Business

Lowe’s looks for edge with new distribution concept

Lowe’s central delivery terminal in Charlotte’s University area.
Lowe’s central delivery terminal in Charlotte’s University area. Katherine Peralta

In an unassuming warehouse off Charlotte’s Old Statesville Road, Lowe’s has been quietly ramping up hiring at its new central delivery terminal, one of two such facilities the retailer has opened to try to gain an edge in the competitive home-improvement landscape.

Think of the terminal as a back room for Lowe’s stores. It’s full of everything from appliances to deck furniture and riding lawnmowers, which are unpacked, assembled and delivered straight to customers’ homes.

Executives say the central delivery terminal cuts down on delivery times by about two-thirds, and gives shoppers more choices because the terminal can deliver items from a regional distribution center, which stocks more items than individual stores. Lowe’s opened its first such terminal in Syracuse in 2014. The company sees potential for up to 70 others across the U.S., with the next one likely being on the West Coast.

Lowe’s move comes as retailers of all types, from furniture to electronics stores, are pressing to improve delivery speeds and product assortments to lure consumers who are increasingly shopping online.

The fulfillment concept also relieves individual stores from having to field their own such delivery teams. Executives see improving process efficiency as key to cost-savings for Mooresville-based Lowe’s, the second-biggest home improvement retailer behind Home Depot.

The concept also helps make Lowe’s more competitive since it helps form better relationships with customers, said Brent Kirby, Lowe’s chief omnichannel officer.

“Our ability to say ‘yes’ is what we want to optimize. Saying ‘yes’ means fulfilling that product and that service in the most effective way for that customer,” Kirby said. “I see this as a competitive advantage over any competitor.”

Home Depot also has taken steps to speed delivery, but it’s taking a different approach. The Atlanta-based chain has opened 18 rapid deployment centers, which accept products from vendors and get them to the stores in about 24 hours, spokesman Stephen Holmes said. Home Depot also just last year finished opening the last of three 1-million square-foot direct fulfillment centers, which are for online orders and can get products to customers within two business days, Holmes added.

Lowe’s made its first delivery out of its new Charlotte facility in November. In its first few months, Lowe’s had about a dozen trucks and did about 80 deliveries a day, facility manager Ryan Pelphrey said. Now, it has 33 trucks and runs over 300 deliveries daily within a 75-mile radius. The center delivers items purchased in stores and online, and serves both household customers and contractors.

The 110,000 square-foot Charlotte facility has 170 full-time employees, and Pelphrey said the goal is to have about 250 by the end of next month. Some delivery workers have transferred from individual stores, but the company did not provide an exact count.

A driver and a rider make up the delivery team in each truck. They start their 12-hour shift around 7 a.m., right as a night shift of about eight workers is leaving.

The delivery team is trained on each product so, for example, they know to set a grill up on a customer’s deck, connect the gas, fire it up and demonstrate how it works – all in a specified 2-hour window the customer selects. They also will haul away the old appliance.

In that respect, Kirby said, the new model gives Lowe’s an edge over an online retailer, which would have a freight company drop the product off on the doorstep and leave.

“It’s hard for them to compete with that personal touch and the insight we have,” Kirby said.

Also thanks to the home-delivery training, liability claims for damage like scratched wood floors in Charlotte and Syracuse were down 40 percent compared with when stores handled deliveries themselves, Kirby said.

“There are some pretty compelling proof points of what we can do when we consolidate the operations,” Kirby said.

Katherine Peralta: 704-358-5079, @katieperalta

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