Will outsourcing jobs help Lowe’s associates better serve customers in stores?
Lowe’s is eliminating “thousands” of assembly and maintenance worker jobs and outsourcing them to third-party companies.
The assembly workers handled tasks such as putting together wheelbarrows and grills for customers and constructing floor models. The maintenance workers primarily did janitorial work. The layoffs were reported to be a cost-cutting move although Lowe’s indicated it was re-prioritizing resources.
“We are moving to third-party assemblers and facility services to allow Lowe’s store associates to spend more time on the sales floor serving customers,” Lowe’s said in a statement released to media outlets.
Associates who were in these positions will be given transition pay and have the opportunity to apply for open roles at Lowe’s, although they aren’t being guaranteed the same hourly pay.
News of the layoffs was first reported by The Wall Street Journal. As of its fiscal year ended Feb. 1, the home-improvement retailer had approximately 190,000 full-time employees and 110,000 part-timers.
The news comes as retailers are facing labor cost pressures due to minimum wage increases across states and a tight labor market.
Marvin Ellison, J.C. Penney’s former CEO, has also made streamlining operations and lowering costs a priority since taking over as Lowe’s CEO in July 2018 to better compete against the home improvement space’s perennial leader and his former employer, Home Depot.
Mr. Ellison’s moves have included shuttering 47 underperforming stores last year, closing the 99-unit Orchard Hardware chain and discontinuing its Iris by Lowe’s smart home platform. Management ranks and buying teams have been overhauled, including bringing over key personal coming from Home Depot.
At the store level, Lowe’s has exited slow sellers, increased focus on omni-channel execution and placed a greater priority on the pro contractor business, traditionally an area Home Depot dominates.
In the first quarter, Lowe’s sales growth outpaced Home Depot for the first time since 2016, but its profit outlook for the year was lowered due to margin pressures. Mr. Ellison told analysts in May, “We made a lot of progress, but our transformation is clearly ongoing.”
- Lowe’s Lays Off Thousands of Store Workers – The Wall Street Journal
- Lowe’s lays off thousands of store employees amid pressure to boost profits – USA Today
- Lowe’s cutting thousands of store jobs as it seeks to outsource workers – The Associated Press/Mercury News
- Lowe’s Companies, Inc. Q1 2019 Results Earnings Call Transcript – Seeking Alpha
- CEO Marvin Ellison takes Lowe’s back to basics – National Retail Federation
DISCUSSION QUESTIONS: Will outsourcing assembly and maintenance tasks enable store level associates to spend more time on the sales floor serving customers as Lowe’s has indicated? Do you think Lowe’s is becoming more competitive with Home Depot as a result of the changes made by Marvin Ellison?