The Home Depot Inc. is an American multinational home improvement retail corporation established february 6th, 1978 in Marietta, Georgia currently based out of Atlanta, Georgia. The company sells tools, construction materials, home appliances and has become one of the leading innovators of the concept of a “Pro” membership system. The company has stores throughout the United States, Mexico, and Canada. The Home Depot Inc. has seen twelve years of increasing revenue beginning in 2010, and the pandemic did not slow the company’s profits down whatsoever, with the Home Depot increasing revenue by 37.135% between 2020 and 2022 (MacroTrends). The company continues to innovate and expand In the home improvement and retail world, The Home Depot has risen through the ranks to become the most profitable home improvement store in the world, as well as one of the most profitable retail stores in the world.
Comparative Advantage
The primary competitors of The Home Depot are Lowe’s Companies, Inc and Menards, two U.S home improvement retail companies which offer many of the same products and services that The Home Depot offers. The Home Depot however holds a comparative advantage over these competitors, this being that The Home Depot has expanded outside of the borders of the United States into a multinational corporation, with stores and distribution centers all throughout the North American continent. The Home Depot also performs better financially than Lowe’s and Menards and has done so consistently, with The Home Depot posting revenue of $155.24 billion in Q3 of 2022. Meanwhile, Lowe’s posted a revenue of $95.39 billion in the same quarter (Macrotrends). The marketing capabilities and operational ability of The Home Depot far outpaces Lowe’s, and Menard’s, a smaller regional home improvement chain largely located in the midwest United States.
Supply and Demand
The Home Depot has a variety of products associated with home improvement but sees its biggest demands in its Pro desk service, flooring, grout, baths and vanities (hbsdealer.com). As evident by the continued growing revenue over the past decade. The Home Depot has plenty of demand for its products and services and with the low cost of production for many of their products, sees little issues in supply outside of the delays that the entire world has seen throughout the supply chain since the COVID-19 pandemic.
GDP and Key Market
The home country of The Home Depot, Inc is The United States, which currently posts a GDP of $23 trillion, the two main countries outside of the United States that The Home Depot operates in are Mexico and Canada, Mexico has a GDP of $1.29 trillion, and Canada has a GDP of $1.99 Trillion. (GDP (current US$), n.d.)
Fluctuations in GDP, economic growth, investments, and patents
With an increasing GDP, the amount of sales in a country will usually rise, while a decreasing GDP usually causes the inverse, with The Home Depot usually following the trends of the GDP in each of the respective countries it operates in. For example, with the current down trends of the overall stock market, Home Depot’s stock has suffered over the past year, even with its financial success. The trends of The Home Depot has been largely disconnected from any economic issues over the past few years as evident by its profitability through the COVID-19 pandemic. Patents are essential to any business and this is evident in many of the products uniquely offered by The Home Depot. All of these factors contribute to the financial state and economics of any given company, and can be seen in a variety of ways throughout macroeconomics.
References
Canada. Canada Economy: Population, GDP, Inflation, Business, Trade, FDI, Corruption. (n.d.). Retrieved September 3, 2022, from https://www.heritage.org/index/country/canada
GDP (current US$) - united states. Data. (n.d.). Retrieved September 3, 2022, from https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=US
Home Depot Revenue 2010-2022: HD. Macrotrends. (n.d.). Retrieved September 3, 2022, from https://www.macrotrends.net/stocks/charts/HD/home-depot/revenue
Pro, H. (2022, August 13). Home depot pro desk vs. Lowe's pro desk full comparison - housecall pro. Housecall Pro - The #1 all-in-one solution for your home services business. Retrieved September 3, 2022, from https://www.housecallpro.com/resources/news-press/trending/home-depot-pro-desk-vs-lowes-pro-desk/
Stock comparison tool. MacroTrends. (n.d.). Retrieved September 3, 2022, from https://www.macrotrends.net/stocks/stock-comparison?s=revenue&axis=single&comp=HD%3ALOW
Tyler, J. (2018, December 28). We shopped at Home Depot and Lowe's to see which store was better - and the winner was clear for one key reason. Business Insider. Retrieved September 3, 2022, from https://www.businessinsider.com/home-depot-vs-lowes-compared-pictures-details-2018-4#this-store-offers-same-day-delivery-anywhere-in-manhattan-starting-at-21-other-home-depot-locations-also-do-this-with-prices-varying-based-on-the-order-size-18
Good afternoon,
Your post is very informative and concise. Your discussion on Home Depot's comparative advantage was quite interesting. The Corporate Finance Institute shares, "In economics, a comparative advantage occurs when a country can produce a good or service at a lower opportunity cost than another country." (CFI, 2022) I like your perspective on Home Depot having the comparative advantage because they are a multinational company and can reach more people. That was a wonderful point. Thank you for sharing your research and perspectives.
Best Regards,
Kristy
References
Corporate Finance Institute. 2022. Comparative Advantage. [online] Available at: <https://corporatefinanceinstitute.com/resources/knowledge/economics/comparative-advantage/> [Accessed 4 September 2022].