Home Depot Case

For the exclusive use of N. Katta, 2016.

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MARCH 22, 2012

JOSE B. ALVAREZ

ZEYNEP TON

RYAN JOHNSON

Home Depot and Interconnected Retail

In November 2011, just days before the holiday shopping rush, the senior leadership team of The

Home Depot, Inc., (Home Depot), the world’s largest home improvement chain, discussed how best

to navigate the new interconnected world of retail. Founded in Atlanta, Georgia in 1978 by Bernie

Marcus and Arthur Blank, Home Depot opened its first stores in 1979 and grew rapidly and

successfully for two decades. But by 1999 performance had waned and shareholders and investors

urged a leadership transition. In late 2000, Bob Nardelli was named CEO, inheriting an organization

that was decentralized and lacked discipline. In response, Home Depot’s leadership focused on

centralization, standardization, and performance metrics. However, by late 2006 customer service

and employee satisfaction had plummeted, and Home Depot had lost market share to rival Lowe’s.

Many felt the focus on profits and performance management distracted associates from delivering

top customer service and hurt the bottom line.

In 2007, Frank Blake, Home Depot’s then-vice chairman of the board of directors and executive

vice president of business development and corporate operations, was named CEO. Blake and his

senior leadership team led the firm through a global recession and revitalized the firm’s once central

culture of customer service. While Blake’s tenure saw a decline in sales attributable to the global

recession, it was marked by gains in market share, strong alignment across business units, and

improvements in information technology (IT) systems, merchandising, supply chain and operations,

as well as renewed employee excitement.

By 2011, Home Depot had been restored to stable yet modest growth, but much was left to be

done and new challenges loomed. (See Exhibits 1, 2, 3, 4 and 5 for Home Depot performance data,

income statement and balance sheet,...