Home Depot head hopes changes will help

Posted: Thursday, November 27, 2003

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.

Just a few years ago, Home Depot dominated the home im-provement industry. But Lowe's sales have been growing at a faster pace.

''We found that there were customers we weren't reaching,'' chief executive officer Bob Nar-delli said in an interview with The Associated Press.

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 Nar-delli'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 same-store sales.

Home Depot reported a 22 percent increase in third-quarter profit behind a nearly 8 percent rise in same-store sales.

Home Depot employees ac-knowledge that the retailer needed to improve its stores and service.

''The changes going on now in our stores, if they were in place seven or eight years ago, we would be better today,'' said Steve Curtis, manager of an Atlanta Home Depot.

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 about the fact that 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 and using technology to teach them, the company has started a leadership program that has Home Depot recruiting former military officers and those with strong business backgrounds to manage stores.

The company also has a human resource worker in each store to work with employees.

''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 his willingness to listen to others' ideas.

''He's not a rah-rah type of motivator,'' Hart said. ''He's not a Patton that goes out and yells and screams at the rooftops, but he is out there in those stores working with the management team constantly.''

Nardelli came to Home Depot in 2000 after serving as president and CEO of General Electric Power Systems. At one time he was in the running to succeed former GE chair Jack Welch.

One of Nardelli's first changes at Home Depot was to centralize buying.

Now, as he steers the major transformation his company is going through he returns to the subject many analysts and customers cite: consistency.

''When I came here I was told, 'If you get 50 percent compliance that's a good day.' And I said, 'Well that's not a good day because customers expectations is to have consistency of delivery not only in the store they shop but as they go from Home Depot to Home Depot,''' Nardelli recalled.

''We can't live with 50 percent compliance. You have to have 100 percent compliance.''



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