Introduction
The main function of the retail trade in building materials of the Home Depot chain of stores is due to the need to create the most favorable conditions for potential buyers to meet their needs and needs for individual goods. The proposed construction products must have the required quality indicators and be presented in the required assortment. The object of the study of this paper is a network of Home Depot construction stores, and the subject of the study is the organization of the process of selling goods in the Home Depot store.
To achieve the goal in the paper, the following tasks are solved: the essence of the process of selling goods in the store and the content of the activity of organizing retail sales. The analysis of the organization of the sales process in the Home Depot chain of stores is also carried out. The important role played by the use of the most optimal forms and methods of trade in ensuring the efficiency of the functioning of retail enterprises has determined the relevance of the topic of this study. Therefore, the purpose of the paper is to consider the features of the process of selling construction goods based on theoretical sources and practical analysis of the example of a particular enterprise, as well as to develop ways to improve its efficiency.
Executive Summary
The Home Depot chain of building materials stores is positioned in the middle price segment and cooperates with both domestic and foreign manufacturers. The store presents products such as dry building mixes, construction chemicals, gypsum fiber and drywall, fiberboard, chipboard, plywood, floor coverings, tiles, wallpaper, fasteners, sanitary ware, insulating materials, glue, and construction goods (Remidez & Beldona, 2021). The place where the store with building materials will be located is important since the chosen location should have a large passability and parking for cars. It is also necessary to identify competitors, their weaknesses and strengths, evaluate the profitability and consistency of suppliers, the effectiveness of advertising, and the financial plan of expenses and income.
Vision & Mission Statements
The competently formulated vision of Home Depot has become the basis of the marketing strategy. It is aimed at meeting the daily needs of customers with the best value for money. Home Depot aims to create a network of construction stores that provides opportunities to all persons involved in the process. The vision of the organization is to focus on customers to enjoy every purchase, and for partners to build long–term, reliable, and open relationships (Remidez & Beldona, 2021).
Moreover, Home Depot strives to allow staff to constantly develop, participating with a team of like-minded people in the life of the company and receiving a decent assessment of personal contribution. The mission of the chain of construction stores when interacting with shareholders is to allow them to have material and psychological dividends from owning the best retail company in the world. The company’s public global mission is to improve the quality of people’s lives by setting standards for the culture of trade and social responsibility of business.
Value Proposition Statement
The value proposition of Home Depot is a promise of value that the company gives to potential customers to convince them to purchase construction goods from this particular chain of stores. Home Depot does not give any specific message in the field of construction work but shows a lot of its products. Thus, the official representatives of the company want to inform that Home Depot is a whole ecosystem with many different products (Remidez & Beldona, 2021).
This is a fairly strong value proposition, as it works for the actual need of users — to be able to purchase all building materials in one place. The Value proposition statement gives the client a clear answer to questions about who this shop is for and why it is necessary to purchase building materials from them. It responds to the important needs of the user that the price of building materials will not change, and delivery, if necessary, will take place quickly.
Company Description & Business Model Description
The Home Depot organization is a commercial organization established in the organizational and legal form of a limited liability company. The main purpose of the organization is to make a profit in the interests of shareholders. The subject of Home Depot’s activity is the saturation of the consumer market with construction goods and services.
Home Depot can engage in certain types of activities, the list of which will be determined by law, only based on a special permit and license (Abu-Monshar et al., 2022). The company carries out the following activities following the procedure established by law. It is engaged in the sale of construction parts and structures and provides trade and procurement, intermediary, and transport services. The foreign economic activity of Home Depot is determined by the export of the company’s products (construction works and services) both for their own production and social needs, and to saturate the market with goods and services.
