← The Art of the Brand
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- [00:00]
A
The Home Depot is a really interesting case study because they've become the largest home improvement store in the world. And their sales are more than Lowe's, Rona and the other home improvement stores combined. Like they have a massive loyal following of both DIY ERs and professionals. And that didn't happen by accident.
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B
What a brand, what a brand, what a brand.
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A
What a mighty good brand.
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B
What a mighty good brand.
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A
It's really interesting how focused and meticulous they were on their planning and their business operations. And they took the time necessary in order to become a great brand. So they didn't rush any aspect of their business. They were very thoughtful. They were actually very slow. And that was a big focus point of their book, is that they first entered into Atlanta. They lived in California. There was demand and market in California in order to do it. But they found the right place to test out the launch of their business. And they launched two stores initially in Atlanta. And there was an interesting kind of fall with department stores. It was JCPenney and the real estate of what was happening in Atlanta and the square footage they have and basically at the bargain in which that they could get it at. But every market that they entered into after they had proof of concept, they always started with only one location to make sure they could understand the culture, the needs and nuances of that community so they could perfect it before they aggressively scaled. And that's really interesting because everybody wants everything right away. And it's. I find when you learn more and more, when I dig into more and more great brands, when we dig into more and more great brands, I'm seeing common threads between brands like Trader Joe's and ikea, Four Seasons and Home Depot. They're all in very different industries. But what makes these brands so coveted and loved is having the same principles. So another thing I thought was really interesting was their focus and obsession on the target market. And this is something that I've seen in the Four Seasons book, in the Trader Joe's book. They weren't fixated on pleasing everybody. What I found really interesting with the Home Depot is they actually created the DIY customer. So when they entered into market in the late 80s and early 90s, the DIY customer didn't exist. We didn't have YouTube back then. So all of the small details and steps for like redoing your bathroom or redoing your kitchen, it didn't exist in an easy to access manual or way. And that was really cool about the Home Depot is they really focused on providing a one stop shop experience, where DIYers felt as empowered as the pro builders. And so they created an entire. An entire book. What was it called?
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B
I can't remember what the name was, but it was just like the Home Depot Renovation Guide.
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A
It was a really high quality book and they spent a lot of money on it.
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B
So that was 100 bucks to buy.
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A
Yeah. And it was like a. It was like a textbook. And the textbook was it brought people in to help them feel empowered for when they. When they had a new home and so that they could. They could come to the Home Depot and they could do what they needed in order to. To. To bring their renovation to. To life and it. For it to be done properly. And that was another interesting thing too, is every single person that they hired was extremely overqualified. So they were very difficult. They were very particular on who they hired as an employee. And their rule of thumb, or their mantra was every single person that works here is way too overqualified for their job.
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B
Home Depot made the customer the hero. Yeah, they did, because there was pride of home ownership. And in the past, you had to either have to come from a trade or to know how to do things, or you would just, like, cut your grass. What the Home Depot did with its recipe book and Bible is allowed every homeowner to, at least to affect their home.
- [04:07]
A
They became the guide.
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B
And that's what the staff members were. Yes, each staff member was a guide. You came in there and they're like, okay, hey, you want to make your home more beautiful? I can help you do that.
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A
Totally. And if you ask anyone, like, the Home Depot was known for its customer service and the knowledge of their staff, which was almost like, you didn't find that at the big box level, like, maybe at a local homeward store, but not at this big box level. And that was done intentionally similar to the Four Seasons, similar to Trader Joe's.
- [04:35]
B
I think the comparison is, and I have spoken about Canadian Tire, which is Canada's previous to Home Depot. That was Canada's go to place for hardware supplies. And they've lost the plot, even though they were an amazing brand. But when you go into home, into Canadian Tire, the staff member, there are just human bodies standing around. They don't know anything. They don't even know where stuff is. But Home Depot was, like, spectacular in that if you said, I'm doing a bathroom renovation, the guy would take you over and go, you need this, this, this, this, do this. Like, it was. It was just a completely different experience.
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A
And that's what they were famous for, like they a part of. So another thing that was really interesting is they had a very clear culture and mission and every person that they hired had to very clearly f. So they weren't looking for like the way that you looked, the way that you spoke. They were looking for the knowledge you had. And every single person that they hired, they wanted them to have a natural entrepreneurial spirit. They didn't want it to be this bureaucratic oversight. Once they had the mission and the morales and the values in place, they wanted you to be able to fit into them because they were your brand values and morals. But for you to be entrepreneurial so that you could run the store and your section as your own and that was it. They, they had very low turnover from an employee standpoint and it built a very strong culture and reverence with customer because the people that worked there loved to work there and loved what they were doing.
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B
I was going to say that because the people that work there weren't micromanaged.
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A
Yep.
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B
They actually loved helping other people do their projects. That's what I always found when I talked to the people at Home Depot. They loved, they loved helping you. It wasn't like, oh, you're annoying me.
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A
Yes, right.
