Lowe’s is closing underperforming stores in US
As part of its company-wide overhaul, Lowe’s will be hiring roughly 2,000 software engineers over the next few years as the Mooresville retailer’s leaders work to modernize the company’s digital capabilities.
During its annual analyst and investor conference Wednesday, Lowe’s executives made it clear that a new era has begun for Lowe’s, which for years has trailed its chief rival, Home Depot. One area that Lowe’s is prioritizing is tech innovation.
Lowe’s CEO Marvin Ellison went so far as to call the website crash on Black Friday “embarrassing.” But, Ellison said, it demonstrated the kind of shoddy technology that store workers deal with constantly.
“We’re simply running Lowe’s differently,” Ellison said.
Lowe’s senior leadership is still working to determine where the 2,000 new software engineers will be based, Ellison told analysts after the event.
“These roles may be based in different existing locations across our enterprise to support recruiting top talent. You should anticipate the Charlotte area will be a beneficiary of some of these and other staff additions,” Lowe’s spokeswoman Jackie Pardini Hartzell said in an email.
Lowe’s, which in recent years has cut costs through layoffs at the store level and at its corporate offices, has undergone major changes this year. Ellison took over as CEO in July, and within days he announced a major shakeup of Lowe’s top leadership by eliminating certain high-profile positions such as the chief operating officer.
This summer, Lowe’s announced plans to close its Orchard Supply Hardware chain, which it bought in 2013, to focus on its main home-improvement business. And last month, Lowe’s said it would close nearly 50 underperforming stores across North America to focus on its most profitable stores.
When addressing mistakes made in the past by the previous management team at Lowe’s, executives didn’t mince words on Wednesday. The company in recent years moved away from popular brands in an effort to improve margins, failed to keep up in IT and lost expertise in stores, Ellison said.
“The company shifted its focus and lost its way,” he said.
Ellison also said the retailer lacked “localization,” meaning that having the same products in stores nationwide doesn’t always make sense. For instance, stores in dense urban areas don’t need to be stocked with tractors and lawnmowers because residences rarely have lawns large enough to require such equipment.
The lack of inventory localization is something that’s led to lost sales, Ellison said, but it’s something Lowe’s can easily improve by assessing the needs of each market.
Another way Lowe’s will look to ultimately boost sales is through improving its offerings to professional customers, such as contractors, who spend an average of five times as much as the typical do-it-yourself shopper.
Ellison, who was an executive at Home Depot from 2002-2014, said he remembers a time when Lowe’s did better with pros than Home Depot did. But, he said, Lowe’s stopped selling brands popular with pros, stopped investing in service and stopped paying attention to out-of-stock items pros buy.
Today only about 20-25 percent of sales come from pros, Ellison said, so the goal is to grow that to at least 50 percent.
“We think we can win this customer back over time, and that’s our goal,” Ellison said.