One Year, Ten Stories

Of all the stories affecting Home Depot operations in 2009, Home Channel News editors selected the following top ten.

In no particular order, they are:

Elimination of Expo Design Center

In January, CEO Frank Blake famously said: “For our shareholders and our associates, the benefits of closing Expo exceed the benefits of continuing to invest in it.”

With one announcement, Home Depot jettisoned 34 Expo Design Centers. Also slashed were five Yardbirds stores, two Design Center stores and a handful of HD Bath remodeling centers. More pain came in the form of 2,000 cuts in support functions.

But in addition to stopping the bleeding (Expo had a $50 million operational loss in 2008), the moves brought the company‘s focus completely on its core warehouse home improvement retailing.

2. “More saving. More doing.”

On March 18, Home Depot said good bye to its six-year-old slogan—“You can do it. We can help.” The new slogan, “More saving. More doing.” is more than just a catchy phrase. It’s a response to the economic times that place a premium on the value of a dollar and a reluctance to spend in general.

The new slogan aligns better with the company’s New Lower Price campaign, which, according to executive VP merchandising Craig Menear, has saved consumers a half a billion since the green arrows began appearing on shelves in the third quarter of 2008.

3. A company F.I.R.S.T.

For the second year in a row, the company has the same three key objectives: customer service, in-stock and store appearance.

“That’s a big deal for the field organization because, in the past we have been very impatient with our strategy in the stores, and it frequently changes,” said Marvin Ellison, executive VP U.S. stores.

Along those lines, Home Depot taught everyone in the company the F.I.R.S.T. approach to customer service. The initials of F.I.R.S.T. stand for: finding the customer in the store; inquiring as to what he needs; responding to the customer; solving the customer’s problem; and thanking the customer for shopping at Home Depot.

4. Meet Martha Stewart

Home Depot will begin carrying Martha Stewart Living products early next year in an exclusive deal announced on Sept. 14. The three product categories—outdoor living, home organization and home decor—will involve collaborations between Martha Stewart designers and Home Depot merchants “that allow customers to easily coordinate decor and design elements when taking on home improvement projects,” according to the joint announcement. Other categories are in the works but are being kept under wraps.

“When you take Martha, who has just a tremendous following and an authority position in terms of design and coordination across the core categories, we think linking Martha with the Home Depot brand is a case where one plus one will equal three,” Menear said.

5. Trade In Trade Up

Since October, customers have been bringing in their old, be a ten-up power drills and receiving a 15% discount when they trade up to any lithiumion battery-powered drill. There are several components to the promotion. It’s recycling, it’s introducing new technology, and it’s value—“their old tool was probably just sitting in the garage anyway,” Ellison said.

Lithiumion-powered tools represent the kind of product innovation that retailers appreciate. They encourage trade ups. Though it’s more expensive, the technology is lighter and more powerful, lasts longer and charges faster.

“Once you’ve used lithium, you’ll be hard-pressed to go back to NiCad,” Menear said.

6. Rollout of RDCs

Right now, more than half of the Home Depot stores in the United States are served by one of 10 rapid deployment centers (RDCs). More are on their way, and the complete roll out is expected to be complete by the end of 2010.

For the executive team, these RDCs are retail gold, capable of making the blunt, direct-to-store shipping practices largely a thing of the past.

Stores that are served by RDCs are noticeably more efficient, according to Ellison. “What we’re seeing early on is improved lead times with product, and simply products getting to the stores a lot faster. We’re seeing better inventory control because you’re not having to carry as much safety stock.”

7. Rollout of merchandising tools

Hand in hand with the development of a 21st-century distribution system is the development of a modern merchandise assortment and forecasting system.

The company is still getting comfortable behind the wheel, but Ellison pointed to some benefits. All stores are not created equal, and clusters of stores can be organized by characteristics, not just volume. That’s an important distinction, according to Ellison. In the past two or three years, stores of a certain volume would receive a corresponding planogram. “Now, we’re saying, ‘Your volume is X, but your history is Y,’ ” Ellison said. “So, your assortment is going to be uniquely designed for you. And that’s something that the new tools have allowed us to do.” And that’s there as on the company is looking to exit the holidays without heavy mark downs.

8. The return of Lennie

It’s not so much that one merchant returned to the company. It’s more that one merchant from the Bernie Marcus and Arthur Blank era returned to the company.

Merchandising veteran Bill Lennie, who spent 14 years with Home Depot before leaving near the end of former CEO Bob Nardelli ‘s tenure, returned to the company in the first half of the year. During his sabbatical from Atlanta, Lennie helped guide the merchandising at 384-store Dick’s Sporting Goods.

In his return to Home Depot, Lennie will focus on the international space with the title senior VP merchandising for international.

9. The virtual road show

Under the direction of executive VP human resources Tim Crow, the company has revised a traditional Home Depot education component with a 21st-century twist. Traveling road shows have helped improve associates’ product knowledge. But as the store base expanded, the difficulties increased.

“We’ve now implemented virtual road shows that take advantage of modern technology, while at the same time providing some of the excitement and immediacy of the prior format,” Blake said.

10. HomeDepotLink

Who needs third-party data providers and the global data synchronization network? That’s the question Home Depot asked earlier this year. Its answer marked a break from retail orthodoxy: not Home Depot, and not its vendors.

The new rules call for suppliers to submit data directly to Home Depot’s new HomeDepotLink portal, not through GDSN.

The move shook up the data synch industry, whose supporters have long subscribed to the mantra “synch with one, synch with many.”