Home Depot product managers are not giving up in the fight against Amazon

Home Depot product managers are not giving up in the fight against Amazon
Image Credit: Mike Mozart

If you are a product manager working in the field of retail goods, there is one word that should strike fear in your heart: Amazon. Retailers like Macy’s, Nordstrom’s, and Kohl’s have all been reporting decreased sales and the culprit is Amazon. They are all losing customers to the online giant. It turns out that in the world of retail, there is one area that has a product development definition that is still safe from the juggernaut that is Amazon: home repair.

What Is Keeping Home Depot Safe?

Amazon has had no problems expanding from books to TVs to video games and even lately in to fashion. How is it possible that they have somehow not gone after the same market that the Home Depot product managers are responsible for? One of the reasons that Home Depot is doing so well is because there are a number of different market conditions that have contributed to more customers coming to their stores.

The Home Depot product managers have discovered that in the U.S., there is a lot of building of new houses going on. Additionally, a lot of people are selling their existing homes to people and then moving on. In both cases, the new owners of the homes arrive with a lot of home based projects that they want to do. This is good news for the Home Depot because they sell exactly the types of products that these new homeowners are going to need in order to accomplish these projects.

There are other trends that are running in Home Depot’s favor. One of them is that the millennial generation is now starting to buy homes. It turns out that they have waited roughly six years longer than is traditional, but they are now making up for it in numbers. Another fact that works in Home Depot’s favor is that in the U.S. roughly two thirds of the homes are 30 years old or older. This means that things are starting to wear out and need to either be fixed or replaced. A combination of low interest rates and rising home values are making home projects more of an investment for current owners.

Will This Trend Last?

Home Depot is expecting its sales to increase by 4.8% in the most recent quarter. This is good news for its product managers. Things have been going well for a while. This quarter will represent the 8th straight quarter in which the chain has experienced growth of at least 4%.Good stuff to put on your product manager resume. This is in contrast to Wal-Mart which is expected to report basically flat sales.

One thing that the Home Depot product managers need to remain aware of is that online sales are growing even faster. In the past year they grew by 10.5%. A great deal of the growth in online sales comes from, naturally, Amazon. However, to Home Depot’s benefit right now Amazon does not have much of a presence in the same markets that Home Depot operates in.

You can imagine how hard it would be to purchase and ship goods from Amazon like lumber, paint, and bathroom fixtures. However, Home Depot is not immune to the “Amazon effect”. Roughly 25% of what Home Depot sells are small items that can be found on Amazon such as drills and hand tools. Another thing that the Home Depot product managers have to watch out for is the 11% of consumers who were planning a home based project and who said that they planned to buy something from Amazon.

What All Of This Means For You

In the world of retail, everything has been turned upside down by the arrival of online shopping. No longer do customers have to go out to stores to see what is available, now it’s all right there on their computer screen. In this new world one company, Amazon, has emerged as a real powerhouse. However, it turns out that they have not yet entered into the home improvement market in a big way yet and so for now the Home Depot product managers are safe.

There are a host of different reasons why things are going well for the Home Depot right now. New houses are being built and moved into and people are selling their existing homes and all of this movement creates a need for the types of products that the Home Depot sells. With millennials now buying house and a lot of houses being older, it is anticipated that people will keep visiting the Home Depot. Although things are good for the Home Depot now because many of their products can’t be shipped, they need to remain aware. Amazon is selling a lot of smaller home improvement items and the online shopping space is growing very quickly.

The Home Depot product managers have been very lucky. They are operating in the retail market segment that Amazon also operates in. Because of the types of products that they sell, currently Amazon is not directly competing with the Home Depot. However, the Home Depot product managers need to keep their eyes open and check their product manager job description in order to make sure that they can still attract customers into their stores as time moves on.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: How do you think the Home Depot could compete with Amazon for the sale of smaller home improvement items?

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P.S.: Free subscriptions to The Accidental Product Manager Newsletter are now available. It’s your product – it’s your career. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

Just in case you’ve been living with your head under a rock, there is this thing called the “internet of things” that is getting ready to take over the world. What is meant by the internet of things can vary from person to person, but basically what it means is the creation of a world in which everyday objects have network connectivity which then allows them to send and receive data. Things like refrigerators and washing machines. What’s a product manager to do in order to get ready for a change like this?

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The Secret To Marketing Packaged Foods

by drjim on October 9, 2017

It's what goes into packaged foods that seems to matter the most

It’s what goes into packaged foods that seems to matter the most
Image Credit: alsis35 (now at ipernity)

I can only speak for myself, but when I go food shopping I’m on a mission. I find what I’m looking for, I put it in my cart, I check out, and then I’m done. It turns out that the world is filled with a lot of people who shop differently than I do. These people actually take the time to look at what they are buying. More specifically, they look at the list of ingredients that goes into what they are buying. If it’s too long, then they won’t buy it. What this means for packaged food product managers is that they now have to find ways to change their product development definition and make their list of ingredients shorter.

