The Chicago Tribune reports that Home Depot has converted itself into a veritable conglomerate, spending “more than $6 billion over the last two years acquiring dozens of companies, including a bank, a catalog selling sewer cameras and a manufacturer of steel bars used to reinforce concrete. Its biggest purchase, the $3.5 billion acquisition of Hughes Supply this spring, gave Home Depot a leading distributor of electrical and plumbing supplies. Home Depot also recently started a portal to help small-business owners find better pricing on payroll services, health insurance and other business services.”
There are two simultaneous strategies in play, according to the Tribune. The short-term play is to give the company a hedge against reversals in the home construction market, upon which it traditionally has depended, and helping “the company stretch from the $200 billion U.S. do-it-yourself market into the $410 billion market supplying and servicing professional builders, contractors and maintenance workers.” But the longer-term priority, analysts suggest, is to remake the company in the image of General Electric – in part, at least, because Home Depot CEO Robert Nardelli is a GE alumnus.
Home Depot denies the GE-like aspirations, however, and says that the company is simply looking to diversify in a way that gives the company a broader base.
There are two simultaneous strategies in play, according to the Tribune. The short-term play is to give the company a hedge against reversals in the home construction market, upon which it traditionally has depended, and helping “the company stretch from the $200 billion U.S. do-it-yourself market into the $410 billion market supplying and servicing professional builders, contractors and maintenance workers.” But the longer-term priority, analysts suggest, is to remake the company in the image of General Electric – in part, at least, because Home Depot CEO Robert Nardelli is a GE alumnus.
Home Depot denies the GE-like aspirations, however, and says that the company is simply looking to diversify in a way that gives the company a broader base.
- KC's View:
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We know this story is a little outside our usual beat, but we thought the strategic and tactical thinking was worth considering, especially as food retailers look to find ways to spread out its bets.
