Home Depot's Fix-It Lady

Tomé, in a Home Depot store in Atlanta, tours at least one outlet every week Erik S. Lesser/Bloomberg

Carol B. Tomé, the chief financial officer at Home Depot (HD) and a leading contender to be the retailer's next chief executive, has caught the technology bug. "I can't wait until the day when I have my credit card loaded up on my smartphone, and I don't even have to carry my wallet—just walk around with my phone," she says, gesturing toward the orange-and-beige Store No. 121, visible from her 22nd-floor conference room in Atlanta. "It's tap and go. It's going to happen. It's all ages, all generations."

It is September, and Home Depot is weeks away from unveiling a mobile app allowing consumers to order merchandise via their iPhone or iPad. "We're already there," Tomé says, visibly pleased that the home-improvement chain would beat its smaller but faster-growing rival, Lowe's, in the race to introduce such a feature.

Lowe's still hasn't introduced its iPhone app, yet Home Depot's small victory is misleading. the world's largest retailer of potting soil and two-by-fours has actually lagged in technology. Until last year, employees stocked shelves as they had for 15 years, using computers powered by motorboat batteries and rolled around stores on bulky carts. the retailer still doesn't offer customers the option to order online and pick up merchandise in stores, as Lowe's (LOW) does.

Technology was an afterthought as Home Depot for years emphasized opening new stores. when Frank Blake replaced Robert Nardelli as CEO in 2007, he shifted focus to increasing profits from existing outlets. "Inventory turns"—a measure of how well a retailer turns goods into sales—have risen for three straight quarters. now, Tomé, 54, has the challenging assignment of leading a belated tech catch-up.

Above all, the company must attract younger consumers accustomed to shopping online, often with devices they carry in a pocket or handbag. during the company's fiscal 2010, which ends Jan. 30, Tomé oversaw tech spending of $350 million, or a third of all capital expenditures. Several former top Home Depot executives say Tomé would be the logical internal choice to succeed Blake, 61, when he retires. Her chances of becoming the fifth CEO in Home Depot's 33-year existence may depend on whether she succeeds at improving the chain's in-store technology as well as boosting online transactions, which amounted to less than $1 billion, or 1.5 percent of its estimated 2010 sales of $68 billion. "The way people shop in the future—Carol is going to craft that for Home Depot," says Carl Liebert III, who left as executive vice-president for stores in 2006 to become CEO of 24 Hour Fitness Worldwide. "It certainly puts her in the driver's seat for replacing Frank when that time comes."

Home Depot's tech troubles provide some sobering lessons for other brick-and-mortar retailers as they try to capture mobile-device sales. when processing special orders for customers, Home Depot employees are now forced to use "prehistoric" technology, hurting both service and sales, Marvin Ellison, the company's executive vice-president for U.S. stores, said at a Goldman Sachs (GS) conference in New York in September. Home Depot also needs to improve its website to lure the 7 in 10 customers who first browse online, Blake said at the conference.

For more than a decade, the company neglected the tech revolution, preferring to open stores—more than 100 a year through 2005. Today there are 2,244 in all. Tomé was in the thick of the real estate binge. She still heads the corporate committee that oversaw that expansion, though in 2008 it became clear that demand for big-box home-improvement stores had reached the saturation point. now it is up to her to approve the big-ticket tech spending needed to move Home Depot online.

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