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The Home Depot Essay

3675 words - 15 pages

The Home Depot


Retailing building supply stores have become a popular retail industry sector due to increased public awareness and the need of many homeowners for the home improvement products. Back in the 1970s, long before warehouse stores ruled home improvement land, do-it-yourselfers shopped at “home centers.” These 30,000 square foot stores offered cheaper prices and wider selection of products, about 25,000 more than local hardware stores and eliminated the extra trip to the lumberyard. The dependence of many of these retailers upon the homebuilding industry for much of their business has also been reduced and the warehouse superstores, such as Home Depot, have become more important. The smaller companies in the retail building supply industry are facing economic difficulties as the industry leaders continue to dominate and warehouse super centers are becoming more evident.

Company Overview

Founded in 1978, The Home Depot is the world largest home improvement retailer and the third largest retailer in the United States followed by Lowe’s Companies, Inc. At the end of fiscal year 1999, the company was operating 930 stores, including 854 Home Depot stores, 15 Expo Design Center stores and 2 Villager’s Hardware stores in the United States; 53 Homes Depot in Canada; 4 Home Depot stores in Chile; and 2 Home Depot stores in Puerto Rico. In addition, they operated wholly owned subsidiaries Apex Supply Company, Georgia Lighting, Maintenance Warehouse and National Blinds and Wallpaper. They approximately employed 201,000 associates at the end of the year. The company has been publicly held since 1981. In 1978 when Bernard Marcus and Arthur Blank, executives with Handy Dan Home Improvement Centers, found themselves out of work after a corporate takeover at Handy Dan. Joined by Ronald Brill another Handy Dan employee; and Pat Farrah, former owner of Homeco, the world’s first home improvement warehouse, they mapped out plan for a bigger and better store catering to the needs of do-it-yourselfers.

These Warehouse type stores, each averaging about 130,000 square feet, stock 40,000 to 50,000 home improvement products and are aimed mainly at the do-it-yourself trade. The stores however also attract many professional-building contractors. Products include lumber, floor and wall covering, hardware, paint, plumbing supplies, and tools. Home Depot also offers facilities maintenance and repair products through its direct mail subsidiary Maintenance Warehouse, and custom window treatments by direct mail through National Blind $ Wallpaper Factory. Much of the company’s success has been attributed to its superior customer service, along with low process and a broad selection of products.

In 1979, they opened three Home Depot outlets in the Atlanta area, adding fourth outlet in 1980. The next year Home Depot when public, opened four stores in South Florida, and posted sales of $50 million. After opening two more stores and making...

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