Todays popularity of custom made things, the things that are unique in their nature and appearance causes many companies to expand their activities in various segments of global markets. The lately growing demand for the housing commodities and constructions (due to the increasing private and governmental spending) allows the retail companies like to Wal-Mart, Office Depot, and Home Depot to rapidly develop their supply chains and outlet structure. One of the most successful companies, which specialize in the selling and service of the things for home, is Home Depot. The growing success and constantly increasing sales of the company are explained in the greatest manner by the following basic rules of Home Depot operations. The company puts great emphasis on the every customer value and service not only it sells the merchandise but provides sufficient support and service to all of its clients, regardless of the amount of money left in one of the Home Depot stores. The company also strongly cooperates with its associates and companies that are professionally engaged into constructing or decorating business for them the special conditions for purchase and service are applied. Zero Defections a work by Reichheld describes the two types of approach to customers: one is continuous acquisition and the other is retention of existent customers.
Home Depot is using the latter tactics. The management of the company strongly believes that return customer is of higher value because the next time he comes to the store, he already knows that Home Depot can be trusted and cooperated with. Therefore the client is more willing to spend his money in the familiar and safe environment. Contrary to retaining the customers, their acquisition is more complex task. The new customer must be attracted by the discount or another sales promotion campaign, plus he should be confident in the company in order to make his first substantial purchase. Home Depot, not being a company distributing everyday grocery goods, is in a high demand for loyal customers willing to spend the money in the store. Nowadays electronic commerce is in the stage of growth, this field of business is currently a global opportunity for everyone.
Home Depot Business Case Analysis Letter to CEOTo: Robert L. Nardelli, - President and CEO of Home Depot, Inc.Date: March, 04, 2004First of all, I would like to thank you for giving me the honor to analyze your well organized and developed company. In this memo, I am going to discuss the strategic factors facing Home Depot, the strategies that the company has been following for the past years, and ...
Home Depot is able to drastically increase its sales (without a substantial rise of costs and prices) if it is to engage in the electronic commerce. The introduction of the web-site sales department can assist the company to point out the regions that currently do not have the stores at their locations but show signs of rapid growth and potential demand for Home Depot services. For the future, the company might focus on gaining back the lost customers. A good idea for the win-back (as well as attracting new customers) strategy would be the introduction of the accumulative discount program. Every new customer (besides the basic services offered by the company, like free delivery and post-sale service) is receiving some sort of document that allows the discount, which is growing correspondingly to the amount of money already spent; plus, every once in a while ability to win money check for purchase in one of the Home Depots global outlet stores..