Home Depot trying to repair its image

This fall, Home Depot is undertaking its own “do-it-yourself” project, seeking to shine up its image and rebuild its revered customer service of years past.

The Atlanta-based company is doing this with a new set of ads boasting permanent markdowns on the cost of 1,000 store items. Home Depot also has hired master plumbers and electricians and is searching for a new ad agency.

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Joey Ivansco/jivansco@ajc.com

Frank Bifulco, Home Depot’s new chief marketing officer, gives a tour of the Home Depot store on Cumberland Parkway. The home improvement chain has lowered prices on more than 1,000 items.

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Bob Andres/bandres@ajc.com

Marvin Ellison, Home Depot’s executive vice president of U.S. stores, on competition with Lowe’s: ‘We may not dedicate as much square footage to showrooms, but we’re better in remodel and repair.’ At left is Home Depot district manager Chris Wilson; specialty sales assistant store manager Tony Midget, who works at the Cumberland Parkway store in Vinings, is at right.

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The strategy is being played out by two new executives — Frank Bifulco, chief marketing office, and Marvin Ellison, executive vice president of U.S. stores.

They are addressing a problem, however, that is more than just image.

The iconic chain that was built on customer service has been struggling to reassert its prominence with helping do-it-yourselfers. The company’s motto since 2003 has been, “You can do it. We can help.”

But in recent years, customers have wondered what happened to the hands-on service that built Home Depot into a retail icon.

In-store service famously has declined in favor of other performance metrics, such as new store growth. Scarce have been the orange-aproned experts that could truly tell a customer how to fix a faucet.

But more recently, Home Depot has come hat in hand to Wall Street investors, acknowledging it’s losing market share in seven of 13 categories, and vowing to do better.

While Home Depot is still the top dog in the home improvement field — it has more stores than Mooresville, NC.-based rival Lowe’s and is the second largest U.S. retail chain after Wal-Mart — same-store sales have taken a hit in recent quarters.

In the second quarter, Home Depot’s sales of $21 billion reflected a 7.9 percent drop in same-store sales, compared to the same period a year ago. Third quarter earnings will be released next month.

‘In market share battle’ with Lowe’s

Still, Home Depot’s chiefs are emphatic about not trying to be Lowe’s — the chain with larger showrooms, wider aisles, calmer colors — which, in part, appeals to women.

“We know we’re in a market share battle,” said Ellison, who has headed the nearly 2,000 U.S. stores for two months. “We may not dedicate as much square footage to showrooms, but we’re better in remodel and repair.”

Home Depot is satisfied appealing to do-it-yourselfers and professional contractors.

“We believe we’re a warehouse with a wow,” added Bifulco, in his sixth month on the job. “I think there was drift in the past. My job is to put a little luster on that wow,” said the former Coca-Cola marketer.

Liz Miller, vice president of programs and operations for the CMO Council in Palo Alto, Calif., said part of it is “in their name. It’s ‘Home Depot,’ not ‘Home Fancy Showroom.’”

Still, she said it seemed for a while that Home Depot didn’t really notice the competition moving in so fast.

But Home Depot has done some things right.

Miller’s organization, the CMO Council, represents 3,500 corporate marketers. The group released a 213-page report in September that ranked Home Depot first among 25 companies for consistently communicating its brand message.

Marriott, Southwest Airlines, American Airlines, and Allstate rounded out the top five.

Miller said Home Depot didn’t stand out in a single category, but did clearly get its message — “You Can Do It, We Can Help” — broadcast through its Web site, call center, events and in-store content channels.

Ken Bernhardt, Regents professor of marketing at Georgia State’s Robinson College of Business, said the brand was built on giving people the confidence to do home improvement projects.

“The point is that people will trade off what a store looks like for help,” he said. But customer service has to be there. “Unless they add service back to equation, they’re going to have trouble.”

Hiring construction pros to work aisles

The company understands it must do more to improve. The effort is multi-faceted and includes trying to put more hands on deck, even as sales have declined and the stock has slid. The stores have implemented a “master trade” strategy — something made easier by the sluggish economy. As the professional home building and contracting market has contracted, Home Depot has hired about 3,000 plumbers and electricians to work the aisles.

Ellison also said he’s trying to make the job of sales clerks simpler.

“We’re removing reports and metrics that have taken away from driving sales,” he said. “We’re taking what associates already wanted to do and allowing them to do it. It’s my responsibility to protect these guys from any excessive tasks.”

The chain also is returning to its low-cost mission. Recently, Home Depot lowered prices on more than 1,000 items. Stores typically have around 35,000 items.

“We’ve done a great job of having lower prices, but we haven’t done a great job of telling customers about it,” said Ellison.

Bifulco emphasizes that the markdowns are “permanent, not a temporary sale.”

In stores, customers will see “new lower price” tags leaping off the shelving to draw the customer’s eye. (Home Depot calls the signs “beam talkers.”)

The price markdowns appear significant. For example, small Home Depot cardboard moving boxes were marked down from $2.25 each to 67 cents. Large ones were marked down to $1.27 from $3.25.

Bifulco said to expect markdowns on everything from “best selling paint” to insulation.

Ads, to run through the end of the year, will reinforce the message on television, radio, online and in print.

But even while Home Depot is refocusing on prices, its competition, Lowe’s, has had a “new lower price” program for four years, according to Chris Ahearn, a company spokeswoman. She said they “reinvigorated” the program with more products and new advertising a year and a half ago. They point to the items in-store with bright yellow signs.

“When I was at Coke, we had Pepsi,” said Bifulco of Lowe’s. “We want to keep them in the rear-view mirror. Nobody beats our [price] guarantee. Nobody.”