Home Depot 2014 Annual Report Download - page 7

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2
Data Breach
In the third quarter of fiscal 2014, we confirmed that our payment data systems were breached, which impacted customers
who used payment cards at our U.S. and Canadian stores (the "Data Breach"). For a description of matters related to the Data
Breach, see Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 13
to the Consolidated Financial Statements included in Item 8, "Financial Statements."
Our Business
Operating Strategy
Over the past several years, we have maintained a consistent strategic framework comprised of three key initiatives –
Customer Service; Product Authority; and Disciplined Capital Allocation, Productivity and Efficiency – tied together through
our Interconnected Retail initiative. In fiscal 2014, we focused on continuing to enhance our capability to deliver a superior
interconnected retail experience for our customers. As customers increasingly expect to be able to buy how, when and where
they want, we believe that providing a seamless shopping experience across multiple channels, featuring innovative and
expanded product choices, will be a key enabler for future success. Becoming a best-in-class interconnected retailer is
growing in importance as the line between online and in-store shopping continues to blur. Our interconnected retail initiative
supports and connects the three other key initiatives of our long-standing strategic framework, with the overall goal of
strengthening the connectivity between our stores and our online channels and our connectivity with our customers.
Our interconnected retail efforts are woven through each of our other three initiatives, each of which is discussed in more
detail below. For example, under our customer service initiative, we strengthened connectivity in fiscal 2014 by rolling out
the next generation of the FIRST Phone, a handheld mobile customer service tool used by our store associates. Under our
product authority initiative, we continued to enhance our website and mobile sites, which serve as an extended aisle of
products, product information and guidance on projects and services. Under our productivity and efficiency initiative, we
continued to optimize our supply chain capabilities to build connectivity among our delivery channels. In fiscal 2014, we
started a pilot for Buy Online, Deliver From Store ("BODFS"), which complements our existing interconnected retail
programs: Buy Online, Pick-up In Store ("BOPIS"), Buy Online, Ship to Store ("BOSS") and Buy Online, Return In Store
("BORIS").
Customer Service
Our customer service initiative is anchored on the principles of simplifying the business, creating an emotional connection
with our customers, putting customers first and taking care of our associates. Our long-standing goal has been to remove
complexity from the stores to allow our associates to focus on our customers, and in fiscal 2014 we continued programs to
reduce unnecessary store reports, store-based emails and meetings that took away from the time store associates could spend
on selling activities.
Our Customers. The Home Depot stores serve three primary customer groups, and we have different customer service
approaches to meet their particular needs:
• Do-It-Yourself ("DIY") Customers. These customers are typically home owners who purchase products and complete
their own projects and installations. Our associates assist these customers with specific product and installation
questions both in our stores and through online resources and other media designed to provide product and project
knowledge. We also offer a variety of clinics and workshops both to impart this knowledge and to build an
emotional connection with our DIY customers.
• Do-It-For-Me ("DIFM") Customers. These customers are typically home owners who purchase materials and hire
third parties to complete the project or installation. Our stores offer a variety of installation services targeted at
DIFM customers who purchase products and installation of those products from us in our stores, online or in their
homes through in-home consultations. Our installation programs include many categories, such as flooring, cabinets,
countertops, water heaters, and sheds. In addition, we provide professional installation in a number of categories
sold through our in-home sales programs, such as roofing, siding, windows, kitchen and bath refacing, furnaces, and
central air systems.
• Professional Customers. These customers are primarily professional remodelers, general contractors, repairmen,
small business owners and tradesmen. We recognize the unique service needs of the professional customer and use
our expertise to facilitate their buying experience. We offer a variety of special programs to these customers,
including delivery and will-call services, dedicated staff, expanded credit programs, designated parking spaces close
to store entrances and bulk pricing programs for both online and in-store purchases. In addition, we maintain a