Bernard Marcus and Arthur Blank founded Home Depot after losing their jobs in the home improvement industry in 1978. Home Depot focused on the needs of the DIY market, specializing in building materials and lawn and garden equipment. Three stores were launched in the Atlanta area in 1979, and four stores in South Florida were added in 1981. The firm posted sales of $50 million that year and went public. By 1983, Home Depot had opened stores in Louisiana and Arizona with total sales exceeding $250 million.

Home Depot expanded into California in 1985 and by the following year had amassed a total of 60 stores and sales of $1 billion. Home Depot continued to grow and entered the northeastern United States and Canada in subsequent years, reaching 500 stores by 1997. Home Depot added a direct-mail interest by acquiring mail-order firm National Blind & Wallpaper Factory and direct-marketer Maintenance Warehouse.

Home Depot launched Villager’s Hardware stores in New Jersey in 1999, a 40,000-square-foot outlet designed to compete with traditional hardware stores. The firm also began to add large appliances to many of its stores. In 2000, Marcus and Blank became cochairmen, and former General Electric (GE) executive Robert Nardelli was named president and CEO.

Aggressive expansion continued in 2001 when Home Depot added another 200 stores and acquired Total Home, a small home improvement chain in Mexico. Marcus and Blank stepped down as cochairmen, and Nardelli assumed the role in addition to his CEO responsibilities.
Having abandoned its Villager’s Hardware concept in the previous year, Home Depot opened its first small store—about 60,000-square-feet—in New York City in 2002. The firm continued its expansion into Mexico, acquiring Del Norte, a small chain in Juarez. Home Depot operates over 100 stores in Canada and has opened a business development office in China.
Competitive pressure by Lowe’s has caused Home Depot to aggressively upgrade its old stores while continuing its growth efforts, and contributed to CEO Robert Nardelli ouster in 2007. Nardelli was replaced by Frank Blake. Sales peaked in 2008 amidst the housing crisis and began to rise again in 2011.
Today, Home Depot is the world’s largest home improvement chain and second-largest retailer after Wal-Mart, operating approximately 2,250 stores throughout the Americas. Home Depot continues to focus on the DIY customer, with more than 40,000 products stocked in a 130,000-square-foot facility.

Case Challenges
1. Is it necessary for Home Depot to emphasize both the DIY and contractor segments of the market to build and maintain economies of scale? Is one segment tied more closely to the general state of the economy than the other? Explain.
2. Has competitive pressure from Lowe’s caused Home Depot to modify its business strategy? If so, how?
3. Do international opportunities exist for Home Depot beyond North America?