[Recession Case Study] Home Depot’s “More Savings. More Doing.” Campaign during the Great Recession (2009)

All businesses have concerns when an economic downturn hits. Typically, sales (or revenues) dry up, and businesses begin to pull back on marketing (investment or people). However, the businesses who don’t reduce marketing and take advantage of competitors pulling back will see long-lasting gains.

Here’s Home Depot’s story.

Background

The Financial Crisis of 2008, otherwise known as “The Great Recession,” was a severe economic downturn that affected consumer spending and businesses across the United States. The crisis was triggered by the collapse of the housing market and the subsequent failure of several major financial institutions. As a result, many companies struggled to drive sales and maintain market share as consumers faced financial uncertainty and reduced spending power.

According to The Ledger article written in 2009, the recession “has shattered shoppers’ mindsets.” Consumer spending in 2008 (unadjusted for inflation) “grew at the slowest rate since 1961” and “expected to remain sluggish [in 2009].” Moody’s Economy.com wrote that people spent 3.2% less in the fourth quarter of 2008 on food and nonalcoholic beverages.

Objective

Home Depot, one of the largest home improvement retailers in the U.S., sought to increase sales and strengthen its connection with consumers during this difficult economic period. “Value can mean more than low prices, but with unemployment high — and consumer confidence low — many are fixating on cost” [source: The New York Times]. Instead of hiring professionals to work on home improvement projects, many customers adopted a mindset of do-it-yourself. Thus, Home Depot adapted their concepts to address the needs of their customers.

Strategy

“Without the usual stream of builders and contractors, Home Depot [began] catering more to the everyday home dweller” [source: Mercury News]. Home Depot returned to its roots—having been founded during the 1982 recession—by launching a new multimedia advertising campaign that emphasized low prices and the do-it-yourself mentality [source: Hardware Retailing]. The company wanted to show ‘value’ by changing its slogan to “More saving. More doing.” (in 2009) vs. “You can do it. We can help.” (in use since 2003).

Hardware Retailing noted that Home Depot’s chief marketing officer, Frank Bifulco, told the newspaper that “by returning to its core and stressing value, Depot [was] presenting itself as being real, authentic and genuine. ‘”‘We knew the consumer was hunkering down and making fewer trips to stores, and only going where the dollar went the furthest,’ he [said].” Home Depot also expanded their marketing to more Hispanic communities [source: Reuters].

According to The Mercury News, Home Depot was offering:

1. Permanently lower prices on 1,000 popular items, ranging from weather sealant to appliances.
2. Arrows inside the stores prominently point out reduced prices.
3. “Power Hours” between 10 a.m. and 2 p.m. Monday through Friday, when sales associates are placed at the end of each aisle to help customers who shop during their lunch hour.
4. “Eco-Options” of 3,000 environmentally friendly product choices.
5. “Ladies Night Out” classes geared to women and localized in interest. At the store located at The Plant in San Jose, for instance, customers buying pricey tile wanted lessons on doing it themselves.
   Free weekend clinics for kids on how to build age-appropriate tool boxes, planters, derby cars and other projects, materials included.
6. “Really free delivery” on appliances, not the rebate-free delivery offered by the manufacturer. For consumers, that’s a savings of at least $65, said Home Depot.
7. Do-It-Yourself workshops where homeowners are taught how to repair screens, paint, install plumbing and other tasks usually done by pros.
8. A “Garden Club” customers can join for access to master gardeners, project ideas, coupons and a buying guide for anything related to gardening.

The campaign’s main focus was on offering customers great deals and discounts on a wide range of home improvement products. Home Depot advertised these deals through various channels, including television, print, and online advertising. Additionally, the company held sales events and promotions in its stores to attract customers. One of the key elements of the campaign was the use of coupons and discounts. Home Depot offered customers a variety of different coupons, including discounts on specific products, store-wide discounts, and even free items with purchase. These coupons were widely distributed through various channels, including newspapers and the company’s website.

Results

The “More saving. More doing.” campaign in 2009 helped Home Depot gained “over 100 basis points of U.S. market share in 2009, a notable accomplishment on a base of fewer stores” [source: Home Depot Annual Report, 2009] and gain market share from its rival Lowe’s in nine of 13 department categories in 2009 [source: Hardware Retailing]. Subsequently, the company exited 2009 with a 39% higher stock price of ~$27 vs. when it entered in Q1 of 2009 at ~$22. It also increased its sales by ~3% by end-of-year 2010. Since 2009, Home Depot has been able to grow its topline (aka sales) consistently year after year.

Resources

• “Home Depot Slogan – A Sign of the Times” | Pro Tool Reviews | Clint DeBoer
• “With Shoppers Pinching Pennies, Some Big Retailers Get the Message” | New York Times | Stuart Elliot | Apr. 12, 2009
• “As consumer budgets fall, ad campaigns get back to basics” | The Ledger | Anne D’Innocenzio | Apr. 22, 2009
• “The Home Depot: 360 mobile strategy bridges the gap between in-store and mobile experience” | Thing with Google | 2013
• “Home Depot says worst of housing crisis over” | Reuters | Dhanya Skariachan | Jun. 10, 2009
• “Home Depot revamps in tough economy” | Mercury News | Donna Kato | Apr. 11, 2009
• “Home Depot Exec Says Chain Adapting in Recession” | The Ledger | MARK ALBRIGHT | Apr. 21, 2009
• “Home Depot returns to its roots with new ad campaign.” | The Free Library | 2009 National Retail Hardware Association | May 1, 2009

Home Depot Slogans [source: Pro Tool Reviews]

• 1993: Where low prices are just the beginning.
• 2001: First in home improvement.
• 2001: Driving down the cost of home improvement.
• 2003: You can do it. We can help.
• 2009: More saving. More doing.
• 2019: How Doers Get More Done.