Monday, August 22, 2011
The Ideas Lowe’s Is Stealing From Independent Garden Centers
Lowe’s Robert Gfeller, executive vice president of merchandising, reported during the call that Lowe’s will take the following steps to turn things around and present value to its customers.
1. Product differentiation. Lowe’s says it’s looking for vendors of all sizes, especially those who provide high-tech products for the home improvement industry.
2. Solutions-based merchandising. Gfeller says stores will bring the components of projects together in vignettes to help the customer visualize the end product (a modernized bathroom), not each step of the project (vanity, mirror, faucets, fixtures, etc.) Gfeller says this new display methodology is being tested in one store, and reallocating store space and making room for these presentations has paid off. Customers found it easier to find what they’re looking for and to understand product value.
3. Going local, which Lowe’s is calling Integrated Planning and Execution. Gfeller said Lowe’s wants to ensure “the right product is in the right market in the right quantity,” and take a comprehensive view of customer needs.
Does any of this sound familiar? Of course it does. These are the same things garden centers have been talking about for years. If you’re already two steps ahead of Lowe’s on these points, good for you. Being agile, offering solutions rather than tools, unique products – these are all traditionally the purview of the IGC versus the box stores. If the box stores are going to take on your sweet spot, how will independent garden centers stay two steps ahead?
Now, here’s another thing Gfeller said: “Customers have learned to wait on the next big deal because they know that if they wait long enough, they can get a lower price than the Everyday Low Price.” Lowe’s will compete with other boxes on price by matching it - offer comparative pricing on commodity items. They call them “high-velocity” items.
Items 1, 2 and 3 above seem to involve a lot of time and cost to the retailer. How will they pay for it if they continue to lower prices?