The first place people usually look when planning to do a home project is a trusted Home Depot store. Serving both building professionals and budding crafters, the company is the largest home goods retailer and the second-largest retailer in the US after Wal-Mart. There are 478 warehouses in 19 states, in the US Southwest, Southeast, and Northeast regions, as well as the West Coast. A warehouse stores and sells no less than 40,000 items ranging from building materials, plumbing supplies, wall and floor coverings, paint, electrical supplies and more, including garden and landscaping tools and supplies. But how did it become the way we know it today?
The first outlets were established in Atlanta, Georgia by Bernard Marcus, Ronald Brill, and Arthur Blank. Marcus and his associates build their business on the concept of lowering price to increase sales and lower cost of sale. During that time, another retailer operating on the same concept hired low-paid warehouse workers who lacked some skills as a way to minimize selling costs. Also at that time, most of the building supply customers are those who deal with DIY work and those people don’t really have a technical background.
Marcus and his associates recognized that issue and saw addressing customer needs as vital to the growth of the company. As such, they have two ways to solve problems.
First is to make sure that your warehouse can stock no fewer than 25,000 different items, outperforming your competitors by a wide margin. The normal capacity of your competitor’s warehouse is up to 10,000 items.
Second, deploy sales staff trained in home improvement projects so they can help consumers with their own projects. Marcus and his associates intended to have trained sales clerks in each store educate consumers. Marcus and his associates believed that if they could make consumers feel more confident about venturing into more home improvement projects, they could keep customers coming back to Home Depot for needed supplies and additional advice from the staff.
Both trade professionals and do-it-yourselfers make up Home Depot’s team of sales people, most of whom are full-time employees; only about 10% of Home Depot’s sales staff work part-time. Each store had a licensed electrician and plumber, whenever possible.
Customers were encouraged to phone the nearest point of sale if they ever encounter problems or have any questions while carrying out a repair or home improvement project. Instructional workshops were also held in the store for customers; on some occasions, the company even invited local contractors as speakers or teachers.
The approach of Marcus and his teams paid off and Home Depot hit its $1B mark in 1986 with 50 retail stores. Naturally, they also encountered some setbacks. Home Depot, however, manages to get back up and running like they did after the Bowater problem. And it may not be without its pitfalls, but Home Depot continues to thrive.