Home Depot's Strategy under Bob Nardelli

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Case Details:

Case Code : BSTR141
Case Length : 13 Pages
Period : 1978-2004
Organization : Home Depot
Pub Date : 2004
Teaching Note : Available
Countries : U.S.A
Industry : Retail

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Background Note

Home Depot traces its roots to 1978, when Bernie Marcus (Marcus) and Arthur Blank (Blank) developed the concept of large, warehouse-like stores, which stocked large varieties of home-related products, and sold them at the lowest possible prices.

The stores targeted mainly 'do-it-yourselfers',5 and adopted a "no-frills"approach to selling merchandize.

On June 22, 1979, the first three Home Depot stores were opened in Atlanta. By the end of 1979, Home Depot had 200 associates, and had crossed $7 million dollars in sales.

In 1981, Home Depot made a public issue, raising over $4 million. Most of the money was ploughed into opening new stores. In 1984, Home Depot's shares were listed on the New York Stock Exchange.

In the early 1980s, Home Depot grew very rapidly, and by 1985, the company had 50 stores and $700 million in revenues. In 1986, the stores' sales touched the $1 billion mark.

In 1991, Home Depot established its first Expo Design Center in San Diego. The Expo Design Centers carried higher-end products compared to Home Depot and sold complete solutions to household needs, such as modular kitchens, assembled bathrooms, etc. In the same year, the company's sales crossed five billion dollars.

In the mid 1990s, Home Depot collaborated with the Discovery Channel and Lynette Jennings (a popular television personality and authority on home decorating and design in the US) on a home improvement program, called HouseSmart, which was televised daily. By 1996, there were over 500 Home Depot outlets. Most of the outlets were in suburban areas and near small towns.

In 1997, Marcus stepped down and Blank became the CEO of Home Depot. In the same year, the company entered into a joint agreement with S.A.C.I. Falabella, the top departmental store in Chile and Peru, to open home improvement stores in Chile...

Excerpts >>

5] Customers who preferred to purchase products and do their home improvements themselves instead of contracting them out.


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