Home Depot, Target Chase Online Opportunities
We’re operating in a multi-channel world, and for many traditional retailers that means trying to bring their expertise in clicks up to the levels of the brick side of the business. Two cases in point, from recent reports, are Home Depot and Target.
Home Depot, according to a MarketWatch report, has taken steps to integrate its off and online businesses, including in-store signage promoting free shipping on items such as grills and mowers. Consumers can also do searches on the company’s site to find items available in local stores.
According to Home Depot, 40 percent of home improvement projects start with consumers doing research online. Forty-five percent of visitors to the Home Depot site went there first before shopping in a store.
"There are interesting opportunities that the internet opens for us," Frank Blake, CEO of Home Depot, told MarketWatch. "It’s a way to extend our aisle. It’s an efficient way for us to communicate the [product] knowledge. It plays a lot of different roles."
Target also sees opportunities to grow its overall business through its website, according to The Wall Street Journal. The company, which is relaunching its website this week with many items not found in stores, is looking to make it easier for consumers to shop online, including reducing checkout times and more closely aligning the web and in-store experience.
The chain’s online sales only represent a small fraction of its overall revenues. According to Internet Retailer, Target is the 22nd largest retailer selling online in the U.S. Rival Walmart is number six on the list.
Interestingly, Target ranked third in a recent survey of consumers by CrossView, scoring high for delivering positive "cross-channel shopping experiences."
Discussion Questions
Discussion Questions: Are the increased efforts Home Depot and Target are making to grow online on the right track? What additional changes do you think these chains can make to most improve their dot-com revenues?
Home Depot has definitely caught up with other retailers and are starting to move towards the front of the pack.
Target’s new web site has yet to be seen. I will say that I don’t really like the strategy of “available online only” for Target in particular. What it seems to say is: “We don’t sell this well enough to stock in stores, so you’ll have to buy online instead.” At least until now, there was no other obvious rhyme or reason to why an item is only available online. It’s confusing and frustrating for the consumer. As you say, it is “interesting” that Target ranks so highly for delivering a positive cross-channel shopping experience. I’m not sure why, really.
Any retailer’s increased efforts to grow online are on the right track. Consider, if one was able to convert the entire business of Target or Home Depot from brick and mortar to online. The retailers would be able to cut costs considerably and, everything else being the same, deliver considerably more profit to the bottom line. The online business model beats the brick and mortar business model in almost every case.
The above certainly isn’t a realistic alternative or a good business decision, but it does indicated where attention and resources should be placed. What additionally should they do? They should do more. They should start thinking about their in store business as an adjunct to their online business and, if they do, their entire business will increase substantially and they will be well poised to grow in the future.
For the longest time, the only Internet-free zones in America were churches and retail stores. It’s refreshing to see these two marry online information with merchandise. Now let’s see what the competition does.
Both Home Depot and Target are keeping their eye on the consumer. They recognize that their shopper base has a higher propensity to shop online.
For example, the BIGresearch June, 2011 Simultaneous Media Usage (SIMM) survey points out the frequency of searching online, and purchasing online is significantly higher for the consumers who shop these two retailers compared to the general population:
Of adults who say they search regularly online before buying, 46.1% of Home Depot shoppers do so, and 45.6% of Target shoppers do so, compared to 41.3% of all adults — that’s an index of 112 and 110 respectively. When it comes to some specific merchandise lines, the Home Depot shopper indexes at 123 compared to all adults, for home improvement shopping, and the Target shopper indexes at 124 compared to all adults for apparel items.
When it comes to buying online in a regular pattern, the Home Depot shopper indexes at 113 and the Target shopper indexes at 119 compared to all adults.
These shoppers are online in an active way. Home Depot and Target may be following their consumer, as much as leading them in the online race. Keep making it easy for their customer base to navigate and make use of their sites, remind them via QR Codes, reward them for their online activities, and keep the messaging of convenience at the store and online level.
Two strong retailers doing the right thing … keeping the consumer at the center of the equation.
Going against the poll results, I thought that Home Depot would benefit more from increased investment in their online business.
I can envision multiple branding opportunities across media channels, combining the HD brand with DIY shows on television and in-store signage, appearances, and events to reinforce the partnership.
There is much more research and investigation involved before making larger purchases at a DIY store like HD than would ever take place at Target. Consequently, I think they stand to benefit from increased focus online in an effort to predispose people to purchase from their brick and mortar locations.
Add “instant gratification.” Lowes, Walmart, Walgreens and Best Buy to name a few advertise online sales with ready for pickup today. Optimization of the shop in your pajamas customer experience is an effective way to add to online revenue.
This will require a “last mile” strategy with convenience as the cornerstone. Retail home delivery is the final step in the “last mile” and deemed the most challenging but at days end, properly done it can improve dot-com revenues.
One could argue, it’s the next logical step. The increased effort to grow online sales is on track.
Improving dot-com revenues is not really the point here. The point is to grow revenues, period, along with share of trips, wallet, heart and soul. The Web (via PC and mobile device) is a crucial point of contact in this battle for the customer.
While the methods have certainly advanced by leaps and bounds, the multichannel retail discussion is hardly new. In 2000 I published a feature article that declared, “all retailing is e-retailing.” It singled out Office Depot, Eddie Bauer, 1-800-Flowers and Petsmart as exemplary “broadband merchants” because of their efforts to integrate their merchandising and services across customer touchpoints.
And I was far from the only one exploring this insight. JC Penney and Eddie Bauer were highly praised by speakers at the 2000 Shop.org for their innovation at integrating in-store, catalog and online touchpoints. Deloitte Consulting published a report on multichannel retailing earlier the same year. “Consumer expectations will raise the bar for all retailers,” the report said, “They will expect 24 x 7 availability, rich product information and offerings, sharp pricing and an easy shopping experience.”
So should we really praise Target and Home Depot all that much for finally getting around to this innovation more than a decade later? Call me a hard case, but I’m disappointed in the limited vision these companies have displayed until now.
Food for thought for retailers in this regard: Your product isn’t product; your product is shopping success. To the extent that all your touchpoints enable shoppers to succeed in interacting with your firm, you will win the share battle. Target, Home Depot, Walmart – you are finally on the right path, but you’ve spotted some scary competitors a huge head start.
While an omni-channel retail presence isn’t at all a new concept, there are a few strategies that both should consider:
–> Think local: as many retailers have already done, leverage an online order with same day delivery/store pick up. If done right, it works.
–> Make it easy: For shelf-stable items, offer a lights-out auto-replenishment plan with preferred pricing. Alice.com and others have done well with this strategy.
–> Support the long tail: Nothing wrong with offering online-only products that don’t justify physical shelf space, particularly if same-day delivery is available.
Both of these retailers have the benefit of adopting some established best practices pretty quickly to their omni-channel plan.
The whole tenor of the direction here is just SO WRONG! Taking retailing expertise from the bricks world to the clicks world? The clicks world is already so far ahead of the bricks world in terms of understanding how to actually SELL to shoppers that the only way to use the bricks world to enlighten the clicks world is if your own clicks world is an abomination. Amazon is not. Amazon is the premier retail selling organization in the world, period. This is why I began calling attention to the need for “Amazonification” of “Walmart” several years ago. In this case, both “Amazon” and “Walmart” are not the issue. They are exemplary of the best online retailers and the largest offline retailers.
The brick and mortar silo versus the online silo has to be eliminated. To succeed you have to sell how customers’ shop – not how you execute your business model.