Abstract

Home Depot was the biggest home improvement retailer in the world in 2004. Set up in the late 1970s, to provide low price, warehouse-like products, Home Depot grew rapidly over the 1980s and early 1990s, adding stores at the average annual rate of 20 percent. However, in the late 1990s, the company's comparable store growth rate began declining. It was also experiencing operational difficulties due to its tardiness in developing systems to manage its rapid growth. In this situation, the board brought in Bob Nardelli as the CEO of the company in 2000. Nardelli was responsible for implementing new initiatives that changed Home Depot's culture and strategic direction. The case discusses the changes implemented by Nardelli at Home Depot in the early 2000s. It discusses the measures he took to eliminate inefficiencies from the company and to streamline its processes. The case also talks about the difficulties that Nardelli, who was the first outside CEO of Home Depot, faced in implementing these changes. The case concludes with an analysis of how Home Depot compared with Lowe, its nearest competitor, in the early 2000s and an analysis of the reasons why the company's share price had fallen.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• The growth strategy of a large home improvement retailer
• The retailer's attempt to revive growth in the face of market saturation
• The effect of change of leadership in strategy.

Keywords

Home Depot, Bob Nardelli, Bernie Marcus, Arthur Blank, New York Stock Exchange, Supply chain, Store layout, In-store improvements, Lowe, US retail industry, The Home Depot Supply, Georgia Lighting, Expo Design Centers, The Home Depot Landscape Supply and Discovery Channel