Roger Holyfield

Pro Sales Manager

Kansas City
 The Home Depot
offers discounts to
Contractors!!

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 MAREI and The
Home Depot have
teamed up to offer
a rebate to MAREI
members!!
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 Members receive a 2%
rebate on all purchases
at The Home Depot.
Registration is
required!!

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 Volume Pricing
Program

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 Direct to Jobsite
Orders

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 Thank You for
your business
and your time
tonight!!!
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  PSM’S ARE TO BE ACCOUNT FOCUSED
 MANAGEMENT OF THE DESKS ARE AT
STORE LEVEL AND DM LEVEL
 WE NEED TO REFOCUS ON BASICS
 ASM’S OVER PRO NEED TO BE
ENGAGED FOR ACCOUNTABILITY
 PASA’S NEED TO BE CONTINUALLY
PROSPECTING FOR NEW BUSINESS

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 CCM REVIEW
 CUSTOMER CREDIT
MANAGEMENT

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 Understanding & Analyzing THD Customer Types
 Enabled customer understanding by turning 3 years of individual POS transactions into trackable shoppers (i.e.
households)
 Analyzed 2+ billion POS transactions
 ‘Trackable’ spend represents ~85% of annual THD sales (no cash/gift card spend included)
 ~31 million known households (name + address); all other households identified by trackable tender only
 Worked with dunnhumby, the leader in customer behavior analytics, to analyze customer shopping behaviors

Differentiating Customer Behaviors Customer Type Engagement Metrics

Pro Consumer
Pro Consumer

AM Weekday Shopping % of Customers 4% 96%

% of Sales 28% 72%
Evening Shopping

Spend per year ~$3,000 ~$300

Only 1 Store Frequented
Spend per visit ~$95 ~$75
Which Departments Purchased
Traditional Pro (e.g., Hardware, Electrical) # Visits 32 4
Consumer (e.g., Seasonal/Garden)
# Stores 4 1
# Departments 8 3
Plus other drivers such as commercial credit, # Subclasses 57 9
number of transactions, etc

10 Source: dunnhumby – Sales metrics based on 52 weeks excluding cash & gift card spend, 10% sample grossed to 100%
 Current D42 MAP Shadowbox SKU Assortment

 Same assortment for all

9 MAP zones

 Unchanged assortment for an

unspecified period of time
(at least 18 months)

Dept Class Sub

Sku # Sku Description # # Class Description Class # Subclass Description
507765 E/O 16OZ GREAT STUFF GAPS & CRACKS 22 4 INSULATION 5 FOAM
110531 PRO FLOUR ORANGE MARK SPRAY 24 3 SPRAY PAINT 6 PROFESSIONAL
837674 8 OZ GORILLA GLUE 24 4 ADHESIVES 12 POLYURETHANES
492191 RESP FOR SANDING PAINTED SURF CP 24 37 TOOLS/SAFETY 8 RESPIRATORS
284858 22 OZ FRAM HAMMER MIL FACE NYL VNL G 25 1 HAND TOOLS 2 HAMMERS
246733 FAT MAX XTREME 25' TAPE MEASURE 25 1 HAND TOOLS 4 TAPES
108011 HUSKY FOLDING LKBACK RZR UTILTY KNIF 25 1 HAND TOOLS 6 CUTTING TOOLS
686743 UTILITY KNIFE BLADE DISPENSER 25 1 HAND TOOLS 6 CUTTING TOOLS
114343 7" HEAVY DUTY STEEL RAFTER SQUARE 25 1 HAND TOOLS 16 MARKING & LAYOUT TOOLS
134525 SHARPIE FINE POINT BLACK 25 1 HAND TOOLS 16 MARKING & LAYOUT TOOLS
438557 1000' YELLOW CAUTION TAPE 25 1 HAND TOOLS 16 MARKING & LAYOUT TOOLS
500615 100 FT METAL CASE CHALK REEL 25 1 HAND TOOLS 16 MARKING & LAYOUT TOOLS
703552 E/O BULK CARPENTER PENCIL-HD 25 1 HAND TOOLS 16 MARKING & LAYOUT TOOLS
895370 7" ALUM RAFTER ANGLE SQUARE BULK 25 1 HAND TOOLS 16 MARKING & LAYOUT TOOLS
641846 2"X27' RATCHET TIE DOWN, 10,000 LBS 25 3 FASTENERS 6 TIE-DOWNS
301174 CLOSE-FIT SAFETY GLASSES,CLEAR 25 5 SECURITY/SAFETY 8 PERSONAL SAFETY
310227 X-FACTOR EYEWEAR SILVER XF4 25 5 SECURITY/SAFETY 8 PERSONAL SAFETY
222402 SUBCONTRACTOR WORK GLOVE-LARGE 25 5 SECURITY/SAFETY 11 WORK GLOVES
446586 FIRM GRIP TRADE MASTER GLOVE-LARGE 25 5 SECURITY/SAFETY 11 WORK GLOVES
223155 ULTRA FLEX GEL PRO KNEEPADS 25 11 STORAGE DEVICES 13 KNEE PADS
172187 WD-40 SMART STRAW 8 OZ. 25 31 TRAILER AND TOWING 4 LUBRICANTS/GREASE/FUNNEL
915150 300 2PK 10 MIL DUCTTAPE-1.89INX60YDS 26 2 AIR CIRCULATION/ACCES. 13 TAPE
461442 2' 12-3 RIDGID TRI TAP 27 3 EXT CORD/WORKLIGHT/SURGE 2 INDOOR
214012 50' 12-3 RIDGID CORD 27 3 EXT CORD/WORKLIGHT/SURGE 3 OUTDOOR

