USA update
In-store lockers at Home Depot
Home Depot is installing in-store lockers so that customers can pick up their online orders
Home Depot is installing in-store lockers so that customers can pick up their online orders
 
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Newly installed Lowe's CEO "cleaning" house and MORSCO buys Nevada plumbing business
HNN Sources
Home Depot is installing lockers in its stores for customers to pick up items they have ordered online; Lowe's CEO is working quickly to streamline the business; MORSCO enters Nevada plumbing market; Lowe's is using virtual reality technology to get people into stores; cloud-based platform makes managing hourly staff more efficient at Ace Hardware; and home improvement companies phasing out paint strippers with toxic chemicals.
Home Depot adds convenience to online sales

Big box retailer, Home Depot is installing lockers in many of its locations to support its in-store pick-up service. The move enables the home improvement retailer to get items to online customers right away instead of waiting for their purchases to be delivered to their home.

Those who order merchandise online are directed to the rows of orange boxes, where they unlock the designated one and then leave without having to seek assistance from an employee. Spokeswoman Lana Johnston has said:
...customers' expectations with shopping are changing, and they want as many options as you can possibly give them.

As a result, Home Depot hopes to have lockers in all its brick-and-mortar stores within three years. With 46% of its online orders picked up at stores, "the lockers allow us to simplify that process by providing customers with the convenience of self-service and time savings," Ms Johnston said.

Lockers at Home Depot were first tested in early 2016 and were rolled out more widely late last year. They offer three compartment sizes that can hold more than 60% of items available through the retailer's "Buy Online, Pickup In Store" program. Items that don't fit can be picked up at the customer service desk.

Lockers are a way that chains such as Home Depot are trying to leverage their network of stores - one is situated within 10 miles (16kms) of 90% of the US population - to provide customers with their merchandise soon after it is ordered.

Given the massive size of its stores and myriad items that it makes available online but are not sold in stores, the lockers seem to make sense. Rob Haslehurst, managing director and partner of L.E.K. Consulting, believes the lockers help reduce lines at the stores' customer service desks, which had become a "pinch point." And "many consumers don't like interacting with people, and the locker gives that segment a way to get their product in an all-digital experience."

The pick up locker option also meets the consumer desire to avoid shipping charges on their online orders, according to research from Astound Commerce, which found that 57% of shoppers (in the US) hunt for free shipping offers, making "low shipping rates" too expensive for most.
Q2 performance

The big box retailer also beat expectations during the second quarter as it boosted its full-year profit and revenue forecasts. Its second-quarter profit reached USD3.51 billion, or USD3.05 per share. That a much bigger per-share profit than the USD2.84 that Wall Street was looking for, according to analysts surveyed by Zacks Investment Research.

Revenue rose to USD30.46 billion, from USD28.11 billion, also topping projections of USD29.98 billion on Wall Street.

Sales at stores open at least a year, or same-store sales, increased 8%, and 8.1% in the US.

Home Depot said that big ticket sales - now being defined as transactions over USD1,000 - represent about 20% of the chain's US sales. It had previously defined big ticket sales as transactions over USD900.

In the second quarter, transactions over USD1,000 were up 10.6% compared to the second quarter of fiscal 2017. Big ticket purchases that contributed to growth during the period included vinyl plank flooring appliances. Its Pro customers also helped drive growth.
New Lowe's CEO hits the ground running

In less than two months, Lowe's chief executive officer Marvin Ellison has decided to shut down a division of smaller stores and eliminate USD500 million in capital projects that will be returned to shareholders.

Lowe's said it would close 99 stores of its hardware and garden chain Orchard Supply by the end of the fiscal year. It also said it would seek to cut back on inventory of slow-selling product lines and reinvest in faster-moving goods.

The acquisition of Orchard Supply, with stores based mainly on the west coast of America, accelerated the company's expansion into key markets like California. But it came at a price as the chain, which Lowe's purchased out of bankruptcy for about USD205 million, was often a drag on results.

For the shutdown of the unit, Lowe's took a USD230 million charge last quarter, and it expects additional costs of as much as USD475 million in the second half of the year.

