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By Larry Dignan  |  Posted 2003-06-16 Print this article Print

Will a Home Depot technology overhaul fend off Lowe's?

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Not all Home Depot stores are like Secaucus. An outlet in West Windsor is visibly cleaner. Decorating projects are prominently promoted. So are John Deere tractors. Associates can tap computers in certain aisles to get more information for customers. Four auto-checkout stations sit ready to take cash or credit. But this weekend afternoon, most customers opt for human cashiers

Wireless scanners and automated checkouts may not be enough to win customers over from Lowe's.

"The gamble is whether Home Depot can beat Lowe's with technology," says AMR's Rosenblum. "The question is whether this is really about technology. I'd argue it's not about technology; it's about customer service."

Home Depot is betting technology can get customers out of the store quickly and efficiently. Its NCR checkout terminals check inventory, monitor cashier idle time and track the time it takes to check out a customer.

Lowe's uses point-of-sale equipment from Ultimate Technology with largely the same functionality as Home Depot's NCR terminals. Lowe's tries to lower its technology costs by having its cashiers use terminals that run off a network based on the Red Hat distribution of the essentially free Linux operating system. Home Depot had trumpeted a big Linux initiative, but later abandoned it.

Home Depot hopes to leapfrog Lowe's with its auto-checkout systems. Home Depot says 25% to 30% of its customers are using them where installed, and plans to have about 800 stores equipped with auto-checkout by the end of the year.

Sources say Lowe's is thinking about auto-checkout systems, but it is unclear how popular such systems will become—especially if lines form when slowpokes can't scan their items faster than cashiers. Cashiers' own efforts may be speeded up by the cordless bar code scanners.

One sure bet: The battle between Home Depot and Lowe's will be fought in the streets.

"Think of it like gas stations, there's one on every corner, but people gravitate to one or the other, " says Forrester analyst Christopher M. Kelley. "The little reasons can be the deciding factor and technology may play a role. Who knows; for Home Depot, it could be auto-checkout."

1999 The company sells major appliances in test markets...Ends fiscal year with 856 stores...2000 Company names former GE Power Systems CEO RobertNardelli as chief executive...Tests initiative dubbed Service Performance improvement (SPI)...2001 Nardelli replaces top executives...Chief information officer Ron Griffin resigns... 2002 Former Delta Airlines CIO Robert DeRodes joins Home Depot...Announces data warehousing and self-checkout projects.

Business Editor
Larry formerly served as the East Coast news editor and Finance Editor at CNET News.com. Prior to that, he was editor of Ziff Davis Inter@ctive Investor, which was, according to Barron's, a Top-10 financial site in the late 1990s. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism.

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