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 Pro Desk Re-assortment Concept
Objective
 Merchandise Pro Desk “grab-and-go” shadowbox with highly Pro penetrated and high sales
opportunity SKUs
Methodology
4. Evaluate current MAP desk assortment using regional Pro Leadership SKU lists (focus on Pro
sales, household penetration, and units) that leverages dunnhumby Pro customer insights
5. Create optimized regional Pro desk SKU assortments based on findings, including “optional”
SKUs for desks with extra space (see Appendix)
6. Provide and confirm alternate recommendations with Merchants/Pro team
7. Develop and communicate execution strategy to field teams (see Appendix)

 Used Memphis market to prove implementing methodology generates positive sales $ uplift
 Two Memphis Pro Desk SKU change examples are detailed below
Different Size of Same Item Different Item Entirely

Previous SKU New SKU Previous SKU New SKU

8 ounce WD-40 12 ounce WD-40 Gorilla Glue KILZ Primer Aerosol

0.68% Pro household penetration 1.85% Pro household penetration 0.57% Pro household penetration 5.46% Pro household penetration
4x Pro sales of 8 ounce version 16x Pro sales of Gorilla Glue

12 * Data represents the PRO CUSTOMER shopping the TOTAL STORE in THD US between 52 weeks 10/1/07 and 9/28/08
** dunnhumby data does not include Cash and Gift Card sales
 Regional Pro Desk SKU Re-Assortment

19 Regions X 23 SKUs per Pro Desk = 437 Possible Unique SKUs

 All 19 “customized” Regional Pro Desk assortments yielded total of only 42 unique SKUs
 D22 (1 SKU), D23 (2 SKUs), D23 (8 SKUs), D25 (22 SKUs), D26 (2 SKUs), D27 (7 SKUs)

 Most Common Pro Desk SKUs (in all 19 desk assortments):

SKU# SKU DESC DEPT CLASS SCLASS
108011 HUSKY FOLDING LKBACK RZR UTILTY KNIFE 25 1 6
206699 METALMASTER STRAIGHT CUT SNIP 25 1 6
256462 NS #3 W/ 1/4 BRASS EZ SNAP BOLT KIT 26 7 3
318435 WD-40 12OZ. SMART STRAW 25 31 4
412235 4 1/2X1/16X7/8 NORTON MTL CUTOFF BLD 25 7 4
423599 E/O NV 14W (60W) SPIRAL SW 4 PK 27 1 10
438557 1000' YELLOW CAUTION TAPE 25 1 16
507765 E/O 16OZ GAPS & CRACKS GREAT STUFF 22 4 5
686743 UTILITY KNIFE BLADE DISPENSER 25 1 6
703552 E/O BULK CARPENTER PENCIL-HD 25 1 16
822388 KILZ PRIMER-AEROSOL 24 15 2
915147 394 GP 9 MIL DUCT TAPE-1.89INX55YDS 26 2 13

 Most Unique Pro Desk SKUs (in 5 or less desk assortments):

SKU# SKU DESC DEPT CLASS SCLASS # Regs Reg1 Reg2 Reg3 Reg4 Reg5
223222 PL PREMIUM ADHESIVE 10.2 OZ 24 1 12 5 NENG NJM NYM OVAL SE
335819 GROUT SPONGE 23 14 5 5 PACC PACM PACN PACNW PACS
233944 WONDER BAR 25 1 13 4 GULF NOPL OVAL SW
514933 BROWN JERSEY 6PK GLOVES - FITS ALL 25 5 11 4 CEN MW NJM NOPL
528927 100' 12-3 HUSKY CORD 27 3 3 4 GULF MS SE SW
277517 50' 16-3 ORANGE WORKFORCE CORD 27 3 3 3 PACC PACN PACS
421791 LIQ NAILS HEAVY DUTY 10 OZ 24 1 10 2 CEN NOPL
515516 LIQ NAILS HEAVY DUTY 10 OZ VOC 24 1 10 2 MATL MW
641846 2"X27' RATCHET TIE DOWN, 10,000 LBS 25 3 6 2 GULF SW
214012 50' 12-3 RIDGID CORD 27 3 3 1 PACNW
697882 15A RECEPT 10PK WHITE 27 2 3 1 OVAL
697901 DECORA 15A RECEPT 10PK WHITE 27 2 3 1 SFL
734834 PHENOSEAL-10 OZ CAULK WHITE 24 2 2 1 NENG
865281 WHITE LIGHTNING 10 OZ TUBES 24 2 2 1 MS

