Atlanta, GA, Feb. 26--Home Depot co-founder Arthur Blank said the home improvement retailer could boost sales and earnings by balancing an efficiency drive with a commitment to great customer service.
"The success we had at Home Depot in its first 23 years was really based on focusing not on the bottom line but by focusing on customers, hearing what our associates were telling us about our business," Blank said after speaking at a leadership forum in Atlanta.
Blank, who co-founded Home Depot with Bernie Marcus, retired from the retailer in 2001 shortly after the arrival of current chairman Robert Nardelli. Blank now owns the Atlanta Falcons football team and is chairman of the Metro Atlanta Chamber of Commerce.
"If we put our associates and customers first, all good things in terms of bottom line numbers to our shareholders really come from that," Blank said.
Earlier in the week, Home Depot reported that net profit in the fourth quarter fell 3%, while sales dipped 2%. The company, which had previously warned that 2002 sales would not meet growth targets, had a 6% drop in sales at stores open at least a year, a key retail measure.
The weak sales trends have convinced many analysts that smaller rival Lowe's is winning customers as it expands to lucrative markets where Home Depot has an established presence, such as the Northeast.
Nardelli, who arrived from General Electric in 2000 with no retailing experience, spent his first year cutting costs. Now, he is boosting worker training to improve customer service and spending millions to remodel aging stores, which face more competition from newer Lowe's warehouses.
Blank said that while Nardelli is focusing on "critical" changes that Home Depot needs as competition grows, management should not be distracted by becoming more efficient at the expense of customers and Home Depot workers.
"There is a lot of opportunity to make enhancements that Bob and the team are putting in place but there has to be balance there," Blank said.
