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Home Depot - building interconnected retail for digital DIY

Stuart Lauchlan Profile picture for user slauchlan March 12, 2017
Home Depot is on a digital transformation journey like almost every other retailer. But where some talk about omni-channel, Home Depot wants to think about interconnected retail.


Home Depot’s omni-channel digital transformation program is a DIY project that we’ve followed pretty closely here at diginomica, although omni-channel isn’t a term that the firm uses much. According to Kevin Hoffman, President of Online, the preferred phrase is interconnected retail:

A lot of people talk about omni-channel or multi-channel. You could say interconnected retail is our acronym for that, but we really think that interconnecting retail is really the future and what we've been working on for the last few years.

When the customers will not respect and they will not stay in any specific channel, you have to be as a retailer channel agnostic and help the customer seamlessly move across all the different ways that they want to engage with you. Interconnected retail is a huge part of our strategy.

That strategy is about the virtual world coming together with the physical world seamlessly so that the consumer or contractor’s experience is frictionless. In terms of physical assets, Home Depot has a significant real estate portfolio:

We've got a couple of thousand stores that are conveniently located near pretty much 95% of the living and breathing population of the country. We've got tremendous supply chain assets…literally hundreds of distribution centers and facilities that Home Depot can bring to bear, not to mention our 400,000 associates that come to the table with expertise and knowledge and know-how and our centralized contact centers that we've built to provide the customer service in the virtual aisle in the web world.

In that web world is a set of virtual assets that the firm has been building up:

We have all the same properties, great mobile apps, mobile web properties, websites, to bring the customer the knowledge and the information that they need and also the e-commerce transaction capability if they would desire that.

The journey

What makes Home Depot’s online thinking different, claims Hoffman, is that the firm doesn’t focus on a specific element of the customer’s interaction with the store:

So many retailers would focus on the tail end of this customer journey. Where did the transaction happen? Did the transaction happen in the store? Did the transaction happen online? When we think about the customer experience, it's really around that whole view of the customer.

He cites the examples of a customer shopping for blinds for their new home:

The journey starts in the inspiration phase and where customers are going to get inspiration and it may be Pinterest. It may be a house. It may be through friends and family and a social network of some sort. So, we've had to deploy and change our ways to make sure that we were present where the customer was getting inspired, because inspiration doesn't always happen in the physical confines of a store.

When the customer is going to research, they are trying lots of different sites, but when they do land on our site, product reviews, imagery, having the right specifications, giving the customer the ability to actually see with augmented reality, see the blinds in their windows before they purchase them. Those are all capabilities that we've had and it gives the customer confidence that they're in the right spot to buy the product.

It’s also about the customer believing that he or she is in a place to get the best advice and guidance, adds Hoffman, as the sort of purchases that are being made aren’t every day transactions:

A lot of things that we sell, how many times are you buying blinds for your whole home, your whole house? How many times in your life are you buying new countertops? Those are purchases that are thousands and thousands of dollars. Sometimes people need to come into your home and measure the space. So, the customers are looking for knowledge, know-how, help from somebody that has sold blinds and countertops for the last 10 or 15 years of their life. So, that's a huge part of the journey.

And the journey continues after the transaction has taken place, he notes:

What gets missed is that that the customers are expecting help and knowledge and support post the transaction. I need a replacement part three years later. Who can I go to that will help me find those parts and has the schematics and has the manual and who will actually have the replacement products that I need? So, when we talk about customer experience and we talk about interconnected retail, it's across that whole shopping journey, not just the shopping cart on a website.

Putting into practice

So that's the theory. In practical terms, Home Depot has invested a lot of time and money in creating deliverables to support it, from digital marketing to experiential improvements all the way down to the fulfllment choices customers have. Hoffman explains:

We've made a pivot, a significant pivot, over the last few years towards more digital marketing. You might be surprised to know that a better part of 55% to 60% of all of the marketing that we deploy now is in the new media or digital world. We still do a ton of TV. We still do a ton of traditional radio. There still is a place in the world for print advertising. But we've seen the customers’ behaviors change where everybody is spending their screen time, where everybody is doing dual screen watching when they're at home. It's changed dramatically and especially with the explosion of mobile. So, we've changed dramatically our marketing habits where we deploy our marketing spend.

That’s meant tapping into new channels, he says:

We manage over 18 million different keyword combinations with Google and partners like Google. We have a very, very active social media practice. We do a lot of re-targeting for customers and are constantly looking at ways to make our marketing and advertising more personal, more contractually relevant for the customer and also more location aware. So, talking to you based off the weather patterns that you're experiencing in your local neighborhood, those are all things that we have and we've deployed in our marketing spend.

Inevitably there’s also a ramp up in spend around mobile solutions. Hoffman says:

I think it's also obvious to everybody just the explosion going on with mobile commerce and mobile shopping. So, we've got an industry-leading mobile app, plus mobile web platform, and really we're doing that whole shopping journey on a little four-inch screen on the proverbial store that you have in your pocket or your purse or your briefcase.

Now, with the mobile application, we have given the customer a customized experience based off your location. We’ll sense what store you’re in. We’ll sense whether you're in or out of the store. We’ll show you only local inventory that's in that store. And then we have specific search algorithms that look for your behaviors and your habits and we’ll return products specific to who we think what type of shopper you are.

You can see the product information that we’ll show the customer and it's about that product authority piece, ratings and reviews, product specifications, and you probably didn't know you needed to see a 360-degree spin of a hammer, but you'd be surprised how many customers enjoy that.

The mobile app also helps with the job of getting customers around the physical store, he adds, as well as guiding third parties to assist:

Key for us is helping them navigate our store, so you can text the exact aisle and the location of where the product is to wherever you’re shopping with or to your surrogate shopper. You can see on a store map exactly where the product is and we’ll even give you walking directions to get to that product. So, that's a great example of where the virtual world and the physical world collide and where we're just trying to make it easier for you to get the job done and whatever you're doing in your home or on your job site.

In part two of this look at Home Depot's interconnected retail thinking, Hoffman talks about the importance of the firm's physical assets. 

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