Home Depot is continuing several initiatives focused on professional customers as it aims to build its customer base in this market segment. The home improvement retailer has increased efforts in its tool rental program, equipped store associates with more tools to understand and help pro customers, and continued the onboarding process for its B2B website. In the company’s second quarter 2019 earnings conference call, Home Depot announced that while sales were impacted by low lumber prices, pro sales continued to outpace DIY sales. Home Depot’s definition of pro includes remodelers and builders, as well as maintenance, repair, and operating supply workers.
The retailer has placed an emphasis on its suite of pro initiatives in the past 18 months as it believes the more it engages with pro customers, the more they spend with Home Depot and the greater loyalty they harbor for the big box retailer. During the second quarter, Home Depot equipped sales associates with several tools to better understand local pro customers, according to executive vice president of merchandising Ted Decker.
“Our My View system allows our Pro sales associates to access customer data and information, so they can proactively work with our Pro customers and determine how we can better serve them,” Decker said on the earnings call.
The My View system complements pro engagements in tool rentals and delivery and mirrors Home Depot's focus on its B2B website.
Home Depot continues to invest in its tool rental business, which it believes is an important aspect of its appeal to pro customers. According to CEO and president Craig Menear, nine in ten pros rent tools and 25% of pros rent from Home Depot. Menear said the company is continuing to invest in the growth of its tool rental business. Currently, investments towards Home Depot's tool rental program are at the retailer’s physical locations rather than digitally through its B2B website. The retailer is investing to ensure it has a wide range of pro-grade products available in its physical stores and ensuring there is a “high level of engagement” between associates and pros in the tool rental program, according to Anne-Marie Campbell, executive vice president of U.S. stores. Campbell said Home Depot is also “exploring hub locations for tool rental.”
After onboarding 135,000 pros during the fourth quarter of 2018 and the first quarter of 2019, Menear said the company is on track to garner more than 1 million customers by the end of the year. During the first quarter, Home Depot added functionality to its B2B interface allowing customers to link purchases to QuickBooks and upload their purchase history. Menear said the pros who have been onboarded to the B2B website have reacted “very positively from a sales standpoint.”
During the second quarter, Menear said the company completed the retrofit of its Hagerstown, Md., facility into a parcel direct fulfillment center. The move expands the retailers one-day delivery capabilities of stock parcel goods from approximately 30% to around 50% of the population, according to Menear. In its first quarter earnings call, Mark Holifield, executive vice president of supply chain and product development, said Home Depot plans to open a flatbed delivery center in Dallas, Texas, by the end of 2019, catering directly to pro customers.
Big-ticket sales—transactions of $1,000 or greater—were up 3.7% in the second quarter and represent 20% of all U.S. sales, according to Decker. Excluding hurricane-related markets, big-ticket sales were up nearly 5%. Home Depot saw strong performances in big ticket categories such as appliances, vinyl plank flooring, and patio during the second quarter.
