December 02, 2003

Home Depot Modernizes

The Home Depot Inc., facing a growing challenge from rival Lowe's Cos. Inc., is undergoing a transformation

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Home Depot reconstructs image

Rival Lowe's cuts into service, sales

By Harry R. Weber
The Associated Press

ATLANTA - The Home Depot Inc., facing a growing challenge from rival Lowe's Cos. Inc., is undergoing a transformation, becoming a retailer with more polish, better merchandise and a new service-oriented attitude of "do-it-for-you."

Home Depot is spending $400 million this year alone to modernize many of its 1,643 stores, making them appear more welcoming and less like cold warehouses. And it's retraining employees and installing computers in stores to teach workers about the products they sell.

"We found that there were customers we weren't reaching," chief executive Bob Nardelli said.

A key part of the company's overhaul is refocusing its 300,000 employees on service, once a Home Depot hallmark that some customers say has become inconsistent from store to store.

"There isn't that extensive contractor-type knowledge that Home Depot originally built its reputation on," said Burt Flickinger, a retail consultant who has studied Home Depot shoppers. "To Nardelli's credit, he's realized it's no longer a strength and needs to be addressed."

Nardelli said the change will take time but is necessary for the nation's largest home-improvement store chain if it is to grow amid increasing competition.

Some analysts say Home Depot is on the defensive due to Lowe's growing success. With about half as many stores, Wilkesboro, N.C.-based Lowe's reported a 33 percent increase in third-quarter profit behind a 12 percent rise in sales at stores open at least a year, or same-store sales. Home Depot reported a 22 percent increase in third-quarter profit behind a nearly 8 percent rise in same-store sales.

As part of the restructuring, Home Depot surveyed employees about their concerns last year, and reported that 70 percent of the written comments dealt with customer service. Many workers complained there wasn't enough staff assigned to help customers.

Home Depot customers interviewed recently said they pick and choose among Home Depot stores because the service is unsatisfactory at some. Lee Anderson said he bypassed his hometown Home Depot in suburban Acworth and drove 30 miles to Curtis' store because employees provide better service.

"If I'm shopping for a saw blade or drywall materials, I like shopping here because they know their stuff," said Anderson, who owns a drywall company.

Besides retraining employees, the company has started a leadership program that is recruiting former military officers and people with strong business backgrounds to manage stores.

"The biggest challenge always is customer service with knowledgeable people and enough aprons on the floor at all time," said Mitch Hart, a Home Depot director. "We're getting better at it. We're not perfect, but I've seen progress." Hart credits Nardelli for being open to others' ideas.
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Posted by Craig at December 2, 2003 07:15 PM