.
- People Empowerment: Training and empowering employees to give expert advice and service to customers has always been the philosophy of Home Depot since its founding. This philosophy based on the notion that if associates are happy, they will take care of the customer.
According to Forbes, CEO Craig Menear often asks at meetings, “What is the purpose of adopting a strategy if it does not advance service to customers?” Also, the company empowers former military men and women by offering them training through leadership programs.
In 2019, Home Depot was ranked #124 World’s Best Employers and #312 for Best Employer for Diversity by Forbes.
- Do-It-Yourself: Most of Home Depot’s customers buy tools, machines, and other products to enable them to build, repair, or improve their homes themselves.
This independent attitude among a majority of its customers is aligned with the company’s do-it-yourself philosophy. Do-it-yourself has been adopted into the service offered in various stores where customers only interact with the cashier as they pay for the products they have chosen.
- Inverted Management Structure: “Put customers and associates first, and the rest will take care of itself.”
This management philosophy was envisioned by the founders, Marcus and Blank, based on an inverted triangle where the customers are the most important, then the store, followed by field support, corporate support, and CEO at the bottom.
- Committed to ethical obligations: Home Depot strives to operate with the values and principles set by the founders that recognize the company’s responsibility to shareholders, employees, customers, suppliers, and the community by behaving ethically.
The management exercises good judgment in decision-making to ensure its bad decisions do not impact others negatively.
- Trickle-Down Effect: Respecting others to earn respect is evident in Home Depot’s operations. Employees are immersed in a highly respectful environment allowing them to extend the same respectful courtesy to customers.
- Communities’ economic well-being at heart: Through the Home Depot Foundation, the retailer is driven by the need to promote and enhance the economic well-being and sustainability of veterans and the community as a whole.
Under its Community Impact Grants, the company awards up to $5,000 to 501(c)(3) designated organizations and funds NGOs that build and repair veteran housing facilities through Veteran Housing Grants Program.
Home Depot’s Strategic Framework
Home Depot’s strategy is based on a three-legged stool structure that drives lasting customer and shareholder value. The framework consists of four elements:
- Customer Experience: The retailer is digitizing its operations to provide unparalleled, seamless, and frictionless service and experience at every touch-point, be it in the digital world, physical stores, at home, or the job site.
- Product Authority: Home Depot seeks to deliver quality and value by maintaining the momentum that drives innovation and growth of pro-business ideas in its stores. To attain this monumental, the company will seek to balance the art and science of retail as well as increasing its collaboration with internal and external partners.
- Capital Allocation Driven by Productivity and Efficiency: Home Depot is overhauling its capital allocation strategies to be replaced with a smarter investment framework that will enable richer returns.
- Interconnected Retail: Attaining the highest level of customer experience, product authority, and smarter capital allocation and investment framework will enable Home Depot to become the leader in a seamless shopping revolution.
Home Depot: Mission: Values: Philosophy: Strategy (2020). Business Strategy Hub. (2020, April 28). https://bstrategyhub.com/home-depot-mission-values-philosophy-strategy/.
Acknowledgement: We gratefully acknowledge the Business Strategy Hub organization for their efforts in sharing information about strategic management and corporate analyses. Thank you Business Strategy Hub team.