HomeDepot CEO’s Resignation Due To Overreliance On Tech?

Written by Evan Schuman
January 3rd, 2007

Was the inefficient technology deployment a reason for HomeDepot’s CEO resignation? An interesting Retail Systems Alert Group analysis suggests it absolutely was.

The group’s Paula Rosenblum writes that HomeDepot was relying too much of technology–and cost cuts–alone and was surprised when customers started to disappear.


4 Comments | Read HomeDepot CEO’s Resignation Due To Overreliance On Tech?

  1. Drew Crecente Says:

    I think I may have read a different article than Mr. Schuman.

    The article spoke to the issues surrounding Customer Service and the well-documented issues that Wall Street had with Mr. Nardelli’s style but didn’t indicate that investing in Technology was an either/or proposition.

    While the attention-grabbing headline and synopsis did its job (to the extent it grabbed my attention), it isn’t a true reflection of the article itself.

  2. Evan Schuman Says:

    Appreciate the feedback, but the very short blurb write-up also did not “indicate that investing in Technology was an either/or proposition.” I’m not sure where you saw that, but it wasn’t in the write-up above. That blurb was also not based solely on the Retail Systems Alert report, but with the report and an interview with the report’s key author, Paula Rosenblum. After seeing this note, I asked Paula if she felt that the blurb was a fair representation of her report and her sentiments and she said it was. Not much more I can do than that.

  3. Paula Rosenblum Says:

    Hi Drew,

    Thanks for your interest in clarity on this much discussed subject. I do think the short synopsis is a fair summary of the article on our blog.

    Specifically, I wrote: “Under his [Mr. Nardelli’s] leadership, hundreds of millions in upgrades to the company’s technology infrastructure were authorized, even as the company’s reputation for customer service continued to decline. And while the technology purchases made are impressive, there just haven’t been enough employees in the store to service the customers properly.”

    I further amplified my thoughts in RetailWire: “In a manufacturing environment, you can replace people with technology, or robots, and it actually works. Retail’s different. You have to interact with something called a customer. To do that, you need in-store payroll and people who are reasonably knowledgeable and helpful. Nardelli missed that. He spent a ton of money on technology, but forgot that he needed people as both customers and employees.”

    It’s my hope that Home Depot can return to its roots as a customer-centric retailing powerhouse. The challenge is large. Increasing a retailer’s payroll to sales ratio is rarely viewed positively by investors. Nonetheless, when the furor over severance dies down, that’s exactly what Home Depot has to do.

    Feel free to contact me any time.

    Best regards,
    Paula Rosenblum

  4. steve malmberg Says:

    This has to do with spending on technology in attempts to acheive better service. Self-service POS works well there but HD wastes manpower in using it. Why not use the regular cashiers to help a person having trouble with a self-serve function? Instead, they take people off the floor to babysit “self-serving” customers. They could also lay out the store so they wouldn’t need dedicated personnel for returned merchandise. Use regular cashiers for that too. Problems lie with all the store personnel populating the various POS instead of the POP.

    I’d also suggest they put their “Do it yourself” expertise onto self-serve interactive video screens around the store, so when a customer wants to learn about how to do a task or how to use a tool, he/she could just touch a screen and watch how it’s done, and take home an instruction sheet printout, instead of searching and waiting for a department employee that usually already has customers in tow.


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