Competitor Analysis Home Depot competitors are primarily in the home improvement and hardware retail industry, but also compete in the building materials retail and distribution, consumer electronics and appliances retail, and convenience stores and truck stops sectors. Some of Home Depot’s main competitors include: Lowe’s, True Value, and Ace Hardware. Now, these competitors are the main competition of Home Depot and all three stores carry about 75% if not more of what Home Depot sells.
Keep in mind, that there are also smaller companies, often family-owned lumberyards or hardware stores that compete with Home Depot and the other large chain stores.
However, Home Depot’s biggest competition is Lowe’s. “Home Depot and Lowe’s are home improvement retailers with very different value propositions. Home Depot has very austere, functional stores that are designed to appeal to the contractor or homeowners on the basis of function and price” (Aaker, 7). This industry is mainly driven by residential real estate construction and renovation.
Large chains such as Home Depot, Lowe’s, True Value, and Ace Hardware are able to expand recently because of their focus on the home improvement market, with contractor sales as a sideline (Hoover. com). This is where the family-owned stores are able to successfully compete against these large chain stores because they effectively cater to the small and mid-sized contractors who believe that price is less important than the other services that these small stores can offer. High customer concentration is the value proposition that the small, family owned stores offer opposed to these large box stores that have limited customer concentration.
The large chain box stores’ value proposition is low-cost. Yes, low-cost is what consumers are looking for in most cases however, many small to mid-size contractors and even do-it-yourselfers are interested in the value proposition of differentiation. They want the knowledge that the workers can give them. They will pay the extra money for better service opposed to no service and a less expensive price. Home Depot believes that their values are the guide to the beliefs and actions of associates on a daily basis. Home Depot’s values are the base to the Company of their unique culture.
It is said, that Home Depot’s values are their “competitive advantage in the marketplace” (HomeDepot. com). Home Depot considers themselves to be the “orange blooded” entrepreneurial spirit of our culture (HomeDepot. com). Home Depot has eight main values that they try to accomplish. First, they think it is most important to take care of people. This is the key to their success, treating people well. Second, Home Depot gives back to their communities. This includes associates of Home Depot to give their time, talents, energy and resources to worthwhile causes within their own community (HomeDepot. om). The third value is to do the right thing. This means to use good judgment and “doing the right thing” instead of “doing things right. ” Home Depot attempts to understand the impact of their decisions and they take full responsibility of their actions. The fourth value is excellent customer service. This is similar to their first value of treating people well but not only must they use mannerism with their customers they must be able to provide quality products, service, price and selection.
Also, they must go that extra step to make sure the customer understands about the merchandise and why they have decided to buy the particular item and buy it at Home Depot. The fifth value Home Depot offers is to create shareholder value; basically, investors invest to provide the essential capital and Home Depot will provide the expected return on their investment. The sixth value is to build strong relationships; again relating back to the first value of taking care of their people and the fourth value of excellent customer service, building a strong relationship is key to success of the other two values.
Trust, creditability, benevolence and commitment must be shown to each and every customer. The seventh value is entrepreneurial spirit; this is just making sure Home Depot is creative and innovative in serving their customers. The last value of Home Depot is to have respect for all people. This means that Home Depot’s associates must work in an environment of mutual respect (HomeDepot. com). On the other hand, Lowe’s main value is to treat their customers, co-workers, communities, investors, and vendors with respect and dignity, and to offer all employees the opportunity to build a career (Lowe’s. com).
Another value of Lowe’s is to create strong business relationships with minority- and women-owned businesses. “Lowe’s strategy since 1994 was to have a softer side, a look that would be comfortable to women. Thus, their stores are well lit, the signs are colorful and clear, the floors spotless, and the people friendly and helpful. Ten years later, the Lowe’s strategy has traction, and Home Depot is attempting to adjust its own value proposition” (Aaker 7). Lowe’s deems that having diversity is key to being a good corporate citizen. Lowe’s has the opportunity to deliver outstanding prices, products and services to their customers.
Lowe’s believes that they take it one step farther than any other company. Lowes’ thinks that with community involvement that they extend beyond the traditional retail setting. Like Home Depot, Lowe’s gives back the their community however, they are known to help in natural disaster recovery and take active roles in programs such as habitat for humanity, American red cross, and education in a toolbox, to just name a few. Lowe’s assumes that through brand awareness without direct advertising that it will help them to be a stronger company.
