Home Depot 2014 Annual Report Download - page 15

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computer viruses; security breaches; cyber-attacks; catastrophic events such as fires, floods, earthquakes, tornadoes, or
hurricanes; acts of war or terrorism; and design or usage errors by our associates, contractors or third-party service providers.
Although we and our third-party service providers seek to maintain our respective systems effectively and to successfully
address the risk of compromise of the integrity, security and consistent operations of these systems, we may not be successful
in doing so. As a result, we or our service providers could experience errors, interruptions, delays or cessations of service in
key portions of our information technology infrastructure, which could significantly disrupt our operations and be costly, time
consuming and resource-intensive to remedy.
Disruptions in our customer-facing technology systems could impair our interconnected retail strategy and give rise to
negative customer experiences.
Through our information technology developments, we are able to provide an improved overall shopping environment and a
multichannel experience that empowers our customers to shop and interact with us from computers, tablets, smart phones and
other mobile devices. We use our website both as a sales channel for our products and also as a method of providing product,
project and other relevant information to our customers to drive both in-store and online sales. We have multiple online
communities and knowledge centers that allow us to inform, assist and interact with our customers. Multichannel retailing is
continually evolving and expanding, and we must effectively respond to changing customer expectations and new
developments. Disruptions, failures or other performance issues with these customer-facing technology systems could impair
the benefits that they provide to our online and in-store business and negatively affect our relationship with our customers.
We rely on third-party suppliers. If we fail to identify and develop relationships with a sufficient number of qualified
suppliers, or if our current suppliers experience financial difficulties, our ability to timely and efficiently access products
that meet our high standards for quality could be adversely affected.
We buy our products from suppliers located throughout the world. Our ability to continue to identify and develop
relationships with qualified suppliers who can satisfy our high standards for quality and our need to access products in a
timely and efficient manner is a significant challenge. Our ability to access products from our suppliers can be adversely
affected by political instability, military conflict, the financial instability of suppliers (particularly in light of continuing
economic difficulties in various regions of the world), suppliers’ noncompliance with applicable laws, trade restrictions,
tariffs, currency exchange rates, any disruptions in our suppliers’ logistics or supply chain networks, and other factors beyond
our or our suppliers’ control.
Disruptions in our supply chain and other factors affecting the distribution of our merchandise could adversely impact
our business.
A disruption within our logistics or supply chain network could adversely affect our ability to deliver inventory in a timely
manner, which could impair our ability to meet customer demand for products and result in lost sales, increased supply chain
costs or damage to our reputation. Such disruptions may result from damage or destruction to our distribution centers;
weather-related events; natural disasters; trade restrictions; tariffs; third-party strikes, lock-outs, work stoppages or
slowdowns; shipping capacity constraints; supply or shipping interruptions or costs; or other factors beyond our control. Any
such disruption could negatively impact our financial performance or financial condition.
If we are unable to effectively manage and expand our alliances and relationships with selected suppliers of both brand
name and proprietary products, we may be unable to effectively execute our strategy to differentiate ourselves from our
competitors.
As part of our focus on product differentiation, we have formed strategic alliances and exclusive relationships with selected
suppliers to market products under a variety of well-recognized brand names. We have also developed relationships with
selected suppliers to allow us to market proprietary products that are comparable to national brands. Our proprietary products
differentiate us from other retailers, generally carry higher margins than national brand products and represent a growing
portion of our business. If we are unable to manage and expand these alliances and relationships or identify alternative
sources for comparable brand name and proprietary products, we may not be able to effectively execute product
differentiation, which may impact our sales and gross margin results.
Our proprietary products subject us to certain increased risks.
As we expand our proprietary product offerings, we may become subject to increased risks due to our greater role in the
design, manufacture, marketing and sale of those products, including greater responsibility to administer and comply with
applicable regulatory requirements and increased potential product liability and product recall exposure. To effectively