*Update: The $29 planks are sanded, the $25 planks are rough. But you wouldn’t know it until you felt them.
I’ve been remodeling a house, and so I pretty much know the local Home Depot in and out. Here’s something “interesting” I came across:
That’s the same product, in a slightly different box, for $5 more just because it’s in the closet aisle and has “closet liner” on the box.
Admittedly, I don’t have the full story. Maybe they’re made by two different companies. Maybe they’re part of a group of products that can’t be separated before placement. Maybe there’s something I’m missing and one product is of superior quality. I can come up with more weak rationalizations if you’d like. The customer still sees the same thing: an intent to “trick” them out of their hard-earned five dollars. In marketing and in ethics, perception is everything.
Overlooking that issue, are people really buying the more expensive product? This might fool a handful of people who just grab things off the shelf, but I would imagine that any cashier or floor staff in the know would point the customer to the cheaper product- and isn’t that what Home Depot wants? To provide the best advice and guidance to their customers? Wait- what does Home Depot want?
This is where we see a great example of “cat poster value systems” that promise a nice set of values but fail to adhere to them consistently.
If you look closely at those orange employee aprons, you’ll see Home Depot’s “wheel of values” which sounds just as sardonic as it actually is:
So which part of the value wheel does “carrying identical but differently priced products” fall under?
Is this really in line with “quality products, service, price and selection,” and “going the extra mile to give customers knowledgeable advice about merchandise”? At best, these two products set up employees for failure by setting a trap to catch employees- and customers- who don’t know the store in and out. By the way, a Home Depot store might carry around 40,000 products, so good luck remembering them all.
This just scratches the surface- building strong relationships? Taking care of our people? Respect? Doing the right thing? How many values does this violate?
When you violate one value, you undermine your entire value system.
You can’t pick and choose what you’re going to adhere to that day because it suits you. It takes a lot of courage and perseverance to adhere to values that might put you out in the short-term.
Speaking of short-term, let’s talk a little bit about the thought process here. There are roughly 2,200 Home Depot stores in North America at the time I’m writing this. For simplicity’s sake, let’s say 1,000 stores carry these two products. Each store seems to carry about 10 units of each product. So, without knowing the cost of the products, we have about $25,000 and $30,000 of potential gross revenue for each product. But what if we just took one or the other out of the equation? We can charge the high price, the low price, or something in the middle. It doesn’t really matter. Now you’ve cut your inventory by 25-50% on this product, you’re staying true to your values, and you probably aren’t losing any more money than before. This isn’t even a drop in the bucket in the short run, but the long run implications for your organization are huge.
Your customers won’t feel deceived, and your employees won’t feel like they’re doing something sleazy.