Home Depot deals mainly in the home improvement and do-it-yourself industry, but what is now the world’s largest players in the home improvement industry had humble beginnings – as all big things do. The company would never have existed was it not for the founders being fired from their old company Handy Dan, but that layoff set in motion something bigger than anyone could have imagined.
Today, Home Depot has extensive US and international operations and is hardly the two-branch home improvement warehouse it once was. What led to this change and Home Depot eventually dominating the home improvement industry is nothing short of a story of dedication and a commitment to serving its customers well.
In this article, I’m going to talk about many aspects of the Home Depot business history that made it the home improvement giant it is today, so keep reading!
Bottom Line Up Front
Home Depot was founded by two former colleagues named Bernie Marcus and Arthur Bank. When the stores first opened, getting customers was a struggle, and at one point even their efforts to hand out one-dollar bills to customers who shopped there failed. It was something new, and Americans just didn’t know what to make of it.
However, the founders of Home Depot were committed to serving their customers to the point where if customers walked out of the store without making a purchase, Marcus would make sure he talked to the customers and ask why. If the answer was that the customer couldn’t find what they needed at the store, he would deliver it to the customer after buying it from somewhere else.
Over time, word spread about their low prices and dedication to customer service, and the company grew to even surpass its competitor, Lowe’s. Today, Home Depot is worth $298.83 billion, consistently beating the competition in the home improvement world.
See also: Home Depot Competitors Analysis: 5 Biggest Competitors
Handy Dan and the Hostile Layoffs
Home Depot as we know it today would never have been possible if it wasn’t for the founders being laid off from their jobs. Marcus and Bank were both high-level executives at a company called Handy Dan, but were laid off when the company decided to lay off a lot of its staff. Today, the layoffs are known more as a ruthless corporate bloodbath, and it wasn’t totally unexpected either.
The culture at Handy Dan was known to be hostile, fear-motivated, and competitive.
As a result, Marcus and Bank were determined to making their company and stores the complete opposite. Even in the early days, they fostered a workforce that cared about the job. In an effort to avoid this fear-based culture, Marcus and Bank created one where people were not afraid to speak their minds either. This led to the company making a lot of its policies and innovations thanks to ideas from its associates.
Today, Home Depot is recognized as one of the most innovative companies in the world because of this positive culture and the developments and innovations that have resulted from it.
See also: Home Depot Mission Statement Explained
Struggle to Get By and a Commitment to Customer Service
When Home Depot was first introduced, the concept of a one-stop shop for do-it-yourselfers wasn’t really the norm. If someone was working on a project, they needed to look for supplies in at least two different places, and the orange warehouse-style stores were pretty strange at first sight. According to Insider, Home Depot couldn’t even pay customers to shop there – something it actually tried as a marketing campaign. Home Depot decided to keep singles at the counter and give them to the customer at the checkout counter, encouraging them to spend a dollar at the store. By the end of the first day, the store still had some notes out of the $700 worth of singles left!
But Home Depot was dedicated to customers, and that didn’t go unnoticed by the customers either. One of the founders, Marcus, used to keep an eye on shoppers and if someone left without a purchase, he would follow them to their car and ask them why. If the customer said that it was because Home Depot didn’t have what they needed, he would go get it from somewhere else and personally deliver it to the customer. Home Depot continues to show this spirit even today, where associates are empowered to give employees up to $50 worth of discounts without any manager’s approval, and the stores even have a strict policy against confronting shoplifters. In 2016, Home Depot fired four of its associates for helping catch a shoplifter! However, this policy isn’t as crazy as it sounds – Home Depot insists that for the safety of its shoppers, only trained security personnel is allowed to confront shoplifters.
At times when supplier deliveries were late or the store had issues with supplies (suppliers were unwilling to do business with Home Depot at first), Home Depot would stock its shelves with products bought from other stores so the customer wouldn’t be inconvenienced. Home Depot would also stock empty boxes and cartons on the shelves to make the store look full in some cases.
News about Home Depot spread by word of mouth at first, but then the company’s low prices started to pull customers in as well. Eventually, the business started to grow at unprecedented rates and into the giant chain of warehouse stores that we know today.
Employee Treatment Throughout the Times
A Quora thread asking people what the best part about working with Home Depot is, is full of praise about the company’s culture, how the people there are great to work with, heartwarming stories about helping customers find lost purses, and more. Employees overall seem to believe that working with Home Depot means working with a company that values hard work and promotes on merit, and where promotions and raises are fair.
This is all information that can be backed up by reputable sources like Comparably, which places Home Depot in the top 25% of employers in terms of turnover rate. However, things haven’t always worked out for Home Depot employees.
Even though Home Depot provides benefits like matching 401K payments, dental insurance, and even tuition reimbursement to its employees in the wake of the great resignation, the company has had hard times with its employees once in a while.
The company has been sued by its employees on occasion, with cases like the wrongful termination of an employee when they refused to create chargebacks to vendors for merchandise that was undamaged and not defective, and a case with the wrongful termination of an employee because of their cancer gained a lot of media attention.
Still, the company has managed to move past those times and stay ahead of the curve when it comes to employee retention and engagement. Home Depot is among the world’s best employers, according to Forbes, and is known to be an inclusive company that is great to work at for women, people of color, and members of the LGBTQ+ community.
Home Depot’s initial attempts at marketing were definitely not a success, but obviously, times have changed. Throughout the past, Home Depot has been stressing things like its cheap prices, the fact that it is a one-stop-shop for anyone trying to take on a DIY project, and the fact that customers will always feel welcome and comfortable while shopping from the stores.
