Pop quiz, people. A customer walks into your store. She has her smartphone out, web browsing on, price-comparison apps and a whole world of online competitors ready and waiting. What do you do? What do you do?

Home Depot has decided to jump into the personal computing arms race with customers by supplying their employees with 10,000 handheld devices, which will be rolled out initially as 5 devices to each store. The devices, according to RetailWire (below), will check inventory availability both in-store and across the chain, have access to incoming inventory not yet at the store, and the ability to contact other employees both in the store and across the chain, potentially to reserve inventory a customer is looking for. With the addition of a payment capture attachment, a customer could also potentially pay for their purchases in the aisle, a la Apple Stores.

I feel for any CIO facing this kind of decision — it’s not as easy as it seems. When you cast it in the light of trying to keep up with customers, it becomes a question of ante: what are you willing to do as a retailer to stay competitive, given how consumers are using technology to reshape or enhance their shopping experiences? Ah, if only it were that simple.

The problem with handhelds is that they are infrastructure. On their own, they do not provide value. It’s only through the addition of applications that they deliver something interesting. As a retailer, you have to find the right combination of applications that justify investing in the infrastructure, and yet are also not so complicated that they add risk to the implementation. Home Depot has opted for inventory management and employee communication, but as you’ll see from the comments below, that’s either too little, the wrong focus, or overall the wrong priority. Wrestling agreement out of the organization as to where to start can often be one of the biggest stumbling blocks to in-store tech investments — right after the big initial price tag.

There are supporters too — voices below that are happy to see Home Depot invest in anything that could potentially help the customer experience in stores. But even these voices miss a crucial point: once these devices are in stores, what next? The hurdle has been passed — the infrastructure is there. Now the only question is, what else can you do with it? The answer is — lots! If you play your cards right. I can promise one thing: customers are already way ahead of you.

Read on for the RetailWire discussion…

Each business morning on RetailWire.com, retailing execs get plugged in to the latest industry news and issues with key insights from a BrainTrust of retail industry experts. Here are excerpts from one of these unique RetailWire online Discussions, along with results from the RetailWire Instant Poll.

RetailWire Discussion: Home Depot Invests $60 Million in Handheld Devices

Tom RyanManaging Editor, RetailWire

What follows is an excerpt from one of RetailWire’s recent online discussions featuring commentary from its BrainTrust panel of retail industry experts.

Home Depot Inc. will hand over 10,000 portable devices to its store associates in 2010 to help them stock shelves, locate inventory, make telephone calls and check out customers throughout the store.

The $60 million investment will be Home Depot’s biggest capital expenditure this year.

“If you compare us to a world-class retailer, from a technology perspective, 1991 is kind of where we are pegged, ” Matt Carey, Home Depot’s chief information officer, told Bloomberg News. “This is the first big customer-service tool we’ve given our associates in a very long time. “

The technology includes mobile-telephone calling, walkie-talkie communications among employees, and inventory management in a single device, Mr. Carey said.

Previously, Home Depot managed inventory by using computers powered by motorboat batteries on rolling carts. In testing the devices last year, Home Depot found that employees spent less time finding products within a store and researching the amount in stock or availability at another store. By clicking an icon on the screen, Home Depot workers can tell customers when an out-of-stock item will be replenished. Or employees can use the device to call other Home Depot stores and ask them to hold merchandise. An attachment to the device processes credit and debit cards, allowing purchases to be made away from the checkout registers, similar to transactions at Apple’s stores.

At least five of the handheld gadgets will be distributed to each of Home Depot’s 2,000 U.S. stores this year, starting in the first quarter.

Home Depot’s handhelds are similar to those used at Lowe’s in enabling associates to track inventory and locate items. Lowe’s employees can start customers’ purchases throughout the store, with cashiers completing the transactions by typing in the shoppers’ phone numbers.

Discussion Questions:

What features on handheld devices will do the most to improve the customer experience? What other retail channels outside DIY could benefit most from such devices and in what ways?

RetailWire BrainTrust Comments:

Richard Seesel
Principal, Retailing In Focus LLC

Apple stores have been using handheld technology for years, and the surprise is that other retailers (from DIY to discounters) have been so slow to react. This is a great technology for tracking inventory and especially for getting customers out the door more quickly (better than, say, self-checkout). It’s easy to see other, sales-driving uses for handheld technology — such as issuing instant coupons to customers using a database that can pull up their purchase preferences from their phone numbers. $60 million seems like a modest investment in this kind of technology.

Charlie MoroPresident, CFS Consulting Group, LLC

I am sure there are benefits to this technology upgrade that I am not giving credit to but, as it pertains to customer service, I see other issues that should/could be addressed.

