Retail is one of the most dynamic and long standing business that has been part and parcel of every culture for centuries, the tradition of trading has developed and evolved with time, and constantly moving forward to this ear the trends are changing very dynamically and the challenge for big retail stores such as Home Depot and Lowes is to constantly connect with the trends and strategize to connect with the consumers.
The requirements of retail are complex and with globalization and the success of digital media and a set of highly informed consumer base it is imperative for retail chains at all levels, be it a local hardware ‘mom and pops’ store or a big chain to operate accordingly the trends that is currently in terms of driving a sustainable business model.
It is imperative to review the history of the retail business over the last 100+ years, and the periods that showcase the evolution starts with the corner stores in the 1900’s and the experience was overwhelming, the next era was the mass modernization culture that lasted till the 1940’s, and evolved to department stores and general merchants (Leibowitz, 2013).
The next trend was the initiation of the Mall culture that known as the suburban culture that lasted from the 1950’s to 70’s, that coincided with the advertising culture growth. The 1970’s to 90’s saw big box stores, involving the value chains, and club stores that drove small retail chains and local merchants out of business, Home Depot was launched in this era in 1978 and went public in 1981 (Our History, 2016).
The current retail culture that is dominated by the ascendency of the digital era’s operational mechanics also known as e-commerce started with the business success of the Amazon in the 1990’s and it is still going strong with the impact on every kind of retail approaches, i.e. the local mom and pops store and big retail chains such as Home Depot.
The current trends that have taken the retail approach to the next step are the m-commerce approach and the omnichannel strategy that is helping retail chains gain mileage amid intense completion in all the sectors.
The competitive force and market factors in terms of entrepreneurial forces as compared to a local retail marketing chain differs predominantly in one aspect and that is resources and the consumer preference to shop from under one roof with buy all options in view of the time constraint due to the busy lifestyle.
The fight in the retail scene for a local mom and pop store and a retail chain like Home depot can be elaborated and analyzed by checking the market factor and the economic factors based on the Porter five forces analysis.
The competition and rivalry is the primary hurdle and market factor that affects business irrespective of their size and magnitude, in the case of Home Depot the main rivals are retail players such as Lowes, Sears and other and the competition level are strong, besides the low cost of switching makes the competition even more intense and thus the needs to come with new strategies and trend ideas to connect with the consumers taken precedence.
The exit factor is moderate and the mom and pops local hardware usually compete on a niche level and the business strategy is all about survival, since besides, competing with Home Depot, the local stores have to compete with other local neighborhood stores and the force is weak for local stores.
The bargaining power of the customers is strong in view of the fact that, the options in view of the aforementioned competition are in abundance, however, the consumer segment aspect is weak for Home Deport, amid the competition, for the local mom and pops, the bargaining power of buyers is also strong, and the focus is on tactics and promotions.
The supplier factor for Home Depot is in favor of the retail chain, since the company has an array of suppliers to choose from, for the local retail stores, the suppliers have the upper hand, since the distribution of certain products and local sores don’t have the power to exploit suppliers like Home Depot.
The threat of substitutes is strong for Home Depot, with the product and services offered are also the forte of the competition and thus, the market saturation is high in the home décor retail. The local mom and pop’s store, threat of substitution is also very strong since, established retail chains, claim all the business and in terms of consumers, they don’t have a loyal niche consumer base to protect their limited and niche business operations.
The final competitive force is the Threat of New entrants that can have an impact on Home Depot’s business, since consumers are always looking out for something new especially in the home improvement sector, however, a local mom and pop retail chain cannot have an impact since, Home Depot is a brand and only a brand with an image to sell can threaten Home Depot. For the local hardware stores the threat of new entrants is very strong due to lack of branding and already minimal resources.
The aforementioned competitive forces review, showcase the fact that the smaller mom and pop stores, though, cannot match on price, but since they are more convenient for consumers to shop at due to saving of time and relationship based tradition, and due to the magnitude of the Home Depot business all the customers of mom and pop stores who could not sustain economically turn to Home Depot (Competition, 2011).
The retail approach in this age from an entrepreneurial aspect needs to come up with strategies to create a franchise to stand any chance to compete in the competitive home improvement, landscape, starting with experience of running the business profitability and a repeatable system that will differentiate the mom and pop store owner to think big in terms of selling a $100,000 franchise and legal and financial know how to expand and succeed, as they will help the mom and pop stores to compete with giants like Home Depot and carve a niche for their own business (Wilson, 2016).
The retail sector is growing dynamically and it is important for both Home Depot and local mom and pop stores to constantly reinvent their business in their own capacities to be able to create revenue streams and most importantly stay relevant in the minds of the consumers.
References
Competition (2011). Home Depot (HD). Wikinvest.
Retrieved from http://www.wikinvest.com/stock/Home_Depot_%28HD%29
Leibowitz, J. (2013). How Did We Get Here? A Short History of Retail. LinkedIn Pulse.
Retrieved from https://www.linkedin.com/pulse/20130607115409-12921524-how-did-we-get-here-a-short-history-of-retail
Our History (2016). The Home Depot.
Retrieved from https://corporate.homedepot.com/ourcompany/history/pages/default.aspx
Wilson, S. (2016). 5 Steps to Turning a Mom and Pop Business into a Franchise. All Business.
Retrieved from https://www.allbusiness.com/5-steps-to-turning-a-mom-and-pop-business-into-a-franchise-15211489-1.html
