Marvin Ellison's number 1 retail fundamental: 'Be in stock'
NEW YORK — When Marvin Ellison came on as CEO at Lowe's, the company was distracted, he told a crowd of thousands at the National Retail Federation's (NRF) "Retail's Big Show" in New York City Monday.
The chain had been focused on the future, which isn't a bad thing, said Ellison, but channeling investment toward things like smart home partnerships and restoration insurance offerings distracted from the core responsibility of having the right product in the right place and in stock.
"The capital allocation was spread away from core fundamental things like having a world-class supply chain; like having modern information technology in the platform; like having modern merchandising systems and technology in the store to create seamless, simple and limited-effort jobs for the associates," he said.
Upon starting as CEO in June, Ellison immediately set a course to go back to basics. He doesn't like the word "overhaul" but prefers "transformation," and the goal of Lowe's current transformation is a return to "retail fundamentals." According to Ellison, these are:
- Be in stock.
- Have an efficient supply chain.
- Make productive use of your space.
- Offer online capabilities with easy navigation, search and checkout.
- Be multichannel so customers can shop online and in-store seamlessly.
- Provide great service and good training for the associates.
Only after these are mastered, "then you can start to have sustainable growth, both at the top line and the bottom line," said Ellison.
It's easier said than done, since home improvement retailers need to cater to three distinct customer segments with vastly different needs. The professional shopper needs selection and on-time delivery. The experienced do-it-yourself (DIY) customer needs education in-store. And what Ellison called the "do-it-for-me" buyer needs help from the moment they walk into the store until installations are complete at home.
All of these rely on different inventory, and all of them want to be served in their own way. The supply chain, explained Ellison, is a fundamental part of that service.
Lowe's supply chain transformation is already underway, and a big test is coming up. Peak season for home improvement retailers is in the spring when the weather warms and both professional contractors and DIY customers get busy.
So after just a few months on the job, the new and improved Lowe's and its executives will be put to the test. One of Ellison's first moves on the job was to shuffle executives. He hired a new CFO, CIO and executive vice presidents of merchandising, stores and supply chain.
"As a management team, we're trying to be disciplined to focus on the fundamentals and not get distracted by all the other things we could be spending time on because we have to get this stuff right first," said Ellison.
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