Home Depot spending $60M on handheld devices to aid customer service

Home Depot will make its biggest investment of 2010 in more than 10,000 portable devices to help U.S. employees stock shelves, make telephone calls and check out customers anywhere in the store.

The Atlanta-based company said the handheld gadgets will cost about $60 million.

For the past decade, employees of the world's largest home-improvement retailer have managed inventory using computers powered by motorboat batteries on rolling carts.

"If you compare us to a world-class retailer, from a technology perspective, 1991 is kind of where we are pegged," said Matt Carey, hired as Home Depot's chief information officer in 2008 from eBay. "This is the first big customer-service tool we've given our associates in a very long time."

Home Depot said the devices will help it vault past the competition, including Lowe's, which has been using handheld wireless technology in its stores since 1995.

Home Depot has trailed Lowe's in comparable-store sales for the past nine years, spurring Frank Blake to order customer-service improvements after he became chairman and CEO in 2007.

In the past two quarters, Home Depot's sales outperformed Lowe's at stores open at least a year.

Upgrading technology is part of Home Depot's broader push of employees into selling.

Workers who once counted cash at the end of the day now spend that time on the sales floor and let the banks count the money, said Chief Financial Officer Carol Tome.

Employees also prepare fewer reports on store operations, putting more back-office workers into the store to serve customers, she said.

At least five of the handheld gadgets from Motorola will be distributed to each of Home Depot's 2,000 U.S. stores this year, starting in the quarter that begins Feb. 1, Carey said.

In testing last year, the company found employees spent less time tracking down merchandise, such as galvanized nails of a certain length, he said. The devices help provide the location of the item as well as the amount in stock or availability at another store.

"With the way things are going in the economy, it's better for a retailer to invest in a customer-facing technology than a back-end technology where they may not see a rate of return as quickly," said Sahir Anand, research director for consulting firm Aberdeen Group's retail practice.

The technology combines mobile-telephone calling, walkie-talkie communications among employees and inventory management in a single device, Carey said. As a result, employees no longer need to carry phones and walkie-talkies or use the rolling computers, he said.

By clicking an icon on the screen, Home Depot workers can tell customers when an out-of-stock item will be replenished. Or employees can use the device to call other Home Depot stores and ask them to hold merchandise, said Cara Kinzey, an information-technology senior vice president at Home Depot.

"It can also be a mobile cash register," said Marvin Ellison, executive vice president of Home Depot's U.S. stores.

An attachment to the device processes credit and debit cards, allowing purchases away from the checkout registers, similar to transactions at Apple stores, said Kinzey, 43.

The handhelds will be Home Depot's biggest capital expenditure this year, said Tome.

Home Depot plans to announce its 2010 capital-spending plans Feb. 23 when it reports fourth-quarter results. The company planned to spend about $1 billion in 2009.

Lowe's device is similar to Home Depot's in helping workers track inventory and locate items on the shelf, said Maureen Rich, a Lowe's spokeswoman.

Employees can use the gadget to start customers' purchases throughout the store. Cashiers complete the transactions by typing in the shoppers' phone numbers, Rich said.