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[17 comments]

Lowe's helps match customers with home improvement pros

May 6, 2014

Watch out, Angie, you and your list have some competition. Last week, Lowe's announced it was expanding its partnership with Porch.com, a site that recommends local painters, plumbers and a wide variety of home construction and repair professionals to the chain's 1,700+ stores across the U.S.

Every Lowe's will have an in-store area devoted to assisting customers find help when a pro is needed. It will also offer local subcontractors the ability to sign up for listings on the Porch.com service.

"While we have already been able to help our customers with projects like installing flooring or remodeling a kitchen, our partnership with Porch means we can now guide customers to find help for nearly any home improvement service, from routine maintenance to dream projects," said Jay Rebello, vice president new business development and corporate innovation at Lowe's, in a statement. "Homeowners trust Lowe's products and project expertise, and now that relationship can extend to the search for home improvement pros by providing a highly personal, localized experience through Porch."

The Porch.com service, which was first introduced at Lowe's locations in the Carolinas and the Seattle market, boasts more than 1.5 million professionals across the U.S. It allows users to find experts based on a wide variety of criteria, including neighborhood favorites, relevant experience, project and cost history, and more. On Porch.com, users can also see actual projects completed by companies and gain access to advice and home management tools.

While there could be some downside to Lowe's associating itself so closely with a service that could lead to a bad experience for consumers, the retailer's management feels Porch is the right service to enable the company to help its customers where and when they need it.

"A core reason for Porch's interest to us was their data-based approach," Richard Maltsbarger, who heads up business development for Lowe's, told Fortune. "They're bringing to the services marketplace a much more advanced use of actual project data, and they have project profiles of the pros that are in your local market."

FINANCIALS:     [NYSE:LOW] [ ]

Discussion Questions:

What do you see as the pros and cons of Lowe's association with Porch.com? Do you see other home improvement retailers doing something similar going forward?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How likely is Lowe's association with Porch.com to bring the DIY chain more customers?

Comments:

The future of retail will require "new models" to serve consumers who are looking for more than products on a shelf. This is especially true in DIY environments where consumers often don't have the expertise to install a sink or build a deck.

Lowe's could create a disruptive breakthrough of bringing professional services to DIY in a meaningful solution approach. And, consumers have shown that they will spend more when they buy a "finished project" versus parts.

But, Lowe's has a lot riding on their "reputation of trust and expertise." A few bad service experiences from Porch that go viral could quickly destroy that trust image and any financial gains.

Still, I have nothing but admiration for retailers like Lowe's who are willing to go outside of the box of selling products, and move toward consumer centric solution/service selling. A test is one thing, it will be very interesting to watch this unfold nationally.

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Chris Petersen, PhD, President, Integrated Marketing Solutions

I think it is the next evolution of solving customers' problems instead of simply selling materials. Customers don't want granite counter tops. They want dazzling kitchens. The combination of materials and service providers makes sense.

It's ironic that the former Lowe's slogan "Let's Build Something Together" fits this alliance better than its current slogan of "Never Stop Improving."

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Richard J. George, Ph.D., Professor of Food Marketing, Haub School of Business, Saint Joseph's University

Smart move. Risks of bad contractors are mitigated by the Porch. This is definitely a service needed by many homeowners. The traditional "source" is a book of business cards that you can peruse at the customer service counter. No guarantees of reliability here either, but really inadequate. This makes a lot of sense.

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Dan Raftery, President, Raftery Resource Network Inc.

It's a logical extension of Lowe's core business and makes sense trying to help customers identify and retain local service providers. While there could be some recommendations that go sideways, overall this should be a big plus for Lowe's.

And we would expect Home Depot and other home improvement retailers to respond in some fashion.

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Bill Davis, Director, MB&G Consulting

Looking for pros and cons in this scenario is not the way to analyze this move. This is, for the time being, a competitive edge over other DIY chains and independents, and if Lowe's locks up a majority of the best people in the markets, they can maintain that edge.

From the consumer side, this makes sense due to busier families with 2 breadwinners and less time for projects. In many cases, this partnership can drive consumers to Lowe's because they can eliminate the contractor mark up on materials.

There will inevitably be some dissatisfaction with the work done just based on the law of averages. However, this new service should more than offset that issue. Lowe's has some leverage in that contractors will try to do good work to stay on Lowe's list.

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J. Peter Deeb, Managing Partner, Deeb MacDonald & Associates, L.L.C.

The digitally forged yellow pages! I can understand why Lowe's would partner with Porch.com in the interest of providing support and referral service for those folks that are interested in the "Do it For Me" side of the equation. The challenge for the ultimate success is the quality of the various referred professionals. The Lowe's brand will be directly associated with the caliber of workmanship and professionalism of the referred experts in the eyes of the customers.

How will Lowe's and Porch.com manage this extensive pool of experts? Is this another version of Angie's List, or an attempt by Lowe's to place more value on this than there actually is to their shoppers?

This association is great for Porch.com as it certainly expands their reach and visibility. For Lowe's, it's a very quick and inexpensive way to claim that their brand is bringing more trust and value to their shoppers. I wonder if Lowe's is getting a share of the revenue that their vendors will be asked to pay to advertise/promote on the Porch.com website!?