The Need To Shorten The List Of Ingredients

The goal for packaged food product managers is to attempt to get their product’s list of ingredients to be as short as possible. At a number of different firms such as Hershey, ConAgra, and General Mills product managers are busy working to shrink their lists. Example of what they have been able to achieve include snack bars that are now able to boost that they contain only fruit and tortilla chips that can list their ingredients as being corn, salt, and sunflower oil. Now that’s something that you can add to your product manager resume.

As the list of ingredients that go into a product gets shorter, the product managers now have an opportunity to move the list of ingredients from the back of the product’s packaging to the front of the product’s packaging. The reason that the product managers are going to all of this effort is because their customers care deeply about what goes into the products that they are going to be eating. Customers are now insisting that they recognize the ingredients that go into a product. What people want is for the things that go into their products to be the same as the things that would be found in a typical kitchen. In order to achieve this, customers are willing to live with products that have some additional sugar and fat.

The goal for product managers is to limit the number of ingredients that go into their products so that their customers can count them on their hands. No more than 10 ingredients is the goal. Studies have shown that 87% of customers look at food nutrition labels and 67% of them stated that they prefer products that have both fewer and simpler ingredients. The goal for packaged food product managers is to attempt to offer more transparency about their foods via their list of ingredients.

The Benefits Of A Short List

Product managers realize that there are some ingredients that will be an instant turn off for many customers. An example of one of these is high fructose corn syrup. That’s why they are currently experimenting with a number of different products that that can use to substitute for these ingredients. If a product manager can come up with a product that consists of simpler ingredients in nice packaging, then they can probably charge a higher price for it.

All of this movement to simpler ingredients means that a number of ingredients are being dropped. What a lot of consumers don’t realize is that those ingredients actually play an important role in how the current product behaves. An example of this would be salad dressings that have had their preservatives and emulsifiers removed. What customers are going to discover is that the product will now coagulate in the refrigerator. When this happens, customers may stop buying the product.

Not all products with shorter lists of ingredients are going to be a success. Haagen-Dazs created an ice cream that contained only 5 ingredients. However, this product eventually failed. The reason for its failure was because Haagen-Dazes customers are seeking an indulgence and the lower fat content of the product that only had 5 ingredients was not popular with customers.

What All Of This Means For You

Product managers of packaged foods have come to learn that their customers really do care about what ingredients go into the foods that they are eating. What this means for the product managers is that their customers want shorter lists of ingredients and they want to be able to understand everything that is on the list.

Product managers at major food manufactures are currently in the process of using their product manager job description to try to shrink the list of ingredients that go into their products. The list of ingredients that go into a product is now moving from the back of the packaging to the front of the packaging. Customers want to be able to recognize everything that goes into their food. The goal for product managers is to try to limit the number of ingredients that go into a packaged food product to no more than 10. Ingredients that customers don’t like are being dropped. However, when some ingredients are removed, it can affect how the product behaves. Customers may not like the new product with fewer ingredients.

Packaged food product managers have a real challenge on their hands. Their customers are telling them loud and clear that what they want is a shorter list of ingredients to go into the packaged foods that they are buying. However, they still want their foods to have the same taste and texture that they currently have. Product managers are going to have to get creative and find ways to deliver the same products to their customers; however, now they can only use 10 or fewer ingredients!

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: What should a product manager do if they have to use an ingredient that their customers are not going to recognize?

Click here to get automatic updates when
The Accidental Product Manager Blog is updated.

P.S.: Free subscriptions to The Accidental Product Manager Newsletter are now available. It’s your product – it’s your career. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

If you are a product manager working in the field of retail goods, there is one word that should strike fear in your heart: Amazon. Retailers like Macy’s, Nordstrom’s, and Kohl’s have all been reporting decreased sales and the culprit is Amazon. They are all losing customers to the online giant. It turns out that in the world of retail, there is one area that has a product development definition that is still safe from the juggernaut that is Amazon: home repair.

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When Is A Diet Soda Not A Diet Soda?

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How To Fix A Product Management Mistake: Diet Pepsi

August 21, 2017

I think that we do need to hand it to the Pepsi product managers – at least on paper they did everything that they really should have done. They conducted countless taste tests and tinkered with their Diet Pepsi product development definition all in a quest to give their customers what they wanted. However, in […]

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August 14, 2017

Over at Pepsi the product managers are facing a bit of a problem. In the U.S. the amount of cola that is being drunk is currently at a three decade low point. What appears to be happening is that their customers are changing their drinking preferences and are now starting to select bottled water and […]

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Victoria’s Secret Product Managers Have To Deal With Bralettes

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So, as a man I generally have very little interaction with women’s bras on a daily basis. However, if I was a product manager over at Victoria’s Secret, bras would make up a big part of my day. The reason for this is because the sales of bras makes up roughly 35% of their total […]

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