Will Home Depot Rub Off on ChemDry?

ChemDry was acquired by Home Depot just a few weeks ago. Well, FORTUNE magazine has just rated Home Depot for 2006 as 13th among its 20 most admired companies. The survey asked business people to vote for the companies that they admired most, from any industry.

Will Home Depot's admired dynamism and culture enhance ChemDry and its franchise network? And what is Home Depot's new corporate cultural that is growiing it so? Here's what BusinessWeek has to say about CEO Bob Nardelli and the culture he has created.

Importing ideas, people, and platitudes from the military is a key part of Nardelli's sweeping move to reshape Home Depot, the world's third-largest retailer, into a more centralized organization. That may be an untrendy idea in management circles, but Nardelli couldn't care less. It's a critical element of his strategy to rein in an unwieldy 2,048-store chain and prepare for its next leg of growth. "The kind of discipline and maturity that you get out of the military is something that can be very, very useful in an organization where basically you have 2,100 colonels running things," explains Craig R. Johnson, president of Customer Growth Partners Inc., a retail consulting firm.

So, Home Depot is rolling out a culture of military precision, rigorous benchmarking, some fear and centralized control.

On Jan. 19, Home Depot announced plans to scale back the growth of new stores from more than 180 per year to about 100. The slowdown will let him plow extra resources into beefing up Home Depot Supply (HDS), a wholesale unit hawking pipes, custom kitchens, and building materials to contractors and repairmen. It's a fragmented market worth $410 billion per year, according to Home Depot, where Wal-Mart and Lowe's are AWOL and the only competitors are regional companies. Already, Nardelli has spent $4.1 billion buying 35 companies to bulk up HDS, and it plans to plunk down a further $3.5 billion to buy Orlando-based Hughes Supply Inc.  By 2010, HDS sales are expected to reach $23 billion, accounting for 18% of Home Depot's total, up from 5% in 2005.

The scope of the task is staggering. Nardelli, in essence, is building a whole new company -- in a market twice the size of do-it-yourself retail -- to service a prickly customer: professional contractors who want low prices, great quality, and instant service. Success in this field will require pinpoint execution, and Nardelli knows it. But his ambitions make some analysts nervous. "He's moving out of retail into services," says Deborah Weinswig, an analyst at Citigroup