Why does Lowe’s seem to have a problem turning shoppers into customers?

Discussion
Source: Lowe's
Mar 09, 2018
Matthew Stern

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.

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?

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Braintrust
"You can’t just have people — or robots — to answer questions, you need to help the shopper move from considering to buying. "
"Lowe’s is having trouble converting because prospects are able to assess value in-situ. This translates into Lowe’s becoming a great showroom..."
"I think Lowe’s efforts in tech have clearly helped to drive traffic ... But the job isn’t done with getting people through the doors."

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22 Comments on "Why does Lowe’s seem to have a problem turning shoppers into customers?"


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Steve Montgomery
BrainTrust

Lowe’s investment in tech would be better invested on its people at store level. This includes increasing the number of people, providing them with better knowledge of the products carried and customer service training.

My recent shopping experiences with both Lowe’s and Home Depot indicate Home Depot is getting back to it roots with a knowledgeable staff who are wiling to take the time to help you find the items you were searching for. They are able to answer the questions customers pose. That was not true at Lowe’s. Admittedly the research sample is small if based on a limited number of shopping trips in one market, so the validity is questionable.

Ken Lonyai
BrainTrust

It’s hard to take an outsider’s view and really analyze the situation, still:

I’m all for high tech, but only if it’s meeting real customer needs. Holoroom is nice, but an expensive rollout to the entire chain or even regionally. Is there enough need? Probably not.

Craftsman tools, once the key male draw at Sears, is on its way to being a commodity. It will be like Stanley tools which is essentially a must-have for any hardware merchant, adding some incremental revenue, but not a gamechanger. And the Craftsman warranty means staff being bogged down somewhat handling warranty replacements.

LoweBot might have usefulness to customers but it’s not a conversion tool.

The sector is doing well right now, so it’s not an industry thing. If I were calling the shots, I’d really be getting to know customers and doing a competitive analysis, to get the right focus.

Lyle Bunn (Ph.D. Hon)
Guest

Excellent points, Ken. Throwing tech at a problem for its own sake is fortunately becoming a practice of the past as proven approaches in problem definition, options analysis, trial and optimization are driven by analytics. Merchandising approaches involve a lot of different players, each with their own constraints and options. Digital experience that focuses on traffic generation and conversion will serve brands, retailers and consumers well when intention is focused on outcome.

Charles Dimov
BrainTrust

Sales = Traffic x Conversion x Average Sales Value (From “Conversion” by Mark Ryski). It seems that Lowe’s has done a great job with driving in-store traffic. An excellent move and use of omnichannel retail tactics and strategy. However, they need to focus on conversion and driving up the average sales value. The tech has done its job. Now comes the investment in sales process, best practices among their staff, upsell discussion and locking in a customer. Frankly, having more associates in the store will help this dramatically — as the in-person experience is a major frustration expressed by many Lowe’s customers.

Bob Phibbs
BrainTrust

Because like most retailers, Lowe’s has so vilified selling that they expect shoppers to convert on their own or with a robot or silly hologram. Retail is a human business. I see many Lowe’s employees on my site looking at my sales articles. But you can’t just read, you have to act.

Conversion takes relentless training on how to take a complete stranger who distrusts you to build enough rapport and become a trusted advisor so you can suggest and close the sale. You can’t just have people — or robots — to answer questions, you need to help the shopper move from considering to buying. That takes a relentless focus on people, not gadgets or price, and not simply adding brands or technology. Fix the training, you fix conversion.

Matt Henderson
Guest

I applaud Lowe’s efforts to stay relevant in the digital world of retail, and much of their focus has been on customer convenience. However, the home improvement and DIY market is best served with a personal touch. DIY shoppers often need advice and guidance when it comes their projects. None of the big box home improvement stores have adequate staff on the sales floor, and only a few of the them are knowledgeable about construction.

