Home Depot 2013 Annual Report Download - page 12

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and where they want. Throughout fiscal 2013, we continued to invest in our website to allow customers to more easily find
and purchase an expanded array of products and provide them with flexibility and convenience for their purchases (for
example, through our BOPIS, BORIS and BOSS programs). Through our website, which can be accessed through computers,
tablets, smart phones and other mobile devices, customers can share reviews, purchase products, track their installation
projects and connect with our associates to gain product and project knowledge. To increase the productivity and efficiency
of our associates, merchants and suppliers and ensure that the right product is in the right place to meet our customers' needs,
we also continued to invest in the development of our distribution forecasting and replenishment system for enhanced
inventory management.
Item 1A. Risk Factors.
The risks and uncertainties described below could materially and adversely affect our business, financial condition and results
of operations and could cause actual results to differ materially from our expectations and projections. You should read these
Risk Factors in conjunction with "Management’s Discussion and Analysis of Financial Condition and Results of Operations"
in Item 7 and our Consolidated Financial Statements and related notes in Item 8. There also may be other factors that we
cannot anticipate or that are not described in this report generally because we do not currently perceive them to be material.
Those factors could cause results to differ materially from our expectations.
Strong competition could adversely affect prices and demand for our products and services and could decrease our market
share.
We operate in markets that are highly competitive. We compete principally based on customer service, price, store location
and appearance, and quality, availability and assortment of merchandise. In each market we serve, there are a number of other
home improvement stores, electrical, plumbing and building materials supply houses and lumber yards. With respect to some
products and services, we also compete with specialty design stores, showrooms, discount stores, local, regional and national
hardware stores, mail order firms, warehouse clubs, independent building supply stores and, to a lesser extent, other retailers,
as well as with installers of home improvement products. In addition, we face growing competition from online and
multichannel retailers as our customers increasingly use computers, tablets, smart phones and other mobile devices to shop
online and compare prices and products in real time. Intense competitive pressures from one or more of our competitors or
our inability to adapt effectively and quickly to a changing competitive landscape could affect our prices, our margins or
demand for our products and services. If we are unable to timely and appropriately respond to these competitive pressures,
including through maintenance of superior customer service and customer relationships, our market share and our financial
performance could be adversely affected.
We may not timely identify or effectively respond to consumer needs, expectations or trends, which could adversely affect
our relationship with customers, our reputation, the demand for our products and services, and our market share.
The success of our business depends in part on our ability to identify and respond promptly to evolving trends in
demographics, consumer preferences, expectations and needs, and unexpected weather conditions, while also managing
inventory levels. It is difficult to successfully predict the products and services our customers will demand. Recovery in the
housing and home improvement market puts further pressure on our ability to meet customer needs and expectations and
maintain high service levels. In addition, we must continually anticipate and adapt to the increasing use of technology and
mobile devices by our customers in the purchasing process. Customers are able to use technology to rapidly compare
products and prices and use social media to provide feedback and information about our Company and products in a manner
that can be quickly and broadly disseminated. To the extent a customer has a negative experience and shares it over social
media, it may impact our brand and reputation. Further, we have an aging store base that requires maintenance to deliver the
shopping environment our customers desire. Failure to maintain our stores and an effective online presence and to timely
identify or respond to changing consumer preferences, expectations and home improvement needs could adversely affect our
relationship with customers, our reputation, the demand for our products and services, and our market share.
Our success depends upon our ability to attract, train and retain highly qualified associates while also controlling our
labor costs.
Our customers expect a high level of customer service and product knowledge from our associates. To meet the needs and
expectations of our customers, we must attract, train and retain a large number of highly qualified associates while at the
same time controlling labor costs. Our ability to control labor costs is subject to numerous external factors, including
prevailing wage rates and health and other insurance costs, as well as the impact of legislation or regulations governing labor
relations or healthcare benefits. In addition, we compete with other retail businesses for many of our associates in hourly
positions, and we invest significant resources in training and motivating them to maintain a high level of job satisfaction.