Home Depot Offers Trade-In Programs to Drive Sales

Discussion
Oct 27, 2009
George Anderson

By
George Anderson

Home Depot is looking to get consumers to stop trying to
get by with their old power drills and holiday lighting by giving them an
incentive to trade-in the old items for discounts on the brand spanking new
stuff.

The do-it-yourself chain is offering consumers 15 percent
off the purchase of a new lithium-ion drill with the trade-in of an old tool.
According to a Home Depot press release,”Lithium-ion chemistry
is not harmful to the environment and it outperforms NiCad by as much as
50 percent, requiring less charging time and saving energy.”

The company
is also giving shoppers a $3 coupon on new LED holiday lighting when they
bring in old strands. LED lights use up to 80 percent less electricity than
standard mini lights while lasting up to 10 times longer, according to Home
Depot. The Christmas lighting deal is good from Nov. 5th to Nov. 15th and
comes with a limit of five per customer.

Home Depot is accepting the trade-ins
as part of the company’s Eco-Options program that promotes more energy efficient
products. According to the chain’s estimates, it sells roughly $3 billion
in Eco-Options products over the course of a year.

Discussion
Questions: What is your reaction to Home Depot’s trade-in program? Do you
see trade-in programs become more common in a wider variety of retail product
categories and outlets?

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18 Comments on "Home Depot Offers Trade-In Programs to Drive Sales"


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Charlie Moro
Guest
Charlie Moro
11 years 6 months ago

Great idea. Comes on the heels of Toys ‘R’ Us doing somewhat of a similar program with kids’ products. When you think of upgrading or even passing on tools and toys–and I am sure there are other categories–what a great way to defer costs and upgrade to new and different in a convenient way.

Those of us that have held onto various products–either past their lifespan or usefulness–will now have incentive to BUY new.

Joan Treistman
Guest
11 years 6 months ago

Home Depot may have taken a page from the Cash for Clunkers strategy and that’s smart. We learned from the summer initiative for trading in old gas guzzlers that pent up demand can be tapped, even in these economic circumstances.

People who traded in their clunkers still had to pay for the new car, but they felt they were receiving a “good value for their money” and at the same time doing something “good for the environment.” Look at how much good you can derive from your dollar!

It appears that Home Depot is trying to create the same emotional equilibrium for the consumer who wants new equipment or lighting, but has been willing to forsake buying because of the cost and limited justification for the purchase. Now do-it-yourselfers can feel they are contributing to the needs of the environment, while they upgrade their tools and lighting based on a “good value for their money”.

Brilliant! Other retailers may observe, learn, and copy the strategy.

David Biernbaum
Guest
11 years 6 months ago

It’s a worthy strategy for Home Depot to motivate customers to trade in the old drills and holiday equipment for fresh goods. I think the “Something for Clunkers” mentality has really caught on!

Susan Rider
Guest
Susan Rider
11 years 6 months ago

It’s another marketing ploy but in today’s economy, probably a successful one. You only have to look at the success of “Cash for Clunkers” to see how people are looking to save and deal. If they tie in the program with energy savings, (i.e. trade in your old energy sapper Christmas lights for the new and improved LED lights, etc), it would even be better.

Steve Montgomery
Guest
11 years 6 months ago

Home Depot’s trade-in program is less about the money the customer will save and more about providing them a rationale to upgrade their “stuff.” Many men like tools but buying a new one when you already have one that works involves justifying the purchase. The Home Depot program provides numerous reasons to upgrade–15% saving, more power (and who doesn’t like that?), charges faster and saves energy. Heck, it would un-American not to trade up! Similar thinking for the LEDs.

I believe that if they are successful with this promotion, then you will see them expand the concept; and others will follow. As indicated in yesterday’s discussion about purchase behavior, people will seek value. Both these and other trade-in promotions are one way to provide that vital ingredient.

Doron Levy
Guest
Doron Levy
11 years 6 months ago

It will probably stimulate some sales in those categories but so would any coupon promo. I guess HD has a plan to responsibly trash those drills, batteries and LEDs that will be coming in. Sounds like it may make more work for the sales staff at a time when hours have already been scaled back.

Gene Detroyer
Guest
11 years 6 months ago

This is a very good idea. It accomplishes two objectives. The first is that it reduces the price of the purchase without reducing the price of the item. The $99 drill stays $99. There is no price reduction to pass on to every drill sold.

The second and more interesting is by taking the trade-in, they are removing the biggest barrier to the purchase. “Why should I buy a new one when the old one works fine?” “I don’t need to have two drills.” “I can’t throw it out. There is nothing wrong with it.”

More retailers should be encouraged to take up similar promotions. There is no downside on pricing and it removes barriers to purchase that are generally out of retailers’ control.

John Boccuzzi, Jr.
Guest
John Boccuzzi, Jr.
11 years 6 months ago

This is a good move for Home Depot. Helping consumers dispose of older tools that are not energy efficient and potentially harmful to the environment is a great idea.

