Home Depot Invests in Customer Service
By
George Anderson
The
housing crisis has been particularly tough on home improvement retailers
and the largest, Home Depot, has certainly not been exempt. Back in
January, the chain announced a number of changes including closing its
EXPO business, eliminating 2,000 store support jobs, and slowing the pace
of new store openings.
One
area where Home Depot has continued to invest has been in the area of store
staff. As a piece by the Financial Times points out, Home Depot
has spent roughly $250 million to fund additional staff hours in stores.
The company has also gone back to what made it successful in the past by
hiring experts to staff departments. Since 2007, the chain has hired more
than 3,000 licensed electricians and plumbers to offer expert service to
customers.
"This
downturn is an opportunity … to focus our resources and attention on
the things that matter, and to bring greater customer focus to the business," said
Frank Blake, chairman and chief executive officer of Home Depot.
Howard
Martin, head of global consumer products at Ernst & Young, told the Financial
Times, "You can’t just cut costs to succeed. Just doing the day-to-day
cost-cutting is a major contribution, but it won’t give you the answers
the success stories will be based on."
Discussion Question: Will Home Depot’s added
focus on hiring workers with expertise in key departments give it an
advantage during and after the current economic downturn?
Home Depot originally built its name on having experienced craftsmen providing customer service. This provided the D-I-Y the opportunity to learn tricks from experienced professionals and not having to make all the mistakes themselves. Craftsmen accepted the jobs due to the continual ups and downs of the construction industry. While not making the daily wages of construction, they also did not have weeks or months of no income.
When the housing market heated up and seem to go on forever, Home Depot lost their valuable customer-service talent. At the same time, their primary competitor created a female-friendly store, leaving Home Depot hanging. This time around, Home Depot must retain this talent and ensure there are a sufficient number on the floor to make a real difference. Second factor is, Home Depot must start upgrading their merchandise. Only selling good merchandise might work during this economic downturn, but longer term they will need better grade merchandise.
These times of economic uncertainty provide the opportunity to take share from competitors. Home Depot has become very much like the late Sam Walton, whose goal was to drive out all of the invisible costs from the store. The cutbacks at corporate in conjunction with the investments in the stores follow this philosophy.
The expression I use is “never let a good crisis go to waste.” This is a great opportunity for Home Depot to attract all those individuals needing assistance to maintain or improve existing homes. Terrific strategy.
This is definitely an excellent move and one that I hope they follow through with. And I hope that they hire more than one expert. If not he will be worn out by the crowd of customers trying to get his attention. In the recent past, I always felt that I knew more than the staff at HD and that was not a comforting feeling.
The added expertise approach is dead on…if they really are hiring, if they are really executing, and if they really have thought through the process and interactions between the experts and the consumer.
I think more people will turn to D-I-Y as their incomes and budgets tighten. Repair instead of replace or replace it yourself will be the buying direction for hardware. Home Depot was essentially built on that business model, so it’s good to see them reinvesting in the front end. HD can make a ton of money by having knowledgeable staff with selling skills roaming key areas.
Frank Blake obviously is aware of the dichotomy in philosophy about customer service between Circuit City and Best Buy. I imagine we can find similar stories throughout the retail industry. Fortunately, Blake has decided to follow the Best Buy mold.
These times are difficult for every retailer (and every business). Those who are able to navigate the down times without denigrating their business (read: cut customer service, among other things) will be around to experience better times. Those like Home Depot, whose objective is to improve their business, will come out on top with great growth in revenue and profits.
By improving the business during these tough times, I don’t mean maximizing revenues or profits. I do mean improving every aspect of the operation from logistics and inventory control to the relationship with customers and building a meaningful brand name. A meaningful brand name means the consumer and customer has a unique and favorable image of Home Depot so that whenever it is time to reengage in the economy, there is no question that Home Depot is the place to go.
Every retailer should carefully consider Mr. Blake’s strategy.
So what’s new? Home Depot says they are just going to do what they have done in the past by hiring experts. That’s like saying they will continue to unlock the doors when the store opens. Seems like every so often, Home Depot comes out with a press release talking about customer service, giving workers bonuses, etc. But let’s get real. Think about it. If you are an expert in home building and remodeling, then why are you shuffling around the sales floor of a Home Depot for minimal wage?
