By Angus Loten
Home Depot Inc. reacted to the rapid spread of Covid-19 in the
U.S. by canceling annual sales events and pulling many marked-down
goods off the shelves to keep crowds away from stores. But rather
than a drop in traffic, amid lockdowns and social distancing,
customers began flocking to its physical and online stores,
spending stay-at-home savings and government stimulus checks on
home-improvement projects.
In August, the Atlanta-based company posted its strongest
quarterly sales growth in nearly 20 years, with May-to-July revenue
up 23% to $38.1 billion, compared with the same period in 2019.
The digital technology needed to meet that rush in demand fell
to Matt Carey, Home Depot's chief information officer. Mr. Carey
and his team quickly spun out mobile apps for curbside-pickup
services and real-time inventory-tracking software, among other
tools. "It was like Black Friday every day," he says about the
unexpected run.
Mr. Carey spoke to The Wall Street Journal about the efforts
Home Depot made to get its technology in place and how it's
handling the surge in business. Here are edited excerpts of the
discussion.
The first steps
WSJ: Hardware stores were declared an essential service. But how
did you keep stores open?
MR. CAREY: We went to crowd-limiting very early. Within 24
hours, we had an app deployed, running in the cloud, that allowed
our associates to control the crowds coming in and out of the
stores. You have a person who has a hand-held device in front of
the store. As one customer goes in, you add them, and as one comes
out, you subtract. Nothing high tech, but it did the job.
WSJ: What have you learned, and what would you do
differently?
MR. CAREY: The past several months provided us a wealth of
customer feedback, in a compressed time frame, related to the
digital capabilities we offer. Take our curbside rollout, for
example. We started with a very scrappy, manual process where a
customer would arrive at the store after ordering online, inform an
associate of their order number, and then the associate would get
the order and bring it out. Associates were actually making
handmade signs that said, "Curbside pickup, park here." We were
able to introduce enhanced features very quickly. The experience
today is now fully embedded into our app -- customers can even opt
in to location-based alerts that let the store know they've arrived
to pick up their order.
The digital experience
WSJ: What was happening at the online store?
MR. CAREY: There was a significant spike in our online business.
Because we earlier had invested in moving that platform to the
cloud, it went off just great with no issues and we continue to
handle that volume without a problem.
The great thing about the cloud is that you don't have to order
hardware, bring it into your data center, get it set up on the
data-center floor and wire it up. Obviously, there is lead time
there. It's pretty clear that we would not have been able, had we
hosted it ourselves, to withstand the volumes that we experienced,
and are still experiencing, on the online platform.
WSJ: What's one example of how the online software might help
customers get what they need for the project they're planning?
MR. CAREY: When a customer is searching for a term such as
"fence" or "fencing," we will return a range of results based on
the various fencing needs they may have. As an example, within a
couple clicks, we can determine that the intent of the project is
to install a wooden fence for a yard, and we will help the customer
with suggestions for additional tools and materials to complete the
project. Suggestions may include concrete for the footings, hinges
for a gate, and even a how-to guide for installing a backyard
fence.
WSJ: How did you handle the pandemic's impact on logistics?
MR. CAREY: The supply chain in general across the U.S., just
finding drivers and trailers, was a challenge. Making sure we could
get products to the stores, a lot of that was human resources, a
need to staff up. But we also had a brand-new distribution center
that was going to come on line. Within two weeks, the use of that
building was pivoted to become an online fulfillment center, to
help offload the volume from the other online fulfillment centers.
The flexibility of our software allowed us to do that.
Essentially, what we did was turn a market-delivery center into
a direct-to-home pick-pack-and-ship center. It was a bulk
distribution center and required a whole different software stack.
You're not planning routes at fulfillment centers. You're
forwarding packages to UPS and other home-delivery carriers. As a
result, customers weren't experiencing the long lead times that
they were from competitors.
WSJ: How were you able to help do-it-yourself home-improvement
shoppers?
MR. CAREY: We have a home-measure service, whether it be carpet
or other products. We want to be able to engage a customer how they
want to be engaged with. If they want to order a sample online, we
want to get those to you. We can help you know how many bolts you
might need. We have a tool to calculate how much it will cost to
buy new countertops. All the things that help you assess a project.
Anything to remove the friction that prevents a customer from doing
a job, even connecting them with a professional. We have these
online services.
We're also using AI and natural-language processing to help
connect the customer to a product they're looking for. In some
cases they don't know what to ask.
WSJ: How are the stores seeing their customer change? Are more
novices still jumping in?
MR. CAREY: We are seeing customers take on expanded projects
throughout their homes that, in turn, create additional activity
across the store. We are seeing their confidence grow after they
complete their first DIY project -- it may be a garden, it may be
painting. With that confidence, we see them take on the next
project that may grow in complexity, like installing ceiling fans
or light fixtures.
WSJ: How has this crisis had a lasting impact on the way people
shop for home products?
MR. CAREY: In many ways, Covid has fundamentally changed how
consumers shop. For many customers, homedepot.com or the mobile app
is the new front door to the store. Our digital sales increased by
roughly 100% in Q2, with 60% of those sales being picked up at our
stores.
Maintaining sales
WSJ: How is Home Depot planning to keep that pandemic
home-improvement surge going? How are you going to keep people
coming into your stores and not Lowe's? And once people are able to
leave their homes, do you expect a drop in home-improvement
interest? If so, how can you win them back?
MR. CAREY: We continue to invest in capabilities that make it
easier for customers to choose however, whenever and wherever they
want to shop with us.
WSJ: How has the pandemic affected older and retired workers,
and are any additional steps being taken for their safety?
MR. CAREY: We've taken several measures to keep associates safe,
including additional paid time off, new wellness programs and
health checks at our facilities. For at-risk associates, those 65
and older or those deemed higher risk due to pre-existing health
conditions, we are offering even more paid time off -- up to 240
hours [by the end of the year] for full-time associates and 120 for
part-time. This additional paid time off can be taken for any
reason and will be paid out at year-end if not used.
Across all stores, we have installed heavy-duty protective
shields that were designed specifically for the Home Depot. Through
the end of our second quarter, we have invested more than $1.3
billion in Covid-related benefits for associates. We also recently
announced that we would extend Black Friday deals for two months
during the holiday shopping season, to avoid driving high traffic
volumes to the stores over just a few days.
Mr. Loten s a reporter for CIO Journal in New York. He can be
reached at angus.loten@wsj.com.
(END) Dow Jones Newswires
October 24, 2020 06:14 ET (10:14 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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