The Home Depot
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Sales The Home Depot |
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This national retailer has expanded in 20 years to the position of high-volume second only to Walmart.
Established as a service-oriented chain, original employees were given generous stock incentives and expertise within the trades was sought.
Successful stock performance has been cemented by these employees, now in store management positions, who have personal investment in the profitability of the company.
Last year, new employee turnover was high. Eighty-five percent of new employees did not remain for more than 3 months.
Daily adjustment of sales associate hours are based on immediate feedback, so sales overhead is a variable expense.
Labor compensation is keyed to Walmart, Target and Costco. Recruiting has therefore become active to enlist seniors with supplementary retirement
income and young people with parental support.
Management of fixed costs is performed at divisional and national levels. Camera systems monitor activity.
Close control of inventory for the 40,000+ SKUs has resulted in maximal RONA with an ROI that reflects maturation.
Based on credibility of the retail brand, exclusive distribution of unique off-shore brands has resulted in new successful lines.
Target customers have included individual homeowners, professional tradesmen, landlords, and renters. Consequently, a significant portion of the business is influenced by local real estate conditions, which include many factors: floods, earthquakes, storms, interest rates, building rates, new starts, retail housing levels, vacancy rates as well as local general economic activity. Expansion of the sales of appliances and general consumer items is making the customer base more horizontal. A major retailer of construction goods was acquired in 2004 and promises wider corporate capacities of the group. |
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| Management divisions at the store level reflect both operations and product group specialties. Freight, physical sales overhead (lot, cashiering) handle distribution of hard goods to customer presentation and sales delivery. Equipment rental, special ordering, and contractor services concentrate on vertical services. Specialized departments include building materials, lumber, plumbing, flooring, electrical, garden, hardware and tools. My experiences were with hardware, power and manual tools and with front end operations, such as cashiering. I was impressed by the huge volume of customer flow; daily sales ranged from $30 to $80 per customer. | Transition from the rapid-growth phase of business development was signaled by the retirement of the three founders. Contemporary models of large retail chains are replacing the unique factors that created a renowned culture. Walmart, Target, Costco and Sears are acknowledged to be major retail competitors; these existing business models are being adopted, and human resources are now blending with them at all levels. Competition in the same home-improvement nitch has stabilized with the decline of Home Base, and the maturation of Lowe's. Sears may present renewed vigor with their recent acquisition by K-Mart. All of these retailers are likely to be impacted by changes in relative international currency rates and by transportation expenses altered by fuel costs. The nature of the product lines undoubtedly will continue encurring periodic windfall profits from regional natural disasters. Earthquakes, hurricanes and other storms provide opportunities to shift inventory to appropriate impacted regions. |
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Copyright ©2004, William P. Fritz |  |  |
