The Marketing Environment: the Home Depot

The Home Depot was founded in late 70’s by two laid off managers, Arthur Blank and Bernie Marcus. They came up with an unusual concept at the time: a warehouse environment where people could by what they need to fix their house and get help/advice from the employees. It was times similar to the ones we face now, when people where looking to stretch their dollar and companies were trying to cut overhead.

The beginning approach was so humble, that even though they had a big space, there was no money to buy inventory. They used empty boxes to give the appearance of a full warehouse. And their Grand Opening strategy… they actually paid people $1.00 at the door so they will come in.

Bernie and Marcus found their niche. The company grew successfully thereafter with over 300,000 associates and 2,500 stores today and one of the strongest Balance Sheet in the USA.

Competitive Forces

The Home Depot started competing against the world know retailers such as Sears and Kmart and also against the small local lumber, paint and hardware stores. The Home Depot offered a one-stop approach to get everything you needed to complete a project and had friendly associates willing to help you make it happen. Their success was without precedent and they quickly beat the competition. Hardware stores like Scotty’s and Builder’s Square went out of business.

Lowes was then founded and created lots of competitor pressure. Lowes develop the same concept but in newer, well lighted stores, and with an environment that caters to the female shopper since it “feels” more like a department store instead of a warehouse.

Other big retailers like Best Buy have also been significant competitors in the Appliance and other Electronics category.

The biggest silent THD competitor is Wal-Mart. They have many locations and also offer a one-stop shopping experience and a low price.

Economic Forces

The Home Depot has been affected by today’s economy since the stores cater to the home buyer and...