Home Depot has started to roll out a scaled down, second generation mobile device for its sales associates, allowing more workers to use wireless technology to assist customers, CIO Matt Carey told CIO Journal. The 25,000 device roll-out is intended to make it possible for more store workers to help customers locate items and give information on products, even in areas for which they don’t have specialized expertise. It’s also an example of how Home Depot is attempting to use technology to increase the amount customers spend on each trip to the store, as well as sales to new customers, an area of focus as the chain has slowed the opening of new stores.
The device, called First Phone Junior, is a scaled-down version of the Motorola phone the company put in the hands of some associates two years ago, which allowed employees to better manage inventory, assist customers and speed checkout lines.
Home Depot only purchased approximately 15 of the first generation devices for each store, Carey said. The broader roll-out of the new device will add around 12 more devices per store and is part of an effort by Home Depot, over the past three years, to use technology to improve customer experiences.
Carey says that when he arrived at Home Depot in 2008, the company’s retail technology was comparable to what other chains possessed “in the year 1990.” To determine which products were out of stock, sales associates had to physically inspect shelves. The chain’s version of mobile computing was a computer terminal on top of a cart “powered by a boat battery,” with a scanner attached, Carey said. When merchandise was determined to be running low, the store’s manager re-ordered the items himself – there was no automatic system.
“That’s not a way to run a modern retailer,” Carey said.
Back in 2008, items were often out of out of stock because the inventory system was so poor, said Scot Ciccarelli, an analyst with RBC Capital Markets. The cost of shipping inventory to stores was higher because it was done on a smaller scale—one store at a time. And store employees spent 60% of their work day on stocking, and just 40% helping customers. The company set a goal to reverse that pattern.
Over the past few years Carey, who previously worked at eBay and Wal-Mart, helped bring in an automated inventory management system, which replenishes items by predicting depletion of stock, rather than waiting for items to run out. The new system includes 19 centralized warehouses located across the country, which order in larger quantity for all the stores in the region. The system took day-to-day general stock level decisions out the hands of local managers, automating those orders, and allowing them to concentrate more on purchases for special store displays or other areas that are specific to an individual location.
“We want our managers dealing with the exceptions,” Carey said.
Meanwhile, Home Depot invested $64 million to deploy 34,000 First Phones, which allowed associates to use a scanner on the device to continuously update and view inventory levels, according to a spokesman for the retailer. The First Phone gave associates instant access to product information, making them more helpful to customers, who often need specific, technical information on tools and parts. Jennifer Smith, senior director of store operations for Home Depot, said this allowed employees to develop a “stronger emotional connection in the aisle” with customers. This connection is helping the chain combat the effects of “showrooming,” when a customer comes to a brick-and-mortar store just to browse, only to make the actual purchase online.
Smith, who appeared at an event with Motorola Solutions in New York to unveil the new devices, said the First Phone devices empower store associates and make them “confident [enough] to have those conversations” with customers. She sees those conversations as a competitive advantage, she told CIO Journal.
The mobile device also helped speed checkout times, allowing employees to scan items for customers as they wait on line, instead of waiting until they reach the cashier. Last spring, the chain also began to allow payment through a PayPal account, requiring only a customer’s phone number and account PIN.
Putting mobile technologies in the hands of store associates won’t solve every problem a retailer may have. “Technology will not solve the basic issues, like cleanliness,” said Alison Paul, a senior retail analyst with Deloitte. She also said customers of some class of retailer, especially in the mid-market price range, are uncomfortable when they’re approached by a sales person bearing a tablet or other mobile device. “Shoppers are not all as tech savvy as [retailers] thought,” she told CIO Journal.
But she said retailers, often gun-shy about investing in technology because the returns aren’t big enough, should experiment with relatively inexpensive tools such as these. The new Motorola devices are “cheap enough that you can afford to try it out in a store, and then you can tweak it,” she said.
So far, the changes have helped the company move toward the goal of providing more customer service, Carey said. By the end of 2011, sales associates were spending 53% of their time helping customers, a spokesman said. And inventory is turning over more quickly. But, at the same time, Home Depot’s chief competitor Lowe’s began last year to arm employees with an iPhone that has many of the same capabilities.
“They have their play and we have ours,” said Carey.
[via Wall Street Journal]