Short answer: Absolutely the right move for Home Depot. The current management already undid some of the damage made by Bob Nardelli when he was the CEO, and there is still work to be done. The best parallel from a strategic standpoint is Best Buy, which rose to the top of its market by stressing customer service while its chief rival eliminated its best sales associates in a cost-cutting move. (And we all know how that worked out for Circuit City.) In fact, the “Geek Squad” premise would be a good concept for Home Depot to follow, giving its stores the halo effect of great service while also driving a free-standing revenue stream.
Home Depot was once regarded as customer- and service-oriented. As they expanded they lost this credibility, Loews expanded and D-I-Y referred not only to doing the work on your home “yourself” but it also came to apply to shopping there (even for their professional customers).
There is no question that having credible experts in the aisles at HD will make a difference between someone making a left- or right-turn decision between Loews and HD.
Maybe HD’s next step is to figure out who exactly the 20 million people coming through their doors are each week–as at this point they only know a very small percentage of them.
Combining a credible in-store experience with customer insight and addressability is the win for them (or for Lowe’s).
Haven’t noticed a difference in my local Home Depot, but on the surface at least, this is a good idea. Just as supermarkets are reaping some gains from recession-caused slowness at restaurants, people are more likely to attempt home repairs and improvements themselves rather than hiring a tradesman. (That much I’ve definitely noticed; the plumbers, electricians and all who I know are having a tough time.) So if experts in-store can give people the confidence to put in new storm windows by themselves (or, in a supermarket, cook seafood, for instance), it stands to reason that these customers will become more loyal to the store and also become confident enough to to attempt future repairs (meals) by themselves. Of course all this will be in the execution. Last time I went to Home Depot, there was a parade of people following the lone “expert” around, all wanting to be “next.”
Why is it so many businesses need to experience tough times before they do the right thing? Home Depot is no exception. The concept of hiring expert staff in an effort to attract customers is something they tossed to the side while times were good and they were making money hand over fist.
Now with a slowing economy and stiff competition from Lowe’s, they finally decide to get their act together. For this long time Home Depot customer, it’s too little, too late.
How are they going to get folks in the store in the meantime? I see this as a good long-term strategy as customers meander into Home Depot several times and start to notice something different, but not a short term fix. After all, not every visit to HD requires expertise. It won’t be good enough to just have experts in the stores, they’ll have to actively greet customers and start talking about projects and solutions!
This is a good start for Home Depot. However, they have a long way to go. I can’t wait to finally get good service there, or at least not be treated rudely like I am every time I shop.
It’s been a while since I’ve been Wowed in the aisles of Home Depot. In particular, their specialty departments (appliances, millwork, flooring, kitchens) are in real need of better staff performance. Better hiring, and improved training, will provide immediate payback for the company.
HD has been knocked badly because they’ve failed to live up to their promise of the ‘orange apron’ being there, and being knowledgeable. This initiative is the only logical (and long overdue) step for them to take.
Good move for, in my view, one of the worst retailers in the marketplace? It’s certainly not a ‘Wow’ move. My experiences at multiple locations of Home Depot have been incredibly poor and consistent. Being the level of ‘bad’ that I would rate them both in product and in service had to be a strategy. If not, it is the worst case of poor results that could be studied.
In the town of my resort home, they have become the only choice left–a bad one at that.
Also, as mentioned, having only ‘good’ product choices, never ‘better’ or ‘best’, limits them and their customers. It’s a strategy that will never win long term.
Is this a good move? Sure. Has it changed anything? Not yet. Simply investing in numbers won’t solve their problems either in image or results. Unless there is a substantial equal investment in training, coaching and continuous improvement this will fail as well. Simply investing money into an ill environment won’t change a thing.
Nevertheless, I have to remember that even Sears and Kmart are still open and fairly prevalent.
