• Mon. May 10th, 2021

Lowe’s Doubles Down On Contractors With Store Revamp As Home Improvement Spending Booms

Since the winter storm in Texas wreaked havoc on homes across the state, Lowe’s stores have been buzzing with contractors rushing to pick up items to replace broken pipes, replace damaged floors and put in new drywall for a backlog of customers anxious to put clean-up efforts behind them.

“There’s lots of repair work as you can imagine,” says Bill Boltz, executive vice president of merchandising at Lowe’s. In other parts of the country, contractors are similarly struggling to keep up with the volume of requests they are getting, with spending on home repairs and improvements expected to hit $352 billion in the U.S. this year, up from $335 billion last year, according to data from the Joint Center for Housing Studies of Harvard University.

On Tuesday, Lowe’s announced a raft of changes designed to help get contractors, plumbers, electricians and other professional customers in and out of their stores faster. “Time is money for them,” says Boltz.

A dedicated “pro” section of the store will now feature frequently-purchased items and a convenience section with first aid supplies, toilet paper, ice and other items needed on the job site. It is adding phone charging stations and dedicated checkout lanes, with employees who can help load items. Parking lots will begin to feature dedicated spots that are large enough for trailers, windshield cleaning stations and free air stations for tires and tools.

It’s all part of a larger effort to cater to a lucrative customer base that generates just 20% to 25% of the company’s revenue, but accounts for roughly half of home improvement spending, according to a recent company presentation. Meanwhile, Home Depot generates a far larger portion of its sales, about 45%, from pros.

“We haven’t talked much about that, but I think we see our pros… who are very busy and have a very robust pipeline… I think we are pretty confident we’re going to take a bigger share of their wallet over time,” said chief financial officer David Denton at a conference in March.

Lowe’s began its push to cater to pros in 2019 by tackling the basics, like assigning dedicated employees to these customers and keeping enough inventory in stock for them to complete a job. It previously faced complaints from contractors who visited the store only to find they couldn’t get the materials they needed.

It also reconfigured the layout of its stores so it was easier to find relevant products next to each other. For instance, toilet seats are now located next to toilets. It rolled out a pro loyalty program, which includes personalized discounts and a dashboard to track previous orders and make reordering easy. It began offering tool rentals at some stores.

There are signs that its efforts are starting to bear fruit. Purchases from pros at its existing stores grew in the mid 20% range in its latest quarter, compared to the low 20% range in the same period a year earlier. That foot traffic is also helping to drive big-ticket purchases, with transactions over $500 jumping about 30% in its latest quarter.

That could result in 2021 being “the year of the Pro,” wrote Wedbush analyst Seth Basham in a recent note to clients, noting that their spending is expected to outpace the DIY crowd this year.