The business model of the Home Depot enterprise is a linear-functional structure and is an exemplary example of the Long Tail business model. The basic principle of this template is selling a little bit of a lot. This principle rejects Pareto’s 80/20 law, in which 20% of bestseller products bring 80% profit (Remidez & Beldona, 2021). As a company that uses this pattern, Home Depot receives up to 60% of the profit from the sale of goods with low demand (Remidez & Beldona, 2021). The main share of profits is not accounted for by blockbuster products, but by a long tail of niche products, which by themselves do not require large volumes and do not provide large margins. As Home Depot offers a variety of such products in large quantities, the total revenue from small sales results in a decent amount. Such business models require low costs for storage facilities and an effective platform for the fast delivery of products to customers.
Industry Analysis & Trends
Five Forces
Porter’s five forces influencing the development of the construction business are buyers, suppliers, existing and new competitors, as well as substitute goods. Since Home Depot is headed by a strong manager and the company operates based on a personal brand, there is no need to fear a massive outflow of customers shortly. Reliable legally backed interaction with suppliers allows the store chain to receive quality goods on time.
The current competitors are large, and the construction market is crowded, so Home Depot needs to work on developing a landing page with a unique trade offer to stand out from the competition in some way (Remidez & Beldona, 2021). New competitors do not pose a danger to Home Depot, as entry into the industry is difficult due to the large number of large companies in the construction market at the moment (Bahadori-Chinibelagh et al., 2019). There are various substitutes for construction products, however, some items offered by Home Depot are unique.
PESTEL
PESTEL includes political, economic, social, technological, environmental, and legal factors that affect the company’s work from the outside. Political factors that may affect the activities of Home Depot in the future are primarily related to the current sanctions (Abu-Monshar et al., 2022). Their economic aspects make it difficult to supply building materials; in addition, the economic consequences of sanctions cause price increases for the company’s goods and services. The tendency of modern society to live in rented housing, and not to acquire their own, negatively affects business (Ramos et al., 2020). Technological factors make it possible to speed up the production and delivery of goods. Legal factors include the need to obtain a license and hire a full-time lawyer, which also affects the final cost of Home Depot services and goods.
Strategic Mapping
Strategic mapping for Home Depot is compiled using the bottom-up method. In this scheme, the main strategic plans and goals for the future are fixed and interconnected. The highlighted prospects for Home Depot are finance, customers and the external environment, business processes, as well as training, and growth. The classic approach to forming a strategic map is to decompose the original Home Depot strategy down into such areas of activity as Finance -> External Environment -> Processes -> People and Infrastructure (Remidez & Beldona, 2021).
Based on the received map, a set of top-level KPIs is formed in the future. Since the described company is focused on entering the markets with its products, it sets itself another strategically important goal – to maximize sales volumes (Gomes et al., 2020). In this case, all the above positions are on the periphery of this main goal. They act as intermediate elements between the strategy and strategic goals.
Benchmarking
Internal benchmarking is a comparison of the activities of different departments of the same company. The historical aspect allows us to establish that when comparing the indicators and results of Home Depot’s activities in the past and present, sales figures for 2018 and 2019 remain stable (Abu-Monshar et al., 2022). The general aspect of benchmarking was performed when comparing the performance and results of branches in different states. As a result of the analysis, it was found that the southern branches of the company have significantly succeeded in comparison with the northern ones (Tohidifard et al., 2018). Thus, it was necessary to find out the differences and use the experience gained in the northern states.
To implement the best experience, it is necessary to conduct internal benchmarking of business processes. It was revealed that in the southern states, the wholesale department has a CRM system that simplifies the transaction process (Remidez & Beldona, 2021). The positive experience has also come to retail, with the use of benchmarking technology (that is, the introduction of CRM), the process of tracking and analyzing transactions in the northern states has also become easier.
Driving Forces
The driving forces of the Home Depot chain of hardware stores are the long-term economic growth trends of the industry. They determine the ratio of supply and demand and influence the expansion of the organization’s construction market by blocking the entry of new competitors into it. Moreover, this driving force reveals the volume and structure of investments in the construction industry (Tohidifard et al., 2018). Another driving force is the change in the composition of consumers and the ways of using construction products (Gomes et al., 2020). In this case, it is the emergence of a new social stratum of consumers, and changes in the terms of sale and service: popularization of sales on credit and warranty service. This driving force is also positively influenced by new types of distribution, such as mail-order and online sales. One of the powerful driving forces is the renewal of technology and a change in the situation in the industry (Abu-Monshar et al., 2022). The production of new and improved products, as well as reducing costs and improving working conditions create prospects for Home Depot for further development.
