2. Merchandising Roots of Leadership
in Home Improvement
Built on National Brands
Exclusive and Proprietary Brands
Focus on Our Core Customers
Knowledge Transfer to the Customer
Aggressively Attacked the Market
Strong Every Day Value Proposition
2
3. Brand Strategy
Proprietary
Differentiate
Brands
Exclusive
Preference
Brands
National
Selection
Brands
Home
The
Depot
Foundation
Built on National Brands
3
4. Merchandising Strategy Going Forward
Add Key National Brands
Exclusive and Proprietary Brands
Focus on Our Core Customers
Drive Knowledge Transfer to the Customer
Aggressively Attack the Market
The Best of Our Past with a Focused Approach
4
5. Brand Strategy: National Brands
Market share leader in Most recognizable brand
overall power tool share in garden
Largest share of gypsum
Pro choice for power tools #1 preferred brand by
wallboard market in US
DIY customers
Most used wallboard
Proprietary brand by Pros
Brands
Exclusive
Brands
National
Brands #1 brand in #1 dollar market share
cooking products
42% unaided faucet
#1 appliance
Home
brand awareness
brand in mkt share
Depot
among builders
Built on National Brands
5
6. Brand Strategy: National Brands
Proprietary
Brands
Exclusive
Brands
National
Brands
Home
Depot
Built on National Brands
6
7. Brand Strategy: Exclusive Brands
#1 Window brand preferred #1 Consumer brand Highest consumer
by Pros & Consumers of paint brand recognition
12% market share 27% market share Over a century of
craftsmanship
Proprietary
Brands
Exclusive
Gaining consumer
Brands Largest producer power tool share
of tile & stone
National Affordable price
installation materials
Brands approach
in N.A.
40% market share
Home
Depot
Innovation at a Value
7
8. Brand Strategy: Exclusive Brands
Proprietary
Brands
Exclusive
Brands
National
Brands
Home
Depot
Innovation at a Value
8
9. Brand Strategy: Proprietary Brands
#1 selling brand of ceiling
fans in the world
>$2 billion in brand sales
Innovation: Over 200
new products since 2005
Fastest growing lawn &
garden brand at HD
Proprietary
Brands
Exclusive
Brands
Meets or exceeds National Brand quality
National
Brands >$1billion in annual sales
Home
Depot
Innovation at a Value
9
10. Brand Strategy: Proprietary Brands
Proprietary
Brands
Exclusive
Brands
National
Brands
Home
Depot
Innovation at a Value
10
11. Establishing the Focused Approach
Merchandising Transformation
Redefining How We Run Our Business
Re-Establishing Product Authority
Through Focused Bay Approach
Building Tools to Enable Execution
Success = Profitable Sales + Share Gain
11
12. Merchandising Transformation: People
Key Investments in People
New Outside Talent
− Gordy Erickson – SVP Décor
− Dave Voss – Lumber MVP
− Frank Bifulco – CMO
Field Talent
− Divisional Sales Managers (DSMs)
− Bruce Merino – SVP Merchandising Services
− Dan Paris – MVP
− Pete Capel – MVP
− Jane Roten – VP Store Environment
Merchandising Execution Team (MET)
Building on an Experienced Team
12
13. Merchandising Transformation: Process
Focused merchants on what customers
want and created better alignment with
operations, supply chain teams.
Focused Bay Approach
Seasonal Planning
Merchandising Presentation
Driving Sales Productivity in the Box
13
15. Process: Focused Bay Approach
Identified assortment gap
~ 800 Bays Reallocated space
~ 85,000 Square Feet Reset in ~ 90 days
Drive more value out of 60% more productive than
every bay in the store under previous program
15
16. 2008 Seasonal Productivity Improvement
Assort Closer to the Customer
Fix Information Flow
Improve In-Stock
Faster Response to Demand
Enhance Inventory Productivity
16
17. Merchandising Presentation
Field merchants partner with merchants
in Atlanta to offer more localized products
Natural Stone Metro Set
17
18. Merchandising Transformation: Systems
Providing our merchants with the tools they
need to more effectively do their jobs.
Better Merchandising Tools:
Assortment Planning
Forecasting
MAP Event Tool
New MST Platform
More Granular Data = Quicker Response Time
18
19. Merchandising Scorecard
Then (Q1’07) Now (Q1’08)
Gained/sustained market Gaining/sustaining market share
in half of our merchandised
share in a quarter of our
categories
categories
Average comp store inventory
Comp store inventory
down 7%
SAP Core Retail being piloted in
Evaluated Core Retail and
Canada; new merchandising
U.S. merchandising tools
tools for U.S.
Reduced promotional activity
Higher rate of
by 25%
promotional activity
More effective smaller resets
Major store resets
Website disconnected Website more integrated
with the business
from the business
19
21. Sustaining Sales & Margin
Gross Margin
Long Term
Short Term • Refined merchandising
This Year transformation
• Focused bay
– Price philosophy
approach
• Seasonal – Line structure
inventory flow
– Marketing integration
• Project business
– Space allocation
• Rationalize • Supply Chain benefits
• Line structure
promotions • Better customer insight
2008 2009 2010 2011+
Building Tools to Drive Sustained Execution
21