It has also adopted several policies along with its dedication to customer service that makes Home Depot one of the best places to shop, with slogans like
- “The Home Depot: Low prices are just the beginning.” in the early 1990s,
- “When you’re at Home Depot, you’ll feel right at home.” in the late 1990s,
- “Home Depot: The first in home improvement” from 1999 to 2003,
- “More Saving, More Doing” from 2009 onwards,
- And currently, “How Doers Get More Done.”
Home Depot has obviously always leaned into letting people know what it stands for and what it has to offer its customers through its marketing.
In the late 2010s, the company also started focusing on the huge role social media has to play in the DIY community – it recognized that social media was the place where DIY-ers went to for advice, help, information about how to get projects done, and even to show off their own projects, and the company leaned into that.
Most recently, the “One Home Depot” strategy focusing on things like unifying and completely transforming company culture, updating 60% of its stores, and a solid $11 billion investment has proven successful, both when it comes to serving customers better and the overall popularity of Home Depot.
Mergers and Acquisitions
Over the years, Home Depot has acquired multiple companies in the home improvement space. These companies include:
- Maintenance Warehouse: This company was a leader in the direct-mail marketing of maintenance, repair, and operations supplies that could reach customers Home Depot could not. The company was bought by Home Depot for $245 million in 1997.
- Apex Supply: Apex Supply is a wholesale plumbing, pipes, and HVAC distributor acquired by Home Depot in 1999. Both Apex Supply and Maintenance Warehouse were later rebranded as “The Home Depot Supply” in 2004.
- Your Other Warehouse: This was another plumbing distributor that focused on special order fulfillment and was bought by Home Depot in 2001.
- Compact Power Equipment Inc.: This is an equipment rental and maintenance service bought by Home Depot for $265 million in 2017.
- The Company Store: The Company Store sells textile and home decor products. Home Depot bought it in a 2017 deal, the terms of which are undisclosed.
- Blinds.com: As the name suggests, Blinds.com is an online store that sold window coverings and was acquired by Home Depot in 2014. The terms of this agreement are undisclosed as well.
- Interline Brands Inc.: This brand is a building products distributor whose acquisition cost Home Depot $1.6 billion in 2015.
- HD Supply: In 2020, Home Depot bought HD Supply for about $8 billion. The company is a wholesale distributor of repair, maintenance, and operations products.
- Redbeacon: The acquisition of Red Beacon by Home Depot was announced in 2012, but the terms of this deal remain undisclosed.
Conflicts Within the Company
Home Depot is a company known for its entrepreneurial spirit, innovation, and relaxed work culture that focuses on growth and openness to change. However, former CEO Robert Nardelli was brought over to the company in 2000 with a completely different vision in mind.
Being a former executive at General Electric, Nardelli was under the assumption that the same management tactics would work for Home Depot’s much more decentralized way of operations as well. This usually resulted in unhappy stakeholders. Employees, investors, and management on all levels weren’t happy with what was going on, and it all came to a head after years of declining stock prices.
Nardelli was known as a hard-handed leader who expected everyone to fall in line and had no experience in the home improvement industry before this job – which turned out to be bad news for the company’s long-term growth.
Eventually, he was replaced by the board of directors in 2007 by Frank Blake.
Current Financial Performance
Home Depot stands at number 26 out of the top 500 US companies that exist today. It is also the biggest home improvement retail chain in the world, with billions of dollars in annual revenue. According to Home Depot’s annual report in 2021, the company made $150 billion in sales, which grew by $19 billion in the year since, and $40 billion over a two-year period. The net profit for Home Depot in 2021 was 16.4 billion, with the goal for 2022 being a total of $200 billion in sales.
While successful marketing and a strong brand reputation and customer service have a lot to do with it, part of this growth can also be owed to the recent growth in the home improvement sector seen since the beginning of the pandemic. When more and more people were spending time at home thanks to worldwide lockdowns, many turned their attention to making some much-needed changes. Things like home offices often needed to be installed, and a lot of people looked to improve other parts of the house, like their gardens.
FAQs – Home Depot Business History
Question: Is Home Depot a successful company?
Answer: Home Depot stands at number 26 on the Fortune 500 list of America’s biggest companies and is the biggest home improvement goods retailer in the world. In the last two years, Home Depot has increased its sales by $40 billion and made $150 billion in sales in 2021. Its target for 2022 is to achieve $200 billion in sales, and it is currently on track to achieve this. This makes Home Depot one of the most successful companies out there and certainly one of the world’s most well-known ones when it comes to home improvement.
Question: Where was the first Home Depot built?
Answer: The first two Home Depot stores were opened in Atlanta in 1979, and the company struggled quite a bit to attract customers. Founders Bernie Marcus and Arthur Bank had to adopt quite a few marketing tactics – like using empty boxes to stock the store and make it look full – to make the stores take off at first. Still, word of the amazing customer service and low prices eventually spread and made the company into the home improvement giant it is today.
Question: Does Home Depot provide good customer service?
Answer: Home Depot’s primary commitment is to its customers, and it shows it in several ways. Not only are sales representatives at stores authorized to give customers up to $50 worth of discounts without any manager’s approval, but they are also strictly instructed not to confront any shoplifters out of customer safety concerns. When a customer walks into a store hoping to find supplies to finish a project, they can expect to be given guidance and advice on the best way to do it as well as all the supplies they need.
Question: How much did Home Depot make in 2021?
Answer: Home Depot made $150 billion worth of sales in 2021, as well as a $16.4 billion profit.
Question: Does Home Depot have international stores?
Answer: Home Depot has international locations in countries like Canada, Mexico, China, the UK, and South America.
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