In a wide-ranging discussion this week at the National Retail Federation’s Big Show in New York City, Marvin Ellison, president and CEO of Lowe’s, offered insights into his plans for rebuilding the home improvement retailer, shared advice for the next generation of retail leaders in the audience, and reflected on how retail has changed his life.
Getting Back to the Basics
Having taken over the top spot at Lowe’s a little over six months ago, Ellison returned to a vertical — home improvement — he was quite familiar with. He had spent 12-plus years at competitor Home Depot before his most recent stint as chairman and CEO of J.C. Penney. Yet Ellison was joining a company that, in his own words, had lost its way.
“Lowe’s had lost its way,” said Ellison. “Good was the enemy of great. There was solid financial performance, but how much better can we be — shareholder return, employee culture.”
Ellison noted that Lowe’s had shifted away from a core retail business into other areas (e.g., being a “smart” home business) that took CapEx away from a world-class supply chain and the company’s retail stores. The plan is to reallocate capital back into Lowe’s core retail business, namely its stores, supply chain and customer service.
“When you’re a great brick-and-mortar retailer, you have to invest in your core (stores), while also putting out a great digital experience,” Ellison said. “[We’re] Getting back to the basics.”
Part of getting back to the basics for Lowe’s is better understanding its customers, which is not without its challenges. According to Ellison, the retailer identifies three core customers: the do-it-yourselfer; the do-it-for-me; and the professional. Each of these customers has vastly different wants and needs, and Lowe’s must be able to meet all of them across the same stores and digital properties.
For example, the DIYer is looking to store associates for help with product instruction; the do-it-for-me customer needs help with project management; and the pro customer needs help with better understanding finance terms. Lowe’s store associates must be equally adept at serving all three customer segments.
Opportunity at Hand
Despite the popular belief that Lowe’s and its top competitor, Home Depot, own essentially the entire home improvement sector market share, Ellison noted that’s far from the case. According to Ellison, Lowe’s views the overall home improvement marketplace at $900 billion. If you combine Home Depot and Lowe’s, there’s roughly $200 billion in revenue. Therefore, there’s $700 billion in market share to be had.
There are broad macro economic trends that factor into Ellison’s optimism for the home improvement sector, including home price appreciation and millennials embracing home ownership. For the former, if a homeowner is confident that they’re going to get a return on investment for improving their homes — e.g., adding granite countertops, updating the flooring — they’re much more likely to spend the money. And for the latter, millennials have shown a desire to live in or closer to cities, areas which typically have older homes. Ellison noted that those consumers want to make their homes custom to their lifestyles and preferences. Both of these trends correlate very well for Lowe’s.
In order to capture additional market share, Ellison cited three steps that Lowe’s will be taking:
- Step 1: Get back to retail fundamentals, including ensuring products are in stock; having an efficient supply chain; optimizing the space in its stores; having an e-commerce website that’s easy to navigate, search and transact; and offering great customer service.
- Step 2: Achieve sustainable growth through adjustments to product assortment and identifying new revenue streams. One area that Ellison would like to see Lowe’s increase its focus is product rentals. He cited this as a huge opportunity for the retailer.
- Step 3: Go out and start taking market share.
Grooming Retail’s Next Leaders
To close his session, Ellison reflected on his own career in the retail industry. He started as a part-time security guard at Target making less than $5 an hour, which he was using to help fund his college education. He’s now at the helm of the #40 ranked company on the Fortune 500.
“Retail has changed my life,” said Ellison.
Ellison cited foundational elements of his growth as a leader, and encouraged the audience to follow in his footsteps:
- Have a vision of what you want to be and how you can contribute to it.
- Plan well, both for short- and long-term objectives.
- Think beyond what is right in front of you, but don’t overreach.
- Have an intellectual curiosity, an insatiable appetite to learn. Ellison noted that during his career he’s made lateral moves in order to learn more and acquire more skills, making him a better employee.
- Don’t let others crush your dreams. People oftentimes can’t see your vision, and subconsciously kill your dreams by limiting your potential, Ellison said.
“Plan well, don’t let anyone kill your dreams, don’t be afraid to take a lateral move if you can learn more, and have an insatiable appetite to learn,” Ellison advised the audience.