Customer service push at Home Depot, Lowe's and rivals paying off

Flipping through door after door on display at her neighborhood Home Depot as if they were pages in a magazine, Debbie Megliorino envisioned her next home improvement project: a bedroom upgrade for her 1950s-era home in Burbank.

But for the 53-year-old postal clerk, the shopping excursion was a bit of a surprise. Instead of a frustrating amount of time finding "the guy in the orange vest" to help her, she said she got attention right away. "A lot of times it's been hard to get someone to help me," Megliorino said. "Today, I've been asked three times if I needed anything. One guy even walked me over to the screen corners."

Her experience was no fluke. Home improvement giants such as Home Depot Inc. andLowe's Cos.are ramping up their customer service in a big way, and it's paying off in sales, profits and shopper satisfaction. Over the last year, the price of Home Depot shares have increased 74% and Lowe's shares have gained 35%, while Standard & Poor's 500 index has climbed 17%.

On Tuesday, Home Depot's shares gained 3.6% after reporting that its net income rose 1.7% for its fiscal second quarter compared with the same quarter last year. The company, citing the uncharacteristically warm spring, said consumers spent more money fixing up their homes.

The big home improvement companies have been busy directing store clerks to spend more time with customers, improving the information and advice they offer in online catalogs, installing Wi-Fi computer service in stores and improving do-it-yourself instructions. They are coming up with ways to reach consumers with smaller budgets through multiple avenues, mostly online.

How-to workshops have largely moved to YouTube channels, and photos on Facebook and Pinterest, an online photo-sharing pin board, have replaced clippings from a magazine or catalog.

"Take a step back and see where the two major players were seven years ago when the housing market was booming," said Peter Wahlstrom, a senior analyst atMorningstar Inc."There was a lot of new construction, and the stores were so busy that they didn't have to cater to the regular customer and bend over backward for them."

"Then we get into the economic downturn and people stop spending. Construction goes from bigger projects to smaller renovations, and customers shift from contractors to those wanting to do it themselves," he said.

In terms of customer service, the giant home improvement chains are catching up with smaller competitors such as Ace Hardware Corp., which has ranked highest in customer service for the last six years in an annual survey by J.D. Power & Associates.

In the most recent survey of home improvement retailers, Ace ranked first, followed respectively by Lowe's, Midwest chain Menards, Home Depot, True Value Co. andSears Holdings Corp. Home Depot moved up from No. 6 to No. 4 in the last year.

"While many retailers have struggled to right-size their staff with the down economy, Ace Hardware and Lowe's clearly have kept the focus on their customers," said Christina Cooley, senior manager at J.D. Power. "What's been pretty clear with Home Depot is they're trying to address their problems and making progress."

Lowe's said it has upgraded its 1,710 stores. The Mooresville, N.C., company has outfitted each with Wi-Fi and 25 iPhones for associates to help customers with their shopping during its last holiday season.

Now, an idea sparked from a Pinterest board can be pulled up on the iPhone or a customer's Wi-Fi-enabled device. Instead of customers' giving possibly inaccurate descriptions of materials needed and dimensions using hand signals, the products can be searched for immediately and bought on the spot.

"We know customers are going to spend a lot of time on social channels, sharing ideas and inspiration with each other," said Brad Walters, Lowe's social media director. "We want them to come into the stores with ideas and questions and talk with our store associates. They're a wealth of inspiration."

Lowe's online effort has also led to cross-references on its Facebook and Pinterest posts to link back to the chain's website, complete with cost estimates and product numbers.

Lowe's reported a profit of $527 million for the fiscal quarter that ended May 4, up 14% from $461 million in the same quarter in 2011.

Its shares Tuesday fell 1 cent to $26.54, down from a 52-week high of $32.29.

Home Depot, the nation's largest home improvement company, has 1,976 stores nationwide.

In 2009, the Atlanta company introduced a plan aimed at devoting 60% of an associate's time to helping customers rather than the previous focus on stocking the shelves and cleaning the store. This year, just before the busy spring season, every employee was retrained under the Customers First initiative.

Customers First includes store "power hours," when orange-vest-clad associates will drop what they're doing during high-traffic times and actively seek customers who aren't already being helped. Employees are also trained to analyze the customer's basket and cart to see what may be missing in order to complete a task, Wahlstrom said.

At the Home Depot store in Burbank, "people will come in with printouts and ask, 'How do I do this?' and now that we're free to help, I can do that," store supervisor Dave Hauer said.

He recalled how one customer came in clutching what he thought was a copy of a go-cart manual. "But it was just the cover, not the manual itself," Hauer said. He helped the customer find the go-cart's components and explained how to build it at home. "I think we made it a lot better, actually. That was a lot of fun."

The company reported Tuesday that its fiscal second-quarter profit for the period that ended July 29 was $1.53 billion, compared with $1.36 billion from the same quarter in 2011. Revenue rose to $20.57 billion, up from $20.23 a year earlier.

Home Depot's stock closed Tuesday at $54.71, up $1.89 or 3.6%. Its 52-week high is $54.98.

"I would like to thank our associates for their hard work and commitment to our customers," Chief Executive Frank Blake said during Home Depot's earnings report.

The big competing national home improvement chains are ranked each year by Home Channel News, a news and analysis outlet that tracks those retailers by annual sales. In 2011, Home Depot took the top spot, followed by Lowe's.Wal-Martand Sears — which have large home improvement departments — weren't far behind, in the third and fourth spots, respectively. Fifth was family-owned Menards.

Large chains such as Ace Hardware and True Value were not ranked by Home Channel News because those stores are individually owned.

In all, there are 4,600 Ace Hardware stores that are part of a cooperative with headquarters in Oak Brook, Ill. The stores are usually woven into neighborhoods and cater to "regular Joes," said John Venhuizen, chief operating officer for the chain whose slogan is "The helpful place."

"We've beaten the same drum for a long time," Venhuizen said. "People are our passion, and that's where we want to win."

Copyright © 2019, Los Angeles Times
EDITION: California | U.S. & World