Home Depot Now Makes $5 Billion Online, but a Stellar Store Experience Remains Its Top Priority

Home improvement can be a challenging proposition, particularly if you don’t know a socket wrench from a round head ratchet. Two retailers, The Home Depot and Lowe’s, have been helping consumers solve these problems for the past few decades, and they basically have the market cornered. In terms of brand perception, they’re neck and neck, ranking No. 8 and No. 5, respectively, on YouGov’s most recent survey of America’s best-perceived brands. [kickout id="4"] To stay on top of the industry, Atlanta-based Home Depot is focusing on a blended strategy, appealing to both construction professionals and the average consumer, while upping its ecommerce and in-store customer service game. “Our goal is to help both professional contractors and average consumers solve problems,” said Kevin Hofmann, Home Depot’s CMO. A dual message For Home Depot, professional contractors make up just 3 percent of its customers, but generate 40 percent of its revenue. The key to the retailer’s success is helping professionals do their jobs efficiently and cost effectively while educating amateur home remodelers and tinkerers to help them build confidence. For contractors, Home Depot offers cheaper bulk pricing, and sends them frequent updates on new product availability and product quantity. [kickout id="1"] “We have a much more intimate relationship with them,” Hofmann explains. “They don’t need a store map; they know our store. The marketing challenge there is more relational. It’s, 'How are we helping them make money on their job?' It’s more B-to-B versus B-to-C.” For the rest of its consumers, who visit the store four to six times a year, their Home Depot runs are vastly different, not only from contractors, but from occasion to occasion. “Sometimes they’re there to pick up paper towels or laundry detergent, other times they’re there because they’re doing a $30,000 kitchen remodel,” Hofmann said. “Trying to pick up those signals is a big challenge, and it’s a different type of message.” More than 50 percent of Home Depot’s marketing spend is digital, including Google search, Spotify and Pandora ads, with the rest allocated to TV, radio and print. “The contractors are heavy mobile users—they’re hardly ever in front of a tablet or PC, and they’re more interested in product features, specifications, price and if we have contractor-like quantities available,” Hofmann said. “The average consumer is engaging in once- or twice-in-a-lifetime purchases: granite versus quartz counter tops, figuring out what that means.” Thus, consumer-focused messages include home improvement tips and how-tos, while contractors focus on product specs. Home Depot’s tagline, “More Saving, More Doing,” which its current agency, The Richards Group, debuted in 2009, appeals to both audiences. “Our position is to be an everyday, low-price place,” Hofmann said. “You don’t have to wait for a sale or a gimmick. You know that you’ll find a great value. Our message to the marketplace is, Home Depot has the best brands and best products. We help you save time and money and turn a house into a home.” At your service Home Depot is one of the largest ecommerce retailers in the U.S., with online sales growing from $500 million in 2009 to $5 billion in 2016, including 19 percent growth in online sales in the fourth quarter of 2016. However, the retailer heavily focuses on the in-store experience and service, prepping its associates for the massive amounts of questions customers might have. “You’re going to bring in a spark plug for your 1979 snowblower and say, ‘I need one of these.’ If the associate doesn’t know the answer to that, you’ll be disappointed,” Hofmann said. “Our associates need to be able to answer those questions, and we’ve extended that promise online, with 24-hour chats to answer questions.” Home Depot's executives walk the talk, too, donning the iconic orange aprons to shadow employees and serve customers at Atlanta-area stores every Thursday. [kickout id="2"] “You learn so much in the aisles,” Hofmann said. “We’re trying to walk in the shoes of our front-line associates, because that’s our differentiator. There are lots of places you can buy a drill. We want you to come to us because we’re not just interested in the transaction, but in the relationship and in your lifetime purchase behavior. The holy tenets of retail are convenience, selection, value and service. Convenience, selection and value tend to get people in, and service is what brings them back.” To appeal to the many consumers who research products online and pick them up in store, Home Depot added new features to its app that let customers virtually try out products. For instance, you can place an image of a faucet on your counter top or snap a photo of your wall to see which shades of paint look the best on it. “One of the biggest barriers for consumers is visualizing, so we’ve blended the physical and digital world,” Hofmann said. “We’re solving the challenges of home improvement with digital tools: knowledge, know-how, buying guides, expertise. It may not result in an online transaction, but it results in a more confident, knowledgeable consumer in the store, buying paint. People are more likely to buy paint from a place if they can say, ‘they helped me out.’” The ‘Home’ Atlanta built Throughout its history, Home Depot has helped out the city where it’s headquartered, too. The company began in 1979 in Atlanta after its founders, Bernie Marcus and Arthur Blank, were fired from Handy Dan Home Improvement Centers. Still located on a sprawling complex on the outskirts of the city, its ties to Atlanta run deep: Marcus helped fund the construction of the Georgia Aquarium, the largest aquarium in the Western Hemisphere, and Blank owns the NFL’s Atlanta Falcons and the city’s MLS team, Atlanta United. “Our founders have poured so much back into the community,” Hofmann said. “Bernie Marcus basically funded the aquarium out of his own pocket. The aquarium is open all the time for veterans—they’ll take disabled veterans or amputees and swim with the dolphins and belugas.” [kickout id="3"] So far, 1,300 veterans have participated in that program, and through its charitable foundation, Home Depot has committed $250 million to helping homeless veterans. Staying true to its founders’ mission is important to Home Depot’s continued success, as well. “We’ve been gifted with a valuable, well-regarded brand, so we want to stay true to it,” Hofmann said. “We’re distinctively orange, and we have a blue-collar vibe: it’s cool to have paint on your jeans and smell like sawdust. That’s a big part of what we think about every day.”

City Spotlight

Home Depot Now Makes $5 Billion Online, but a Stellar Store Experience Remains Its Top Priority

How the retailer meets the changing needs of contractors and consumers

A

Christine Birkner

About

Subscriptions

Events

Publications

A

WORK SMARTER - LEARN, GROW AND BE INSPIRED.

Subscribe today!

Christine Birkner