Home Depot getting better handle on products

By Rachel Tobin Ramos

The Atlanta Journal-Constitution

At the end of fiscal 2009, Home Depot had $10.2 billion worth of inventory on its books. But knowing where things are is a a problem that has vexed Home Depot management and customers alike.

“We carry between 35,000 and 40,000 products inside our stores and we didn’t know where they were,” Home Depot chief financial officer Carol Tome told investors at the Citi Retail Conference last week.

The company intends to change that, she added. Calling the company’s store technology “1991 vintage,” Tome said Home Depot plans to do in five years what has taken other retailers 20: transform store technology.

Home Depot plans to spend $350 million this year updating store technology to better control inventory.

The retailer is launching wireless, hand-held devices that can track stock, order out-of-stock items or look for them at other stores. The company is spending $60 million on those hand-held tools, which have been common with other retailers for more than a decade.

Atlanta-based Home Depot was founded as a warehouse retailer that stored its stock on tall shelves. But “just-in-time” inventory management and seasonal product shifts are making the company rethink how it buys, stores and tracks merchandise.

The push for better technology coincided with the hiring of former eBay chief technology officer Matt Carey in 2008.

One year into the effort, Tome said the company has made “huge progress.” She said it should enable Home Depot to sell fewer items at clearance prices and churn through inventory at a faster pace.

“The clearance level for the company is the lowest it’s been in 15 years,” Tome said, “and we had an improvement in inventory turnover in 2009 for first time as 10 years.”

The technology improvements dovetail with Home Depot’s efforts to improve how it gets products to stores. The retailer is spending $250 million on a multi-year effort to build new regional warehouses that distribute products more efficiently. The company already has built 13 warehouses and has six to go in 2010, Tome said.