Home Depot and Analysis Research Paper

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Home Improvement

Retail Operations Analysis

A Comparison and Analysis of Company-Specific Strategies used by Lowes and The Home Depot

The two biggest firms operating in the retail space that targets the home improvement niche are Lowes and the Home Depot. These two firms essentially dominate the industry with Home Depot accounting for nearly sixty percent of total revenues, and Lowe's capturing a bulk of the rest (about 39%), but there are number of smaller firms that also target specific market segments as well as various local markets that all compete for a smaller share of the market. In this industry there is not a great deal of opportunity to create a strategy in which product differentiation can offer a competitive advantage. For example, most stores carry either the same product mixes, or products that could be considered direct substitutes, and most of the consumer preferences will be related to price, convenience, customer service, and ordering and delivery options.

Furthermore, the industry in general is highly correlated to the performance of the housing market, and any movements in this market have a significant amount of influence over any developments in the home improvement industry. One analysis of the industry summarizes the key points by describing that the mature retail industry is largely characterized by a high degree of market concentration and homogeneous product lines, leading to high levels of price competition, particularly between two major companies that dominate the market (IBIS World, 2016) This analysis will consider some of the industry and company specific challenges that these two industry giants face in the U.S. home improvement retail market.

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The Home Depot

Home Depot's (HD) approach to a mission statement is fairly broad and includes mention of service, selection and price. The business is focused solely on the home improvement industry states that it will satisfy customer needs through offering a large selection at a low price. Other than that information, the company does not publish readily available information on its target market or other aspects of its strategy. Rather, the company focuses more on its value system, consisting of eight values, that it has crafted into a "value wheel" and includes items such as an entrepreneurial spirit, relationships, service, etc. (The Home Depot, N.d.). However, the organization does not explicitly give away much information about its market strategy.

Other sources are more informative however. For example, the Panmore Institute has recently published a guide that outlines the foundation for the current strategy such as that the Home Depot's current generic strategy (based on Porter's model) is broad differentiation combined with cost leadership; however, it also provides some information about the company's initial generic strategy was cost leadership (Smithson, 2016). Home Depot stores first opened in 1979, and used a cost leadership strategy to begin building its market share while advertising this….....

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