Home Depot makes omni-channel strategy a priority for 2014
SCT Newswire Articles
Home Depot will spend about $300 million developing its omni-channel operations this coming year, executives told investors this week. “By providing our customers with offers like ‘buy online, pick up in store’; and ‘buy online, ship to store,’ we can drive sales-per-square-footage growth without adding square feet,” said Carol Tomé, Home Depot’s CFO and head of corporate service. The company, which has budgeted some $1.5 billion for 2014 capital expenditures, plans to open eight stores, most of them in Mexico. About $200 million of that will go toward improving mobile apps, the website and other omni-channel operations, Tomé said.
An additional $100 million will go toward warehouse and supply-chain improvements that will ease deliveries of e-commerce purchases to stores for pickup. “We deliver from stores now, but it is not connected to our online presence, and it’s not optimized for our customers or associates,” said Chairman and CEO Frank Blake. “Improving this delivery process has taken longer and involved more-complex issues within the store than we anticipated, but we feel confident about our ability to bring this to life next year. We’ll see benefits not only in customer service but also in the efficiency of our supply chain.” The company will spend more money experimenting with technologies to support these sorts of options, he said. About one-third of Home Depot’s online orders are currently picked up at a physical location.
The company has also experienced success with Skype-enabled kiosks that allow online shoppers to chat with in-store salespeople, said Kevin Hofmann, Home Depot’s president of online business. “Over 10 percent of all of our online orders are created in-store with a consumer or a professional contractor working together with store associates,” Hofmann said. “Our conversion rates are significantly higher when we bring the consumer and the associate together over the digital channel via interactive chat; we do that thousands of times a day.
Mobile phones make up about 35 percent of Home Depot’s online traffic, so the retailer will be upgrading its mobile app to include more interactive features, Hofmann said. “Oftentimes our team gets asked about how many stores we’re building,” he said, “Well, my answer is this: With 5 million downloads, we just built 5 million new stores and intend to build millions more. I’d like to get a store into the purse, the pocket, the backpack or briefcase of every man, woman and child in the country.”
Home Depot also wants to encourage sales associates to help in-store customers find items online that might not be available at a particular store at any given time, Hofmann said. To encourage this, the company gives each physical store credit for the online sales done on the computers identified through that store’s IP address.