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MarketScreener Homepage  >  Equities  >  Nyse  >  The Home Depot, Inc.    HD


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Retailers See E-Commerce Investments Pay Off Big as Coronavirus Keeps Shoppers Home

08/19/2020 | 05:20pm EST

By Sara Castellanos

Retailers from Home Depot Inc. to Nestlé SA and AutoNation Inc. have accelerated their e-commerce efforts to keep up with a rush to online shopping impelled by coronavirus precautions.

Technology executives have overseen the rollout of projects aimed at making it easier to browse and buy online while minimizing contact with in-store employees, a trend that will likely continue even once the pandemic subsides.

U.S. e-commerce sales are forecast to grow 18% to $709.8 billion this year, according to a June report from market research firm eMarketer. E-commerce is expected to represent 14.5% of total retail sales this year -- a record, according to the firm. This week, retailers including Walmart Inc., Target Corp. and Lowes Cos. reported surging e-commerce sales for their most recent quarters.

At Home Depot, online sales doubled in the quarter ended Aug. 2, representing more than 14% of the approximately $38.1 billion of net sales, a spokesman for the company said Wednesday. That proportion was up from about 9% in the same period last year. Total sales growth in the quarter -- 23% -- was the company's strongest in nearly 20 years, it said.

"Online has really become the front door to stores," said Fahim Siddiqui, senior vice president of information technology at Home Depot.

In mid-March, Home Depot's tech team quickly developed a feature on the company's mobile app and website to let customers pick up items in front of the store if they didn't feel comfortable going inside. The rate at which customers were engaging with the mobile app and website has more than doubled in the year to date compared to the same period in 2019, the company said. So tech teams have had to monitor the compute capacity on infrastructure services such as Google Cloud to make sure there are no website slowdowns or interruptions, Mr. Siddiqui said.

To handle the influx of online orders, the company in May converted one of its warehouses in the Chicago area into a direct-fulfillment center to ship packages to customers' homes. The merchandising, supply chain and technology teams moved new inventory into the facility to fill online orders and converted to new IT systems to manage the warehouse. The project was completed in about three weeks, Mr. Siddiqui said.

At Nestlé, e-commerce sales soared this year for products ranging from pet food to coffee. E-commerce sales on direct-to-consumer websites such as Nestlé Purina PetCare and Nespresso grew by almost 50% in the first half of the year, amounting to 12.4% of total sales of over $45 billion, according to the company's July 30 earnings report.

"Half jokingly, we were saying from now on it's going to be like a Black Friday or a Cyber Monday every day," said Filippo Catalano, group chief information officer at Nestlé.

Mr. Catalano also oversaw efforts to support the move to remote work for customer service teams to be able to answer questions about online orders, which included ramping up virtual private network connections to allow them to securely access work accounts. Use of cloud services also increased to enable those employees to communicate with customers.

Gartner Inc. has seen an "incredible surge" in interest in digital commerce capabilities from IT executives at companies across many sectors, said Jason Daigler, vice president and digital commerce analyst at the tech research firm.

Shoppers have chosen to experiment with new home-delivery methods and purchases from online-only brands during the past few months, which is forcing businesses to adapt to compete, Mr. Daigler said.

Companies that have typically relied on in-person sales visits to sell complex products, such as building materials, are investing heavily in digital tools that allow customers to configure a product, get a price and execute a transaction online, he said.

Manufacturers that typically sell through bricks-and-mortar retailers, some of which closed then maybe reopened in distancing mode, are now setting up websites to sell directly to customers, Mr. Daigler said.

The pandemic has accelerated a shift to digital engagement in customers at AutoNation, said Mike Jackson, chief executive of the automotive retailer in a July 23 earnings call. The company has sped up several digital projects over the past few months to adapt to the changes in customer behavior.

One project, called Store-to-Door, lets customers find and purchase cars online and have the vehicle delivered to their home if they don't feel comfortable going into the dealership. The project had been expected to roll out next year; instead, it became available nationwide in April.

The company also revamped its website months ahead of schedule to make it easier for customers to get a quote on their used cars by answering a few questions, said Marc Cannon, chief customer experience officer at AutoNation, who oversees IT.

"When we saw what was happening in March, we said we have to accelerate this and put all hands on deck because the expectations of people are going to change, so how are we changing?" he said. "We jumped on it quickly."

"We're in a new place," he added. "Digital is not going to go away."

Write to Sara Castellanos at sara.castellanos@wsj.com


Stocks mentioned in the article
ChangeLast1st jan.
ALPHABET INC. 0.45% 1892.56 Delayed Quote.7.98%
AUTONATION, INC. -0.65% 76.69 Delayed Quote.9.89%
GARTNER INC -0.59% 160.41 Delayed Quote.0.14%
NESTLÉ S.A. 0.66% 101.02 Delayed Quote.-3.11%
TARGET CORPORATION 0.33% 191.91 Delayed Quote.8.71%
THE HOME DEPOT, INC. 1.77% 284 Delayed Quote.6.92%
WALMART INC. 1.02% 146.33 Delayed Quote.1.51%
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More news
Financials (USD)
Sales 2021 130 B - -
Net income 2021 12 753 M - -
Net Debt 2021 27 357 M - -
P/E ratio 2021 24,0x
Yield 2021 2,12%
Capitalization 306 B 306 B -
EV / Sales 2021 2,56x
EV / Sales 2022 2,56x
Nbr of Employees 415 700
Free-Float 60,1%
Duration : Period :
The Home Depot, Inc. Technical Analysis Chart | HD | US4370761029 | MarketScreener
Technical analysis trends THE HOME DEPOT, INC.
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 33
Average target price 306,54 $
Last Close Price 284,00 $
Spread / Highest target 25,0%
Spread / Average Target 7,94%
Spread / Lowest Target -26,1%
EPS Revisions
Managers and Directors
Craig A. Menear Chairman & Chief Executive Officer
Edward P. Decker President & Chief Operating Officer
Richard V. McPhail Chief Financial Officer & Executive Vice President
Matthew A. Carey Chief Information Officer & Executive VP
Paul Antony Senior Vice President-Technology
Sector and Competitors
1st jan.Capitalization (M$)
THE HOME DEPOT, INC.6.92%305 755
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