New Georgia Encyclopedia: The Home Depot

NGE >> Business and Industry >> Business >> Retail >> The Home Depot

The Home Depot

Founded in Atlanta in 1978, the Home Depot has evolved into the world's largest home-improvement center and the second-largest retailer in the United States. Beginning with just three stores, the Home Depot

The Home Depot

now boasts stores in all fifty states, Canada, Mexico, and Chile. The Home Depot ended its 2004 fiscal year with sales of $73 billion and earnings of $5 billion.

The Home Depot began after coworkers Bernie Marcus and Arthur Blank were fired on the same day in 1978 from their executive jobs at Handy Dan Home Improvement Centers in southern California. Turning a potential disaster into an opportunity, Marcus, a native of Newark, New Jersey, and Blank, a native of New York City, hatched a business plan. The two men envisioned a chain of home-improvement warehouses, larger than any of their competitors' facilities, filled with a vast array of products and staffed by customer-service experts. After securing sufficient capital and searching nationwide for a suitable location, Marcus and Blank opened two stores on June 22, 1979, in Atlanta, which made the city the official home of the Home Depot.

The stores were a rousing success,

Arthur Blank

and Marcus and Blank initiated an aggressive yet well-planned expansion program. By 2003 the Home Depot had grown from three stores employing 200 people to more than 1,700 stores employing 300,000 people. Today, a new store opens every 43 hours, and more than 22 million customers visit a Home Depot store each week. The Home Depot's growth is unparalleled in the business community. It was the youngest company to reach $30 billion, $40 billion, $50 billion, and then $60 billion (in 2004) in sales. Critics of the company's meteoric success contend that the Home Depot's aggressive expansion policy unfairly drives smaller, preexisting competitors out of business and creates a monopoly in some markets. Despite such criticism, the company's plans call for continued expansion.

The Home Depot revolutionized the home-improvement industry by offering a wide selection of merchandise, low prices, and exemplary customer service to both the professional contractor and the do-it-yourself customer. Before the advent of Home Depot, small mom-and-pop stores, carrying a limited and specific selection of merchandise, dominated the industry and typically emphasized sales to the professional contractor. As a result, home-improvement projects often required driving to several stores to obtain the necessary materials. By contrast, the Home Depot stores offer a one-stop shopping warehouse. The average Home Depot store is approximately 130,000 square feet and is stocked from floor to ceiling with some 40,000-50,000 different products. An emphasis on size and volume allows the Home Depot to remain profitable by selling more for less. This, in turn, allows the Home Depot to negotiate lower prices from the merchandise vendors, with the savings passed on to the consumer.

In 2006 the company announced its acquisition of Home Decorator's Collection, a home furnishings retailer based in St. Louis, Missouri. The purchase was made to expand Home Depot's online and special order sales.

The

Customer Service

Home Depot stores are staffed by knowledgeable professionals who are able to assist the novice in home improvement. Every Home Depot associate undergoes extensive and continuous training in product knowledge and customer-service skills. To further assist the do-it-yourself customer, and to bolster sales, the Home Depot stores also provide home-improvement training seminars to the public free of charge.

The company is also dedicated to giving back to the community and donates time, labor, money, and supplies to numerous charities, totaling more than $200 million in contributions. The Home Depot Foundation, established in 2002, supports a variety of community projects, including Habitat for Humanity; City of Hope, a California-based cancer-treatment center; and KaBOOM!, a playground-construction organization.