Home Depot has become a synonym for home improvement, and it has been catering for thousands of people every month. If you live in the USA and need any home improvement product, Home Depot is just a few minutes away with its immense presence throughout the country.
Being the largest retailer, they have tons of product lines. Besides, their customer service has been praised and is up to the industry standard. But, they have missed some important opportunities, and now they are facing the consequences for those, which we will know in this Home Depot swot analysis.
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Home Depot: Company Overview
| Company | The Home Depot Inc. |
| Industry | Retailing |
| Founded | 6 February, 1978 |
| Founder | Bernard Marcus, Arthur Blank, Ron Brill, Pat Farrah, Ken Langone |
| President & CEO | Ted Decker |
| Headquarter | Atlanta, Georgia, U.S. |
| No. of Employees | 4,90,600+ |
| Annual Revenue | $151.16 billion (FY 2021) |
| Website | homedepot.com |
The founders, Ken Langone, Arthur Blank, Bernard Marcus, Pat Farrah, and Ron Brill, could have hardly filled the boxes in their first store with products in 1978. After 45 years, in 2023, they now have more than 2300 stores globally, filled with boxes.
The company now employs more than 400,000 people starting with just the founders. With more than $157 B of revenue, it ranks in the top 100 companies in the USA.
They are still number one in the industry with their exclusive pricing strategy. But, there are some issues they have been facing in recent years.
Product & Services of Home Depot
Furniture | Flooring | Kitchens | Tools & Equipment | Garden & Lawn | Lumber | Plumbing | Electrical | Paint | Building Materials & Hardware | Fixtures
Home Depot Competitors
Lowe’s | Ace Hardware | Mendards | Home Hardware | Amazon | True Value | Walmart
Did You Know?
A Home Depot store had been a home for a stray cat for over 13 years. One thousand five hundred customers in that area petitioned to keep the cat in the store, and the company agreed. Later the cat got adopted by another customer.
Strengths of Home Depot
Diversified Product Line: Customers want convenience while buying groceries or shopping. And Home Depot’s extensive and diversified home product range provides precisely that need. You can find a large variety of products for any target market, whether it’s for your kid or your parents.
Reputed Customer Service: When you have motivated and skilled employees, that will help you build a positive image for your brand and will pay in lots of ways. Word of mouth for Home Depot’s customer service is known to all, and it’s highly rated in the industry.
E-Commerce & Online Purchase: Covid-19 has changed online purchase patterns and how consumers perceive the entire experience. Companies with solid e-commerce and easy-going purchase experience have helped build trust, and Home Depot was one of the significant players that had a positive effect.
Largest Retailer: Home Depot’s brand image has set in the consumer’s mind that wherever you go, you will find a Home Depot retail store throughout the country, and you won’t have to worry about any equipment. Home Depot was able to gain that trust with more than 2.3k stores.
Perceived Value Product: Home Depot are excellent at finding and giving customers their best products at the lowest price possible. Even their “Match and Beat program” enables consumers to compare the prices and shows that they can offer ten times lower prices than the closest competitor.
Weaknesses of Home Depot
Low International Presence: Home Depot has a low global presence compared to other competitors. It has more than 2.3K stores globally, and 90% (More than 2.1K) are in the USA alone. Even though they have stores in Canada and UK, it has little to no presence in the global market.
Old Facilities: Continuous employee, infrastructure, and strategy improvement is a standard practice to stay in the game. But Home Depot seems to have forgotten about the stores’ infrastructure and overall facilities. And because of that, their $11B digital transformation project has gone to water.
Controversy: Home Depot knows how to take care of their employees, but made a little mistake a few years back. They let go of one of their disabled employees for asking for an emergency break time. As a result, there were a lot of controversies, and they had to pay $100,000 to settle the entire situation.
Late Adoption in Technology: Even though they have an excellent e-commerce wing, they lacked the first mover advantage because of the late adoption of modern techs. Several issues, such as page loading and payment, led to a lower website engagement rate. Besides, they missed so many opportunities for the competitors.
Uncertainty in Supply Chain: As a giant in the home improvement industry, many things are moving, and there are a few categories of precise raw materials they need to always have in the inventory, such as lumber. But, as things go, any minor inconvenience can interrupt the entire supply chain, and the company could lose loyal customers.
Opportunities for Home Depot
Global Expansion: Expanding the business into other continents and markets are an excellent opportunity for the company. In 2022, the home improvement industry was valued at over $342 B, and the estimated value in 2030 will be $575 B. It is a perfect opportunity for the company to try and grab the other market, especially the Asian market.
