The most important core competencies are:

    Do-It-Yourself  Experience

    Service Delivery Process

Do-It-Yourself Experience

Building up do-it-yourself experience for home improvement customers is very significant due to the high level of competition existing between home centers. The leading merchants in the industry are continuously investing and emphasizing the development and management of DIY experience offered to the customers. To keep the highest position in the industry all leading home centers recognize the value of it and are almost equally successful. Its toughest competitors Sears Hardware and Lowe’s are slightly better or equally skillful in delegating the knowledge of and power over home improvement projects to their customers.

Home Depot is considerably a new player on this market and its Villager’s and Expo stores are specially tailed to create and serve DIY experience. Home Depot does it in many ways. It:

    Offers free classes on home repairs and appliance installation

    Offers help of professionals in projects like interior designing

    Through commercials and store design creates an atmosphere where a customer feels ‘in charge’, 

         rather than lost in an unknown world.

Service Delivery Process

Service comes into play since the first moment the customer enters a store. The first one to one encounter with a sales person might be critical in the eyes of a prospective as well as established customer. A knowledgeable and pleasant sales person can encourage a customer to ask questions and start feeling comfortable in the department that otherwise might be completely new. The whole image of a sales person plays an important role in what kind of experience a customer will maintain after leaving the store. None of the following can be underestimated by a professional salesperson that should:

    Have an expert knowledge on the subject and give an impression that a customer can trust the person as a human being rather than as an employee of a store trying to sell the most expensive or unattractive to others item

    Have a  polite and respectful attitude to a customer’s needs

    Be professional and neat in the looks

The other part of service delivery process consists in providing customers with help in the areas of delivering acquired merchandise, installing, maintaining, or fixing it. Also the Internet presence comes as a valued channel over which store’s service can reach a customer. 

Competitive Comparison of Core Resource Value / Cost Contribution Scores

Competitive Core Resource Comparison

As this table indicates, Home Depot is using its core resources far better than its competitors.  It scored higher than its competitors in the Competitive Core Resource Comparison Scores.

Distribution & Logistics –  (lowest) Home Depot scored low in this core competency compared to its other core competencies.  The core resource that contributes the most is company size.  It greatly affects how Home Depot’s products are distributed.

Service Delivery Network  - (lowest) Home Depot also scored low in this core competency in using its core resources.  The core resource that contributes the most is personnel.  How personnel is used as raw labor to provide service to the customers, has a largest impact on the overall delivery of service.

Competitive Expansion –  (highest) Home Depot scored the highest here. Home Depot uses its core resources very well in this core competency.  The core resource that contributes the most is financial strength.  It is a critical component in Home Depot’s capability to expand in the best strategic fashion than its competitors.

DIY Experience – (medium) Home Depot scored the next highest after competitive expansion in using its resources in the most cost effective way.  The core resources that contribute the most to are personnel and name recognition.  How Home Depot uses its personnel is a critical factor in providing the best DIY experience to the customer.  In addition, name recognition is also important to the DIY experience.  How customers perceive Home Depot has a great impact on what the customers experience in the stores.     

Select Core Competencies and Core Resources for the Competitive Strategy Development

Core Competencies:

Do-It-Yourself Experience

Other Home Depot’s competitors are constantly working on the DIY experience as a competitive advantage factor. In order to stay in the lead Home Depot should introduce or reinforce some marketing tools like:

    TV ads and billboards to the customer who can feel ‘in charge’ at the store

    Mail, web, and magazine announcements on organized classes and special promotions

    New ways to make a customer see the sore as more than a place of  purchasing but also as a place of      

        education and entertainment

 Service Delivery Process

Another core competency, which should be a part of the competitive strategy, is service. Competitors in the industry heavily invest in it and Home Depot no longer stands out as the only home center with exceptional service that can by itself lure customers. There are several things that can be done to reinforce Home Depot’s position:

    Personnel as a resource that conditions service should be more carefully selected to meet the local type of customers. Also a more thorough training both in the product and the customer behavior knowledge is advisable. Ultimately, big investments in distribution and logistics, competitive expansion, as well as DIY experience make sense only when there are satisfied customers who choose Home Depot.

    In the stores geared to small do-it-yourself home improvers it is imperative that the navigation is made easier. The warehouse looks that were consistent with a professional contractor type of job have the opposite effect on an individual customer who comes to the store to find a small single item rather than a huge supply of major building material.

    A smoother and more efficient channel should connect the customer’s service requirements with their implementation in the store policy.

Competitive Expansion

    As mentioned before Home Depot dominates the industry with the huge number of stores (900) and an energetic expansion of new ones. That can reinforce competitive strategy since there are still many areas not serviced by any home center or the distance to the nearest one is forbidding. By careful selection of locations for new outlets Home Depot has a chance to reach those areas. In better serviced territories is should choose locations in the vicinity of those home centers that lack one of the customer value factors.

    To have access to valuable information on local customer’s preferences it would be beneficial if Home Depot’s expansion incorporated acquiring small DIY stores. The competitive edge could be gained by developing local small stores that have stayed in the mentality of the local populace and earned their trust and recognition.

    A buyout of Lowe’s could have many beneficial affects. Not only the significant cost involved in building new stores would be erased but also many strategic locations could be gained. Moreover, Lowe’s even though only half as big as Home Depot scores equally well with customers or even better e.g. on the ‘friendly’ interior design. Many of its ideas would improve Home Depot style e.g. shelves within the reach of women.

Core Resources

Personnel

In order to maintain its core competencies Home Depot should select personnel as its resource to develop competitive strategy. Many aspects of a successful home center depend on performance of its sales workforce that interact with customers and together with product’s price build two most important customer values.

As mentioned before Home Depot’s competitors score equally well with their personnel. Therefore, Home Depot should try to differentiate itself:

Personality tests together with professional knowledge tests should be held evenly important in selecting prospective employees. 

Financial rewards could have a motivating force for better serving customers. A selection of the employee of the month or most friendly sales person should be directly linked to bonuses.

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