Business Goals & Objectives
SMART Goals
The goals of the Home Depot hardware store chain meet the performance criteria and are specific, measurable, attainable, relevant, and time-bound. The goals to implement 50 new construction projects and increase sales by 20% per year are specific since there is a certain action, which is the result (Gomes et al., 2020). They are measurable since there are quantitative indicators — the number of projects and the percentage of sales.
Moreover, these goals can be considered achievable, since the figures are derived from the analysis of statistics for the past period — the number of completed projects and the dynamics of the growth of the profit indicator (Bahadori-Chinibelagh et al., 2019). The goals are relevant, as Home Depot is working on an expansion, and it has all the necessary resources, personnel, and equipment (Abu-Monshar et al., 2022). Everything is calculated in the business plan, and the costs are budgeted. These goals are limited in time since there is a period for which implementing the specified number of projects and increasing profits are needed, and monthly productivity was taken into account in it.
Balanced Score Card Approaches
The balanced scorecard approach again uses four perspectives: finance, customers, internal business processes, training, and development. They have simple and clear logical relationships with each other, which makes it possible to achieve an understanding of the processes taking place in the company at the level of all performers. Financial indicators include working with revenue, profit and profitability, cash flows, leverage, and the level of financial risks (Remidez & Beldona, 2021). Consumer value indicators evaluate market share, customer satisfaction indicators, and customer loyalty. An important place in the balanced scorecard approach is occupied by evaluating the performance of internal business processes, namely performance indicators, quality indicators, and timeliness (Abu-Monshar et al., 2022). It is also necessary to evaluate the effectiveness of innovations and employee productivity by criteria such as the percentage of income from new products, the index of the rate of improvement, morale, professional development, and staff turnover.
The Competition
The construction market in the USA is characterized by the presence of many sellers offering a homogeneous product, with free pricing. The construction industry in the United States is expected to achieve an average annual growth of 5% and reach a volume of US$ 1,805 billion by 2023 (Abu-Monshar et al., 2022). There is no price control, however, due to non-price competition there are barriers to entry into the industry. Lowe’s store remains one of Home Depot’s main competitors which leads a number of the largest sellers (Remidez & Beldona, 2021). However, the maintenance of sold products creates noticeable competitive advantages for Home Depot. Another competitive advantage of the company is the brand of this supplier and its positive image.
References
Abu-Monshar, A., Al-Bazi, A., & Palade, V. (2022). An agent-based optimisation approach for vehicle routing problem with unique vehicle location and depot. Expert Systems with Applications, 192(15), 1-15.
Bahadori-Chinibelagh, S., Fathollahi-Fard, A. M., & Hajiaghaei-Keshteli, M. (2019). Two constructive algorithms to address a multi-depot home healthcare routing problem. IETE Journal of Research, 6(4), 1-7.
Gomes, M. I., Ramos, T. R., & Póvoa, A. P. (2020). A new matheuristic approach for the multi-depot vehicle routing problem with inter-depot routes. OR Spectrum, 42(5), 75-110.
Ramos, T. R., Gomes, M. I., & Póvoa, A. P. (2020). Multi-depot vehicle routing problem: A comparative study of alternative formulations. International Journal of Logistics Research and Applications, 23(2), 103-120.
Remidez, H., & Beldona, S. (2021). Developing and implementing machine learning software at Home Depot. Journal of Cases on Information Technology, 23(4), 1-13.
Tohidifard, H., Tavakkoli-Moghaddam, R., Navazi, F., & Partovi, M. (2018). A multi-depot home care routing problem with time windows and fuzzy demands solving by particle swarm optimization and genetic algorithm. International Federation of Automatic Control Papers, 51(11), 358-363.