Operating Strategy. Our operating strategy is to offer a broad assortment of
high-quality merchandise and services at competitive prices using knowledgeable,
service-oriented personnel and strong marketing and credit promotions. We believe
that our associates knowledge of products and home improvement techniques and
applications is very important to our marketing approach and our ability to
maintain and enhance customer satisfaction.
Customers. The Home Depot stores serve three primary customer groups:
' Do-It-Yourself ("D-I-Y") Customers: These customers are typically
home owners who purchase products and complete their own projects and installations.
To complement the expertise of our associates, The Home Depot stores offer "how-to"
clinics taught by associates and merchandise vendors.
' Do-It-For-Me ("D-I-F-M") Customers: These customers are typically
home owners who purchase materials themselves and hire third parties to complete
the project and/or installation. We arrange for the installation of a variety
of The Home Depot products through qualified independent contractors.
' Professional Customers: These customers are professional remodelers, general
contractors, repairmen and tradesmen. In many stores, we offer a variety of
programs to these customers, including additional delivery and will-call services,
dedicated staff, extensive merchandise selections and expanded credit programs,
all of which we believe increase sales to these customers.
Products. A typical The Home Depot store stocks 35,000 to 45,000 products during
the year, including both national brand name and proprietary items. The following
table shows the percentage of Net Sales of each major product group (and related
services) for each of the last three fiscal years:
To complement and enhance our product selection, we have formed strategic alliances
and exclusive relationships with selected suppliers to market products under
a variety of well-recognized brand names. During fiscal 2006, we offered a number
of proprietary and exclusive brands across a wide range of departments including,
but not limited to, Behr Premium Plus' paint, Charmglow' gas grills, Hampton
Bay' lighting, Mills Pride' cabinets, Vigoro' lawn care products, Husky' hand
tools, RIDGID' and Ryobi' power tools, Pegasus' faucets, Traffic Master' carpet,
Glacier Bay' bath fixtures and Veranda' decking products. We may consider additional
strategic alliances and relationships with other suppliers and will continue
to assess opportunities to expand the range of products available under brand
names that are exclusive to The Home Depot.
HD Supply Segment
Operating Strategy. Our operating strategy is to provide a total solution for
every phase of a building project, from infrastructure to construction to lifetime
maintenance and repair and remodel. We believe that our broad product and service
offering, our highly knowledgeable sales force and our reputation for superior
customer service enable us to be a single-source supplier to our customers for
the entire project lifecycle.
Customers. We distribute products and offer services primarily to builders,
contractors, government entities, industrial businesses and maintenance professionals.
Our customers typically select their vendors primarily on the basis of product
availability, relationships with and expertise of sales personnel, price and
the quality and scope of services offered. Additionally, professional customers
generally purchase large volumes, are repeat buyers because of their involvement
in longer-term projects and require specialized services. We complement our
product offering with customer-driven, value-added services, such as integrated
supply, design assistance, kitting, assembly and fabrication services.
Products and Services. Our products and services are focused around the following
four major categories that are related to different phases of a building project:
' Infrastructure: This category covers the products and services to construct
and support the public works systems for residential and commercial projects.
' Construction: This category covers the interior and exterior structural building
components for residential and commercial projects.
' Maintenance: This category covers products and services for the routine maintenance,
repair and operations needs of multifamily housing, hospitality, healthcare,
government and industrial facilities.
' Repair and Remodel: This category covers home improvement products and building
materials, serving the consumer, professional handyman and light remodeler markets.
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