Home Depot 2014 Annual Report Download - page 10

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We also continue to use the Eco Options® page on our website to reach consumers interested in environmentally responsible
and cost-saving products and projects. The site provides consumers with information on the benefits of environmentally-
preferred Eco Options® products through "green" blogs, articles and projects, featured Eco Options® products and energy and
water savings calculators to help consumers estimate potential savings by switching out their older, less efficient products
with energy- and water-saving models.
We also support sustainability through our recycling efforts. We continue to offer our nationwide, in-store CFL bulb recycling
program launched in 2008. This service is offered to customers free of charge and is available in all U.S. stores. We also
maintain an in-store rechargeable battery recycling program. Launched in 2001 and currently done in partnership with
Call2Recycle, this program is also available to customers free of charge in all stores throughout the U.S. Through these
recycling programs, in fiscal 2014 we helped recycle over 725,000 pounds of CFL bulbs and over 940,000 pounds of
rechargeable batteries collected from our customers. In fiscal 2014, we also recycled over 107,000 lead acid batteries
collected from our customers under our lead acid battery exchange program, as well as over 200,000 tons of cardboard
through a nationwide cardboard recycling program across our U.S. stores. We believe our Eco Options® programs and our
recycling efforts drive sales, which in turn benefits our shareholders, in addition to our customers and the environment.
Seasonality. Our business is subject to seasonal influences. Generally, our highest volume of sales occurs in our second fiscal
quarter, and the lowest volume occurs during our fourth fiscal quarter.
Competition. Our industry is highly competitive, with competition based primarily on customer service, price, store location
and appearance, and quality, availability and assortment of merchandise. Although we are currently the world’s largest home
improvement retailer, in each of the markets 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, some of
whom have a lower cost structure than ours, as our customers increasingly use computers, tablets, smart phones and other
mobile devices to shop online and compare prices and products.
Intellectual Property. Our business has one of the most recognized brands in North America. As a result, we believe that The
Home Depot® trademark has significant value and is an important factor in the marketing of our products, e-commerce, stores
and business. We have registered or applied for registration of trademarks, service marks, copyrights and internet domain
names, both domestically and internationally, for use in our business, including our expanding proprietary brands such as
HDX®, Husky®, Hampton Bay®, Home Decorators Collection®, Glacier Bay® and Vigoro®. We also maintain patent
portfolios relating to some of our products and services and seek to patent or otherwise protect innovations we incorporate
into our products or business operations.
Disciplined Capital Allocation, Productivity and Efficiency
We have advanced this initiative through building best-in-class competitive advantages in our information technology and
supply chain to better ensure product availability to our customers while managing our costs. During fiscal 2014, we
continued to focus on optimizing our supply chain network and improving our inventory, transportation and distribution
productivity.
Logistics. Our supply chain operations are focused on creating a competitive advantage through ensuring product availability
for our customers, effectively using our investment in inventory, and managing total supply chain costs. Our fiscal 2014
initiatives have been to further optimize and efficiently operate our network, build new logistics capabilities and improve our
inventory management systems and processes by investing in information technology.
Our distribution strategy is to provide the optimal flow path for a given product. Rapid Deployment Centers ("RDCs") play a
key role in optimizing our network as they allow for aggregation of product needs for multiple stores to a single purchase
order and then rapid allocation and deployment of inventory to individual stores upon arrival at the RDC. This results in a
simplified ordering process and improved transportation and inventory management. We have 18 mechanized RDCs in the
U.S., and we opened our first RDC in Canada in early 2014, with a second Canadian RDC scheduled to open in the second
half of fiscal 2015. We also continued our U.S. transload program for imported products in four facilities operated by third
parties near ocean ports. Transload facilities allow us to improve our import logistics costs and inventory management by
postponing final inventory deployment decisions until product arrives at destination ports.
Over the past several years, we have centralized our inventory planning and replenishment function and continuously
improved our forecasting and replenishment technology. This has helped us to improve our product availability and our