Mr Ellison said the exiting of Orchard Supply was part of a larger strategic review of the company that will including looking at its real estate holdings and assets that don't involve its retail business. Cost cutting will also be a major focus. He said:
The company has unfortunately become distracted over the past few years. We must create a true expense reduction culture here.

Lowe's same-store sales growth has usually lagged Home Depot's because it focuses more on DIY customers compared to its rival's focus on professional contractors (tradies) with their larger purchases.

The home improvement retailer's same-store sales increased 5.2% during the period that ended August 3, capitalising on the delayed demand for spring season goods but missed expectation of a 5.34% increase.

However net sales rose 7% to USD20.89 billion, beating expectations. Excluding one-time items, the company earned USD2.07 per share, topping estimates of USD2.02.
Restructure

Under Mr Ellison, who took charge in July, the company has also eliminated four senior positions including chief operating officer, chief customer officer, corporate administration executive, and chief development officer, while creating two new senior roles for stores and supply chain.

To keep Lowe's from slipping further behind Home Depot, Mr Ellison said a shake-up was necessary. In a statement, he said:
We have taken a fresh look at our organisational structure and are realigning our leadership team to improve our focus, better leverage Lowe's omni-channel capabilities and deliver increased value for our customers, associates and shareholders.

The overall purpose of the changes is to "drive operational excellence," according to the company.
Reece-owned MORSCO enters new market

US-based distributor of plumbing, waterworks and HVAC products, MORSCO announced it has entered into an agreement to purchase the assets of Desert Pipe & Supply's Las Vegas location.

Desert Pipe & Supply is a plumbing wholesaler located in Palm Desert, California and Las Vegas. The company has serviced residential and commercial plumbing and mechanical contractors for more than 30 years.

As a part of the agreement, five associates and one Desert Pipe & Supply location in Las Vegas will become a part of MORSCO, operating under the Farnsworth Wholesale brand, following a transition period. Desert Pipe & Supply's Palm Desert outpost will continue to be owned and operated by the existing Desert Pipe & Supply ownership. MORSCO CEO, Chip Hornsby, said:
MORSCO is very enthusiastic to be a part of the booming Las Vegas market. This is certainly an area of the country we've had on our radar for some time and this opportunity with Desert Pipe & Supply fits well into our overall strategic growth initiatives for 2018. As the Las Vegas economy continues to recover from the financial crisis in the late 2000s, MORSCO sees plenty of opportunity here...

Australian plumbing group, Reece recently completed its acquisition of MORSCO. First announced in May 2018, this acquisition marks Reece Group's entry into the US plumbing market through MORSCO's 170+ branches within 16 states throughout the Sun Belt region of the US.

Related:
Supplier update: Reece expands into US, after 10 year study
Lowe's attracting DIYers with reality tech

Augmented reality and virtual reality tools are being used by Lowe's to help customers visualise and "feel" a large home improvement product in the context of the customer's living space.

Josh Shabtai, director of lab productions at Lowe's Innovation Labs, said:
We look at age-old customer problems. These are problems that keep resurfacing that folks haven't solved yet. Our hypothesis is that as we move people closer to realising their visions, they'll feel more confident.

Lowe's Innovation Labs were established four years ago to delve deeper into these questions, said Mr Shabtai. Often working with startups, the company has since rolled out several pilot projects to test customers' comfort with virtual and augmented reality, including Holoroom How-To, which immerses a customer in a DIY project - such as tiling a shower - and gives them step-by-step instruction to complete the task; employee training programs that involve virtual reality; Holoroom Test Drive, a feature that uses VR to offer customers a chance to sense the feeling they are actually holding and using a power tool; and View in Your Space, a mobile app feature which lets customers visualise how a piece of furniture may fit within the physical dimensions of their own living spaces.

Of these pilots, two currently are still in market: Holoroom Test and the AR feature which went live for Android users in March.

While quick turnaround trials may suggest there are challenges getting customers to comfortably use the technology on a regular basis, Mr Shabtai said the timing is part of Lowe's approach to test new use cases, study the outcomes, and apply the lessons to future releases. He said:
We're trying to refine the experience and move on to an application that will be better and ready to scale.

