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Retail

Lowe's CEO Marvin Ellison Discusses Why Internet Sales Are Exploding

Lowe's top exec discusses leadership challenges and opportunities, rapidly changing consumer preferences in home improvement, and the retailer's unprecedented digital acceleration.

RugNews.com Editors
7/6/2020
portrait of Marvin Ellison
Marvin Ellison, President and CEO of home improvement giant, Lowe's

MOORESVILLE, N.C. -- With two years under his belt as president and CEO of Lowe's, Marvin Ellison shared his goals and strategies, including the retailer's unprecedented digital acceleration, during a July 1 webinar for the NRF Retail Leadership Series. Moderated by NRF president and CEO Matthew Shay, the discussion covered a range of topics from the $72-billion home improvement company's role as an essential business during the Covid-19 pandemic, to its support for employees, small businesses and minorities during current economic times, as well as the cultural and personnel transformation Lowe's has undergone since Ellison joined the company in July, 2018.


Lowe's CEO says he plans to grow the 2,210-store retailer into an Omni-channel business.

Another transformation on the new CEO's agenda was a move to grow the 2,210-store retailer's e-commerce business -- a goal that proved prescient as Lowe's recorded an unprecedented 80 percent e-comm sales increase during the first quarter of 2020. It's no coincidence that quarter lines up with the timing of mandatory store closings due to Covid-19. 

To prove that point Ellison reported that the previous quarter's online sales were less than 10 percent. "As a matter of fact, our e-commerce growth was delutive to the core retail growth. Think about that in a modern retail environment. That's just how far behind we were."

INVESTMENT IN E-COMMERCE

"To put it in perspective, the platform that managed our e-commerce business was a decade old," Ellison said. He likened the company's e-commerce site to home computers used 10 years ago. "To say that we were behind would be an understatement, and we've taken some aggressive steps."

One example he cites is Buy-Online-Pick-Up-In-Store (BOPIS).  "Order-online-and-pickup-in-store is one of the key strategic elements of an e-commerce platform for a brick and mortar retailer.

"When I arrived here, it took 12 steps for an associate of Lowe's to pick an online order for bulkless pickup -- that's 12 manual steps! It was just the most operationally inefficient process you had ever seen in your life. 


Buy online and pick up in-store is one of the key strategic elements of Lowe's e-commerce platform.


MIGRATING TO THE CLOUD

"So fast-forward, we made a big commitment to migrate this entire decade-old platform to the Cloud.  And we will have that transformation and that re-platforming effort done by the end of July," Ellison said, noting that even Google Cloud executives were surprised by the record pace of the project.


"On a call with the CEO at Google Cloud, he basically said that of all the clients they have worked with, and with all their extensive background in Cloud technology, he has never had a customer transform such a massive site as quickly as the team has done here. That tells you we have accelerated because we know this is something we have to get better at."


GOING MOBILE


Lowe's introduced 80,000 mobile devices for associates to be able to get real time data, and to manage and pick up online orders from the aisle

"In addition to that, we rolled out over 80,000 mobile devices for our associates to be able to get real time data, and to manage and pick up online orders from the aisle -- versus from a terminal as they were doing two years ago. 

"Because of demand and a shift in consumer demand [during Covid-19], curbside became a huge request from customers," Ellison explained. What's more, the pandemic forced the company to accelerate development of planned updates to improve the customer experience.

"We had curbside on our project road map for 2021; we had lockers on our project road map for late 2021. Well, everything has been accelerated. We just updated our mobile app. Now not only can we deliver curbside, we do it in a way that we can have customers tell us they're on the way for pickup, that they have arrived, and we can be out there almost instantaneously to the customer pulling up.  

"We were able to get that developed in a matter of weeks. A year ago that would have been impossible because we didn't have the infrastructure to make that happen," he noted.

FUTURE ONLINE GROWTH

"Now with all the work with Cloud Technology and with re-platforming the site, with all the things we've done with improving search navigation and getting to one-click checkout. We've got a mobile app now that is one of the highest rated retail mobile apps in the App Store -- from what was a one and a half star rating two years ago. And we are seeing tremendous growth online.

"We will be having a lot more initiatives that we will be launching in the next weeks and months. My team recently mentioned to me that we launched almost 100 applications in one week; in the previous year we launched less than 40 for the entire year.  That gives you an idea of the speed. But we still have much to do; we are still not as nearly as good as we are going to be."


TIPS FOR THE TRADITIONAL RETAILER


Lowe's is investing in creating a state of the art customer experience and includes in-store kiosks.

"We've accelerated capital investment. We have a wonderful people working on it.  As I said to Jim Kramer [host of Mad Money], when he asked me the question, 'It takes three things for a traditional retailer to have an effective in e-commerce business. You need time, you need capital, and you need talent.

"We've had a year to work on this, so we're investing the time, we are spending the money and accelerating capital spend. And I'll put my e-commerce team, the platform and the technology leaders up against any talent in the industry. We recruited talent and they are making a huge difference.  We have a lot to do, but man, I am pleased with the progress we are making.


OMNI-CHANNEL AGILITY


Lowe's omni-channel approach is designed to be customer friendly and includes smart phone integration.


Asked by NRF's Shay if his goal was an ideal mix of e-commerce sales versus in-store, Ellison described the Lowe's approach as agnostic. "What I am challenging the team to do is to serve the customer the way they choose to be served. We want to create enough agility that if the customer wants to come in and shop the traditional way of walking a store, picking up, putting in a cart, and buy at point of sale, we want that to be a very seamless and very customer-friendly transaction.

"If the customer decides to do a bulkless transaction, come in and pick up -- we want it to be seamless and customer-friendly. If they want to use a locker; they want to be curbside; they want it delivered to their home; they want it same day, next day -- we are trying to figure out all the customer demands on how they transact with Lowe's. "


SEAMLESS, FRICTION-LESS SHOPPING


Lowe's CEO Ellison credits front line associates for improving customer-experience ratings, which increased during Covid-19.   

"And we want to create the ability to make it seamless: to take any friction points out so that the customer will be pleased with the exchange with us and want to come back and shop again."In the past, we haven't done that. If you look historically there have been a lot of transactions that have been very customer unfriendly. There have been a lot of friction points; a lot of frustration. It tends to gives the customer the indication that we are not thinking about them first. 

"So we laid out all the possible transaction and interaction points with Lowe's. And you ask yourself a simple question:   'How can we make these great customer experiences, how can we make it easy for the associate? Based on that, we are totally agnostic. 

"We want to create a seamless environment and we think that by leveraging our 2200 stores -- which are working warehouses -- we think we have a unique advantage to do that in a much different way than other retailers can. We have the physical space to do so many things in our stores that traditional retailers simply cannot do."

 To view the entire webcast, and learn about Lowe's safety protocols and corporate social responsibility during Covid-19, the company's positive year over year growth in customer service, and more, go to NRF Retail Leadership Series: Marvin Ellison, President and CEO, Lowe's

About Lowe's

Lowe's Companies, Inc. (NYSE: LOW) is a FORTUNE 50 home improvement company serving approximately 18 million customers a week in the United States and Canada. With fiscal year 2019 sales of $72.1 billion, Lowe's and its related businesses operate or service more than 2,200 home improvement and hardware stores and employ approximately 300,000 associates. Based in Mooresville, N.C., Lowe's supports the communities it serves through programs focused on creating safe, affordable housing and helping to develop the next generation of skilled trade experts. For more information, visit Lowes.com. 

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