Lowe's Big PlanBy Larry Dignan Print
The No. 2 home improvement retailer's systems target better store designs...and Home Depot.
One right turn, two lefts and three miles away from the Secaucus Home Depot, mothers are pushing baby strollers along airy, bright aisles at a Lowe's home improvement store in North Bergen, N.J. Space is largely organized by project, such as a kitchen remodeling. Garden aisles are protected from birds. Red buttons in every aisle summon customer service. The storewide call for help repeats every 10 seconds, often enough to become grating if there isn't a quick response.
The No. 2 home improvement retailer clearly has its sights on No. 1 Home Depot. In 1994, 13% of Lowe's stores were within 10 miles of a Home Depot. Today, that number is 72% and counting. Lowe's, which trails Home Depot in stores 875 to 1,568 through May 2, also is using technology and intelligent store planning to try to outsmart its rival. "Opportunities are plentiful for us," said CEO Robert Tillman, on an earnings call.
Lowe's doesn't disclose much about how technology fits into its strategy, but notes in financial filings its systems offer real-time inventory monitoring, labor planning, "item movement experience" and centralized inventory replenishmentmost of the items Home Depot has on its list.
Industry executives familiar with Lowe's plans say the company mines sales and customer data to select merchandise, schedule workers based on sales trends and gauge the success of promotions. Lowe's also has excelled at integrating its operations with those of its suppliers. In comparison to Home Depot, Lowe's has streamlined many business processes such as human resources, upgrading to PeopleSoft 8 late last year, about the time when Home Depot was immersed in the early stages of a rollout of the same software.
Lowe's technology tactics are often conservative. Where Home Depot tries automated checkout counters, Lowe's counters by simply opening more registers. On a red sign, Lowe's pledges that "if we see more than three people in line we will open another register." On one recent visit Lowe's was true to its word: five open registers with two people in each line.
Lowe's also has managed to keep full-time employees on the floor. Full-timers accounted for more than 80% of Lowe's employees in 2002. Nick Canter, senior vice president of operations for Lowe's Northern division, said at an investment conference in April that the company has cut turnover while boosting retention for 20 straight months.
One person familiar with Lowe's technology says the company is like many retailers, with dozens of applications that don't communicate well together. Nevertheless, Lowe's picks projects that give it the best opportunity to outwit Home Depot. The company uses data warehousing to target customers who sign up for newsletters and catalogs, aid store design and employ electronic data interchange tools to meld its operations with vendors'.
"More technology doesn't mean you're more successful unless it translates into a unique customer experience," says David Szymanski, director of retailing studies at Texas A&M.
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