Industrial News

It continued its aggressive push into the professional services market, even reaching an agreement to purchase an industrial bank (EnerBank USA). The application has been held up by the Federal Deposit Insurance Corporation (FDIC) moratorium on applications.

Home Depot has also sought to build its retail business by pushing beyond its core DIY competency to include other formats (convenience stores, gas and car washes) and product categories (home appliances, auto supplies, online advertising).

RetailWire followed the developments at Home Depot closely over the year and its BrainTrust panelists, as usual, were generous with their insights and advice. Here are some highlights:

Focus on the consumer -
"I think Home Depot should get its head out of the software and into the customer and their needs. Do some customer research. Find out the different segments of computer skills, tendencies and affinities. Understand that no single solution is going to serve the market. Web portals with application-powered customer service are undoubtedly one of the important areas to focus on. So is in-store service. Home Depot's economic model is based on most people finding what they need all by themselves. The level of in-store service is horrible. If you don't know what and how, you wander around, lost." - Don Delzell, Partner, Retail Advantage

"Many graying boomers avoid Home Depot because their knees and feet can't take the interminable walking and searching on those concrete floors. Others don't visit HD because they can't tip their heads back far enough to view those itty bitty, up-high product tags through the bottom part of their bifocals. And still others simply can't lift the larger, bulkier, heavier items over the lip of the shopping carts. These are bedrock issues, which can't be patched with technology. Home Depot would be one of the first to stress the necessity of a strong foundation for construction projects. Why, then, are they not addressing cracks in their own foundation?" - Michael Banks, Ph.D., Partner-Owner, Select Marketing LLC

Auto supplies -
"It seems almost everyone thinks this is a good idea. To quote Randy Owens and Alabama -- I'm sure it 'feels so right.' But it could well be 'oh so wrong.' Do the target demos match? Of course. Do the target interests match? Maybe. Does the retailer positioning match? NO. HD may pick up the occasional motor oil or spark plug sale, but the guy who is rebuilding his 1965 Mustang is not going to HD for a rebuilt starter motor. The credibility isn't there -- never mind the selection. This is a marginal move that will force HD to sacrifice space and inventory that would be better devoted to reinforcing their core position as the place I can find absolutely everything I need for home DIY projects. That's why I'm there once a weekend." - Ben Ball, Senior Vice President, Dechert-Hampe

Home appliances -
"Lowe's showed Home Depot that there was big money in white goods (large appliances). Home Depot has some catching up to do, and it will continue to be handicapped by the mediocre quality of its salespeople's performance. Sears is handicapped by two issues: (1) its reputation as a place to buy appliances only if they're on sale and (2) its salespeople's reputation for having high-pressure 'commission breath.'" - Mark Lilien, Consultant, Retail Technology Group

Vendors buy ads on homedepot.com -
"Home Depot's on-line ads are very positive development for consumers... Vendors know far more about their products than the typical Home Depot employee. The ads will typically highlight the feature and benefits of key items and assortments. I've always felt that vendors are the missing link in retailing where knowledge often must be transferred to the shopper prior to purchase. Hopefully, Home Depot will be able to translate this innovation into more effective store-level service with more point of purchase ads through instant messaging, kiosks, and other new technology." - Bill Robinson, Senior Executive, QuantiSense

What is on white boards at Home Depot headquarters for 2007? Charles P. Walsh, President, The Network of NWA, thinks a return to their "tried and true formula" would be advisable.

"In my opinion, the year 2007 should be a rebuilding one for HD which means a focus on their core business and customer. That would entail them spending 90 percent of their energy on improving and enhancing their execution of their core business," says Walsh. "HD may want to limit the number of strategic initiatives that they launch; reduce or trash current initiatives that aren't in 'the box' that is their core competency."

See the full RetailWire online discussion:
"BrainTrust Advice 2006: 'Told You So, Home Depot'"
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/11858
(Free registration required)

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