In a recent Q&A with Knowledge@Emory, Marvin Ellison,The Home Depot's executive vice president of U.S. stores, discussed how the world's third largest retailer is refocusing its efforts on the consumer. Ellison, an Executive MBA graduate from Emory University's Goizueta Business School, was moved up the ranks at the home improvement giant to help improve customer service. Acknowledging The Home Depot's past mistakes, Ellison credits chairman and CEO Frank Blake, who took over in 2007, for making customer service a priority for the retailer. Ellison says a consumer-centric approach is the only way to win out in a difficult retailing environment.
Today, Ellison directs sales efforts across The Home Depot's retail divisions, overseeing some 270,000 employees at more than 1,950 stores in the U.S., Guam, Puerto Rico and the U.S. Virgin Islands. With more than 25 years of retail experience, he has served in a variety of operational roles at The Home Depot since joining the company in 2002. In his conversation with Knowledge@Emory, Ellison talks about the economy, motivating employees, and getting a handle on buying trends.
Knowledge@Emory: What are some of the customer service challenges facing The Home Depot, given the difficult economic and retail environment?
Ellison: For all retailers, the biggest challenge is to make the necessary adjustments based on the customer's buying patterns. Specific to The Home Depot and other retailers who do have large ticket or more expensive items to buy, this economy has certainly put pressure on the amount customers will spend per visit or per transaction at the store. The biggest challenge is finding a way to adjust to the customer's buying patterns and to adjust to the natural trend of people spending less.
Knowledge@Emory: Local employees must be one of the most useful resources on the shopping habits of people coming into the store. How do you get information to travel back and forth between the C-suite, middle management, and the stores? This has to be a complicated process to manage at such a large company.
Ellison: It is a complicated process. But we've put a number of process improvements in place. We've eliminated a lot of communication from the corporate office to the stores. I know this might sound contradictory. But what we've determined is that the stores are at the end of the funnel, and it can be non-productive for every department and any person within that department to have the ability to send every store manager an email at any time. To this end, we put in place a blackout period, so that the only time that people from the corporate offices can communicate with the stores is on Monday. We blacked out the rest of the week. The reason we did this was so that the stores can focus on communication from the direct supervisor. It minimizes the distractions.
We also took a look at all of the reports and metrics that the stores were receiving, consolidating it down to a smaller scorecard and putting the additional information online that could be accessed if the store manager needed it. In addition, we have a weekly internal TV broadcast on Monday morning. I'm on the broadcast along with my senior VP of operations and one of the leaders of merchandising. We give the stores their weekly operating and merchandising priorities. They also receive a 10-page-or-less document-basically a playbook-with those priorities. It might sound simple, but that's why it works. There are no competing messages they have to deal with. They know how their store is performing against their peer group.
Knowledge@Emory: What has changed at The Home Depot since you've come onboard? What are some of the ways you've trained and empowered staff in order to make changes in customer service effective?
Ellison: I have to give credit to our chairman and CEO Frank Blake for making it easy for me to motivate the stores. This is a very difficult economic environment with a lot of companies reducing staff. But we've made a commitment to keep our front line associates-those working at the stores-first and foremost. Our leadership team, including everyone above vice president, did not get any kind of merit increase this year, so we could keep our merit increases for front line associates. And, unlike many companies, we decided to continue to match employee 401Ks. We have kept the bonus structure in place for our associates in the stores. If they hit their financial targets, they receive their bonus.
We've also simplified the business. We've articulated to the stores that customer service is their number one priority. The founders created an inverted pyramid model for the business-with the CEO and chairman at the bottom and the customers and the front line associates at the top. In paraphrasing Bernie Marcus, one of the founders, If you take care of the customers and the associates, everything else takes care of itself. That model had been put away in a desk drawer somewhere, but when Frank Blake was named chairman and CEO, he pulled it out to use as our compass in decision-making.
Knowledge@Emory: Given the importance of customer service to the bottom line, could you talk about some of the challenges big box retailers face in providing superior customer service, as well as the ways The Home Depot has learned from past mistakes?
Ellison: I think it goes without saying that in a tough economy, business leaders are in a tough position to deliver results. And I can speak to The Home Depot, because I can be definitive on the mistakes we made. In the past, we did become focused on other things that we believed would give us short-term benefits. But customer service is an investment. You're not going to improve staffing on Monday and improve your financial results on Tuesday. But it's something that you have to be committed to.
There are other things, as well. I spent more than fifteen years of my career in mass merchandising at Target, and the difference between an employee working in a mass merchandising environment vs. an employee working in a home improvement/project environment is the level of knowledge. At a mass merchandiser, it's about how much things cost and where they are located. But if you're in a home improvement or project environment, you not only need to know where the wood flooring is located, but if you have a basement with a concrete floor, you'll need to know what type of flooring to put down. The project knowledge needs to be greater. The questions become more and more complex. Our environment is very challenging in that regard, but when we get it right, we have customers who come to us for life. Right now, one of the financial investments under the most pressure is the value of one's home. We're playing a role to help people maintain that value and create an environment that's positive for them and their family.