Home Depot 2010 Annual Report Download - page 8

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Our Business
Operating Strategy. In fiscal 2010, we continued to invest in our business and made solid progress against our
key initiatives. During the year, we introduced new technologies, continued the transformation of our supply
chain and enhanced our on-line presence to provide a more interconnected retail experience for our customers.
We continued to eliminate tasks to give associates more time with customers and provide enhanced customer
service. At the same time, we remained focused on offering every day values in the stores. Finally, we continued
our focus on disciplined capital allocation, expense control and increasing shareholder returns.
Customers. The Home Depot stores serve three primary customer groups:
•Do-It-Yourself (“D-I-Y”) Customers: These customers are typically home owners who purchase
products and complete their own projects and installations.
•Do-It-For-Me (“D-I-F-M”) Customers: These customers are typically home owners who
purchase materials themselves and hire third parties to complete the project or installation. We
arrange for the installation of a variety of The Home Depot products through qualified
independent contractors.
•Professional Customers: These customers are primarily professional remodelers, general
contractors, repairmen, small business owners and tradesmen. In many stores, we offer a variety of
programs to these customers, including delivery and will-call services, dedicated staff and
expanded credit programs, all of which we believe increase sales to these customers.
Products. A typical Home Depot store stocks approximately 30,000 to 40,000 products during the year,
including both national brand name and proprietary items. The following table shows the percentage of Net Sales
of each major product group (and related services) for each of the last three fiscal years:
Product Group
Percentage of Net Sales for
Fiscal Year Ended
January 30,
2011 January 31,
2010 February 1,
2009
Plumbing, electrical and kitchen 30.0% 29.8% 30.6%
Hardware and seasonal 29.4 29.1 28.7
Building materials, lumber and millwork 21.7 21.9 22.1
Paint and flooring 18.9 19.2 18.6
Total 100.0% 100.0% 100.0%
In fiscal 2010, we continued to introduce a number of innovative and distinctive products to our customers at
highly attractive values. Examples of these new products include EcoSmart®LED light bulbs, Commercial
Electric®electrical tools, Husky®tool bags, Platinum Plus™ carpeting and Ryobi®outdoor tools.
To complement and enhance our product selection, we continued to form strategic alliances and exclusive
relationships with selected suppliers to market products under a variety of well-recognized brand names. During
fiscal 2010, we offered a number of proprietary and exclusive brands across a wide range of departments
including, but not limited to, Behr Premium Plus®paint, Hampton Bay®lighting, Vigoro®lawn care products,
Husky®hand tools, RIDGID®and Ryobi®power tools and Glacier Bay®bath fixtures. We also continued our
partnership with Martha Stewart Living Omnimedia to offer an exclusive Martha Stewart Living brand of home
improvement products in select categories including outdoor living, paint, cabinetry, flooring, and shelving and
storage. We may consider additional strategic alliances and relationships with other suppliers and will continue to
assess opportunities to expand the range of products available under brand names that are exclusive to The Home
Depot.
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