Earth-friendly programs are becoming more common and consumers are responding to these types of programs. I see other retailers creating similar programs throughout 2010.

W. Frank Dell II
Guest
11 years 6 months ago

Good idea. The current problem is getting consumers into the store and buying anything. People may want a new drill but don’t want to spend the money. Think of this as a linked coupon. It helps ease the guilt of spending money. As for holiday lights, everyone has dead strings. This will be a winner for Home Depot.

Roger Saunders
Guest
11 years 6 months ago

We all have a certain need to “clear out the attic.” And, picking up the latest and greatest goes beyond the tech space. This is a sharp idea that has application for a wide variety of retailers–not new, but a useful reminder.

– Buy a mattress and we’ll haul away the old one.
– Time for a new appliance–we’ll install and remove the old one.
– Bring in last year’s gown, we’ll donate it to charity, as you buy this year’s fashion.
– Cash in the old ink cartridge, light bulbs, etc, and we’ll conveniently dispose of them for you, as you happily go home with a fresh pack.

Retailers who continuously make the CONSUMER central to their thinking, come out the winners, as they provide a service, offer improved merchandise, and keep everyone in the game. Sharp!

Mel Kleiman
Guest
11 years 6 months ago

I ran a trade-in program when I worked for Hoover Vacuum Cleaner, too many years ago to even count. Most people may not know that Hoover used to make not only vacuums but also small appliances.

In my local market, I ran a promotion with the largest retailer in the area promoting “Trade in your old iron.” One week we sold over 4,000 irons. I don’t think Hoover sold 4,000 irons in this country in a year.

Ben Ball
Guest
11 years 6 months ago
The “it gives permission to make an otherwise questionable (by your wife anyway) purchase” folks have it cold. This is a brilliant permission-slip campaign. There are a number of categories where the purchase behavior is governed by the old phrase…”you can either have two–or too many!” Unfortunately, I participate in many of those categories, and tools is definitely one of them. The principal reason for owning two or more properties is so you can justify stocking two or more workshops! I think the bigger question for retailers is this: There are clearly two possible purchase motivators (‘permission slips’) in this offer. One is value–I get something for my old tool. The second is doing something green. I wonder which will drive more purchases? I wonder how many purchases of each type will be truly incremental over a 12 month (or longer) purchase cycle? These questions were initially raised with “Cash for Clunkers” where both the length of the purchase cycle and the fact that it was our tax dollars funding the incentive caused a fair… Read more »
Mark Burr
Guest
11 years 6 months ago

Okay, so what happens to the stuff? It’s a great gimmick, but what will really happen to this stuff? Will that story be followed up on?

With Cash for Clunkers, several hundred thousand perfectly good vehicles that may have been better used by those that could less afford a new one were removed from the market for the sake of…? Stimulating one month’s sales over the six months to follow?

I’ll be curious to see if HD has really thought this one through as to how this ‘stuff’ will be disposed of and how much it will cost them to so so. Further, will its results actually produce enough margin to offset that cost?

Kai Clarke
Guest
11 years 6 months ago

This sounds like a good marketing strategy, but does it really make good business sense? HD is losing 15% from their earnings to spur purchases during a season where purchases are already high. Add to this the cost of managing the return program, and then disposing of all of the products (especially the disposal fees of the batteries for the old battery-operated drills) and the charges for HD could be tremendous. All of this when they are already selling many drills and holiday lights anyway. HD would have been better off offering the incentive and then donating the products to foundations that could use the tools!

R Seaman
Guest
R Seaman
11 years 6 months ago

The successful trade-in event will depend on several things. The consumer’s need to replace an item or to upgrade an item and the dollar amount of the trade-in allowance.

If an item has been consistently advertised at 25% or more off, which has been the catalyst utilized by a majority of today’s retailers to generate sales, then a 15% trade-in allowance would not create much of a response. In this scenario, a 30% trade-in allowance could generate additional sales.

For this reason and others that have been cited earlier, I do not feel that the use of trade-in events will become a major marketing tool in the future.

Today’s consumer has learned the regular/suggested retail is not the everyday retail and when they shop, they are watching for the reduced price before making a purchase.

Ed Dennis
Guest
Ed Dennis
11 years 6 months ago

This is gimmick marketing and it might provide a short-term spurt. I expect HD is more interested in traffic than anything else. You can get a better product at a better price at Sears…and keep your old drill.

Tim Henderson
Guest
Tim Henderson
11 years 6 months ago

I really like this program. I’ve often cited trade-in programs from the likes of Amazon (the Video Game Trade-In program) and RadioShack as a great way to reach the more savvy recession shopper. There’s also an obvious green element with such programs that should appeal to many consumers.

Trade-in programs won’t work for all products. But that shouldn’t stop more brands from taking a look at these programs and beginning to noodle how they too can trade in old promos for new ones.

John Crossman
Guest
John Crossman
11 years 6 months ago

I like this idea a lot! It’s creative, it’s green, and it’s focused on the consumer. Way to go, Home Depot!

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