NRF 2021: How are Lowe’s and Wayfair defining operational excellence?
In separate virtual sessions last week at the 2021 NRF Big Show, Marvin Ellison, CEO of Lowe’s and Wayfair co-founder and CEO Niraj Shah shared perspectives on how each of the businesses’ operations have set them up for success.
Mr. Ellison described some core elements critical to a strong retail foundation as he discussed the moves he made upon joining Lowe’s to boost the home improvement chain’s fundamentals and transform its digital operations.
“When I think about operational excellence in retail I think about the analogy of building a home where it starts with a really stable and solid foundation,” he said. “If you don’t have a robust labor management system, if you don’t have a strong, stable IT infrastructure, if you don’t have an e-commerce platform that gives you agility, if you don’t have products that speak to the customers from a value, quality perspective, it’s really difficult to be effective in retail, whether its 2021 or 1921.”
Digitally-native brands face their own set of operational challenges, which Mr. Shah addressed in discussing the success of Wayfair, an e-tailer which has grown from a $1.1 billion dollar business to $14 billion in just six years.
“E-commerce is a very tough business and the reason why it’s tough is that it’s sort of like an athletic competition that really rewards the fully well balanced athlete vs. someone who has particularly strong arms or particularly strong legs,” said Mr. Shah. “What I mean by that is perhaps you’re great at merchandising but you’re not great at logistics, or perhaps you’re great at merchandising and logistics but you’re not great at technology. … Whatever you’re not great at is actually what limits your growth. … And being great at other areas doesn’t make up for it.”
Mr. Shah attributes not just Wayfair’s success as a whole, but its ability to weather the pandemic, to achieving this versatility.
“All the things that you do to try to make yourself a world class organization — it pays off because they then can handle the unknowns in addition to also being great at handling the knowns,” he said. “If you try to catch up once you fall behind it’s too late in a crisis. You don’t have time.”
DISCUSSION QUESTIONS: What do you see as the biggest impediments to operational excellence throughout retailing today? Do you agree with Niraj Shah’s that well-roundedness in different operational areas is rewarded and that the operational things retailers aren’t great at will always be limiting factors?