The Home Depot’s Omni-Channel Retailing Strategy

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Table of Contents

Introduction
Discussion
Conclusion
References

Introduction

The Home Depot is one of the largest stores in North America for home improvement products. However, this firm faces stiff competition from the rival firms such as Lowe’s which operates in the same market. In order to manage the stiff competition in the market, the management has considered the use of the Omni-Channel Retailing and distribution strategy.

According to Baird and Brian (2011), there has been a shift in the supply chain from the brick-and-moter stores to the online stores. However, firms have come to realize that despite the growing relevance of the online stores, the relevance of the brick-and-moter stores cannot be ignored.

Customers will always visit the websites of different companies to know more about the products they desire, but will visit the stores when planning to make the actual purchase, especially for the involving goods. The management of the Home Depot has realized that they have to integrate their retailing and distribution strategies in order to remain competitive in the market.

Using the Omni-Channel Retailing is the best way through which this firm can understand the needs and meet the expectations of all its customers.

Rushton, Croucher and Baker (2010) define Omni-Channel Retailing as “An evolution of the multi-channel retailing that emphasizes on a seamless approach to the consumer experience through the available shopping channels.” In this study, the researcher is interested in investigating the impact of the recent integration of the Omni-Channel Retailing and distribution strategy at the Home Depot.

Discussion

Integration of the Omni-Channel Retailing and Distribution Strategy

The management unit at Home Depot made the decision to integrate this strategy following a research that was conducted by the marketing department of this firm. It was discovered that different customers are attracted to different distribution channels. There is a section of the customers who would prefer making their order at the stores after conducting a physical supervision of the products they want to purchase.

The research also determined that another section preferred the use of online marketing. They would view the products on the online stores and make their purchases without making a physical visit to the store. There was another elite group that would visit the website first to learn about the products available before visiting the stores physically to make their purchases.

This meant that this firm had to use a channel that would capture the varying approaches of shopping used by different customers. This also meant that the marketing unit had to embrace an approach that would not only be effective in serving the customers, but also communicating with them whenever this is necessary (Giannopoulos, 2014).

The firm decided to improve the design of its stores as a way of improving its brick-and-moter marketing strategy. In order to capitalize on its online marketing strategies, the firm has improved its online presence to reach out a larger number of its clients. Its website has all the products available at its stores. The products have full descriptions, including their prices and delivery methods.

According to Archer (2014), in order to achieve success when using the Omni-Channel Retailing, it is important to develop the specialized supply chain strategy software. The management of this firm has developed the special software that allows its customers to trace the movement of their products once they make the purchase.

This improves their experience with this firm because it creates the perception that the buyer is accompanying his products. In order to satisfy the digitally-savvy customers, this firm has remained very active on the social media, ready to respond to some of the common questions.

This has helped the firm remain popular in the market, and it has managed to address some of the wrong perceptions that some detractors have tried to associate it with in the market.

The firm has also improved its communication systems to enable its customers to make relevant communications and get responses as a way of improving their experience with this firm. The whole effort has been geared towards generating a greater customer experience whenever they visit the firm, either at the physical stores or website.

The Benefits of the Integration

The decision to integrate the Omni-Channel Retailing and distribution strategy at the Home Depot has had a massive impact on this firm from various fronts. The firm has experienced a massive improvement of customer flow into its physical and online stores. Currently, more customers are interested in visiting the Home Depot shops because of the new designs that it has embraced in arranging the stores.

The website is more user-friendly, with detailed explanation of the critical issues that a customer may want to know about the products offered by the firm. The brand is becoming stronger in the market.

According to Bowersox, Closs and Bixby (2011), most firms that are using the Omni-Channel Retailing strategy have become more focused on selling their brand than the individual products. Once a customer is convinced that a specific brand is superior to other existing brands, he or she will always be looking for products holding that particular brand.

Home Depot has several home improvement products. It may be costly and time consuming to promote individual products in the market. In order to address this problem, this firm has embarked on the massive promotion of its brand using this new marketing strategy.

It has been using various promotional channels to advertise the brand, and some of the popular products. This may partly explain why this firm has experienced an improvement in its sales income within the past one year. The firm has been forced to increase its expenditure, as discussed in the section below.

Challenges Associated with the Integration

It is a fact that this new strategy has brought positive impacts on this firm, especially in terms of improvement of the sales. However, it has also brought a number of challenges that the firm has been forced to find a way of addressing. The biggest challenge that this new strategy has brought on this firm is the increased expenses that this it is forced to incur to support the system.

The firm has been forced to employ more people to work as store attendants, customer care services, and database administrators. This means that its expenditure on labor has shot up for the period that it has been using this strategy in the market (Bonebrake, 2014).

The firm has also been forced to increase its expenditure on social the media marketing in order to increase its audience. It has become active on Facebook, Tweeter, and YouTube, and this means that its advertising expenses has increased. The cost of maintaining large databases where its customers can access information whenever they need it has also doubled.

Other than the increased cost of operations, the management of Home Depot has also been experiencing the problem of finding the right workforce to work with the integrated strategy. Finding employees who understand this new dynamic has been a challenge as most of the employees have either specialized on brick-and-moter marketing strategy or online marketing.

Some of the employees, including those at the managerial levels have either been slow to the change or directly opposed it. Some of the employees have been unwilling to adjust their strategies despite the obvious need to embrace the change. Another section of the employees have been too slow in adjusting to address the issues that come with this change.

This has complicated the process of integrating this new strategy into the firm’s supply chain system. In order to address these issues, the firm has organized in-house trainings for its employees to enable them adjust to the new system with speed. The increased profitability of the firm has been able to address the problem of the increased cost of operation.

Conclusion

The Home Depot is operating in a highly competitive market, and the Omni-Channel Retailing and distribution strategy has offered it a perfect opportunity to manage this competition. The firm is using multiple distribution channels and marketing strategies as a way of reaching out more customers in the market.

This process has forced the firm to spend a lot in the multiple strategies, but the impact has been impressive. The overall performance of the firm has improved in the entire North America. The brand has become stronger as most families in this market currently know about the brand. This has resulted in improved profitability for the firm.

References

Archer, D. (2014). The Store of the Future’ is Incomplete Without Mobile Technology. RWeb.

Baird, N., & Brian, K. (2011). Omni-Channel Fulfillment and the Future of Retail Supply Chain: Retail Systems Research. Web.

Bonebrake, V. (2014). Parting the Ways for Supply Chain Excellence. Web.

Bowersox, D. J., Closs, D. J., & Bixby, C. M. (2011). Supply chain logistics management. New Delhi: Tata McGraw Hill.

Giannopoulos, N. (2014). Home Depot Builds Omnichannel Foundation. Web.

Rushton, A., Croucher, P., & Baker, P. (2010). The Handbook of Logistics and Distribution Management. London: Kogan Page.

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