Describing 2011 as a pivotal year for the nation’s No. 2 home center chain, Lowe’s executives continued to hammer on their theme transformation from retailer to a “home improvement company” during its annual conference last month.
What exactly is a home improvement company? CEO Robert Niblock explained.
“At the heart of our strategy is Lowe’s fundamental mission to deliver a better customer experience — in fact, the best it can be,” Niblock continued. “Better experiences begin the day a customer first thinks about the need for home improvement and continue until that project or need is fulfilled.”
The customer is something the Lowe’s team has studied in scientific detail. Senior VP marketing and advertising Tom Lamb defined the company’s target customer by first breaking down home improvement consumers into four distinct groups, each with primary shopping motivation that influences their habits.
• “Diligent maintainers” are those who get the project done and move on. They represent 15% of households and 10% of home improvement spending;
• “Opportunistic diehards” are those who relentlessly search for the best deals. They represent 20% of households and about 20% of spend;
• “Inquisitive curators” are those who seek out expert opinion and innovation for their home as a retreat. They represent 30% of households and 30% of spend; and
• Finally, the “trendsetting upgraders” are those who love exploring and experimenting with their homes. These consumers represent 30% of households and 40% of spend.
Lamb described the target customer as a combination of “inquisitive curators” and “trendsetting upgraders.” Together these two groups are described as “creators,” and they represent more than 70% of home improvement dollars. Creators value reputation, customer experience, product range, availability and good value, he said. The retailer believes that by meeting the expectations of the creator customer, it will exceed the expectations of all customers.
The creator mind-set also applies to the commercial business customer, who makes up about 25% of Lowe’s sales today, he added.
Getting to know the customer, and retain the customer, will determine the success of the company’s goals. Niblock pointed to tough decisions — including a round of 20 store closings in October — as part of a changing world.
“In 2011 we made a series of very hard, very critical but very important decisions to create Lowe’s of the future,” Niblock said. “Rather than be a home improvement retailer focused on store expansion as the engine for growth, we’ll be a home improvement company focused on maximizing asset productivity in order to grow.”