These Best-in-Class Retailers Are Tech Companies at Heart

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Successful retailers have always gone the extra mile to serve their customers. Sales associates armed with a friendly smile, a helpful tip, in-depth knowledge, and a listening ear have long won patrons over and created loyal customers.

But the fact that consumers today can order anything from their phones, from any locaytion, and in a matter of minutes has changed the competitive landscape. Home Depot (NYSE: HD), Starbucks (NASDAQ: SBUX), and Nike (NYSE: NKE) are embracing technology to improve their customer service game.

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Read on to find out how tech has become an integral part of the business for these best-in-class retailers.

Home Depot

This big box home improvement chain hasn't always believed that technology could be a competitive advantage. In 2007, the company realized it was more than 15 years behind in its information technology capabilities and made a commitment to changing that.

Today, technology is at the core of the company's strategy, called One Home Depot, which more tightly connects all facets of its business to provide a superior customer experience. The core idea: A customer should have just one view of Home Depot no matter how they shop.

This interconnected experience will require continued investments, but the company is already seeing benefits to this approach. The company grew its online sales by over $1 billion in 2017 to 6.7% of total sales. An impressive 46% of the company's online purchases and 85% of online returns involve the online shopper stopping by a conveniently located brick-and-mortar location. This ability for customers to "cross over" between a digital and physical store helped the company log impressive 7.5% same-store sales growth last quarter.

Home Depot has no plans to slow its tech investments which are keeping it steps ahead of its largest brick-and-mortar competitor, Lowes.


In 2010, Starbucks enabled what it called a "truly innovative mobile experience for customers" when it started to allow coffee lovers to get their favorite drink by paying with the Starbucks mobile app. Since then, the app has grown to account for over 30% of the entire company's tender in the U.S., an estimated $100 million per week. This amazing growth has been partially fueled by the popularity of the convenient Mobile Order and Pay feature, which allows Starbucks members to skip the line. The feature has captured 11% of the total payments in U.S. stores.

Starbuck's app usage growth is no accident. Global Chief Strategy Officer Matt Ryan calls the company's digital capabilities "foundational" to the customer experience. In Dec. 2016, Ryan explained how Starbucks would use its digital flywheel to enhance the member experience by improving ordering, payments, rewards, and personalization. The benefits the company has seen are pretty amazing with its clientele increasing their spend between 20% and 70% once they join the membership program and start using its app.

Because of its tech victories, the company is looking to further drive revenue growth by digitally connecting with the 60 million non-members that visit a Starbucks store in any given month.


Nike is utilizing technology to improve the entire delivery system for its products, from its factories, through the supply chain, and even in how customers order products. This sneaker and apparel giant sees tech as a way to reduce costs, improve speed of delivery, and improve its direct-to-consumer experience.

Nike's factories are putting into place an army of robots, and the benefits include a 30% reduction in labor and a 50% improvement in speed to manufacture. Additionally, Nike is working to implement its express lane, which connects consumer demand to a flexible factory that makes more of customers want. This combination of IT technology, plant automation, and "near shore" factories cuts the time to bring its products through the supply chain from 60 days to less that 10. Lastly, the company is using its family of apps to create buzz around its new footwear launches and allow sneakerheads to "reserve" a pair in advance. These apps -- combined with the company's loyalty programs -- drive spending to three times the rate without these apps.

Thanks to the successes the company has experienced with its tech, Nike is looking to push these capabilities even further. Chief Operating Officer Eric Sprunk said recently that the company is "digitizing" its entire supply chain.

These merchants understand that embracing technology is not just a nice to have but critical for retaining and engaging customers. Starbucks CEO Kevin Johnson explained the far-reaching impact of technology in our lives, specifically the mobile internet, which has "changed not only consumer behavior, but human behavior." The pace of technological innovation isn't slowing down, and these market-leading retailers are embracing this movement head on.

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Brian Withers owns shares of Home Depot, Nike, and Starbucks. The Motley Fool owns shares of and recommends Nike and Starbucks. The Motley Fool has the following options: short May 2018 $175 calls on Home Depot and long January 2020 $110 calls on Home Depot. The Motley Fool recommends Home Depot and Lowe's. The Motley Fool has a disclosure policy.