Home Depot Remarkable Review
Photo credit: iStock.com
The Work of a Remarkable Company
Even the most remarkable companies still have work to do. The Home Depot, a clear candidate for being a Remarkable Retailer and is a great example of that. Let’s take a closer look at the company's performance under Craig Menear’s leadership. Note: Menear was CEO from 2014 - 2022, and Chair from 2015 - 2022.
Home Depot is a GROWTH company
Home Depot’s generated profits in excess of its cost of capital in every year that Craig was CEO (blue bars). In addition, the market believed that Home Depot’s future profits would be greater than they were at present (orange bar). This is the DNA of a Growth company. In fact, Home Depot is in the top 10th percentile of all other retailers. But not all companies that earn a 'Growth' designation are remarkable. For that, we need to look deeper into how the delight their customers and build resilience, smarts, and agility into the company’s DNA.
Home Depot's focus needed to be on DELIGHTING its Target Customer
ROIG benchmarked Home Depot during Craig’s tenure. Although we utilize a blend of metrics to score the degree to which any company is 'delighting' their customers, the NPS scores below highlights that Home Depot has opportunity to improve its Remarkable Retailer score was with the customer. Their NPS score was respectable (49%), but were not significantly higher than their biggest competitor Lowe's, and was even below Ace and TrueValue. Note: NPS scores vary across industries, however, more remarkable NPS scores typically start with a promoter base that is ~60% or higher.
Source: internal ROIG project research, asking NPS question among shoppers of each retail store within the past 12 months
And from our research on Costo at the time, working to better meet the needs of their customer was exactly what Home Depot was working on.
Customer-Centric Offerings Introduced during CEO Craig Menear's Tenure
Craig Menear understood the need to focus on the customer - especially the high value prosumer segment . During his time in chair, Home Depot introduced a number of customer-centered offerings. This highlights an understanding the needs of their customers and working to meet those needs better than the competition.
This is a snap shot of the new value props introduced:
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Reserved Pro Parking
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Commercial credit
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Bulk pricing
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Expanded assortment and project pricing available
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Dedicated checkout and order loading
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Call ahead ordering or buying online & pickup in-store within 2 hours
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Shipping and Delivery Services (to jobsite)
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Tool and Truck Rental (pro-grade)
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Purchase tracking (export to Excel)
Home Depot's next area for improvement: Agility
Although we do not have all the elements (measurements) to determine Home Depot’s degree of strategic and organizational agility, we do know a few things.
According to comparably.com, who tracks employee NPS scores (or eNPS) where employees are asked on a scale of 0 to 10, how likely are you to recommend working at your company, Home Depot’s eNPS was +18. This compares to Lowes at 6, Ace Hardware at 6, and True Value Hardware at an impressive 43. While ahead of several of their competitors, Home Depot only ranks in the "generally satisfied workforce" range of the scale, whereas an "exceptional" score is 50+ on this scale.
Home Depot clearly has room for improvement on the employee satisfaction side of the Agile equitation, but our definition of Agility is more complex. It goes beyond a simple engagement or eNPS number to include the degree of change-elasticity in the employee base, a strong performance leadership capability, high executive team effectiveness, and strong 'systems' that contribute to a higher organizational IQ (where companies strive to be “smarter” tomorrow than they are today).