Kim Garretson
Guest

Purely anecdotally, in Palm Springs Home Depot and Lowe’s are directly across the road from each other. Looking at store layouts and merchandising, Home Depot feels a lot more full of product, especially in all of the temporary pop-ups for impulse merchandise or special offers. It also concentrates smaller merchandise and smaller seasonal items at the front of the store, moving larger patio furniture more to the side and back of the front. Walk into the Lowe’s and it feels different. More wide open up front with less merchandise and a big space for outdoor furniture, which is an infrequent purchase at best. Home Depot has a better pulse on the customer I believe.

Tom Dougherty
BrainTrust

A myopic view. Conversion of lookers to buyers is not as simple as having an “app for that.” The days of the first iPhone are ancient history.

Lowe’s is having trouble converting because prospects are able to assess value in-situ. This translates into Lowe’s becoming a great showroom for other retail venues.

The investment in technology advancements is mandatory. It is the cost of doing business.

As a brand guy, I have a simple question to ask and, not surprisingly, it is about brand. Who does the customer believe they ARE when shopping at Lowe’s? It is the answer to that fundamental brand question that inspires loyalty and margins.

This article started with a great statement of THE problem — Lowe’s Hardware. That is the problem. It’s a HARDWARE store and has done little else to differentiate its shoppers from OTHER shoppers.

Doug Garnett
BrainTrust

I agree. But I will offer a correction. Lowe’s is “Lowe’s Home Improvement” not “Hardware.” Maybe that error reflects a perception in the market — but I don’t think so. Lowe’s IS ahead of Home Depot in the perception of appealing to women and carrying decorative as well as hardware items.

Doesn’t mean I don’t think they have issues around their brand — they do. But it’s not that they’re stuck in “hardware.” From what I’ve seen, their agencies continue to wander around in a wilderness of cleverness without focus.

Ben Ball
BrainTrust

I’m a bit surprised by the comment that most of the items people did buy were low-margin, big-ticket items like lumber and washing machines. It seems counter-intuitive that more traffic and lower dollars are driven by high-ring items. Unless everyone else is buying nothing? It seems more likely to me that Lowe’s efforts to drive traffic are bringing shoppers in who aren’t typical DIYers. Likely their purchases tend more toward low-ticket items like cleaning supplies and household needs. That would be a logical result of Lowe’s strategy, much the same as adding food and beverage changed the nature of drug store front-end sales and dollar store mix. Both hurt margins and lowered average ring.

David Katz
BrainTrust

SOS: “Shiny Object Syndrome” — A LoweBot and HoloRoom prove that Lowe’s can build tech. This doesn’t mean they should build it … It’s all about the three Ds of consumer experience: discovery, differentiation and delight. (Discounts seem to work, too … ).

Take a look at Target. Brian Cornell stated, “just because we can build the store of the future, doesn’t mean we should build it.” Instead, the company focused on local, smaller, easier-to-shop stores with lots of value-built private branded product.

David Weinand
BrainTrust

Technology is great as long as it serves the needs of the business and a big part of that is increased conversions. I agree that more associates are necessary in the vastness of these types of stores but if Lowe’s can leverage technology to better train them and enable them to have more answers at their fingertips, conversions will improve.

Cate Trotter
BrainTrust

I think Lowe’s efforts in tech have clearly helped to drive traffic (whether this is down to the actual tech or just the buzz about it is another question), among other things. But the job isn’t done with getting people through the doors. You can’t assume that the numbers are going to convert without some help. This is where retailers really need to be thinking about their in-store environment, and most importantly their staff. People are still the face of businesses like Lowe’s and companies should be leveraging them to work together with attention-grabbing tech.

Daniel Reynolds
Guest
1 year 2 months ago

The tech is nice, but at the end of the day people are still the biggest driver of conversion.

Glenn Cantor
Guest
1 year 2 months ago

Both Lowe’s and Home Depot are about the same distance from my home, in opposite directions. It is my perception, based on past shopping trips, that Lowe’s never has the item that I need, while Home Depot has it. That means that at Lowe’s I am apt to turn around and leave, while at Home Depot, I am likely to buy other stuff.

