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November 20, 2006

Home Depot continues to move away from core business

Analysis of: Home Depot wades into consumer electronics arena | www.retailingtoday.com
This analysis is solely the work of the author. It has not been edited or endorsed by GLG.
Analysis By:
Larry Doan
FormerStore Manager, Lowe's Companies, Inc.
Implications: Will customers buy into purchasing electronics from a home improvement retailer?
 Will the sales associate be knowledgeable about this new product?
   What about the space needed to merchandise , will it be the same in all stores or will customers have to search for it.
    

Analysis: I think home depot is diluting its core business by expanding into non traditional candy and electronics. I don't think the public will be fooled into purchasing items that are not traditional for this type of store. If I want electronics I go to best buy or Radioshack. When I want home improvement items I shop Lowes or home depot. I don't think its a natural fit and I think customers will reject it. 
  Secondly I don't see the sales associate being as knowledgeable about electronics as they are about home improvement. I don't forsee the training needed to sell this complicated line of merchandise.     
   Lastly space, I don't see a common place for this merchandise throughout the store, therefore the consumer will have to search out this new category. I also think this space could be utilized for a hot home improvement item, if there is one to be found.   
    Home depot might learn from Lowes venture into electronics in the late  1990's. It wasn't pretty. What wasn't lost due to theft was given away as consumers perceived this as a lost leader and drove prices down. Without margin to be made Lowe's quietly went out of the electronics business.

Other Analyses of the Same Source Article:
Electronics = Vibrant Category = More Foot Traffic
November 16, 2006, Author: Mark Buss, President and Chief Executive Officer , SAECO INTERNATIONAL GROUP SPA
Is it time for Home Depot expand into Consumer Electronics?
November 14, 2006, Author: Cathy Stauffer, Founder, Cathy Stauffer Consulting
Can Home Depot Be Successful in the CE Business?
November 13, 2006, Author: GLG Expert Contributor
Home Depot testing store line distribution while already well entrenched on the internet channel.
November 13, 2006, Author: Mark Sussman, President and Chief Executive Officer, Pyramid Solutions, Inc.

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