US Insights

4 Takeaways From the Lowe's Investor Conference

Hannah Hayes

Analyst

Retail 12.19.2018 / 09:00

Lowe

These four themes stood out in terms of Lowe’s future priorities.

On Wednesday December 12th, Lowe’s held its biennial Investor and Analyst Conference. After a year of significant change in terms of leadership, financial priorities, and key initiatives, Lowe’s new leadership team announced a long-awaited, strategic plan to drive long-term growth over the next three years. Throughout the event, four major themes stood out in terms of Lowe’s future priorities:

Modernizing processes to master retail fundamentals.

At its core, Lowe’s new strategy centers around bringing systems, tools, and processes up-to-date to help align with shoppers’ changing expectations and drive productivity for associates. Digital investments will provide expanded SKU counts online, an optimized search experience, and more connections with the retailer’s service arm to help shoppers shop wherever and however they prefer.

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In stores, streamlined reporting, a single, mobile order management system, and an optimized payroll and scheduling allocation program aim to give associates more time helping shoppers, and help them spend less time focusing on process-centric tasks.

Driving efficiencies in supply chain.

As it works to evolve into a truly omnichannel operation, Lowe’s is heavily investing in its supply chain to enable faster delivery and free up time for its associates. The retailer plans to move bulky deliveries out of the majority of its stores, building out over 20 new bulk distribution centers and 90 new cross-dock delivery terminals to manage last mile delivery (along the same lines as plans from its rival Home Depot). With less large product in stores’ back rooms, space can be reallocated to smaller parcel orders for same and next day delivery and give associates more time to focus on customer service.   

Leveraging data to optimize assortment.

After citing out-of-stocks and reset issues as the source for lingering conversion problems, Lowe’s plans to use transactional data and rely on core home improvement and fast-moving SKUs to drive productivity. The retailer is rolling out merchandise execution teams in all of its stores to tailor assortment at the market and store level, optimizing end caps and off-shelf space to create more focus, and ultimately, drive sales. Operationally, Lowe’s plans to shift its inventory management system from an inventory dollar measure to an inventory turn measure, prioritizing key home improvement brands and relevant, fast moving products to drive productivity.

Building value to capture pro market share.

While Lowe’s vows to continue aligning with the needs of DIY and DIFM shoppers, the retailer is looking to pro contractors as its main opportunity to create growth. The retailer is working to build an image as a trusted pro retailer by introducing popular national brands, ensuring job lot quantities are available in stores, expanding headcount in its pro services division, and creating a clear and consistent bulk-pricing model to drive loyalty with the lucrative shopper base.

As Lowe’s works through its new strategic investments, expect the retailer to demand efficiency as well as alignment with its new initiatives. While these four themes serve as the building blocks to Lowe’s broader investment strategy, check back to Retail IQ in the New Year for our in-depth analysis and implications for aligning with Lowe’s expansive strategic overhaul.

Source: Kantar Consulting

Editor's Notes

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