Solutions to Enhance the Value

Solutions to Enhance the Value of Home Depot

Presently, the Home Depot has over 1800 warehouse style home improvement stores spread over the United States, Canada and Mexico and is providing the decisive home improvement shopping experience. Such stores fulfill the requirements of all sorts of home improvement customers, from novice to specialists. (the Home Depot Inc.) the greatest challenge that the Home Depot is facing is maintaining the growth in the coming years. Let us analyze the strategies which can be adopted by the company in this venture.

Move into the Asian market - china centralization

The Home Deport is reaching the saturation levels of its stores in the U.S. necessitating the requirement of diversifying into the professional services and international arenas. (Home Depot 4th-Qtr Profit Rises 9.5%; Shares Fall (Update11)) Home Depot, with the establishment of its two sourcing offices in Shanghai and Shenzhen is aiming to set up new stores in the near future. Many of the proprietary brands of Home Depot like Ryobi, Hampton Bay and Glacier Bay are already being made in China. A new market for home improvement and decoration is emerging in China as an outcome of the private housing boom in China and big single window home development retail counters are expected to revolutionize the mode of Chinese shopping. (Learning to pay more attention to urban consumers: What home improvement companies could learn in China) the determinants that turn China attractable to the Home Depot are considered worthwhile to examine. The Gross Domestic Product of China is estimated to be about $1.5 trillion and the population of the nation is exhibiting an increasing trend along with the personal wealth. The Chinese market for home improvement is presently hovering at about $50 billion and increasing progressively at the rate of about 20%. (the Home Depot Plans China Business Operation)

About 70% of the total expenditure on home improvement in China is for the conclusion of interior space in new homes. This is being visualized as a concrete growth opportunity accorded. The increasing force of Home Depot in merchandise and services has been recommended for finishing a home. The market prospective of the Home Deport in China is supported not only by the growing economy there, but by the comparatively confined competitive structure. As per the company sources, presently in China, there are less big-format home improvement stores and China is much assisted by the small outdoor markets and shopping malls. (the Home Depot Plans China Business Operation) Trust is regarded as crucial for foreign chains presently prevalent in the Chinese Market. The Chinese retailers generally resort to selling shoddy goods supported by dodgy guarantees so that the foreign chains assure of no forged and money back guarantees will assure the potentialities of thriving inflows into the Chinese Market. (Learning to pay more attention to urban consumers: What home improvement companies could learn in China)

2) Remodel existing stores and technology

The Home Depot is required to restructure more and more stores. The store re-modeling projects of the Home Depot was continued in the year 2004, which exploded its sales and increased its profit persistently for the year by 16%. During 2004 they generated a profit of about $5 billion against the sales of $73.1 billion which can be compared with the profit of $4.3 billion against the sales of $64.8 billion during 2003. The share earnings has enhanced to $2.26 during 2004 than that of 1.88 during 2003. (Home Depot bottom line surges in 2004) About $1 billion is spent by the Chief Executive of Home Depot, Bob Nardelli for restructuring older stores and is introducing higher-priced items like Maytag appliances, enhancing the average sale of 7.3% to almost $55. Most of the advantages of the store remodeling / refresh programs and heavy investment on the information technology are now behind the success for the company. (Home Depot 4th-Qtr Profit Rises 9.5%; Shares Fall (Update11))

But they are required to remodel more stores. Most of the existing stores are considered old and dirty with bad indicators and damaged shelves. Home Depot should think of considerable remodels for 45 stores during the current year, however, the 300 confront direct rivalry from the new Lowe's locations. (How to Revive Home Depot: The nation's second-largest retailer needs to jump-start growth) So as to enable the Home Depot to compete more aggressively against No. 2 Lowe's Cos there prevail a requirement to remodel locations with brighter lighting, bigger signs and largely stretched aisles. (Home Depot 4th-Qtr Profit Rises 9.5%; Shares Fall (Update11)) Thus the company Home Depot is for serving both the new construction and maintenance/repair/upgrade necessities from lumber to carpeting to light bulbs to lawn care in the year 2005. (a Case for Home Depot) Home Deport is required to search out if there is any after sales consideration. There should be a scope of concentrating on smaller stores that are more consumer-friendly. That would also permit them to expertise in the niche categories like lawn or business. (How to Revive Home Depot: The nation's second-largest retailer needs to jump-start growth)

3) Buy suppliers - Eliminate middle man supply chain example lumbar

The brokers and middle-men are conveniently been avoided by the Home Depot with direct purchasing from manufacturers and supplying the wares to various stores on their own. This assists in reducing the price of the ultimate sale a little. This process is considered to be useful for the company if pursued in a practical mode. (Going to Check Out the new Home Depot Store this Week in Cornwall? Make Sure to Check This Out First)

4) encourage culture of customer service and product knowledge

To meet the requirement of the customers, Home Depot is required at the first instance to ensure a safe environment for customers and associates. Safety is a prime concern. All the subsidiaries are required to be dedicated to ensure the associates and customers about its security. The objective is to entail every customer with excellent customer service. This incorporates the greeting of customers and querying about their requirement of assistance. It further implies walking with each customer to the products rather than just pointing to merchandise. (the Home Depot Inc.) it is required to inform the customers about the installation of the products purchased by them. (Going to Check Out the new Home Depot Store this Week in Cornwall? Make Sure to Check This Out First) the arrangement should be that the customer search out every thing they require, in job-lot quantities to accomplish their project objectives. The store ensures the accessibility of the products by the customers through heavy stockings, fast order turnaround and complete vendor shipments. The product collection is required to be continuously varying so as to maintain pace with the varying techniques and styles, and to match the requirements of the increasing customer base. (the Home Depot Inc.)