Brand awareness helps to provide competitive advantages. First, “Awareness provides the brand with a sense of familiarity; and people like the familiar” (Aaker, 158). This brand familiarity helps especially in low involvement decisions such as what brand screw driver to use, for example. Yes, Home Depot and Lowe’s both sell the same brands of hardware but seeing a brand name associated with Lowe’s for tools in Habitat for Humanity, for instance, strengthens the brand awareness not only for the actual brand itself, but for Lowe’s who carries it.
Lowe’s value is to create and establish commitment. Commitment is also seen in brand awareness. The logic is that if a name is recognized than there must be a reason (Aaker, 158). This reason is in essence to Lowe’s and their customer loyalty commitment. This is why, people know that Lowe’s is about establishing and keeping a relationship. Their employees are able to show trust, benevolence, creditability, and commitment. Lowe’s is said to be so successful due to their incredible customer relationships. True Value Company is another retailer of the Home Improvement Industry.
The interesting component about True Value is that it is one of the largest member-owner cooperatives. True Value’s vision is “to help every True Value be the best hardware store in town” (TrueValue. com). True Value compares themselves to the retail chains and big boxes of the Home Improvement industry. True Value is proud to be committed to the success of their independent hardware store. With their strong growth strategy, so far, they have been extremely successful, keeping in mind, that they are not a box store and that they are not a chain.
True Value’s growth strategy is: •A compelling store format that raises the bar for the retail experience •Wide product assortments that exceed customer expectations •A focus on local expert advice and superior customer service •Merchandising geared to today’s Do-It-Yourselfers enthusiasts •Increased brand recognition through national marketing and advertising •Active involvement in the communities we serve o(TrueValue. com) True Value’s promotes many of the functional strategies and programs that are needed to support a good target value proposition.
Within True Value’s growth strategy many functional strategies are accomplished, such as; customer relationship program, brand-building strategy, communication strategy, information technology strategy, and quality program (Aaker, 8). With True Value’s strong growth strategy they are bound to continue to compete against the big box stores such as Lowe’s and Home Depot. True Value’s competitive edge: “an organization with $2 billion-plus in annual revenue, more than 60,000 products, 12 distribution centers and extensive buying power. All the tools our entrepreneur-retailers need to be the best” (TrueValue. om). This is phenomenal, considering that True Value is a member-owned store, it is not like Home Depot and Lowe’s; it is much more personable. Another competition against Home Depot is Ace Hardware. Ace Hardware is known to provide reliable service, advice and products to help customers get their projects done right. “So you can count on the same reliability in the quality, value and selection of Ace Private Label products” (AceHardware. com). Ace Hardware promotes the benefits that customers can seek from using Ace Hardware opposed to another store and brand.
Ace Hardware is manufactured and independently tested to the same demanding quality standards as the leading national brands, this proves that Ace is certified to be as good, and if not better than the leading national brands. Another value that Ace offers is that their hand tools carry a Full Lifetime Guarantee and are all marked with a Satisfaction Guarantee. This is a perk because box stores have a 30 day return policy unless the company itself offers an extended warranty or guarantee. Ace is proud that they are priced well below the cost of other national brands and are the same or better quality.
And to ensure a good price, Ace offers coupons in papers frequently to compete with Home Depot and Lowe’s. Ace is also to be sure that they offer a wide variety. They want to make sure that they can fit all ones home improvement needs. Therefore, they offer a complete selection to uphold their values. Like Lowe’s and True Value, Ace Hardware also gives back to their community. The Ace Hardware Foundation was developed to help in charitable fundraising. It is dedicated to improving people’s lives, be it through needed health care or disaster relief.
Like Lowe’s, Ace is known to give back to their community. They help with the American Red Cross and Children’s Miracle Network. Ace believes in order to have a strong customer relationship they must give back to their community. Home Depot estimates their market share in the home improvement industry to be approximately 15%. Home Depot believes that their sales performance has been and could continue to be, negatively impacted by other competition that they encounter in various markets. Therefore, Home Depot has a lot of growing to do in their market and it can be done by changing their strategies.
Cite this Competitor Analysis: Home Depot
Competitor Analysis: Home Depot. (2018, Feb 11). Retrieved from https://graduateway.com/competitor-analysis-home-depot/