Dive Brief:
- The Home Depot is emphasizing the unique needs of its professional customers, who are largely contractors, since professional sales have historically outperformed DIY consumer sales, according to EVP and CFO Richard McPhail, who spoke on Home Depot’s Tuesday earnings call.
- The sales gap between the two kinds of customers in Q3 2023 was the narrowest in years, according to McPhail. While professionals are getting the most attention, investments made to empower associates and power a better digital experience will benefit all customers.
- “This customer interacts differently,” said President and CEO Ted Decker speaking about the role of professionals on the call. “They are accustomed to interacting with their suppliers in a different way than our traditional business model. Pros working on complex projects want to reserve product, use trade credit and have products delivered to their job site in a staged manner.”
Dive Insight:
Home Depot has put its professional customers first in recent years due to reduced spending among DIY customers struggling with economic uncertainty. The basics of a good retail experience hold true for both demographics, but professionals require special considerations.
Support for professional customers was reflected in two recent executive changes. Hector Padilla was named EVP of U.S. stores and operations in October and will focus on improving the in-store experience for this subset, drawing on his prior experience as EVP of outside sales and service.
Ann-Marie Campbell was promoted to senior EVP in October to better align the pro-specific operations with the global stores organization. She was previously EVP of U.S. stores and international operations and will continue to oversee the U.S. stores business as well as Home Depot’s Mexico business and outside sales and service.
Campbell and Padilla’s combined knowledge, as well as support from head of outside sales Chip Devine, will enable the company to create a seamless experience for professional customers, according to Decker.
“By combining the outside sales and service business with the global store organization, the company is bringing together its full ecosystem of deep expertise with its newest capabilities to serve pro customers — from the core pro customer working on smaller, simpler projects to pros working on larger, more complex projects,” Decker said.
Professionals shop across Home Depot’s in-store and digital offerings, and Decker said the company is committed to delivering a frictionless, interconnected shopping experience.
“Ultimately, we must focus on removing friction within our operations, so our customers have a great experience every single time no matter how they choose to shop with us, whether in the aisles of our stores … with a sales associate or digitally,” Decker said.
The in-store experience is receiving particular attention due to Home Depot’s “get stores right” strategy. The company uses field merchandising teams to determine inventory on a store-by-store basis to maximize availability.
These efforts are supported by investments in computer vision, according to Decker. This technology helps associates quickly locate products stored overhead and pairs with Home Depot’sSidekick app to help associates prioritize filling shelves where stock is low.
The national roll out of Sidekick was only recently completed but is already driving meaningful improvements, according to Decker.
“The beauty of these initiatives is that they also drive productivity,” he said. “They make it easier for associates to restock product, have a greater depth of high-velocity product and ensure we remain in stock with more products on the shelf and available for sale.”
“As a result, we enable our associates to focus on the most important tasks and allocate more time to deliver a better shopping experience,” Decker said.
Home Depot’s digital investments are expected to improve the customer experience for all. Recent upgrades include improvements to order tracking and updated search and recommendation algorithms, according to executive vice president of merchandising William Bastek.
Rival home improvement retailer Lowe’s has also been pursuing professional contractors but has a smaller share of the market. Professionals only account for 25% of Lowe’s sales, according to remarks by CEO Marvin Ellison this September.
The results of Lowe’s latest effort to woo contractors, a suite of digital tools for professional customers launched in April, will likely be on display during its Nov. 21 earnings call.