Home Depot’s Digitization Investments Lay Foundation for Brisk B2B Growth

Home Depot Pro’s investments to digitize its business customer relationships are paying off.

“For the Pro customer, we continue to invest in the ecosystem of capabilities, including enhanced fulfillment, more personalized online experience, as well as other business management tools to drive deeper engagement with our Pro customers, and we believe our efforts are resonating. In May, we launched new capabilities on our B2B website to enhance the interconnected shopping and quoting experience for our Pros,” Executive Vice President and Chief Financial Officer Richard McPhail said during the company’s Q2 earnings call.

Home Depot Pro, which is the firm’s wholesale operation dealing exclusively with the trade (e.g., contractors), outpaced the consumer (DIY) segment, according to executives on the call. The company is encouraged by the continued momentum from its Pros, who report healthy backlogs in the wake of pandemic surges in demand and supply chain bottlenecks.

The firm experienced big ticket strength across many Pro-heavy categories like pipe and fittings, gypsum and fasteners.

Integrating Payments and Loyalty Programs

Pros who participate in the company’s Pro Xtra loyalty program, now in its second year, are outperforming the average. The company recently linked its loyalty program to its commercial credit cards, integrating and streamlining the process.

Customers that are logged into Home Depot’s B2B experience also outperformed customers on the consumer side.

The company said that sales leveraging its digital platforms increased 12% during the quarter, driven by factors including an improved Pro site experience and more robust fulfillment capabilities that help drive online conversion.

The firm experienced record downloads, traffic and sales via its mobile app, and continues to see improved conversion rates, as ongoing enhancements within digital properties resonate with customers.

“We are very pleased with the performance of our digital assets as we delivered the highest sales dollar volume in company history. We continue to introduce new and innovative products aimed at simplifying the project, saving our Pros time and helping them take on more jobs,” said Jeff Kinnaird, executive vice president of merchandising.

Part of the firm’s digital investment went toward integrating its B2B web site with its ordering and quoting systems, so Pro salespeople can seamlessly modify orders. New interconnected capabilities remove friction for both pros and associates, allowing them to collaborate on orders, both in-store and online. More than 50% of online orders were fulfilled through stores because of the interconnected retail strategy, the firm said.

Overall, in the second quarter, Home Depot delivered the highest quarterly sales and earnings in company history. Sales totaled $43.8 billion, up 6.5% from the same period last year.

Read more: Home Depot’s Record Q2 Shows Nesting Trend Alive

Deflation and Inflation

While the company experienced the effects of macro inflation, a seldom heard word also came up on the call: deflation.

“Deflation from core commodity categories negatively impacted our average ticket growth by 14 basis points during the second quarter, driven primarily by lower lumber prices,” said Kinnaird.