Camille P. Schuster, PhD.
BrainTrust

Having lots of choices is great. Having technology to demonstrate features is great. Having technology provide information is great. But who is there to help the consumer sift through the information and choices to determine what choice is good for them? Technology and product selection by themselves do not translate into sales.

Cynthia Holcomb
BrainTrust

As hardware stores like Lowe’s and Home Depot morph into destination “fashion/style” home product retailers, selling everything from lumber to light fixtures to the latest in appliances, real humans with category knowledge who care about the customer need to be on the floor. Technology for technology’s sake is more about PR. Let’s face it, in the middle of a remodel or search for a new stove because the stove at home broke down, how many humans want to spend the time to talk to a robot? Home Depot has stepped up the shopping experience with knowledgeable, customer service-trained staff actively seeking out customers to offer assistance. Lowe’s website look and feel is stylish, likely driving increased store traffic, raising customer expectations of a good in-store experience worth the drive time. Instead they find a self-serve model when they arrive.

Brandon Rael
BrainTrust

The sales, omnichannel and supply chain processes seem to be well established by Lowe’s. However, at this stage of the game its the relationship selling that will be the key differentiator in converting customers from showrooming to actual shopping.

Lowe’s has made strides and investments in their sales force. The next natural progression will be for Lowe’s to relentlessly invest in the sales associates’ training, development and continuous improvement. That way, the sales associates essentially evolve into brand ambassadors and advocate for the brand and the product categories they represent.

Essentially, it will be to Lowe’s advantage to find creative and interesting ways to create outstanding customer service, and drive the conversion rates, whether it’s ultimately online or in the brick-and-mortar locations.

Doug Garnett
BrainTrust

At this point, the tech isn’t in the store in any major way. So the tech is not directly causing this. My sense is two things:

1. The tech IS a distraction. Sure looks like too much executive time has been spent, and far too much PR effort put into, a technology PR program. Most likely, to appeal to investors — and that effort has no impact on shoppers.

2. In the store, Lowe’s has made significant compromises in personnel and merchandising — the two items that will increase or decrease conversion.

Interesting to see this, as well, in that I’ve worked many store programs around advertising innovative products. By advertising innovative products, store traffic increases AND conversion increases (whether they buy those innovations or not).

Why? A robust mix of staples and innovation deliver the experience that shoppers want (not any of these crazy ideas to make store into c-grade amusement parks).

Harley Feldman
BrainTrust

Investments in technology must solve a problem and/or benefit the consumer. It sounds like Lowe’s has been investing in technology for technology’s sake. As the article stated, Home Depot has focused on using technology to deliver better service in the stores which raises conversion rates. Lowe’s needs to focus on investing in technology in areas where the in-store consumer gets a direct benefit.

gordon arnold
Guest

Lowe’s is a discount brand retailer. Quality associates, supervisors, and managers cost more money than they are willing to pay. So they invested in selling tools that prospects can utilize to select for their priorities and needs. After the decision is made, prospects use Lowe’s free WiFi to purchase cheaper online or down the road. The only people fooled in this market plan are the executives that dreamed it up and relentlessly stand by it.

Craig Sundstrom
Guest

Let’s see: a lot of people are coming to “shop” but not “to “buy,” and when they do buy it’s bulky, low margin items … this doctor diagnoses “showroomingitis.”

The article doesn’t get into comparisons, but I have to wonder if this isn’t the same problem facing most DIYers (if not in fact most retailers).

My own observation is that Lowe’s seems to offer a superior experience to Home Depot, but it simply doesn’t have enough stores to compete better … “seem to” being the key phrase here, since they don’t have one near enough to me to make a visit worthwhile.

wpDiscuz
Braintrust
"You can’t just have people — or robots — to answer questions, you need to help the shopper move from considering to buying. "
"Lowe’s is having trouble converting because prospects are able to assess value in-situ. This translates into Lowe’s becoming a great showroom..."
"I think Lowe’s efforts in tech have clearly helped to drive traffic ... But the job isn’t done with getting people through the doors."

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