Lowe’s Doubles Down on Consumer Offerings, Streamlines Supply Chain
In a bid to strengthen its consumer efforts, both for the novice DIY-er and its Pro segment, Lowe’s has launched several initiatives to improve the end experience, implementing changes across its entire ecosystem, including the supply chain.
According to the company’s Q4 2021 earnings report, Lowe’s reported net earnings of $1.2 billion for the quarter ended Jan. 28, 2022, gaining market share across DIY and Pro through its total Home strategy.
DIY Trends Holding Strong
During the earnings call, Marvin Ellison, chairman and chief executive officer of Lowe’s, stated current trends point to increased interest in home improvement.
“We're encouraged by the strengthening millennial household formation trends that will support home-buying in the coming years,” he said. “Other trends remain favorable, including baby boomers' increasing preference to age in place. And with the extension of remote work for some employees, we're expecting a permanent step-up in the repair and maintenance cycle.”
Ellison also added that 50% of the homes in the U.S. are over 40 years old and will continue to require investments for upkeep. Approximately two-thirds of Lowe's annual sales are generated from repair and maintenance activity, he said.
To support this continued growth, Lowe’s has invested in several initiatives, the newest being DIY-U by Lowe’s — a DIY ecosystem with live and on-demand home improvement skill-building.
Lowe's consumers can access three types of experiences each month: two live streams, an in-person kids workshop that teaches DIY skills, and two adult in-person workshops in all stores nationwide.
The workshops are hosted by Lowe's Red Vest store associates and allow consumers to shop and add supplies to their cart in real-time and receive live answers to project questions.
Additionally, Lowe’s recently launched same-delivery of DIY products via a partnership with Instacart.
Consumers can have about 20,000 Lowe's items across the appliances, building supplies, light fixtures, garden and outdoor essentials categories, and more, delivered from the store to their door. Same-day delivery will first be available in Boston and Charlotte, but the company plans to expand to other locations in the coming months.
"Online is a key piece of our omnichannel strategy, and the combination of Lowe's home improvement expertise and Instacart's ability to help deliver right to your door within hours offers a new, convenient way to shop," said Mike Shady, Lowe's senior vice president of online, in a statement.
Pros Segment Overtaking DIY
Lowe’s said it expects its Pro base to outpace DIY in 2022. Customer sales for Pros increased by 23% in Q4.
In early February, the company announced an updated loyalty program — MVPs Pro Rewards and Partnership Program — solely targeting its Pro consumers.
“We redesigned our loyalty program based on feedback from our Pro customers who expressed a desire for a business partnership rather than a series of stand-alone transactions,” said Ellison.
Ellison stated that Pros who leverage the company’s loyalty and credit offering spend 300% more than Pros not engaged in the programs.
Streamlined Operations Trickle Down to the End Consumer
In an effort to improve efficiency across its business cycle, and thus provide a more cohesive consumer experience, Lowe’s has invested in several back-end solutions.
[Related: How Technology Can Eliminate Supply Chain Inefficiencies and Solve the Crisis]
The company stated it has launched a new inventory management system across its stores, providing added visibility into inventory in the home bay location and product in the top stock, endcap, off-shelf and back stock room.
“This new system will eliminate the countless nonproductive hours associates have been spending looking for products,” said Joe McFarland, executive vice president of stores at Lowe’s, during the earnings call.
This combined with a new training process is expected to drive $100 million in productivity this year, according to the company.
Additionally, the company’s partnership with Instacart is a larger part of its market-based delivery model, moving away from the store delivery model, where each store acts as its own distribution and transportation center for these products.
“As we continue to expand our market-based delivery model, we're freeing up space in our 10,000-square-foot store back rooms, which on average are considerably larger than our competition,” said Ellison. “And we are testing out different options to drive both greater in-store fulfillment and expanded delivery alternatives for both Pro and DIY customers."
