'Amazon-proof' Home Depot builds on its DIY digital foundations

Profile picture for user slauchlan By Stuart Lauchlan February 20, 2018
Summary:
Home Depot may not be entirely 'Amazon-proof', but it's building on its specialist retailer base to put down some strong long-term digital plans.

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Yesterday Walmart paid the price of Wall Street’s predilection to ‘Amazon panic’, a threat that looms over almost every company in the retail sector.

In stark contrast, Home Depot’s ongoing digital transformation into a hybrid online/offline business won investor approval as a seemingly Amazon-proof company.

In comments to The Street, Home Depot CFO Carol Tomé pitched the idea:

We are not an item retailer. We are a project retailer. That is very different than selling consumable items. It's just very different. We also help you when you have a problem. If your bathroom is leaking water, that's a very different need than if you are trying to match a sweater to your eye color. And then housing is a good asset class. So do we have an Amazon protected moat around our business? Of course not. But do we have barrier islands around our business? Yes, we do. Our job is to continue to invest in those barrier islands.

That’s a similar party line to the one espoused by Williams-Sonoma CEO Laura Alber last year when she said:

While Amazon does really so many things really well, have you ever tried calling them and asking them if they could please come refurnish your living room?

But while there’s no looking over the corporate shoulder for signs of Amazon incursion (yet), Home Depot CEO Craig Menear maintains that digital investment remains a top priority for the company:

We continue to invest in our digital properties and it has increased traffic and conversion. Versus prior year, our online sales grew 21% in the fourth quarter and 21.5% in fiscal 2017, now representing 6.7% of our total sales. While we are seeing significant growth in our online sales, these online shoppers see the relevance of our stores as approximately 46% of our online U.S. orders are picked up in our stores, a testament to the power of our interconnected retail strategy.

He adds:

Our interconnected business made great strides in 2017 as the team continued to enhance our digital assets to enable a more seamless experience for our customers no matter how they choose to shop with us. We implemented a new e-commerce platform, enhanced our search and mobile functionality, increased check out speed and expanded chat functionality to improve the customer experience with our online contact centers.

In every bay in the store where there’s an opportunity to have product that is enabled through technology, you’ll see that happen over the next five years. It will continue to evolve and it won’t be somewhat a section over the next five years, it will be in every bay in the store. That will happen, because the manufacturers are finding ways to enhance their product for the customer.

My take

Amazon-proof? Only time will tell. But for now, Home Depot is investing wisely in digital enablement, both online and in-store. Kevin Hoffman, the firm’s Online and Chief Marketing Officer, articulates the strategic philosophy well:

We’ve been chasing, chasing the customer and wherever they lead us, we invested significantly to eliminate a lot of friction between the different channels as we pursue our One Home Depot strategy investing in expertise and knowledge in the online property.

Sound thinking.