HOME DEPOT CASE

GROUP 6 – SECTION A
TEAM MEMBERS
ABHINAV GUPTA - 219278001

DIBYADARSHAN DASH - 219278025

RAHUL DALMIA - 219278068

RICHI RACHAYIKA MISHRA - 219278070

SHUVAM SENAPATI - 219278084

SINDHU RANJAN - 219278087

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WHAT IS HOME DEPOT’S MAJOR CUSTOMER SEGMENTS? WHAT DO
THESE SEGMENTS VALUE TODAY AND HOW MIGHT EXPECTATIONS
CHANGE IN THE FUTURE? HOW DOES HOME DEPOT POSITION ITSELF
FOR THESE CUSTOMER SEGMENTS?

Do-It-Yourself Customers
Customers who’d buy products and then complete the project and installation part by themselves.

Traditionally this segment has people in their 60s - 80s. They usually bought products via the stores and

received store information via flyers in newspapers and other stores. Such customers sometimes require

financing in case of larger projects which Home Depot provides as well. This segment values saving of money

along with saving costs of assembling. They like to build relationship and like to try new things as they

received information through flyers. This segment is likely to shift to DIFM (Do-It-For-Me) segment in the

future with rise in income. Home Depot positioning revolved around the fact that it is a DIY products company

and manufactured foods that are cheaper, convenient and carriageable.

Do-It-For-Me Customers
Customers who purchase or select products in store and then hire third-party providers for completion and

installation of projects. Home Depot themselves offered a variety of installation services and in-home

consultations and demand for this is expected to keep increasing. Customers prefer this kind of service due

to convenience, quality and Home Depot brand’s guaranteed results. Such customers sometimes require

financing in case of larger projects which Home Depot provides as well. This segment values convenience

over anything. It is easier to assemble as the installation would be done by store. This segment might move

to digital mode and offline channels because of the convenience it would provide. Home Depot here

positions itself as a company that doesn’t only provide wide range of products but also as a provider of in-

house consultations and installation service.

general contractors, property managers, building service contractors, and specialty tradespeople such as

installers. This segment got a lot of focus and benefits from Home depot which supported their businesses

with programs for delivery, credit, will-call services, dedicated parking services closer to the entrance and

bulk pricing for both in-store and online purchases. They also got the option to become “Pro Xtra” to avail

more discounts, exclusive offers and purchase tracking tool. They value their own business and constantly

trying to find out niche and novel methods to improve their business. This segment also values loyalty and

discounts. With the growth of their business, this segment would like to form better partnerships with the

Home Depot. They would like better tailor-made plans and loyalty benefits. Home Depot positions itself as

a company that provides wide range of services such as credit, will-call services, dedicated parking services

closer to the entrance and bulk pricing for both in-store and online purchase as well as tracking tools. For

this segment, Home Depot is a company that engages in forming formidable business to business sales.

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WHAT ROLE SHOULD ONLINE CHANNELS FILL? WHAT ROLE SHOULD
BRICK-AND-MORTAR CHANNELS FILL? HOW SHOULD HOME DEPOT
BEST LEVERAGE THE DISTINCT CHARACTERISTICS OF THE ONLINE AND
IN-STORE CHANNELS TO GAIN A COMPETITIVE ADVANTAGE?

Do-It-Yourself Customers
• The online channel provides a digital experience to the customer which is feasible and more user-

friendly with features like digital media and many more.

• It provides more variety in products and a lot to choose from, many times more than what is supplied

in offline stores.

• It also provides us with data on buyers' different buying behavior and preferences for future changes.

Brick and Mortar Channels

experience.

• For the new generation facing this work for the first time, these brick and mortar stores will be a great

attraction point as they are the ones in need of most assistance.

• They can leverage their professional/highly skilled associates for workshops and training.

Omni Channel Approach

people interested in some not available product in the store can be ordered online with assistance

and get it delivered later.

• It can use its brick-and-mortar stores as a fulfillment center which will save a high amount of

investment and the cost of delivery, and returns will be more feasible and less costly.

