1. Presented by Edmund Davis Mary Ann Horton Narender Mendiratta Shamsuddin Pattharwala Do-it-yourselfDo-it-for-me

2. HBI : Case Analysis Research methodology Recommendations Drivers behind the concept Outlook of Home Furnishing industry Customer identification and market positioning How should HBI proceed

3. Research Methodology The HomeBase case Library databases, periodicals, articles and analyst opinions HomeBase, Home Depot, House2Home store visits Web sites of HBI and competitors

4. Recommendations for HBI Proceed with House2Home concept Create a leading brand name Build strong customer relationships Establish a strong e-commerce presence

5. Home Improvement Industry $165 billion industry Cyclical and sensitive in nature Industry S&P index in 2001 fell by 30.8% vs. 8 % decline in overall S&P 500 index S &P industry survey predicts sluggish sales

7. HBI vs. HD HOMEBASE Product differentiation Uncompetitive prices High cost of sales, low SGA expenses State of the art MIS HOME DEPOT Customer satisfaction Competitive prices Low cost of sales, high SGA expenses $200 million investment in IT per year

8. HomeBase Current Scenario Market leaders? Market challengers? Niche marketers? NO What should HomeBase do?

9. HBI’s options Improve market position in current industry Sell and close down- retire Exit and shift industry

10. Identified Industry Home Furnishing Industry “DO IT FOR ME”

11. Home Furnishing Industry Overview $125 billion industry Highly fragmented Less cyclical 7% growth rate since 1970 S & P’s industry survey predictions: 10% growth rate, more than that of retail industry due to concentration of upper-income professionals

12. Porter 5 Forces: Home Furnishings 1. Barriers to entry: high- capital intensive 2. Bargaining power of suppliers: high 3. Bargaining power of buyers: high 4. Substitutes: many in fragmented industries 5. Industry rivalry: competitive

13. House2Home SWOT Weaknesses –Poor brand image of HBI –Inexperience in new market –Poor bond rating Threats –Large retailers diversifying product offerings –Turndown in economy

14. House2Home SWOT Strengths –Extensive retail supply chain –Experience in the retail industry –Management commitment to the new strategy Opportunities –Fragmented nature of home furnishing industry –Home furnishing market projected growth(10%) more than overall retail growth –High product margin in home furnishing(40%)

15. The Winning Strategy Utilize experience in retail in the highly fragmented home furnishing industry

16. Who is the customer? Female shoppers, 35-54, middle to upper- middle income level Like to decorate their homes Like to make purchasing decisions but prefer to leave installation to professionals Part of dual income families Avid Internet users

17. What does the customer value? Time Convenience Family Home

18.  House2Home  Ikea  Pier 1  Bed, Bath & Beyond  Linens n’ Things  Sears  JC Penney  Target  Wal-Mart  K-Mart High Price High Quality Products and Services Home Furnishings Positioning Map  HD Expo

19. Product 4 categories: Outdoor living, indoor living, home décor, and seasonal goods Offer deep and wide selection Provide more value added services on the line of custom installation, silk flower and balloon arrangements Additional product offerings based on customer demand( wish list)

20. Price Both designer label and value brands at different price levels Core products priced significantly lower to drive repeat traffic More pricing schemes similar to gift registry services

21. Place Conversions of HomeBase stores only in appropriate western markets Expand in mild climates with mean household income $50,000 + Potential Markets: Northern Virginia, Atlanta, Georgia and Austin, Texas E-commerce: delivery and pick-up, customer service, advice

22. Promotion Creating a “buzz” about unique concept Magazines: Martha Stewart Living, O – The Oprah Magazine, Regional lifestyle Radio: Morning and Evening rush hours Web: Oxygen sites, Food Network, Better Homes and Gardens TV: Lifetime, other family and educational programming

23. How HBI Should Proceed Convert HomeBase stores only in those markets with appropriate demographics Invest in the e-commerce infrastructure to maintain a strong Internet presence Open additional stores in western market Expand in new markets

24. Conclusion HBI can become a leader in market share with the House2Home concept by positioning as value and quality leader in terms of product offerings and price positioning in high margin industry