Home Improvement

Home Depot is betting its $1 billion investment in IT infrastrucutre will boost growth and earnings, while fending off rival Lowe's. Can a strategy designed to improve efficiency also increase customer satisfaction?

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"This system will give us better metrics on cashier performance," says DeRodes. "That's important because we want to train cashiers who aren't performing as well." By using analytical software to study the number of items in each customer's purchase, the type of items (are they heavy and cumbersome such as lumber or bags of cement?), and the time it takes the cashier to process the order, the company can identify if an individual cashier is unusually slow and needs more training on the register.

A Project Portfolio to Speed Customers on Their Way

Store #121 sits diagonally across the street from Home Depot's Atlanta headquarters. This is where the company is piloting a bunch of new applications collectively known as FAST (front-end accuracy and service transformation) intended to improve cashier accuracy and enhance customer service. The other purpose of the FAST projects, according to John Beasley, Home Depot's former director of operations strategy, is to close or even leapfrog the technology gap between Home Depot and other retailers like Wal-Mart and Target. Two FAST applications that will be rolled out to stores this year are an electronic product catalog, called Online UPC, and an online receipt lookup service that will be in stores this month.

Online UPC. This is essentially an electronic catalog of products that don't have bar codes on them—such as nuts and bolts, bales of hay and drywall—and therefore can't be scanned at the POS. The application runs on the POS system and is intended to replace three-ring binders filled with pictures of products, their bar codes and stock-keeping unit (SKU) numbers that every cashier has at his register. Online UPC will make determining prices on unmarked items easier for cashiers. Beasley says that while only about 3 percent of transactions require the electronic catalog, the application will save 23 seconds of customer wait time per product over the binder—not an inconsiderable amount of time when one imagines a customer twiddling her thumbs while a cashier runs a price check.

Online receipt lookup. This lets customers who've paid for merchandise using a credit card, debit card or check return an item even if they've lost or forgotten their receipt. When the customer's card is swiped, or his checking account number entered into the POS, the application searches through 90 days of transactions to find an electronic copy of the customer's receipt. This should also help the company cut down on fraudulent returns, which cost the retail industry millions each year.

Wireless scan guns. The company is in the process of replacing its corded scan guns with wireless ones that cashiers can use to ring up merchandise and that workers on the floor can use to check inventory. Although some supermarket chains and wholesale clubs such as Albertsons, B.J.'s and Sam's use cordless guns already, what makes Home Depot's unique is their two-way communication feature. For example, when a cashier scans the UPC for a barbecue grill at the checkout, the gun transmits the SKU number to the point of sale system. Using business rules, the POS identifies the product and whether it requires assembly, and sends a message back to a small screen on the gun prompting the cashier to ask the customer whether they want Home Depot to assemble the grill for them for an additional charge. (DeRodes says he doesn't yet have numbers on the amount of money Home Depot has made through cross-selling opportunities identified by the gun, but says the scanner has paid for itself on the basis of checkout accuracy alone.) The maintenance costs for the wireless guns will also be lower than they were for the corded guns, according to Ray Allen, Home Depot's former director of store systems, who worked on the FAST projects with Beasley.

Web-based kiosks. One of the more gee-whiz technologies the company rolled out in mid-2003 is its color solutions centers. These Web-based kiosks in the paint department help customers color-coordinate the rooms they're decorating. The kiosks contain a computer, a touch-screen monitor and a lens used to scan fabric, upholstery, rug or wallpaper swatches. Following prompts on the screen, a customer holds a swatch against the lens, and then the computer prints out a selection of matching paint colors. The customer can have Home Depot mix paints according to the colors on the printout. DeRodes says it's difficult to pinpoint how much sales of the company's Behr brand of paint are driven by the kiosks, but he says that customers tell Home Depot that the kiosk plays a positive role in their shopping experience.

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