Please ensure Javascript is enabled for purposes of website accessibility

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

By Brian Withers – Updated Apr 17, 2018 at 4:32PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Integrated e-commerce capabilities, powerful mobile apps, and robots seem more at home in a tech company, but with these retailers, it’s just everyday business.

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 over patrons and created loyal customers.

But the fact that consumers today can order anything from their phones, from any location, in a matter of minutes, has changed the competitive landscape. And because of that, Home Depot (HD -1.37%), Starbucks (SBUX -0.62%), and Nike (NKE -3.41%) are embracing technology to improve their customer service games.

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.

Laptop with screen full of charts jumping off the screen and a hand with a stylus selecting one.

Image source: Getty images.

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.

Starbucks

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 December 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

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 what 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 -- reportedly 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.

Riding the wave

These merchants understand that embracing technology is not just nice to have, but is 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.

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Starbucks Corporation Stock Quote
Starbucks Corporation
SBUX
$86.57 (-0.62%) $0.54
The Home Depot, Inc. Stock Quote
The Home Depot, Inc.
HD
$278.33 (-1.37%) $-3.86
NIKE, Inc. Stock Quote
NIKE, Inc.
NKE
$95.33 (-3.41%) $-3.37

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
342%
 
S&P 500 Returns
107%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.