How Home Depot Product Managers Are Fighting Back Against Amazon

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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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?