If the strategy for self-checkout is a priority, why not upgrade the amount of terminals along with scanning wands that can more easily check out larger items that do not fit on the scanner while you wait for the lead cashier. Doesn’t checking me out in the back of the store remove me from the impulse shopping experience you have spent time creating at the front of the store?

Why do associates need a phone? Do we envision conversations we will need to interrupt to get service? Why not just walk us to where we need to find the item we are looking for?

The advantage of a smaller hardware store in this big box environment is the conversation of how I best do a repair or the item I need to complete a job, maybe interactive kiosks in every department could be a technological advantage, and a jump from the 1991 benchmark.

Doron LevyPresident, Captus Business Consulting

The biggest challenge for associates on the sales is finding stock availability either at that location or others. As long as these handhelds are tied into the chain’s network, I can see them making the associates’ job much easier. Now that they have the tech, all they have to do is actually train their associates to serve customers and all will be well at HD.

Susan RiderPresident, Rider and Associates, LLC

Putting technology at associates’ fingertips is a great thing but I think focusing on the features is a mistake. The main problem at their stores is training. The training should be the focus. All the tools in the world are useless unless they train and educate the associates. This isn’t a one-time thing, with store turnover; this is an ongoing effort with discipline and a budget. Many times, companies spend millions of dollars on technology and two years later all those sexy features are not being used because no one invested in training.

Joel WaradyPrincipal, Joel Warady Group

This is a great start for Home Depot but there is so much more that they can do with handheld if they really want to be a customer-centric retailer.

• Why not have video access on the handhelds? When a customer asks them how a certain product should be used, or how a large piece of home repair should be installed, they could call up the video, right there on the handheld, and show the customer what is involved.
• As a follow up on the video, every inventory item — especially those items that require installation — should be cross-referenced in a database stating what tools will be needed for a proper install. Then, when the customer asks where an item is in the store, and the Home Depot employees pull it up on the locator, they can also recommend to the customer that they will need the following tools for installation. This could lead to a potential upsell.
• The employee should have the ability to capture both the name and the email address of the customer in exchange for a special recognition. Maybe an additional discount, maybe a free gift every 6 months, etc. Once that name is captured in the handheld, it should be downloaded into a central database that is available at all stores. Then, when the customer shops at another store, and checks out on the fly within the aisles, the sales clerk will know how often they shop, what stores they shop at, etc. It allows for better appreciation, and better dialogue with the customer.

There are a number of additional initiatives that should be considered with the handheld rollout. The key is to provide as much information to the customer — and the employee — while on the floor. It will lead to a significantly more pleasant and more profitable shopping experience.

Ben SprecherFounder and President, Incentive Targeting, Inc.

I think there’s a great opportunity to use handheld devices to increase customer service in the store. I can’t remember the last time I went to a hardware store where I didn’t ask an employee for some kind of help. The simple stuff ( “where can I find extension chords? “) should be easy, but often my questions are more intricate ( “what type of nails should I use to re-attach my aluminum gutter? “). And often, that type of question leads to a shrug, or a 10-minute wait for the one guy in the store who knows something about gutter nails.

Carol SpieckermanPresident, newmarketbuilders

Wise investment, Home Depot! To me, the most important feature is one of the most basic: having the ability to determine the amount and location of back stock. Twice in the past month, store associates have told me that they know they have more of an item but that they have no idea where to find it! Second to that would be knowing when additional stock will be available and/or quickly determining if another location has the stock and if so, presenting the option to ship it directly to the customer or to the store.

James TenserPrincipal, VSN Strategies

I’m a bit skeptical about this huge investment to support somewhat pedestrian capabilities. Helping shoppers locate desired items is good service to be sure, but what does manage inventory mean in the context of these $600 devices? And in-aisle cashiering is a nice-to-do, but how often is this likely to be of interest to the HD shopper?

The real customer service payback from equipping HD employees with mobile devices would come from maintaining optimal selling conditions at the shelf, especially item availability (aka in-stock). If these devices support a feedback process that supports store staff detecting and correcting shelf conditions, then we’re talking innovation.

Handhelds and their associated network may also support some workforce and store execution management functions — pushing tasks out to the right people at the right time. Ideally this would include the myriad supplier reps who perform merchandising tasks inside HD stores.

With all this potential, deploying just five devices per store seems woefully inadequate, which implies to me that the unit cost is a huge limitation. Wouldn’t it be wiser to use $99 iPhones with cheap apps and reach five times the users for the same capex?

Read the entire RetailWire discussion: http://www.retailwire.com/discussions/sngl_discussion.cfm/14260

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