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Wednesday, August 15, 2007
According to ProSales, Ron Jarvis, SVP of pro business, tool rental and environmental innovation, said "The Home Depot's target pro audience consists of three subgroups: the very small repair/remodeler who might do this work solely as a side business; the professional remodeler who works fulltime at that craft, either alone or with several employees; and the small- to medium-sized home builder."
To further penetrate this market, HD plans to:
- Assure that each store has "job-lot quantities" of the eight fastest-selling items in construction."
- A pro desk.
- Pro sales managers. These are 240 of these people nationwide who operate as outside salespeople...
- Managed accounts. Each pro sales manager has 30-50 accounts.
He also said "The Home Depot sees this downturn as an opportunity to grow market share. The Home Depot is doing that, by making certain it has highly attractive prices on what he called "project starters" (key products). The article also mentions that HD does not serve the production builder market.
So, from an electrical distributor viewpoint, what does this mean?
- HD is still a competitor, especially for your smaller (<10>
- Expect HD to focus more on the resi market vs. other segments (i.e. property management).
- HD will compete based upon price, and inventory. They'll use price as the driver for high turn items, and make their margins on the market basket philosophy. As a distributor, how you source these items can be key. Do you need a value line and a premium line? For the particular SKU, does your customer care about the brand? If you have a strong resi business, do you have the right price for these items from your manufacturers?
- Counter convenience can be key...get them in and out quickly.
- How are you calling on your small accounts? Do they have a relationship with your company or is the relationship transactional in nature? Consider reviewing the # accounts/salesperson and the purchase performance of each account. Do your salespeople have too many accounts to call on (and is this the way they are justifying their compensation?)
- Small to mid-sized builders represent significant opportunities. Should you reach beyond the contractor to the person who writes the check? The building supplies industry does this on a regular basis (but be forewarned, your sales organization is unfamiliar calling on these people) in the form of selling, upselling, marketing and incentive strategies.
Although HD Supply is in the process of being sold (albeit at a discount), HD may still be one of your competitors. Do you have a plan to capture these customers?
To read the complete ProSales article, click here