After a difficult second quarter earnings report that included a change to the yearly guidance report and the announcement that it will close it’s Orchard Supply Hardware stores, the new CEO of Lowe’s laid out an aggressive plan to build on the company’s Pro Customer base.
New CEO Marvin Ellison told reporters about 30% of all Lowe’s sales go to Pro Customers. Ellison explained that Lowe’s considers the Pro Customer to be an important part of the company’s strategy because, “they have some very simplistic expectations on what it takes to get their business, and really it starts first with service. We’ve heard oftentimes that pros deem time is money, so they want to get in and out quickly, so we’ll invest more emphasis on simple things like loading, staffing the desk, and making sure that we improve our delivery processes,” Ellison explained.
Ellison also told reporters Lowe’s plans to attract more Pro Customers by making sure it has a wide variety of products available. “They just want to have a product there, and so I discussed in my prepared comments how we are not only rationalizing inventory, we’re also investing in job lot quantities. Pros need to be able to walk in to see a depth of inventory that they can complete their jobs, and we are very inconsistent in that today.”
It also appears Lowe’s will be aggressive in making sure name-brand manufacturers have their products in Lowe’s stores, because that attracts Pro Customers. “Bill Boltz, our new EVP of Merchandising and I are already working on this—we need the brands. Pros resonate to certain brands, and so we’re working to look at our assortment in our pro building materials area and asking the question, what brand gaps do we have in the assortment that we need to attack, and that is already underway—to try to make sure that we are responding to the feedback we received on certain and specific brands that we need to add to the assortment,” Ellison added.
Ellison told reporters on the conference call that he will be working with his current suppliers to make sure they remain loyal to Lowe’s, but he also plans on meeting with new suppliers in an attempt to bring new products into the stores and lure more Pro Customers.
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What or who is the PRO Customer? Please define.
Pro customers for both Lowe’s and Home Depot are any professional contractor of any size. Some may only have a few employees, and some may have multiple job sites working at the same time. Both retailers now specifically stock products for contractors, provide special credit options that are not available to individual consumers, provide delivery options to job sites, have dedicated sales representatives for contractors,and even have private B2B websites (like lowesforpros.com) so contractors can easily find what they are looking for. Both Home Depot and Lowes report more than 30% of all of their revenue comes from contractors in a wide variety of areas, including electrical, plumbing, painters, hardwood flooring installers, and framers and drywall hangers. – S.C.