Lowe's goes for the pros with contractor services

New effort timed to tap a rebounding housing market




CHARLOTTE, N.C. — Mooresville, N.C.-based Lowe's Cos. Inc. is pushing to attract more professional contractors, builders and tradesmen, targeting their business with special discount programs, dedicated salespeople and sophisticated new data-mining.

The effort has ramped up over the past 18 months or so for several reasons. Although pros are a small percentage of Lowe's shoppers, they generate an outsize percentage of revenue — 28 percent in Lowe's case. They reliably and frequently place big orders.

And with the housing market rebounding, there's a bigger chunk of new business up for grabs as home builders get back to work. The pro business is growing faster than the general home improvement market, Lowe's executives told analysts last month.

Lowe's still lags Atlanta-based Home Depot, its biggest competitor. Home Depot started aggressively targeting pros with discount programs and new services designed to help them shop quickly in 2011. Sales to pros account for about 35 percent of Home Depot's revenue.

But Mike Horn, Lowe's vice president of pro services, said that while Home Depot is Lowe's chief rival, it's also the easiest to keep tabs on and compete with. The real challenge for Lowe's, Horn said, is to compete with lumberyards, specialty stores selling only plumbing or electrical equipment, and mom-and-pop retailers that can devote more attention to each customer than a big-box store, even if they don't always have the lowest price.

When Lowe's began expanding as a regional chain of stores six decades ago, sales to pros accounted for about 60 percent of sales.

That fell through the years, as it closed lumberyards and changed to be more of a consumer-friendly retailer aimed at do-it-yourself shoppers.

But now:

• The company has packaged more goods in "contractor packs." For example, Liquid Nails costs $1.77 for a tube, or $1.59 apiece in a case of 24.

• Lowe's has added more items contractors need and packaged them in ways that make them easier for pros to buy quickly. It now sells wire by the roll and in more than the previous three colors, because contractors usually need multiple colors to wire all the systems in a house or building. And a wider selection of professional-grade electrical tools is grouped together in a single display. "So it feels more like an electric supply house," Horn said.

• The company is partnering with GE, its credit card provider, to mine purchasing data. That helps the dedicated pro services worker in each store target customers. "They can find customers that typically buy a lot of drywall and reach out to that customer" when there's a sale, Horn said.

• Lowe's plans to roll out an improved e-commerce platform on its Lowe's for Pros website. Currently, the store has call-ahead and fax ordering options for pros. Lowe's will unveil an upgraded pro ordering system this year, Horn said.

The system should allow pros to order supplies, track their orders and integrate everything with their own purchasing systems.

• Some changes are simple; for example, stores now have a dedicated phone line to the pro counter, instead of requiring contractors to call the main line and ask to be transferred.

The store must balance pro customers' needs with the do-it-yourselfers who are the bulk of its business.

"We have to separate out the pro customer," Horn said. At the same time, the stores have to maintain a wide appeal. "We try to stay centered around that logic."