Lowe’s Enriches Customer Service and Curbs Cost Pressures With Retail Tech
Lowe's Q1 2019 Results
Sales for the first quarter increased 2.2% to $17.7 billion from $17.4 billion in the first quarter of 2018, and comparable sales increased 3.5%. Comparable sales for the U.S. home improvement business increased 4.2%.
In its battle to improve the customer experience and mitigate cost pressures, Lowe’s Companies recently rolled out a new model to improve associate engagement, tens of thousands of mobile devices, and is overhauling its pricing and point of sale (POS) systems.
The home improvement retailer attributed improved sales performance in its first quarter to its commitment to improving in-stocks and customer service, along with a focus on winning Pro customers.
“Our first quarter comparable sales performance is a clear indication that the consumer is healthy and our focus on retail fundamentals is gaining traction,” commented Marvin Ellison, Lowe’s president and CEO.
However, Ellison also noted the company is taking actions to more systematically analyze and implement retail price changes to mitigate cost pressure.
“Our recent acquisition of the Retail Analytics platform from Boomerang Commerce will also assist in modernizing and digitizing our approach to pricing,” he noted.
Lowe’s will implement changes to its pricing and POS systems, and noted ineffective legacy pricing tools and processes contributed to gross margin contraction in the quarter which impacted earnings.
“With these changes we will streamline who can affect costs and pricing changes and sequence those pricing actions to prioritize those that have the greatest impact to gross margin,” Ellison explained. “We will also have better visibility for the merchants to understand the impact of our pricing actions without having to view multiple systems and numerous reports. We're establishing a more efficient process to systemically analyze, prioritize and implement pricing actions to offset cost pressure.”
Lowe’s Smart Model
Lowe’s also rolled out a new customer service model it calls the “smart model, which now guides the way the retailer hires, trains, evaluates and coaches its associates. Lowe’s trained over 280,000 associates on smart customer service in its first quarter, according to EVP, Stores, Joseph McFarland.
The program includes a comprehensive toolkit, training program and mobile devices, which are designed to provide associates with the tools they need to deliver outstanding customer service.
The retailer also rolled out around 88,000 smart mobile devices through its stores so that its associates no longer need to leave the sales floor to log into a terminal to determine the price, availability or order status of an item. The smart devices also boast functionality to process buy online pickup in-store (BOPIS) orders, which takes Lowe’s from a 12-step paper-based process to an average of two digital scans.
“The new smart device reduced tasking hours by providing associates with real-time data without ever-stepping up the sales floor,” said McFarland.
“In the first quarter 60% of our online purchases were picked up in our stores which reinforces the power of our omnichannel model,” he continued. “The role of smart devices in the systematic improvements in BOPIS represents a significant advancement in the partnership between our stores in IT, and are really terrific early examples of what we can accomplish as an organization when we are focused and aligned.”
To further improve the customer experience, Lowe’s also replaced a series of non-facing customer positions with over 6,000 assistant store managers and department supervisors in its Q1.
“These customer-facing store leadership roles are focused on providing better departmental coverage and expertise, as well as coaching our associates in delivering excellent service,” McFarland. “With the addition of department supervisors we're ensuring that we have the proper coverage for strategic areas of focus, such as paint.”
Finally, Lowe’s will continue the rollout its new customer centric labor scheduling system in its second quarter and plans to have it fully rolled out by the second half of the year. This new system replaces its current staffing system that doesn't effectively capture and predict sales and customer traffic patterns. The new system will better predict customer demand by time of day, day of week and department, allowing Lowe’s to align labor hours with peak traffic, said McFarland.
“Though we are in the beginning stages of change we are excited about the early results we're seeing and committed to the work ahead to fully capitalize on the healthy demand in our sector,” said McFarland.