Want to be Home Depot's CMO? Neither Does Anybody Else

Growth Problems and Other Issues Keep a Plum Marketing Post Unfilled

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It's a rare opportunity to steward one of America's most influential brands, overseeing a $533 million marketing budget at the nation's second-largest retailer, which has annual sales of $84 billion. Yet Home Depot has struggled to find-and keep-a CMO.

Less than 11 months after marketing guru John Costello left the CMO post, his replacement, Tom Taylor-a 23-year Home Depot vet-announced his plans to leave by year's end. And back in 2001, the position lay vacant for almost a year after another longtime Home Depot executive, Dick Sullivan, left within weeks of being appointed.

Why has it become such an unpopular posting? For starters, there's the business challenge of leading a brand on the verge of saturation that is scrambling to find new growth prospects and is routinely schooled by a rival, Lowe's, that's half its size. Then there's the daunting task of working for CEO Bob Nardelli, a former GE executive, according to retail-watchers and recruiters.

"I'm not sure anyone is going to want that job," said George Whalin, president of Retail Management Consultants, San Marcos, Calif. "Nardelli has an industrial management approach and it's not the best way to run a big sprawling retail company, which is to find very bright, talented people, put them in the position and let them do their job."

tough environment

It's also a hardworking environment, where "Friday is considered only two more workdays until Monday," according to David Gallagher, a recruiter at Boyden Global Executive Search based in Home Depot's home market of Atlanta. He said that since Mr. Nardelli's appointment in 2000, there's been a steady exodus of the company's old guard.

"Recruiting someone for this position is going to be pretty tough," Mr. Gallagher added. "The fact is, no matter what the company line is, the last two people left because things didn't work out. They didn't leave to take a bigger job somewhere, and both are still looking for their next opportunity. This was not a case where someone got a CMO role with, say, a General Motors, and couldn't turn down the opportunity."

Turnover issues aside, the challenges facing any incoming marketing head at Home Depot are unprecedented as the chain grows increasingly vulnerable to the competitive brand that promises to improve home improvement. "Every retailer faces a brand life cycle, and Home Depot is further along that life cycle than Lowe's," said Nick McCoy, an expert on the home-improvement sector at research firm Retail Forward. "It's now a saturation problem. You can't just open new stores forever. The main difference right now between Home Depot and its competitor is that Lowe's still has new-store-expansion opportunity."

prospecting for growth

Indeed, Home Depot has failed to match growth against Lowe's in the key metric of same-store sales, and despite heated criticism from Wall Street, won't even break out those results anymore.

That's not to say the chain isn't trying to find new growth prospects, including expansion into Mexico and Canada. Additionally, in just the last two years, it's spent nearly $6 billion buying companies that service contractors in order to expand into the professional market, a diversification move criticized by some analysts.

Additionally, the chain targeted a more affluent audience by launching a high-end website and catalog dubbed 10 Crescent Lane, which sells outdoor gazebos that can cost upward of $10,000, as well as high-end comforters and even home furnishings. There has even been speculation Home Depot plans to move into home electronics. "Whoever the new guy is who comes in is going to have his plate full," Mr. McCoy said.

Meanwhile, there's a dearth of talent for marketing retail executives, as is evident in a spate of recent hires. To launch its national Macy's brand, Federated tapped Anne MacDonald, formerly of Citibank. Wal-Mart Stores lured Stephen Quinn, formerly of Frito-Lay, and Sears drew in a former IBM marketer, Maureen McGuire.

But Home Depot's outgoing marketing head Mr. Taylor, who started working for the company at 16 and climbed the ranks even without a college degree, called the split amicable. When asked why he would take a job to only leave it 11 months later, he said: "As I turned 40, I started re-evaluating my personal goals. I've had a desire to prove my worth at another job" and "climb the ladder at another company."

In the meantime, Mr. Taylor said Roger Adams, his No. 2 as senior VP- marketing at Home Depot and a former GM executive, is well-equipped to manage the job and has a longtime relationship with the retailer's agency of record, Richards Group, Dallas.

Mr. Taylor said he is working with Mr. Nardelli to find a replacement.
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