Learn From Home Depot And Macy’s, But Not Office Depot

There was an interesting article about the latest earnings announcement of retailers like Home Depot, Macy’s, and Office Depot.

First of all, Home Depot and Macy’s are following a recession strategy that I call simplify, target, and align (okay, I just made up that name). Home Depot simplified by closing peripheral businesses like Expo Design Centers and cutting 7,000 of its staff. It targeted by keeping high in-stock levels and maintaining its incentive pay structure. The align step should come next; they need to get the organization to understand and embrace the strategy. And, I loved this quote from Home Depot’s CFO:

We believe if we take care of our associates, they’ll take care of our customers

This statement perfectly aligns with the 4th law of customer experience: Unengaged Employees Don’t Create Engaged Customers. But what makes it even more impressive is that it came from the CFO! Hopefully Home Depot can ignite the customer-centric spark that it once had.

Macy’s, on the other hand, simplified by consolidating its four divisions into a single organization and it’s targeting with an initiative called “My Macy’s,” in which it will tailor the merchandise in stores to target the customers in particular regions of the country. I feel compelled to say DUH! It shouldn’t have taken a recession for Macy’s (or any other retailer) to create localized merchandising strategies.

The article also discusses Office Depot’s disappointing earnings and weak same-store sales. Those results don’t surprise me. Office Depot ended up in last place out of the 25 retailers in Forrester’s 2008 Customer Experience Index and also had the largest drop in its ratings from last year.

The bottom line: Simplify, target, and align!

Written by 

I am an experience management transformist, helping organizations improve business results by engaging the hearts and minds of their customers, employees, and partners. My "job" is Head of the Qualtrics XM Institute. The Institute is still being established, but our goal is to help organizations around the world thrive by mastering Experience Management (XM). As part of this focus, I examine strategy, culture, interaction design, customer service, branding and leadership practices. And, as many people know, I love to speak about these topics in almost any forum. Prior to joining Qualtrics, I was managing partner of Temkin Group (leading CX research, advisory, and training firm), co-founder and chair of the Customer Experience Professionals Association (CXPA.org), and a VP at Forrester Research. I'm a fanatical student of business, so this blog provides an outlet for sharing insights from my ongoing educational journey. Check out my LinkedIn profile: www.linkedin.com/in/brucetemkin

5 thoughts on “Learn From Home Depot And Macy’s, But Not Office Depot”

  1. Hey Bruce – “I felt compelled to say DUH!” – What a refreshing bit of transparency! How many times do we look at the customer experience (esp. as a customer) and think, “How can this company be missing __________, and still be in business?” I had experiences at LA Fitness last week and Joe’s Sports the week before that just left me shaking my head, and wishing there was a better alternative. What are your tips to align the front line staff with customer-centric initiatives in a big box retail environment?

  2. Great Post!
    I was curious to understand how can the customer-centric initiatives extend to franchise outlets. We have three Starbucks franchise outlets near my school campus, all three suck in service. Can you throw some light on this please?

  3. Hi Joe and anishvshah: Thanks for the feedback. Every once in a while “duh” is just what you need to say. As for your questions, here are my quick thoughts…

    Front line employees, like all employees, do what is measured, incented, and celebrated (this is, of course, one of the 6 laws of customer experience). So I always start by looking at how those items in the front-line enviornment. Those items address the cultural and motivational side of things, but we also need to look at skills and tools. Do you have the right people, are they being trained and coached appropriately, and do they have adequate tools.

    I haven’t worked much with individual franchise outlets, so I’m not terribly familiar with the exact mechanisms that brands have for enforcing consistency in experiences across franchisees. But, my guess is that the franchise owners near your school are not measuring, incenting, or celebrating great customer experience.

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