Mr Shabtai said early results are showing that VR-and AR-enabled tools offer two key use cases: helping customers better navigate how they'll use tools or whether products are physically compatible with their homes; and helping employees learn more quickly to offer more personalised expertise. This will add more value to the in-store experience.
When [customers] come into a Lowe's store, they want to talk to an employee who is a real expert in the space.

According to company proprietary data, employees who are trained on machinery using VR are 76% more likely to try out a piece of machinery compared to those who were trained using conventional methods; and customers have 42% greater recall with VR tools compared to YouTube how-to videos.

He conceded that the biggest challenge standing in the way of more mainstream adoption is cost, while AR can be more quickly deployed given the ubiquity of smartphones.

Lowe's advantage is to tie the customer closer to the brand through these types of immersive efforts. Tactile experiences through virtual and augmented reality are ways legacy retailers can keep customers loyal, especially with competition from Amazon. Jim Cusson, president of retail marketing agency Theory House, said:
Amazon wins on convenience and selection, so how can retailers combat that? A lot of this has to do with the experience and brand engagement [derived from immersive tools like VR and AR].

Morningstar analyst Jaime Katz also wrote in a recent report that Lowes' business model is built off of customer service, knowledge, and innovation. Using VR and AR could help augment its reach.
Ace Hardware manages hourly staff with software

Several Ace Hardware locations have turned to workforce management software company Deputy to help manage an hourly workforce across a number of stores.

The software supports mobile clocking in and out capabilities, scheduling, meal and break compliance, task-tracking and performance management. This should free up managers and floor staff to spend time serving customers. Darrell Moseley, owner of a Washington-based Ace Hardware store, said:
I used to spend up to eight hours a week creating my staff's schedules, With Deputy's integrated timesheet and scheduling feature, this previously laborious task only takes a couple hours, leaving my time open to pay attention to other critical matters - bettering our store's performance.

Deputy is an Australian-based company that aims is to make managing employees easier. Ashik Ahmed, Deputy's CEO and founder, tells UK-based Techworld.com that Deputy is designed to reduce the stress of mundane tasks and automate team schedule management. He said:
Deputy as a product, what we do is scheduling, time and attendance, communication and tasking. These problems are universal for any hourly paid worker and Deputy solves them in a mobile-first, user-intuitive way that allows the product to get easily adopted.
The key part of what we offer is mobility. Everyone has a smartphone these days and 60% of our user base is actually on mobile.

Deputy's platform is a smartphone-based app, which is accessible by every employee to clock in and out and swaps shifts. Auto-scheduling is a new feature that is powered by artificial intelligence for workers to build their own schedules. Mr Ahmed said:
Quite a lot of businesses will be using an iPad app that we have for clock in and out, and of course we made sure it is all GDPR (General Data Protection Regulation) complaint. Because it is smartphone accessible, people can have their schedules and do everything they need to change their work lives.
For Deputy...what we want to do is get the best employees back on the floor working with the team. Everything that they have to do from an administrative perspective, they can do straight from their phone.
Home improvement firms ban toxic chemicals

Home Depot announced it will stop selling paint stripping products containing purportedly toxic substances responsible for consumer deaths. The big box retailer will phase out the use of the chemicals - methylene chloride and N-methylpyrrolidone - in paint removal products by the end of this year.

Banning the two chemicals is a way "to build upon our strategy to maintain continual improvement in health and environmental safety for products," it said in a statement.

The announcement came after aggressive lobbying by a group known as Safer Chemicals, Healthy Families, which includes more than 450 US-based organisations and businesses. At least 60 deaths are blamed on the chemicals commercial use, the group said.

Rival home improvement retailer, Lowe's was the first US retailer to agree to ban those chemicals, according to Mike Schade, a representative of Safer Chemicals.

Paint and coating giant, Sherwin-Williams also recently said it would stop using the chemicals.

The chemicals have been found to pose unacceptable health risks to the public, including cancer, harm to the nervous system and to childhood development, and death. In 2017, the US Environmental Protection Agency proposed a ban on the paint removers that contain the chemicals.

However, the agency has taken no action since Scott Pruitt became EPA administrator.
HNN Sources


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