After visiting two Home Depots in the Dallas area just yesterday, they have a long way to go on customer service. The first store employee I encountered seemed less than thrilled to have to help me. I always get the feeling from the men that they don’t want to be bothered with helping me. I had to go to a second Home Depot store, since the first one did not have a working rip saw to cut the MDF I needed. At the second store, two employees were working on loading some lumber and finally noticed I was waiting and told me they would be with me and then went back to what they were doing. I waited since I was told by another male employee that they were the only two that could help me. I finally got my MDF cut and I said “thank you” to the employee and he just walked away!!! Unbelievable!!! I did encounter two women that were very sweet and helped me find the additional supplies I needed. Another older man helped me load the wood into my car and he was very kind as well.
Unfortunately, when 50 percent of the employees I encountered were rude with absolutely no customer service skills, I think that maybe Home Depot needs some secret shoppers to report back. I did call the Home Depot customer service number to report my experience. Sorry to vent, but I’m sure there are lots of people looking for work that would have a much better attitude!
Good news that Home Depot is going to have the right people on the floor again–a huge help for D-I-Yers. It will make a difference once shoppers know.
In addition to execution, increasing the amount of in-store information to educate about products, and streamlining custom order and follow-up process would add more reasons to go back. Also, continuing to improve the shoppability of the store–being able to locate things easily by aisle and on the shelf will be welcomed by those who shop and search.
I think the silver lining of this recession in retail is a real top-down commitment to customer service. For decades, retailers waved the flag of customer first; ads that shouted “customer satisfaction guaranteed,” and posters in the break room that cheered “smile, we love our customers.” That was about all it was, lip service. But now, I sense something quite different happening; brand-right, customer-first service strategies that are being developed, executed, measured, and managed. Hallelujah!
The first line sales associate is where the rubber meets the road. They are the people who retailers have tasked to deliver the brand message to every customer every day. You bet they should be well trained experts; management’s job security depends on them! Those retailers who take this downturn as an opportunity to reassess their associate selection, compensation, and training strategies within a lean payroll environment will win now. If they further develop their service strategies by investing in customer facing technologies that further enhance access to these knowledgeable associates while maintaining lean payrolls, that’s even better.
I think this is a good start for Home Depot and have noticed more available associates willing to point me in the right direction over the past 6 months. But….
How long can they keep this up? They have loaded up the store with associates, but this cannot be cost effective over the long run. The funds re-allocated from cost-cutting in other areas will run out if the economy doesn’t recover soon.
How many of these associates can actually answer customer questions vs. only locating items in a store? What about multi-lingual expertise? In the southwest, at least 50% of the shoppers I see are Hispanic. How many of those 3000 experts are Spanish-speaking?
Labor optimization isn’t about the number of employees on the floor, but more about having the right people in the right place when customers need them.
I am glad to see Home Depot is attempting to improve their customer experience, but without an investment in a technology that helps cost-effectively distribute this expertise to more customers, when and where they need it, this attempt could be short-lived.
“If you beat your competition to the best employees, those best employees will help you beat your competition.”
Customer service is not about solving a problem once you have created it. The key to GREAT customer service is to get it right the first time.
An investment in your people is the best investment with the highest long term ROI out there.
Great move by Home Depot.
I think it’s great when a business invests in customer service. It makes people want to come back and even entices people who once quit the brand to come back.
Not too long ago, Home Depot got rid of their long-time quality employees in favor of lower-paid staff. Lowe’s reaped the benefits as people flocked to their stores to get quality help. So now, Home Depot is reversing their previous decision and expects the public to cheer. Sorry, too little, too late.
It’s great to hear Home Depot will again focus on customer service, though it will be a long road to success.
In essentially abandoning the service strategy during the Nardelli era, Lowe’s stepped in and has used it to their advantage. During these lean times, those retail operators who will survive already understand that every customer interaction counts, and are consciously creating consistent and intentional in-store experiences.
It will be interesting to see if Home Depot truly has the focus and commitment to restoring a tarnished service reputation.
So Home Depot is going back to what made them the company they are today. I stress going back to; should have never left this practice but as the company’s founders Bernie & Arthur moved on, so did their working model and Home Depot’s stock has suffered for years as a result.