Leaner and Cleaner

The Home Depot (Atlanta) has announced plans to test smaller stores in urban areas – some as small as 50,000 square feet, roughly half the size of a typical Home Depot warehouse store. One is scheduled to open next year in Chicago, and another is planned for Brooklyn, N.Y.

While Home Depot wouldn't elaborate on the thinking behind the new, smaller approach, the retailer's main rival, Lowe's (Wilkesboro, N.C.), has been aggressively adding stores in major metropolitan areas, many in which Home Depot has a presence. Lowe's stock has outperformed Home Depot's lately. Since the beginning of this year, Lowe's shares have risen 62 percent, while Home Depot's have climbed about 7 percent.

At the same time, Home Depot has indicated plans to improve its warehouse-store shopping experience by removing congestion from aisles and freeing sales associates for more customer service. “From the beginning,” said Larry Mercer, executive vp of operations, “the cornerstone of our business has been customer service. We're going back to basics.”

The retailer says the overriding theme will be to free clerks from a broad variety of assigned tasks so they can pay more attention to customers. “Our sales associates have been dedicating 80 percent of their time to assigned tasks and only 20 percent to the customer,” said Tony Brown, president of Home Depot's Tampa-based Southern Division. “We're going to reverse that to taking care of the customer 80 percent of their time. We hope customers feel they are being attacked by our sales associates.”

Among the initiatives Home Depot plans are: creating a late shift to stock the shelves and accept deliveries after the stores close; training employees in sales techniques and customer service; and opening a centralized call center to handle most customer calls to stores.

All 103 stores in Florida and southern Alabama will be converted to the new procedures by July 1. The company plans to convert the rest of its more than 1100 stores in North America by this fall. It will mean banning forklifts from the sales floor except in emergencies during the day and keeping aisles clear of pallets waiting to be loaded onto shelves. It's the same system that supermarkets, and more recently membership warehouse clubs, have been increasingly using to keep stocking crews out of customers'path. The move to overnight stocking has also been driven by injured-customer lawsuits and concerns raised by government job safety agencies.

Many Home Depot stores in Florida as elsewhere are restricted, and in some cases forbidden, from having late-night loading and unloading outdoors. The company has also had to honor commitments to residential neighbors to hold down noise at loading docks. At a New Port Richey (Fla.) Home Depot, for instance, after-hours truck deliveries are made at the front door rather than the back.

Competitor Lowe's has been promoting the premise that its stores are just as large and well-stocked but far less jammed. Home Depot clerks are routinely asked not only to help customers in what otherwise is a self-service layout, but also to stock shelves and unload deliveries all day. They field price checks and questions phoned in from customers. Since Home Depot got into several installation businesses a decade ago, the stores also became a beehive of service call questions about Home Depot subcontractors.

In Florida, according to a St. Petersburg (Fla.) Times report, Home Depot's annual sales volume has increased 20 percent, to more than $50 million, in the past two years. On Saturday or Sunday, 20,000 to 25,000 shoppers jam a typical store. Every Monday, the day commercial contractors put their biggest strain on a Home Depot store, the staff is still trying to recover from the weekend incursion that depleted the inventory.