A change in strategy

ATLANTA — Home Depot Inc., facing a growing challenge from rival Lowe’s Cos. Inc., is undergoing a transformation, becoming a retailer with more polish, better merchandise and a new service-oriented attitude of "do it for you."

Home Depot is spending $400 million this year alone to modernize many of its 1,643 stores, making them appear more welcoming and less like cold warehouses. And it is retraining employees and installing computers in stores to teach workers about the products they sell.

Just a few years ago, Home Depot dominated the home improvement industry. But Lowe’s sales have been growing at a faster pace.

"We found that there were customers we weren’t reaching," chief executive officer Bob Nardelli said.

A key part of the company’s overhaul is refocusing its 300,000 employees on service, once a Home Depot hallmark that some customers say has become inconsistent from store to store.

"There isn’t that extensive contractor-type knowledge that Home Depot originally built its reputation on," said Burt Flickinger, a retail consultant who has studied Home Depot shoppers. "To Nardelli’s credit, he’s realized it’s no longer a strength and needs to be addressed."

Nardelli said the change will take time but is necessary for the nation’s largest home improvement store chain if it is to grow amid increasing competition.

Some analysts say Home Depot is on the defensive due to Lowe’s growing success. With about half as many stores, Wilkesboro, N.C.-based Lowe’s reported a 33 percent increase in third-quarter profit behind a 12 percent rise in same-store sales. Home Depot reported a 22 percent increase in third-quarter profit behind a nearly 8 percent rise in same-store sales.

Home Depot employees acknowledge that the retailer needs to improve its stores and service.

"The changes going on now in our stores, if they were in place seven or eight years ago, we would be better today," said Steve Curtis, manager of an Atlanta Home Depot.

As part of the restructuring, Home Depot surveyed employees about their concerns last year, and reported that 70 percent of the written comments dealt with customer service. Many workers complained about the fact that there wasn’t enough staff assigned to help customers.

Home Depot customers interviewed recently said they pick and choose among Home Depot stores because the service is unsatisfactory at some. Lee Anderson said he bypassed his hometown Home Depot in suburban Acworth, Ga., and drove 30 miles to Curtis’ store because employees provide better service.

"If I’m shopping for a saw blade or drywall materials, I like shopping here because they know their stuff," said Anderson, who owns a drywall company.

Another shopper at the Atlanta store, Beverly Hoke, said she also bypassed the Home Depot closest to her home in suburban Decatur. "If I’m not able to find something, they’re there to help me," she said.

Besides retraining employees and using technology to teach them, the company has started a leadership program that has Home Depot recruiting former military officers and those with strong business backgrounds to manage stores. The company also has a human resource worker in each store to work with employees.

"The biggest challenge always is customer service with knowledgeable people and enough aprons on the floor at all time," said Mitch Hart, a Home Depot director. "We’re getting better at it. We’re not perfect, but I’ve seen progress."

Hart credits Nardelli for his willingness to listen to others’ ideas.

"He’s not a rah-rah type of motivator," Hart said. "He’s not a Patton that goes out and yells and screams at the rooftops, but he is out there in those stores working with the management team constantly."