Sun Nov 18 2018 #lowes

Lowe's Troubles Have Only Begun

Financial rags have been critical of Lowe’s performace as compared to Home Depot. They’re right to compare the chains, but fail to understand the underlying reason for Lowe’s poor sales growth and other technical shortfalls.

The worst has yet to come.

Lowe’s new CEO, Marvin Ellison, is prioritizing cost-cutting and stock buybacks instead of investing in the business. This is a short-term strategy that will not only be unsuccessful, it will deeply damage the chain’s long-term prospects.

To understand the difference between Lowe’s and Home Depot, all one needs to do is take on a significant home improvement project and compare the two stores as your suppliers. Just a few minutes on Lowe’s web site is all it takes to inform how deeply fucked Lowe’s is – basic parameters of their merchandise, such as the dimensions of lumber, cannot be used to search for items. Clicking on major categories directs you to pages indicating no items can be found in that category! Product specifications are incomplete, and store inventory data is unreliable. Compare to Home Depot, which does a much better job on this front.

Many DIYers these days will use the Internet to research their project before visiting the store. Anyone who lives near both Lowe’s and Home Depot, and considers the store web site to be a significant resource, will obviously not view Lowe’s as their best choice.

But that’s not the worst of it. Sign up for a MyLowe’s online account, and you’ll quickly learn that you have to re-enter your email & password to take actions as simple as viewing the local store’s weekly ad, or adding an item to your saved items (like when organizing a shopping list.)

Lowe’s is missing out on a generation of young homeowners by investing over ten-billion in stock buybacks while apparently ignoring these huge, obvious problems with its web site. Astonishingly, Ellison and new CIO Seemantini Godbole have made no public-facing commitments regarding their web presence.

Beyond their online problems, Lowe’s faces real problems within the stores themselves. The Motley Fool touches on these problems writing about Lowe’s failing inventory management systems, inability to keep merchandise in stock, and trouble updating stores. But these articles, too, miss fundamental differences driving Home Depot’s success – which comes at Lowe’s expense.

Home Depot offers a tool rental service for DIYers and small contractors. This drives commercial business to the store, and offers homeowners another reason to choose HD over Lowe’s.

Speaking of tools, visit the power tool merchandise area at any Lowe’s I’ve ever visited, and you’ll see an unmitigated disaster – cramped aisles full of too many brands, yet lacking many products from prosumer-favorites like DeWalt. Lowe’s is simultaneously pushing new product lines from Kobalt (Lowe’s house brand of tools) and Craftsman (recently sold to Stanley Black & Decker, who also own DeWalt and Porter Cable.) My local Lowe’s has so many new power tools they literally cannot fit them into the power tool section – and yet there seem to be no employees assigned to assist customers with power tool purchases.

This brings me to the most dangerous move Ellison has discussed with Lowe’s shareholders – reducing and alienating its workforce. Lowe’s has been criticized for mis-classifying employees as managers to avoid paying overtime when they work in excess of 40 hours per week. Now, they are reportedly ordering employees to sign arbitration agreements to continue receiving their bonuses.

Lowe’s troubles have only begun.