Home Depot Pours Investment Into Interconnected Retail

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Home Depot Pours Investment Into Interconnected Retail

By Tim Denman - 05/23/2016
Home Depot continues to invest in a host of deployments designed to make its goal of an interconnected retail experience a reality. The retailer is blurring the line between in-store and digital shopping with significant investment in e-commerce, supply chain and fulfillment initiatives that are not only increasing the customer experience but providing operational efficiencies and cost savings.

"We continue to believe that blending the physical and digital channels into a seamless customer experience which we call interconnected retail, provides a unique opportunity for us to expose the power of the Home Depot," said Home Depot chairman, CEO and president Craig Menear in a recent earnings call with analysts. "This has been and will continue to be one of the central tenets of our company strategy and we will remain committed to the investments in our interconnected capabilities."

While the Home Depot will likely always have a strong brick-and-mortar presence it has experienced a surge in online sales activity along with the rest of the industry. In fact, the retailer's online sales growth for Q1 2016 increased 21.5% year-over-year.

In addition to investment in its e-commerce presence, the retailer is in the midst of a chain-wide deployment of a customer order management (COM) system that is expected to be complete before the end of the year. Coming right on the heels of its COM rollout, the retailer's buy online deliver from store (BODFS) initiative will also be fully rolled out before the calendar reads 2017.

"In certain markets where BODFS has been introduced the demand has been much stronger than we anticipated," Menear said. "This is a good problem to have, but it is challenging delivery capacity which we’re working to address."

While BODFS is a new offering from Home Depot the retailer has been offering buy online pickup in store for quite some time and a large portion of its online shopper utilize the service, with 40% of customer choosing the option.

Making the BODFS initiative a success requires a fully dynamic supply chain with the flexibility to scale up capabilities as demand dictates. According to Home Depot, recent investments in its supply chain has allowed it to improve in-stocks, inventory productivity and logistics costs.

"Ship to store orders through our RDC network leverages both our inventory and our fulfillment channels," Menear said. "The cost savings of this initiative have been above our expectations in both our ship times and customer satisfaction scores continue to improve."