A case study from the Economist Intelligence Unit
The Home Depot:
driving sales through
mobile technology
March 2014
Sponsored by
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or contractors and amateur builders alike,
mobile technology has made buying products
from The Home Depot a much smoother process.
The Atlanta-based retailer of lumber, appliances
and other home-improvement products has
introduced smartphone applications that help
customers check product availability, order
products for pickup and navigate the aisles of its
big-box stores. It also plans to equip sales
associates with phones that will allow them to
place orders from anywhere in the store and quickly
search for information that might help customers.
So far the company’s mobile innovations have
had promising results. Mobile technology helped
drive sales from the company’s online channels up
by more than 50% during the third quarter. Online
sales now account for about 3% of Home Depot’s
total sales.
“Our customers’ shift to mobile technology has
been much faster than we anticipated,” Frank
Blake, the company’s chief executive, said in a
recent conference call with analysts. “We are
having to play catch-up in this area and it will be a
major focus of our investment in 2014.”
An interconnected approach
Cara Kinzey, senior vice president of information
technology, said the company approaches mobile
and online technology from “an interconnected
standpoint” that combines its digital operations
with its more than 2,200 brick-and-mortar retail
outlets across the United States. “We have a
constant cycle of people researching and buying in
both online and in our physical stores,” she said.
© The Economist Intelligence Unit Limited 2014
“We have a pretty rounded strategy around drawing
back and forth.”
The company has seen unexpectedly strong
results from a program that allows customers to
buy products online and have them shipped to
stores for pickup at a later date. The benefit of this
particular element of The Home Depot’s omnichannel strategy is that when customers do come
to the brick-and-mortar store to pick up their
orders, they often buy additional items. “We did
not have high expectations of volume from that but
once we implemented it, it was very surprising at
how much it was utilised,” Ms Kinzey said.
This year, The Home Depot plans to introduce a
new service that will let customers order products
through their mobile devices or online and have
them delivered from one of its stores. That would
improve customer service by shortening delivery
times and boost supply chain efficiency, as the
company currently ships from distribution centres
that may be farther away from its customers.
Currently, Home Depot ships items from stores only
for its professional customers and does not ship
from stores at all for orders placed online.
However, customers could use the new service for
larger goods, such as patio sets, grills or lumber,
which may be too big to fit in their cars. Ms Kinzey
said the company expects the feature to attract
more customers.
Mobile for all: customers and employees
Several million people have downloaded The Home
Depot’s mobile app, which was first introduced in
late 2009. Others visit the company’s website on
The Home Depot: driving sales through mobile technology
their mobile devices, often to locate a local Home
Depot store or search for a particular product and
find out if it is in stock. “They may not want to go to
the store unless they know we have a part that’s
there, like a belt for a lawnmower, for example,”
explains Ms Kinzey.
At the store, customers may use app features
such as a barcode scanner or a floor plan map—
currently available for about two-thirds of the
retailer’s stores—to help find products on the
store’s shelves.
The Home Depot first deployed mobile
technology to sales personnel before developing its
consumer app and mobile web technology. Today,
the country’s biggest home-improvement company
has learned that it needs to provide sales associates
with the same physical tools used by its customers,
so the company plans to unveil soon a new mobile
device for salespeople resembling a smartphone.
The device will allow sales associates to search
products for a customer or to quickly find and play a
how-to video on, for example, the installation of a
particular pipe. “These capabilities will make our
customers more comfortable with what they’re
doing and what they’re buying,” Ms Kinzey said.
Salespeople at The Home Depot have an
incentive to help customers learn to use the
company’s mobile apps and website because of a
profit-sharing program that rewards them for
online sales. A sale anywhere within the ZIP code of
a brick-and-mortar Home Depot is credited to that
store, thus benefitting sales associates. “Now
associates want to teach you actually how to
download the app and how to navigate it. They can
tell you tricks in the store, especially if you’re a
pro, so you will utilise the app more and they can
earn more sales credit,” Ms Kinzey said. “It helps
them as well as the customer.”
In an effort to make products easier to find and
facilitate transaction closings, the company may
change the landing page of its mobile website to
include questions that help narrow customers’
choices and show them what different purchase
options might mean. “We engage you, and then we
might start telling you how long it would take to
get a product to your house,” she said. “There are a
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© The Economist Intelligence Unit Limited 2014
lot of options possible. We do facilitate pretty well
now, but it still can be improved.”
Segmenting the mobile market
The company is continuing to differentiate its
mobile options, having long ago realised that its
customers can range from home-improvement
hobbyists to career builders and contractors. For
professional builders, The Home Depot recently
launched a specialised app that allows users to
obtain receipts electronically. “Instead of them
keeping them in a manila envelope in their truck,
they can just have [the receipts] on their app and
they can print them if they ever need them,” Ms
Kinzey said. The ability to gather receipts through
the app, she added, was the attribute most
frequently mentioned by contractors when they
were asked for feedback.
Now the company is developing a feature in the
professionals’ app that will enable builders to
authorise payments for supplies picked up by
workers or “runners” at Home Depot stores. “I think
this will be a huge help for our pros,” she said.
Based on information gleaned from search
results, The Home Depot recently embarked on
efforts to offer the ability to purchase services
through its mobile technology, such as the
installation of appliances or carpets. Like other
retailers, the company is also trying to improve the
accuracy of its barcode scanning technology for
mobile app users.
Mobile’s future role
The company is seeing a significant amount of
revenue growth from the “interconnected traffic”
between its online technology and its stores,
particularly given that The Home Depot is not
currently building stores or expanding
internationally, Ms Kinzey said. The rise of mobile
technology will continue to play an influential role
in the company’s business and could even have an
effect on the appearance of its stores. “We’re going
to change what we have in stores somewhat, but
we continue to evaluate and research,” she said.
“It will eventually cause things to look a little bit
different.”