Columbus, OH, November 1, 2006--As 2010 approaches, Home Depot is on the cusp of a three-decade growth path that has fundamentally reshaped the home improvement industry. In fact, the retailer is poised to outpace even Wal-Mart's first 30 years of growth.
However, according to global management consulting and market research firm, Retail Forward, increasing market pressures will require Home Depot to pursue an aggressive retooling of its business model.
In its recently released report The Home Depot 2010, Retail Forward emphasizes that reaching maturity means the retailer is under increasing pressure to mine growth with new merchandise offers, services, formats and markets. "The challenges are being magnified as they occur in the context of significant corporate restructuring and increasing competition from Lowe's," comments Steve Spiwak, report author and manager of Retail Forward's Key Account Program on The Home Depot.
In The Home Depot 2010, Retail Forward assesses The Home Depot's growth and outlook and provides insight into the strategies and tactics the company is developing to build and sustain profitable growth amid a maturing domestic retail market. Report highlights include:
The Home Depot's stellar growth will moderate through 2010. The Home Depot is forecast to continue logging solid overall sales growth during the next five years, though the pace should slow from the heady gains clocked during most of its history. Despite the slowdown, growth will be more than enough to keep the company the largest home improvement retailer in the United States and among the biggest retailers globally.
Retail services, professionals and international markets will drive much of the retailer's growth. Future growth will be shaped by The Home Depot's increasing emphasis on retail services, the professional market and international expansion to fuel sales as prime locations for its big box stores become scarcer. The company's market share gains will slow.
While The Home Depot remains firmly ensconced as the top player in the industry, the steady rise in its share of industry sales is slowing. This is due in large part to looming market saturation, which makes growth harder to come by.
Further growth won't be easy. The factors that have propelled The Home Depot's stellar growth for most of the past three decades—rapid big-box store growth and a decentralized management structure—won't be enough to drive industry-beating growth in the future. As it continues to implement fundamental changes to its corporate culture, The Home Depot is developing new strategies to build and sustain profitable growth amid a maturing domestic retail market.
"We expect The Home Depot to aggressively pursue innovations as it seeks to build a sturdy platform for future growth," states Spiwak. Innovations include:
Store Modernization—Improving the Experience
Merchandising—New Products, New Appeals
Services—A Do-It-For-Me Focus
Formats—Tapping New Markets
Non-store—Extending Multichannel Reach
Pro Market—Moving Beyond Retail Core
Capabilities—Enhancing Efficiencies.
International—Getting Serious Overseas
The ability of The Home Depot to implement its growth strategies will have far-reaching implications for home improvement retailing. Most important is its ability to stay ahead of Lowe's.
The Home Depot will face many other obstacles to growth in the coming years. Among the most challenging will be the need to surmount saturated domestic markets.
"Competitors will need to innovate service and merchandise offers, tap under-penetrated market segments and build new customer touch points to survive amid The Home Depot's market domination, Spiwak notes. "Supplier survival strategies in a sector dominated by The Home Depot include supporting new retail growth initiatives, developing supply chain enhancements and offering innovative new products and services," he concludes.