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B
Which is what happens. The typical retailers pay people garbage, treat them like garbage, they treat the customers like garbage. And I don't know, did you read, did it have a military background anywhere in the Home Depot? Because my buddy who was in the military did really well in that organization.
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A
No, it was actually started by two friends that met though they were Orthodox Jews. They were Orthodox Jewish faith and they had started in homeware stores and they were basically treated very poorly and they had just gotten in really at the right time. But they had really good work ethic. They understood the value of a dollar. They really were focused on, on the economics of running a business lean because they watched so many department stores come and go, especially in the homeware space. And it was really interesting. They talk about they were known by paying their vendors the fastest, like to a point where it didn't actually make sense at the rate that they paid vendors. But they created really strong and long lasting relationships because their vendors loved them the most because they got paid the.
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B
Fastest, which would result in them getting first access to new stuff, to the best stuff, exclusive when stuff was in demand. So it allowed them to be a place that could be relied upon to. So that, that's, that's what is an intangible strategy that most people don't do right but something like that provides disproportional total benefits.
- [07:22]
A
And they, it just in every aspect of their business, they did it right. Like even when you look at the way that they set up the DIY versus the pro buyer. So for the professional buyer there was no discount or differentiation in price. But the way that they kept and maintained loyalty within the pro buyer is they created and they also were very focused. They didn't want the professionals to enter through a, an entrance. So that was another thing too. No, they, they didn't want them to. They, that was a, a big thing for them is that they wanted the, the entrance way to be the same. They have a separate entrance for the really big slats. But it's not only for professionals. It's for people who are buying like big, big, I guess boards of wood or drywall. And so they wanted, they wanted the pros to enter into the same, they wanted the people who were diying to feel equal to the professionals. And what they did that was separate for the professionals is they would like extend line of credits. They would allow pros to have perks and benefits from shopping at the Home Depot. They had a whole pro center that if the pros needed help at a different level of like education awareness, they were being serviced by the right kind of person. So it wasn't, it wasn't a division of pro versus diy. It was ensuring that both customers got exactly what they needed within their, within their brand.
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B
You know what, you know what kind of did. When I think about it, it was a destination for everything about the home. It wasn't a building supplies destination. So there's a difference between doing commercial building which has different types of contractors. Right. They service people who renovated homes.
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A
Yep.
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B
Right. Not, not general contractors who are doing building renovations. So that's what allowed the person who did home renovations to come there and love it because it was the best destination for home supplies.
- [09:09]
A
Yeah. And what I also thought was really interesting about the Home Depot is that when they entered into markets like in New York, they completely changed their business model. So in New York specifically, the people that were looking to do home renos often worked full day jobs. So it didn't make sense for the store to close at 6 or 7. They actually created a 24 hour Home Depot store so that people who worked day jobs that needed renovations were able to actually go and buy their product somewhere.
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B
The hours of operation are ridiculous. Figure out when your Target market shops. But I remember that with Home Depot just in the general stores they were open to 10 way later than normal retail stores.
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A
And so even when they entered into Canada, they, they entered into Canada by hiring an entire Canadian executive fleet because they knew that the culture was different in Canada than in America. And they didn't try to force an American, they didn't try to force an American Home Depot into Canada. They wanted to create a different living and breathing version of Home Depot. And Home Depot blew up in Canada because it fit into the culture, into the fabric of. Of. And that's what Home Depot understood, is they understood that their brand is a community and it's something that is more than just a place to go and buy, like lumber and wood. Like, my dad's relationship with Home Depot was religious. Like, he loved Home Depot.
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B
You didn't really price shop it. No, you just, you just trusted that you get good value and then you would go in and buy it. So you didn't have coupon shoppers looking for the cheapest drill on the market. You would just go to Home Depot.
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A
Home Depot and you trusted it. And Home Depot also interesting. They actually created the luxury kind of tool market. So before Home Depot, Sears had like a tool bench. And that was a very good Sears.
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B
Mastercraft was an amazing brand.
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A
It was lifelong warranty and so Sears Master craft. Actually Mastercraft ended up going into Home Depot because of the folding of Sears. And that was a really long play that they had. They had nurtured a relationship and the people that worked for Sears were also very loyal to the brand. And the transition of Masterclass, Mastercraft going into Home Depot was actually a really interesting play that was founded in good principles and morals and loyalty. That Mastercraft felt good about going into Home Depot because it was a good brand. But before Home Depot, Sears had the tool bench, but that's all that had existed in the market. Home Depot actually created that like almost man cave of like tool shopping for men. It had never existed before the Home Depot and that was another reason why that brand was so iconic. But the takeaways that you can learn as a business about Home Depot is that it's not about whether or not you sell tools. It's what can you see within the patterns of these brands? And I recommend you read Trader Joe's and the Four Seasons case study and the Home Depot case study because the similarities are more similar than different between luxury, hospitality and tools. And it's, it's because they cared about their employees. They had a clear moral and culture. They focused on the customer and they understood clearly who their customer was. And they weren't focused on pleasing who their customer wasn't. And these were really important takeaways for understanding a brand as a religion. Cool.
- [12:24]
B
Good answer.