Posts Tagged 'Home Depot'

New management at Lowe’s

Marvin Ellison recently left JCPenney (see comments above) to take over the chairmanship at Lowe’s. This is probably a better fit, given his background at Home Depot, and he was quick to reorganize the C-suite. My comment (on RetailWire) raises the question of whether these were the right steps to take:

Mr. Ellison is finishing his second week on the job, so it’s premature to judge the reorganization or anything else he’s done. The newly created positions (stores and supply chain) may be needed but they appear from the outside to be more operations-oriented than customer-facing. It’s too early to tell whether this kind of approach is meant to improve operating margins or to truly recapture some of the market share being won by Home Depot. That may take a deeper dive into Lowe’s strategy than what we’re seeing so far.

JCP pursues B2B opportunities

Here’s a new RetailWire comment on Penney’s announcement that it is going after B2B opportunities with hotel operators, property developers, etc. to place its home goods in these kinds of facilities. It’s another example of CEO Marvin Ellison taking a page from his Home Depot playbook:

I’d be less concerned about the borrowings from Home Depot if I didn’t see improvements on the softlines side happening at the same time. There’s evidence (at least to these eyes) that the new merchant team at JCP is making some headway especially in women’s apparel, where the assortments and brand identity look crisper than they have for awhile.

That being said, the B2B initiative is a puzzle to me. Penney may see it as a volume opportunity — and a branding opportunity to place its private-label home goods inside hotel rooms, etc. But will hotel operators and franchisees be interested in dealing with a middleman, if they already source their linens and towels through the buying power of brands like Hilton, Marriott, etc.?

Is stingy inventory management costing sales?

There is some recent reporting (about Home Depot and other retailers) that stores are trying to keep their inventory levels very lean, and are willing to send customers to their websites if their shopping trips end with an out-of-stock. I addressed this problem recently on RetailWire:

I’ll use myself as an illustration of why the answer to the headline question is “yes”: Over the holiday weekend I had three separate transactions with Amazon (for K-cups, indoor spotlights and a new laptop battery) that saved me three different shopping trips. I had the assurance that the items were in stock, would show up quickly and would be priced competitively. It’s not just the price and the convenience of the transaction, but also the assurance that the items are in stock.

This is a powerful rebuttal to the brick-and-mortar model, especially as more stores try to keep up with Amazon by offering too much selection in a limited amount of space. Retailers have forgotten the maxim of “Narrow and deep,” and find it more and more difficult to stay in stock on such a broad array of SKU’s. (In fact, Target has had this problem for years.) This is one more way in which “omnichannel” has turned into a double-edged sword for many retailers — and not the growth driver it was imagined to be.

JCP finally names a new CEO

Just a few days after JCPenney held its “analysts’ day” in New York — and left unanswered the question of succession planning — it announced yesterday the appointment of Marvin Ellison, the senior store executive at Home Depot, to succeed Mike Ullman next year. Here’s my comment from today’s RetailWire discussion:

There is some comparison being made between Mr. Ellison and Brian Cornell, the new CEO at Target. Mr. Cornell was also praised for his operational background (especially given Target’s data breach and missteps in Canada). But he also identified merchandise categories that will help Target the brand differentiate itself from more “consumables”-oriented competitors.

Yes, Mr. Ellison is faced with some operational challenges — and, in particular, he needs to attack the store count and bloated SGA more aggressively. (This was a big unanswered question at the JCP analysts’ meeting last week.) And “blocking & tackling” becomes more important in an omnichannel environment, with competitors like Amazon who are experts at logistics.

But, at the end of the day, any new leadership at JCP needs to redefine the meaning of the brand without repeating the mistakes of the Ron Johnson era. Right now, JCP is in an “error correction” mode, but turning back the clock to 2010 can only get you so far. Let’s see if Mr. Ellison is up to the task.

