Executive briefing: Marvin Ellison

Home Depot’s executive VP U.S. stores is a man on a mission

Ask Marvin Ellison any question about Home Depot’s business, and the answer will probably circle around, gravitate toward or — probably most likely — hammer squarely on the concept of customer service.

That’s one of the takeaways from an interview with the Home Depot executive VP U.S. stores. And there were many others, such as his company’s belief in the theory that grabbing market share from competitors is the surest way to growth in a struggling economy. Of course, there’s a service angle to that mission, too.

Here are some highlight bullet points from our briefing with Ellison, which took place during a recent visit to the Home Depot’s “Store Support Center” in Atlanta.

On customer service

“We first made a decision when Frank Blake became chairman and CEO that we wanted to once again regain our customer appreciation and be viewed as a customer service-leading retailer. So we asked, ‘How do you get there?’ It was very basic. You get there by doing some of the old-fashioned things really well. That’s training and staffing and making sure that we create an environment in the stores where customer service is viewed as the most important role of any associate. The second thing you do is to go out and try to find the technology that enables the associate in the store to have time to spend on customer service versus chasing all the other operational and task-driven things that happen in any given store.”

On the 60-40 split

“We did an analysis and realized almost 60% of all hourly payroll was spent on non-customer-facing parts of the business — unloading trucks, auditing the back end, counting cash in the cash room, stocking shelves. And so we were astonished, as a customer-centric company, that most of our money was not spent on customers. What we had to do was pull a 180-degree turn; we’ll have 60% spent on service, not on tasks. We have a plan to do that by 2014, but we’ll be there before 2014. At the beginning of this year we got to 50%, and we’ll end this year at 55%.”

On the First Phone

“The First Phone was a huge initiative toward [getting to 60%]. We put this in the hands of anywhere between 15 to 20 associates in a store. They have it on their hip, and they can do everything. All the key reports are on the phone. Real-time sales so you know exactly what’s going on. More importantly, it gives you the ability to solve a problem with the customer without ever losing connectivity.

“As a mobile POS device, it allows us to address any long lines on busy days. Anyone who has the device is allowed to use it as a mobile POS. For customer service at checkout, it’s a huge deal. The First Phone is part of a location tool. I can type in hammers, and it tells me the aisle and the bay location. It shrinks the amount of time it takes to answer customer questions.

“It also helps us with our in-stock position because this device is used as our in-stock tool. It gives us the ability to put right products on the shelf and allows us to manage our inventory without having to go to extreme steps of stickers on products. From an in-stock standpoint, customer checkout standpoint, locating the product, all those things are very positive.” 

On the competition

“We think we’re in one of the most competitive retail spaces in the market place right now. And we also know that our smaller competitors are very formidable because they have product knowledge and they lean on service. But what we believe and what we have proven is that because we have a dominance in product assortment and because of our scale, we have a great advantage on price. And when we layer outstanding service on top of that, then we have a winning proposition. And that’s even more reason why we spend so much time talking about service.”

On the pro customer

“Just like DIY customers, pro customers come from different demographics, different spending patterns. It’s our responsibility to provide them the service they require. Painters or electricians all have different ways they spend and different expectations. We’re seeing all the above, but it doesn’t matter. For us, we strive to create the best shopping environment for our customers, period.”

On growth strategy

“In the U.S. we have a very simple philosophy. When you look at the last five years and look at the impact of the economy on our overall sales, we think that our growth strategy falls within our existing stores. So you’re not going to see a big plan from The Home Depot to open a lot of stores or create unique store formats as a way to create new-store growth. Instead, you’re going to hear us talk about how we’re going to take market share and the steps we’re putting in place to grow sales per square foot in our own stores.”

On the next big thing

“The biggest thing is continuing to make customer service the priority as it relates to how customers shop. You’re going to hear us talk a lot about interconnected retail; creating a seamless connection between dot-com and store; and addressing the needs of how, when and where our customer wants to shop. We call our strategy interconnected retail, because we believe that our responsibility is to make sure however the customer wants to buy that we have the ability to service their needs whether they want to buy in the store or online. But don’t be confused by that. This is nothing but an extension of our focus on customer service.” 

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