How Home Depot Copied Apple to Build an Ingenious New Bucket. So they made a better bucket and are selling it for $7.49, nice. But I liked this part:
It might be hard to believe, but when the Home Depot was founded in 1978, it was hugely innovative. Floor to ceiling stacks of oriented strand board might lack the panache of 3-D printing, yet both developments had similar effects. Prior to the arrival of these walk-in warehouses, weekend warriors were left with whatever limited selection their local hardware store carried. For two decades, Home Depot founder Bernie Marcus made it his mission to make exotic tools and hard-to-find building materials available to anyone with a pick-up truck.
In 2000, Marcus retired and brought on Bob Nardelli as CEO. Nardelli had been one of Jack Welch’s hatchet men at GE, and he spent the next seven years driving down costs—at the expense of Home Depot’s reputation for innovation. “From what I understand, it had a brutal cost-cutting culture that stymied product innovation,” says Herbst.
At the same time, Amazon and other online tool sellers were beating physical retailers at the price game. Shipping bags of concrete was cost prohibitive, but online sales of hyper-profitable, high-ticket power tools boomed. “If the game is played solely on a price-cutting platform, you will inevitably run out of margin to support new innovation,” says Herbst. “What the consumer doesn’t appreciate is that innovation costs money—R&D, prototyping, design, engineering, IP—all of these activities require an investment.”