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 Northern Plains Region Pro Desk Re-assortment
Sku # Sku Descr Dept Class # Sub-Class #
507765 E/O 16OZ GREAT STUFF GAPS & CRACKS 22 4 5
461457 XL GROUTING SPONGE 23 14 5
421791 LIQ NAILS HEAVY DUTY 10 OZ 24 1 10
984590 ALEX PLUS WHITE 10.1 OZ. 24 2 2
822388 KILZ PRIMER-AEROSOL 24 15 2
655095 25' X 1-1/4" FAT MAX TAPE 25 1 4
108011 HUSKY FOLDING LKBACK RZR UTILTY KNIF 25 1 6
206699 METALMASTER STRAIGHT CUT SNIP 25 1 6
686743 UTILITY KNIFE BLADE DISPENSER 25 1 6
233944 WONDER BAR 25 1 13
438557 1000' YELLOW CAUTION TAPE 25 1 16
703552 E/O BULK CARPENTER PENCIL-HD (countertop) 25 1 16
895370 7" ALUM RAFTER ANGLE SQUARE BULK 25 1 16
126724 4PC RATCHETING TIE DOWNS 25 3 6
479666 1-5/8" COARSE DRYWALL SCREW 1 LB (countertop) 25 3 10
553471 ENERGIZER AA 36-PACK 25 5 10
514933 BROWN JERSEY 6PK GLOVES - FITS ALL 25 5 11
412235 4 1/2X1/16X7/8 NORTON MTL CUTOFF BLD (countertop) 25 7 4
318435 WD-40 12OZ. SMART STRAW 25 31 4
915147 394 GP 9 MIL DUCT TAPE-1.89INX55YDS 26 2 13
256462 NS #3 W/ 1/4 BRASS EZ SNAP BOLT KIT 26 7 3
423599 E/O NV 14W (60W) SPIRAL SW 4 PK 27 1 10
277525 100' 16-3 ORANGE WORKFORCE CORD 27 3 3
Shaded records indicate change from current MAP assortment

Northern Plains Pro Customer Financial Metrics (Historical Annual Pro Performance*)

New Mandatory SKU Assortment** Current MAP Assortment**

Dollar Sales $1.96MM Dollar Sales $1.08MM
Units Sold 489K Units Sold 230K
Number of Transactions 212K Number of Transactions 99K
Pro Households 81K Pro Households 51K
Pro Household Penetration 40% Pro Household Penetration 25%
Spend per Household $ 24.04 Spend per Household $ 21.06
Trans. per Household 2.6 Trans. per Household 2.0
Price per Unit $ 4.00 Price per Unit $ 4.67
# Pro Leadership Skus 23 # Pro Leadership Skus 10

Projected Incremental Region Sales of New PRO Desk Assortment: $100-$200K

14 * Data represents the PRO CUSTOMER shopping the TOTAL STORE in NPL Top 6 MARKETS (101, 129, 164, 262, 185, 147) between 52 weeks from 2/4/08 to 2/1/09
** dunnhumby data does not include Cash and Gift Card sales
 Regional Pro Desk SKU Re-Assortment – Optional SKUs
 Due to differences in Pro Desk layouts, an “optional” list of SKUs were developed to fill extra space

Northern Plains Region Optional SKUs

Sub-
SKU # SKU Descr Dept Class # Class #
879282 SHIMS - HOMEOWNER DIY PACK 21 15 4
483689 1 7/8"X300' MESH JOINT TAPE WHITE 22 12 5
303121 1 1/2" LONG MASK BLUE MASKING TAPE 24 5 10
222343 3 PK PERFORMANCE SILVER KNIT-3/8"NAP 24 7 21
184861 KNIFE RETRACTABLE 25 1 6
628375 HUSKY 6 IN 1 REVERSIBLE S/D 25 1 7
964501 E/O 10PK PENCILS & VERSA SHARPENER 25 1 16
793616 7 1/4IN X 24T DIABLO SAW BLADE 25 7 6
501714 COTTON TERRY TOWELS - BAG OF 24 28 4 20

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 Pro Desk Re-Assortment Execution Strategy
Objective
 100% compliance to the re-assortment plan (no deviation from ‘Mandatory’
or ‘Optional’ SKU lists).

Execution
5. 1-2 store associates need to dedicate ~2 “non-customer facing” hours for re-assorting the Pro
Desk merchandise (preferably before opening or after close).
6. Remove SKUs (and associated price labels) from the desk that are not on the “New
Mandatory SKU Assortment” slide and place merchandise back into current planogram
location. If planogram space not available, work with DM/RMM to execute sell through
strategy of limited stock.
7. Assort shadowbox and countertop with identified ‘Mandatory’ SKUs. If merchandising space
remains, fill with SKUs from the ‘Optional’ list. Add new price label for each newly assorted
‘Mandatory’ and ‘Optional’ SKU.
8. Daily set integrity is very important, so keep sufficient, yet manageable on-hand quantities of
each SKU at the desk.

Questions
 Call your Divisional Merchandising VP Pete Capel @ 770-384-2242

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