Home Depot 2015 Annual Report Download - page 4

Table of Contents
2
Our Business
Operating Strategy
Since 2009, we have been guided by a consistent strategic framework organized around our customers, our products and our
disciplined use of capital, tied together through our interconnected retail initiative. In fiscal 2015, we announced an evolution
of this strategy to reflect the changing needs of our customers and our business. The fundamental aspects remain the same,
but we are now focused more than ever on connecting various aspects of our business to drive value for our customers, our
associates, our suppliers and our shareholders. Our current strategic framework is comprised of three key initiatives –
Customer Experience, Product Authority, and Productivity and Efficiency Driven by Capital Allocation – tied together by our
interconnecting retail initiative. As customers increasingly expect to be able to buy how, when and where they want, we
believe that providing a seamless and frictionless shopping experience across multiple channels, featuring innovative and
expanded product choices delivered in a fast and cost-efficient manner, 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 and customers demand increased value and convenience.
Interconnecting retail is woven through each of our other three initiatives, as discussed in more detail below. For example,
under our customer experience initiative, we are focused on connecting our stores to our online experience and connecting
service to customer needs. Under our product authority initiative, we are focused on connecting our product assortment to
local needs and connecting our customers with product information to inspire and empower them. Under our productivity and
efficiency initiative, we are focused on connecting our merchandise from our suppliers to our customers by optimizing our
supply chain. Overall, we are collaborating more closely, both internally and externally, through deeper cross-functional work
and a more integrated, longer-term approach with our suppliers and other business partners, to build complete end-to-end
solutions.
Customer Experience
Our customer experience initiative is anchored on the principles of putting customers first and taking care of our associates.
Our commitment to customer service is a key part of this initiative, and in fiscal 2015, to underscore the importance of
customer service, we re-trained our store associates on our Customer FIRST program. We recognize that the customer
experience includes more than just customer service, and we have taken a number of steps to enhance this initiative to
provide our customers with a seamless and frictionless shopping experience in our stores, online, on the job site or in their
homes.
Our Customers. We serve three primary customer groups, and we have different 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 third-party professional installation in a number of
categories sold through our in-home sales programs, such as roofing, siding, windows, cabinet refacing, furnaces
and central air systems. This customer group is growing due to changing demographics, which we believe will
increase demand for our installation services. Further, our focus on serving the professional customers, or "Pros",
who perform these services for our DIFM customers will help us drive higher product sales.
• Professional Customers. These customers are primarily professional renovators/remodelers, general contractors,
repairmen, installers, small business owners and tradesmen. With our acquisition of Interline Brands, Inc.
("Interline") in August 2015, we expanded our service to the maintenance, repair and operations ("MRO") Pro. We
recognize the unique service needs of the Pro 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 loyalty program, Pro Xtra, that provides our Pros with
discounts on useful business services, exclusive product offers and a purchase tracking tool to enable receipt lookup