Craig Menear, Home Depot CEO, admitted that the DIY retailer’s problems with legacy tech had affected its sales. Menear said this on November 19, while announcing the company’s third-quarter 2019 results. Home Depot reported a $2.8bn income of $27.2bn for the third quarter, a rise of 3.5% from the previous year. It also anticipated an overall sales growth of 1.8% for 2019 in comparison with the last year’s 2.3% projection. During an analyst conference call, Craig said that Home Depot’s digital strategies were on target and were delivering the anticipated benefits. However, the firm’s returns from the investment would prolong the initial expectations.
It’s a delay for one of the most prominent digital change initiatives in a trade whose money matters have been curved upside down by the growth of online commerce. Home Depot revealed a bold plan to invest $11.1bn at the end of 2017, to transform itself into a more digital-centric store. It would take three consecutive years from 2017. In 2020, they aimed to boost proceeds to $115-$120 billion from $101 billion in 2017. Since then, Home Depot has pushed frontward on several fronts with its One Home Depot digital renovation strategy.
The retail aims to create a continuous experience for clients across its digital offerings, especially in its more than 2,000 physical stores. Besides, break down core data silos to get a perfect picture of customer activity while creating a more efficient business supply chain. To accelerate its digital swing, the retailer has dedicated to hiring 1,000 new IT workforce. They include product managers, software engineers, and user-experience designers.
In approximately two years, the company has made substantial progress. Yet, the outdated tech structure is noticeably showing a strain on its efforts. The firm didn’t respond to the comment, but Menear said that undoing legacy tech has proven complex than was expected initially.
The critical area that’s has really been affected is the company’s refurbished B2B website, which aims for experts instead of casual DIYers. With the ability to create more personalized user experiences, the site helped bolster its B2B sales. However, unspecified problems with the legacy structures are delayed by extra efforts to tailor its offerings for the principal building contractors. Forrester’s digital transformation research head, Allen Bonde, confirms that it’s usual for massive transformation projects to encounter struggles. He, however, credited Home Depot for its courage to face transformation. Menear’s message failed to reassure investors leading to shares down at 5.4%.
