Home Depot Focuses on Digital-Powered Inventory Management in Period of ‘Moderation’

While sales were down for home improvement giant Home Depot in the third quarter — reporting a 3% decline YoY at $37.7 billion — the company is moving forward in funding key improvement investments. 

During a period that Ted Decker, president and CEO of Home Depot, describes as “moderation,” the company is focusing on delivering a frictionless, interconnected shopping experience tied to accurate inventory management. 

“We continue to invest in…creating a frictionless interconnected shopping experience for our customers. We are pleased with the progress we are making,” said Decker during a recent call with investors. “And yet we believe there's still opportunity to reduce pain points across the shopping journey.”

These improvements address challenges across consumer communication, returns, and order management — all intrinsically tied to providing shoppers with the right products at the right time.

But what are those products?

Billy Bastek, EVP of merchandising, shined a light on some of the complexities related to category management and demand planning, as consumer shopping trends have shifted significantly. 

“We saw a continuation of a trend that we have been observing throughout the year with softness in certain big-ticket, discretionary-type purchases. Instead of engaging in larger projects, customers continue to take on smaller projects,” he said. 

Big ticket comp transactions (purchases over $1,000) were down 5.2% YoY, reported the company, and average tickets decreased 0.3%.

Demand Planning Powered By Tech

Ann-Marie Campbell, EVP of U.S. stores and international operations, emphasized the importance of in-stock and on-shelf availability (OSA), stating the company has been investing in technology like machine learning, computer vision, and mobile applications to streamline workforce processes as it relates to inventory.

“Having the right products in stock in the right quantity, and on the shelf available for purchase, is critical,” said Campbell. “Using machine learning technology and computer vision helps our associates quickly find D-power-sized products in the overhead, and [the] Sidekick [app] helps direct associates to key bays where OSA is low or outs exist.”

These tools have been deployed across all U.S. stores, she said, and while the investments are relatively new, she’s seen “meaningful improvement” to on-shelf availability and in driving productivity.

“They make it easier for associates to restock products, have a greater depth of high-velocity product, and ensure we remain in stock with more products on the shelf and available for sale,” she said, adding that this frees up associates to focus on more important tasks related to delivering an improved shopping experience. 

More Growth Strategies

In terms of knowing which categories to invest in on a store-by-store basis, Campbell said the company has been implementing its Get Stores Right (GSR) initiative, which leverages Home Depot’s proprietary space allocation model, along with field merchandising teams, to form merchandising strategies.

Other areas of focus include the company’s website and app, which received several enhancements in the third quarter to improve order tracking and search and recommendation algorithms. 

These initiatives are looking to support digital shopping growth, as sales leveraging the company’s digital platforms increased approximately 5% YoY.