Home Depot cleans up its own security breach

A recent data breach at Home Depot has been in the news, because the scope of the problem was even bigger than what Target reported last year. It’s too early to tell what sort of impact this will have on HD’s business, but not too early for RetailWire panelists to speculate:

It’s hard to know whether consumers have become numbed to “data breach” stories, and therefore Home Depot will take a smaller sales hit than Target. Part of the issue with Target was its visibility, the timing during holiday season, and the former CEO’s decision to describe the possible reach of the problem as broadly as possible — against the advice of his own team. Home Depot seems to be taking a more low-key approach to the problem, and I do expect them to catch some flak about why this happened after April when they had months to respond effectively to the issues at Target.

Do appliances make sense for Walmart?

RetailWire panelists recently discussed a new venture by Walmart to pump up its comp-store growth. My point of view:

Appliances make sense in the same way that an expanded assortment of electronics have helped Walmart capture market share from Best Buy and other competitors. But the category requires commitments to floor space and trained customer service. What business does Walmart plan to exit in order to make room for appliances, and what is the volume risk?

Bottom line: Walmart has the sheer number of stores and formats that allows it to experiment with new categories, and online groceries seem like a natural extension of its food business. But here’s a word of caution: Until Walmart can convincingly return to its position as the low price leader — instead of being beaten by Target, Amazon and others — no amount of experimentation will help it recover lost sales momentum. If Walmart plans to sell appliances, it had better plan to beat Sears, Lowes and Home Depot on price every day.

Home Depot spends on handheld technology

From a recent Retail Wire comment about Home Depot, which is equipping its sales associates with handheld devices:

Apple stores have been using handheld technology for years, and the surprise is that other retailers (from DIY to discounters) have been so slow to react. This is a great technology for tracking inventory and especially for getting customers out the door more quickly (better than, say, self-checkout). It’s easy to see other, sales-driving uses for handheld technology — such as issuing “instant coupons” to customers using a database that can pull up their purchase preferences from their phone numbers. $60 million seems like a modest investment in this kind of technology.

Martha Stewart meets Home Depot

A brief comment on today’s Retail Wire blog about the new agreement between Martha Stewart Living and Home Depot stores. New categories like home decor and office organization will start appearing soon at Home Depot under the Martha umbrella. My opinion? It’s a good move:

A good move for both companies: It gives the Martha Stewart brand a more credible outlet (by far) than Kmart, and it gives Home Depot a strong umbrella for launching new product categories. Moving into organization and other “soft home” businesses also helps Home Depot push back against Lowe’s more upscale brand positioning. Finally, it looks like one more step in the continued irrelevance of Kamrt.

Home Depot: Missing a multi-channel, multicultural opportunity

The Wall Street Journal reports that Home Depot has shut down its Spanish-language website. My comments today on Retail Wire:

This seems like an odd decision on the part of Home Depot. A huge amount of website traffic is geared toward drawing customers to the brick-and-mortar store by providing product information and pricing before they shop. So shutting down the Hispanic site seems disconnected from a key strategic purpose for any multichannel retailer. It’s worth noting that the Lowes.com website provides easy links not only to a Spanish-language version but also to Chinese, Vietnamese and Korean versions. Lowe’s is apparently paying attention to the rapid growth of Hispanic and Asian consumer populations, especially as it continues to penetrate many of Home Depot’s key markets. Maybe Home Depot ought to demonstrate more patience with its strategy.

Should Home Depot spend money on better service?

Short answer: Absolutely the right move for Home Depot. The current management already undid some of the damage made by Bob Nardelli when he was the CEO, and there is still work to be done. The best parallel from a strategic standpoint is Best Buy, which rose to the top of its market by stressing customer service while its chief rival eliminated its best sales associates in a cost-cutting move. (And we all know how that worked out for Circuit City.) In fact, the “Geek Squad” premise would be a good concept for Home Depot to follow, giving its stores the halo effect of great service while also driving a free-standing revenue stream.