Home Depot shifts strategy to push bargains
Home Depot is launching a new advertising campaign this month. And if it ever seemed like the Atlanta-based chain had Lowe’s envy, Big Orange has left the blues behind.
The new campaign is a digging-in-the-dirt, paint-in-the-hair, roll-up-your-sleeves attempt to say Home Depot is the real deal.
The new slogan —- “More saving. More doing.” —- signals a return to value, which took a back seat in 2003 to “You can do it. We can help.”
New TV ads promote Home Depot’s bare-bones style, “do-it-yourself” moxie, and bargain prices. It’s all an attempt to woo shoppers who are flocking to purveyors of the cheap such as McDonald’s and Wal-Mart.
“Right now what the consumer is responding to is value,” said Howard Davidowitz, chairman of a national retail consultancy and investment bank Davidowitz & Association in New York. “Frankly, it’s almost the only thing.”
The ad campaign is the result of an ad agency search that Home Depot’s Chief Marketing Officer Frank Bifulco led last year. The Richards Group of Dallas kept the account, and created the new slogan in the process.
Bifulco said he stressed two things —- to return to Home Depot’s core of “being real, authentic and genuine” and to emphasize value.
“We knew the consumer was hunkering down and making fewer trips to stores, and only going where the dollar went the furthest,” he said.
According to TNS Media Intelligence, Home Depot spent $480.2 million in 2008 on direct print, TV and online advertising. In 2007, the company spent $574.4 million. Gross advertising costs in 2008 were $1.2 billion.
“We were the original home improvement warehouse, so we’re comfortable in our own skin,” said Bifulco. “If a paint associate has a little bit of paint on his apron, it’s because he knows how to get color right.”
Founded in 1979, Home Depot has been a trailblazer in warehouse retailing, where decor is metal racks, and contractors and do-it-yourselfers roam the aisles searching for lumber, ladders, windows and doors.
The new ad campaign also jabs at the more female-friendly and style-oriented Lowe’s, Home Depot’s biggest rival.
Both Home Depot and Wal-Mart for years got outsmarted by their slicker rivals: Minneapolis-based Target and Mooresville, N.C.-based Lowe’s.
But as wallets have grown lighter and consumers drive harder bargains, Davidowitz says there’s never been a better time to be a warehouse retailer.
“Stores that look more like a warehouse than a Lowe’s are at an advantage,” he said.
Wal-Mart’s strong emphasis on food and Home Depot’s no frills stores are winning back shoppers. Last quarter, Home Depot gained market share from Lowe’s in nine of 13 categories —- the first time in years. Last fall, Home Depot started driving prices lower on certain items and discontinuing unprofitable promotions on others.
Lowe’s tagline, “Everyday low prices” and its own “new lower prices,” shows the company won’t stay on the sidelines.
“Lowe’s is a formidable competitor,” said Bifulco. “We are never relaxed or haughty. But we don’t fall prey to Lowe’s envy. We want to make the Home Depot different and better and special … and we’re on the trajectory to do that.”
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