DIY omni-channel building from Home Depot and Lowes

While omni-channel has been a theme perhaps most associated with areas such as fashion, its relevance spreads across the entire retail sector, up to and including the DIY and home improvement markets, as firms such as Lowes and Home Depot illustrate.

Both firms want to differentiate themselves with better omni-channel customer experiences and both have a penchant for pursuing improved offerings for the Professional customer as well as the amateur weekend DIY enhusiast.

At Lowes, Chief Customer Officer Michael Jones says the mission to leverage omni-channel capabilities to help customers achieve their end goal of “great project results”. To that end:

Customers can engage with our associates in-store for extra buys, our content on Lowes.com for inspiration, our contact center for ongoing support or our project specialists who work with them in their homes.

He adds:

Our interior and exterior project specialists are now the critical element of our omni-channel strategy and a differentiated capability in capturing and serving project demand. They meet with customers in their homes to design, plan and manage their home improvement projects.

Lowes.com just had a makeover which Jones says will improve the customer’s engagement with the firm:

We launched our new Lowes.com site, advancing our online shopping experience with optimized functionality and display for touch-screen devices to support a better mobile experience, improved product and content recommendations, refined search algorithms, improved click-to-chat capabilities, larger project images and expanded product views, including video content.

That redesign did result in a few bumps in the road, admits Jones, but things are now back on track:

As anticipated, following the launch, we had a brief period of disruption as customers increased their familiarity with the redesigned site. We are now seeing improved performance and have received great customer feedback on the new site.

There’s also an increasing move towards digital technologies to raise brand awareness in the competitive home improvement market. This is a learning process, says Jones:

Both the promotional landscape as well as marketing, digital marketing, continue to evolve. We continue to utilize media mix modeling, so that we can optimize every dollar spent against the best return. We continue to migrate from print advertising and analog into digital. We're not seeing a fundamental shift in promotional cadence or promotional depth, so the market remains very rational in terms of promotions.

But what we are seeing are new and enhanced techniques in getting our promotions in front of our customers. So, as an example, we have a very strong social media footprint on Snapchat, Facebook, on Instagram. In the second quarter, we drove 27 million impressions on social media alone, and that's on top of 32 million impressions in the first quarter. So with our digital capabilities and our ability to continue to flex promotions, we're finding that we can get the right promotions from the customer at the right time. So we're learning a lot. We continue to evolve it, and it's an evolving space.

He adds that analytics is providing a better insight into the customer profile:

I think you [will] see us leverage our consumer insights analytical capability to tweak promotions to make them more efficient, and I think you see us use some of our marketing digital capabilities to ensure that we're getting better utilization on how we extend our promotions.

But again, I would define the promotional environment as rational with much better tools to help us optimize how we bring promotions in front of our customers. And I think that the learnings I think are inherent in some of the digital tools that are being deployed and how we better utilize promotions to get a return on every dollar spent.

Supply chain

Over at Home Depot. there’s been some significant technology investment that’s starting to pay off, according to CEO Craig Menear, particularly in the area of supply chain transformation:

We continue to see great productivity from our supply chain as the dividends from investments made over the past several years yield a positive impact on our inventory productivity, logistics costs, and service to our stores and customers.

Key to this is the Supply Chain Synchonization Project - AKA Project Sync, now in the early stages of a multi-year roll out. Sync enables Home Depot workers to see exactly what is on every inbound truck load, how many small cartons and pallets are necessary for bringing freight into a retail store and to access instructions on how to stage carts and pallets to reduce product touches and footsteps.

The aim is to grow inventory turns - the number of times a retail outlet changes its entire inventory - from 4.8 times in fiscal 2015 to a targeted 5.7 times by the end of fiscal 2018.

This rollout follows the completion of the firm’s Customer Order Management System (COMS) which is now live in all US stores. COMS enables Home Depot employees to track  the status of an order and where it is in the process of manufacturing and delivery and provide customers with more accurate information.

Next up is Buy Online, Deliver From Store. Menear says:

We’ve always delivered from our stores. The difference now is you can execute the transaction online and pick much shorter delivery window for your delivery. We are in about 700 plus stores now with buy online deliver from store very early days. We will be finished with that rollout by the end of this year and we're seeing really nice pickup from our customers and reuse, particularly our Pros, who have used buy online deliver from store coming back and using it a second and third time.

All told, the online investment is paying off, according to Ted Decker, VP Merchandising, with double digit growth in the firm’s most recent financial quarter:

Our interconnected retail initiatives continue to evolve to meet the changing demands of our customers. Mobile and tablet are over 50% of our traffic and are important tools that our customers use to engage with our products, our stores and our associates.

We are enhancing the functionality in mobile with features like larger and clear product images, live mobile chat, and a simplified checkout experience. As evidence of the success of our interconnected strategy, approximately 42% of our online orders are now leveraging our store footprint for fulfilment and nearly 90% of our online product returns are processed through the convenience of our stores.

The firm also sees potential in the growth of smart device technologies, starting with the relative prosaic garage door opener. Decker says:

We're excited about expanding smart technology with the new Ryobi garage door opener. This innovative system connects with any smart device and allows our customers to operate the garage door remotely, talk on the phone or play music through an embedded Bluetooth speaker or park with ease using the laser park assist attachment.

But with Halloween coming up in a couple of months, one of the most visible signs of digital innovation from Home Depot may come in the form of an animated window projector kit:

This allows our customers to easily decorate their windows with animated digital holiday clips. This is the first digital decoration in the marketplace and it is exclusive to the Home Depot.

Er, Happy Holidays.

My take

Home Depot has been ramping up its technology investment for some years and it’s starting to pay off. The emphasis on supply chain optimisation and inventory control is a healthy one. Lowes may not have been as visible in tech investment to date, but it’s catching up too, with a strong focus on customer analytics and digitally-empowered engagement.