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Adrian Weidmann, Principal, StoreStream Metrics, LLC

Many would-be do-it-yourselfers, myself included, find that many jobs are too big or difficult. Having the Lowe's imprimatur could instill confidence is what has been a hit and miss area, home improvement pros. If the contractors show up on time, do the work within the parameters of the bid at a reasonable price and leave the job sites clean, this could be a boon to Lowe's. If they don't, this could give Lowe's a black eye in an area where Lowe's has little or no control.

I found the porch.com website to be slow and lacking up-front reviews. Before hiring any contractors, I want know what my neighbors think, and I want to be able to share my opinions of their work when the job is complete. Therefore, I would be careful before selecting a contractor from porch.com.

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Max Goldberg, President, Max Goldberg & Associates

The biggest constraint for doing home improvement projects is tapping into the network of contractors for the once-in-a-while need for a trade at a good price, and with comfort that they know what they are doing. If it was convenient and easy to do, and "prescreened safe," I'd get up off the sofa from watching "This Old House" and actually do some of those projects.

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Peter J. Charness, SVP America, Global CMO, TXT Group

I've had many bad experiences with retail-recommended contractors, including that one time favorite, Home Expo. I don't see from the article that Lowe's is interested in quality workmanship, but rather quality access to workman. That may be enough to generate greater loyalty for the near term. But if the consumer experiences don't match the Lowe's promise, loyalists will find another retailer for their business.

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Joan Treistman, President, The Treistman Group LLC

We tell our clients that their customers want solutions and not products. Lowe's affiliation with Porch allows them to provide solutions without having all the issues that come with managing an internal contract workforce.

It also insulates them should a customer have a bad experience. Not only did Lowe's not recommend the contactor, but the customer selected the contractor from a third party.

One thing I didn't see is what Lowe's gets out of the deal - other than potential higher market baskets as others have pointed out. I would find it hard to believe that they are not receiving any compensation from the deal. If so, then this might provide a way for a customer to have recourse against Lowe's.

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Steve Montgomery, President, b2b Solutions, LLC

Consumers will have an expectation that the contractors have been vetted by Porch.com and/or Lowe's. So that could be a risk if not handled properly. But there is big upside for Lowe's with this business model. I expect consumers to reward them for thinking outside the big box.

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Larry Negrich, Vice President, Marketing, nGage Labs

I like this offering by Lowe's. Sure, if one is going to do a ground-up redo of the family room or kitchen, you're going to want to embark on the full blown contractor search and vetting process. But if you need to buy and replace the cabinets in the laundry room, or have the wallpaper removed in the kids' room and the walls painted, this type of recommendation should be fine and fast and easy and add a push to Lowe's home improvement sales.

In particular, folks who move into a new house or condo in an area with which they are somewhat unfamiliar and don't know a lot of other people, often have a hard time knowing who to get and trust for the smaller jobs. This should help them.

'Liatt'

The pros of associating with Porch.com are highlighted above -- by helping consumers solve any home repair problem they might have, Lowe's can differentiate themselves from the competition, which provides service only for a limited range of projects.

The risk is quality control. By associating with Porch.com. Lowe's runs the risk of "getting some on them" -- specifically getting associated with poor results and shoddy workmanship.

I like the idea -- I just question the scope of their effort -- by going too broad, they will lose control, which always has some risk.

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Mark Price, Managing Partner, M Squared Group, Inc.

I am a major proponent of this process. It is exactly what I do in the retail trade on a national level. I serve the retail trade by referring/sending vendors to handle the repair or maintenance requested. Of course, my company is much smaller with nowhere near the deep pockets of Lowe's.

I am sure Lowe's, with the array of attorneys they must have on staff, know to absolve themselves of any responsibility as a result of a problem occurrence with a vendor they recommended.

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Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

The pro (no pun intended) is obvious: it offers the ability to help customers, beyond the normal service provided, (presumably) at little cost...exactly what a company should strive to do.

The cons? As some have noted, there's always a potential liability issue (and even beyond that, a related "reputation" issue). But the biggest one of all: what happens when one of the pros suggests shopping at a place other than Lowe's??

'notcom'

Two words to describe Lowe's arrangement with Porch.com: competitive edge. Lowe's recognizes the need for retailers to differentiate by providing service, which is what customers say they want, need, and presumably will respond to. And they will fill their baskets with Lowe's products to do those DIY jobs.

Whether this particular service arrangement will work remains to be seen, but it's an impressive effort by Lowe's. Porch's "Advanced use of data" can only help.

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Naomi K. Shapiro, Strategic Market Communications, Upstream Commerce

There are definitely pros and cons of this merger in regards to how it will affect Lowe's. Since, none of us have crystal balls, we can only speculate. Depending on how strong the association and what type of process the contractors go through to be listed on Porch.com will be what affects Lowe's. At the end of the day, a percentage of Lowe's reputation is resting in the hands of Porch.com and their contractors.

Mitch Fredricks, Regional Sales Manager, Central States, Certona Inc

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