The Home Depot: The World's Largest Home Improvement Retailer

Few companies have taken advantage of economies of scale as effectively as The Home Depot. Since its founding in 1978, the home improvement giant has steadily expanded its footprint while staying true to a clear and consistent strategy. This is the story of how it all began – and the key factors that have enabled Home Depot to scale to such massive heights without compromising on its core philosophy.

• Experienced founders: Co-founders Bernie Marcus and Arthur Blank applied their years of experience in the industry to shape the company's early vision and operational model.

• Advanced supply chain network: With over 1 million products available, Home Depot’s operations require a supply chain of extraordinary complexity and sophistication.

• Extensive store footprint: From its two stores in 1979, Home Depot has grown into a retail powerhouse with over 2,300 locations across North America.

The story of The Home Depot began in 1978 with Bernie Marcus and Arthur Blank. At the time, both were executives at a home improvement chain called Handy Dan – Marcus serving as CEO and Blank as Vice President of Finance. Following a power struggle at the top, the two were dismissed, sparking the idea to start their own venture.

With the support of merchandising expert Pat Farrah and investment banker Ken Langone, their vision took shape. In 1979, they opened the first two Home Depot stores in the greater Atlanta area. These locations stood out from many other hardware stores at the time, spanning around 60,000 square feet and offering more than 25,000 SKUs. Whether it was building materials, home improvement products, or garden supplies, the stores signaled that if you wanted supplies for your next renovation project, it was the go-to destination.

The concept proved to be an instant hit. Growth accelerated rapidly, and by 1989, the company had opened its 100th store across the U.S. By replicating its winning formula and leveraging an expanding store network, Home Depot built powerful economies of scale and what eventually would become an enormous moat.

Since its early years of rapid growth, one of Home Depot's defining strengths has been the sheer scale of its offering. Its big-box stores average around 104,000 square feet, with an additional 24,000 square feet dedicated to garden centers. These huge stores allow Home Depot to carry an extensive range of products, positioning it as a one-stop destination for both professionals and DIY enthusiasts.

Home Depot relies on a highly sophisticated supply chain and inventory management system to support its expansive product offering. With over one million products on its website, a deeply integrated and agile supply chain is critical. The company has consistently invested in advanced logistics technology to ensure items are reliably in stock and readily accessible, whether in-store or online.

Over the decades, Home Depot has built a broad global vendor network, sourcing products from thousands of suppliers worldwide. By working directly with these vendors – often under exclusive agreements – the company gains control over pricing, quality, and supply continuity. This model allows Home Depot to stay asset-light while still maintaining a high degree of control over its inventory and product assortment.

In recent years, the company has had strong growth in terms of e-commerce. The company has invested heavily in building a robust digital platform that integrates seamlessly with its physical stores, allowing customers to shop how and where they want. Whether it’s ordering online for in-store pickup, curbside pickup, or direct delivery to homes and job sites. For 2024, the share of sales online amounted to roughly 15% of total sales.

Further reading: Edward "Ted" Decker's Rise to the Top at Home Depot

Since reaching 100 stores in 1989, Home Depot has steadily grown its store count. As of early 2025, the company operates 2,347 locations – primarily in the U.S. but also in Canada, Mexico, and U.S. territories, including Puerto Rico, the U.S. Virgin Islands, and Guam. Its closest competitor, Lowe's, runs approximately 1,750 home improvement stores.

In the 1990s, Home Depot expanded into South American markets such as Peru, Chile, and Argentina. However, it eventually exited these regions, either closing operations or selling them to local players. A similar story played out in China, where the company acquired a local chain, The Home Way, in the 2000s. Despite the initial ambition, the venture proved unsuccessful and was eventually wound down.

From its first two stores in Atlanta, Home Depot's growth has been remarkable. Beyond its expanding store footprint, it ranks among the U.S. companies with the largest number of employees, with its roughly 470,000 associates, trailing only giants Walmart, Amazon, and UPS.

From its first stores in Atlanta, Home Depot has followed a clear strategy – steadily expanding its footprint and capturing market share. In doing so, it has built the world’s largest home improvement retailer and set a benchmark for how to scale a business effectively. The result: when it comes to home renovation projects, you know exactly where to start.