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WHO ARE HOME DEPOT’S MAJOR COMPETITORS? HOW DOES THE
COMPANY COMPETE WITH TRADITIONAL BRICK AND- MORTAR
RETAILERS VERSUS ONLINE-ONLY RETAILERS?

The major direct competitors of Home Depot are

• Menards

• The True Value Company

• Lowe’s Companies Inc.

• Ace Hardware Company

• Sherwin-Williams Company

The indirect competitors are electrical and plumbing stores, independent hardware stores, tool and

equipment rentals, and floor stores. Along with it, online retailers such as Amazon, Walmart are also

becoming indirect competitors.

The company uses the advantage of operating more than 2200 stores with over 400000 associates in the

US to compete against brick and mortar retailers as they already know how to operate these stores

profitably. The company also focused on the right areas such as investing in IT capabilities during the

financial downturn which helped it increase its online sales from 3.5% to 6.7% of its total sales. The company

also uses its people capabilities to provide advice on home repair and improvement and holds workshops

and one-on-one training sessions with customers. This advantage also helps the company to compete

against online-only retailers as they lack the experience of the traditional approach and thus do not have a

good understanding of the market. Apart from this, the company is also moving towards digital marketing

spending more than 50% of their marketing budget on it in the year 2016. This will help it increase its online

and offline presence. Also, having offline stores, the company can provide agile and in-store experiences to

customers as most of these customers want them interchangeably for example the initiative ‘ Buy Online

Deliver from Store Service’ was launched by Home Depot.

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WHO ARE HOME DEPOT’S MAJOR COMPETITORS? HOW DOES THE
COMPANY COMPETE WITH TRADITIONAL BRICK AND- MORTAR
RETAILERS VERSUS ONLINE-ONLY RETAILERS?

Current Challenges for Home Depot

• Unavailability of space to hold orders of customers who bought online but opted for the in-store

pickup option. Therefore, balancing the store space for online and in-store purchases is a challenge

• Training associates to be technically adept in order to aid customers who have prior knowledge of

the things they require through videos and other sources online. This would help gain trust of

customers who require associates to assure them that they are making the right buying decisions

• Providing the one stop shopping experience, through appropriate mix of channels, that customers

look for while keeping in mind not to dilute the brand image

Future Considerations for Home Depot

• The future customers are Millennials and Post Millennials who would be more tech savvy and hence

their needs to be a significant investment into integrating latest technologies to provide a more

seamless experience.

• Latest trends in the virtual space like VR and AR can be used to accentuate the app experience which

would directly improve the customer experience of those who prefer to shop online. AR Imagery

techniques can be used to create virtual environments in the smartphone of the users where user

can select their furniture of choice and visualize the look and appearance inside a 3D virtual

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 environment made after scanning the room. This would help Home Buy to connect more with their

products and hence will lead to greater conversion rate and sales.

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• Home Depot can look into investing in online associates who would be able to assist the DIY segment

of customers. Thus, this would eliminate the need of hiring more associates at each of their Home

Depot Store locations and would enable Home Depot to reach their customers even in the remote

part of the country.

• There has been a rise in the demand for custom designed products, so I feel Home Depot should

invest in a specialized segment of the product category where the customer can build the product

virtually and that would be delivered to their house. For example, if a customer wants a wardrobe, a

wardrobe builder toolbox in the app would provide a host of customizations to create a specialized

wardrobe. Customizations can be the width of the door, no shelves, mirror placement, extra features

like permanent locker, light connectivity etc. This would enhance the overall user experience and

would increase the retention rate.

• Introduction of Online Rental program where the customers can rent out the furniture and other high

value items like lawn mowers for a specific amount of time and pay a monthly charge and then after

the stipulated period, they can choose to pay the outstanding amount and keep it to themselves or

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 return it to Home Depot. Home Depot can have a specialized facility to refurbish these products to

be sold and rented again. This would add more customers who frequently change locations and

cannot afford to buy home supplies upfront.

• Home Depot should consider starting combo deals or loyalty programs where loyal customers can

avail future discounts or free shifting services throughout the country. These schemes will help gain

more customers.

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