Friday, February 20, 2009

Lowe's --Do They Understand Merchandising?

Lowes Companies Inc (LOW) reported Q4 and year end results. They of course took the opportunity to explain that the market was beating them up and the consumer is not spending. Predictable management comments, all of which are correct were made by President and CEO Robert Niblock. Which is exactly the problem! The market knows that the consumer is staying at home and contractors are not buying what they used to.

The press release deals with the standard growth metrics of yesterday. Same store sales, openings, closings, relocations and square footage. The strategy therefore is monolithic geographical growth. Get the right location and the customer will show up.

What about merchandising strategy? All other retailers seem to have one. Some strategies are better than others but at least there is a baseline to compare to. Location is only one strategy. What about product mix, price points, promotions and all that marketing 101 stuff? It does not appear to be present. Or at least it is not sufficiently important enough to be mentioned in the earnings press release.

The world is changing. The big box we have everything approach may prove to be too overbearing for a selective marketplace. Does Lowes know how to merchandise?