Why does Lowe’s seem to have a problem turning shoppers into customers?
Lowe’s Hardware has more customers coming through the door these days, but those customers aren’t spending like the chain needs them to spend.
Lowe’s experienced a 9 percent stock slip last week after an announcement that the chain forecast a drop in margin in 2018, according to Reuters. Not only did the chain demonstrate a failure to turn its increased store traffic into increased sales, but those items that people did purchase were lower margin, big-ticket items such as lumber and washing machines. The company’s cited its investments in advertising and home delivery as cutting into margins. While Lowe’s did experience increased same-store sales this year, the growth trailed that of top home improvement chain Home Depot. And Lowe’s forecast that its same-store growth would slow.
On a conference call quoted in the Reuters article, CEO Robert Niblock referenced having made an investment in Q3 quarter to increase conversion rates and foresaw the need to make incremental investments to tackle the issue moving forward.
In Lowe’s Q3 earnings report released in November, Mr. Niblock referenced investments in messaging, integrated customer experiences and omnichannel capabilities as being traffic drivers both online and in-store.
It appears the traffic drivers may be working, and yet the question remains if the strategy can also drive conversions.
Lowe’s has gotten a lot of press for tech innovations that have come out of its Lowe’s Innovation Lab. The company’s robotic salesfloor assistant, LoweBot, was introduced in 2016 and, according to the company website, was set to be rolled out through San Jose, CA locations in 2017. The Lowe’s Holoroom was an early entrant into virtual/augmented reality-based home product visualization. The company has also piloted virtual reality for how-to demonstrations, tested an in-store navigation app and even demoed an “exosuit” to allow employees to more easily lift heavy objects.
Lowe’s has also been pursuing deals of a less high-tech nature. The retailer recently announced becoming the exclusive source of Sherwin-Williams paint products, according to the Charlotte Observer, and that it would sell Craftsman-brand tools beginning later this year.
- Lowe’s struggles as investments hit margins – Reuters
- Lowe’s Reports Third Quarter Sales and Earnings Results – Lowe’s Hardware
- Lowe’s innovates because it has to – RetailWire
- Lowe’s Innovation Labs – LoweBot
- Is the exosuit the breakthrough the wearables market has been waiting for? – RetailWire
- Challenges continue at Mooresville-based Lowe’s – Charlotte Observer
DISCUSSION QUESTIONS: Does Lowe’s failure to drive higher conversions indicate that its high-profile investments in tech aren’t all they’re cracked up to be or are other factors at work? What can Lowe’s do to turn increased store traffic into increased sales?