Product Diversification: Now that Home Depot has become one of the giants in the industry, they have enough capital and expertise to expand the product category to similar niches, such as interior design and furnishing, to broaden the overall authority of the brand. That way, they can attract more customers from different target markets.
Strong E-Commerce Wing: As a late adopter of the e-commerce wing, they still have a long way to go to become the best in this sector. As the industry grows, so is consumer perception and buying patterns, etc., they always need to stay updated with the trend and keep an eye on how they can give the consumers the best online purchasing experience.
Acquisition: There is always room for improvement and solving problems in every industry. Most times, gains like Home Depot skip or don’t give enough attention to find those minor issues. As a result, small companies develop better solutions and become direct competitors. But, they can start acquiring these small companies for more significant value to add to the company.
Threats to Home Depot
High Competition: The Home Improvement industry has always been the toughest. Big giant companies are trying to capture the market with different offerings. One of the significant advantages of Home Depot was its lowest price. But, in recent times, a competitor like Lowe’s is trying to find a way to close the price gap, and Amazon is trying to do the same.
Unbalanced Revenue Market: As mentioned, most revenue comes from the USA market. The company is highly dependent on this single market alone, and any slight economic issue or inconvenience can affect the overall revenue. As a result, the company could lose a lot with that.
Recession: Recessions are unavoidable in the modern economy, and 2023 is one of those years where it fell its effects. As the company is dependent on the USA market, that will affect the company too, as the recession signs are already showing. As a result, the buying power will decrease, and people will avoid buying anything that does not necessarily include the Home Improvement sector.
Strike: A couple of years back in 2020, Employees struck to increase the payment by 20%. Besides, they even threatened to strike thirteen other states. The company is bound to listen to the employees at these moments. As a result, the company had no choice but to increase it, and they ended up increasing the payment by 5.5%.
[Bonus Infographic] SWOT Analysis of Home Depot
Recommendations for Home Depot
As a giant company, sometimes, it can be challenging to prioritise the issues and challenges they are facing. Besides, staying at the top of the industry with tough competitors trying to capture the market can be overwhelming too. So, here are some recommendations;
- They should never lose track of what they have been offering to the market, a ten per cent lower price and the best value product.
- Expanding to the global market should be one of the top priorities to stay ahead compared to others and capture the market as early as possible.
- Bringing new product lines can attract new customers from different target markets and grow the overall authority of the brand.
- Innovating and solving every single issue related to the e-commerce and online purchasing process is a must so that customers can have the best experience possible.
- Lastly, acquiring a new business with ideas and with a great team can be a way to disrupt the market.
Frequently Asked Questions (FAQs)
Who Is The Biggest Competitor for Home Depot?
Lowe's is the biggest competitor for Home Depot. The other competitors are Amazon, Ace Hardware, HHGregg, etc.
Who Is Home Depot’s Biggest Customers?
Home improvement professionals, such as builders, repairers, remodelers, plumbers etc., are Home Depot’s biggest customers.
Final Words on Home Depot SWOT Analysis
Having the title of “Largest retail store” in the home improvement industry and getting the customers the valued products at the lowest price has always been one of the main factors for all these years of thriving in the industry. But, with the new tech and giant competitors, Home Depot is facing new challenges it must tackle to survive in the coming days.
References
- Wikipedia contributors. (n.d.). The Home Depot. Wikipedia.
- The Home Depot is ranked #40 in Top Brands for Millennials. (n.d.). Comparably.
- Adibfar, A., Gulhare, S., Srinivasan, S., & Costin, A. (2022). Analysis and modeling of changes in online shopping behavior due to Covid-19 pandemic: A Florida case study. Transport Policy, 126, 162–176.
- What is The Home Depot’s price guarantee? (n.d.). Home Depot.
- Home Depot: number of stores 2011-2021, by country. (2022, July 27). Statista.
- Giles, M. (2019, November 20). Home Depot’s $11 Billion Digital Rebuild Hits A Legacy-Tech Speed Bump. Forbes.
- Home Depot to Pay $100,000 To Settle EEOC Disability Discrimination Lawsuit. (2018, August 17). The National Law Review.
- Yu, Y., Wang, X., Zhong, R. Y., & Huang, G. Q. (2016). E-commerce Logistics in Supply Chain Management: Practice Perspective. Procedia CIRP, 52, 179–185.
- Home Improvement Market Size, Share, Trends & Forecast 2030. (n.d.). Fact.MR.
- Danziger, P. N. (2020, May 20). Lowe’s Is Narrowing The Gap Between Its Chief Rival Home Depot. Expect Its Surge To Continue. Forbes.
- Home Depot workers seek 20% pay hike, threaten to strike in 13 states. (2020, January 16). Mexico News Daily.
