As part of a seminar at the National Retail Federation’s Big Show Chapter 1, an ongoing virtual event to be followed in June by a now virtual Chapter 2, Marvin Ellison, president and CEO of Lowe’s and Niraj Shah, co-founder and CEO of Wayfair, discussed the development of their companies before and through the COVID-19 pandemic. The retail executives then looked beyond at a future when the application of technology will improve and simplify the consumer shopping journeys and purchase decisions.
In application, technology as Ellison and Shah see it developing, will give consumers now options and means of shopping for housewares and home furnishings.
For Ellison, the future holds simplicity. Ellison noted that since his tenure at Lowe’s began in July, 2018, he has focused on the home-focused core of the company’s business. Lowe’s has been able to present itself to customers as a solution for their needs across households. Lowe’s will use technology to improve the shopping experience by making it easier via initiatives that are invisible to customers and even the employees serving them, Ellison said.
“As we think about the future, we take a step back and ask one simple question,” he said. “What is in the best interest of our customers? So everything we try to do is not about our competition, it’s not trying to replicate or predict what will happen in the macro environment. It’s really about being customer-centric and asking the questions: What do we do as a company that will give the customers the ability to shop any way they chose? If they want to have a traditional in-store transaction, how do we execute that and do it in a way where it is flawless, it is simple and we take friction points out?
“If a customer wants to buy online and pick up in store, buy online and pickup in a locker, buy online and pick up curbside, deliver to home— as we think about all the ways customer desire to shop and all the ways customers will probably shop in the future— it definitely dictates how we go to market internally and determines our capital spend and our innovation strategy,” Ellison continued.
Ellison said the company has developed an approach to the market dubbed Total Home that will focus on making it easy for consumers to use Lowe’s as a means of creating the household they envision.
“We’re thinking about things beyond getting your bathroom remodeled,” he said. “We want to provide all your textiles as well. If you’re going to get your kitchen remodelled, we want to provide you every element you need to make that kitchen functional, make that kitchen something that will meet your dreams and inspirations.”
Lowe’s will use technology to make the more complete home shopping experience it is developing as smooth as can be.
“The most effective technology is technology no one sees. It’s always behind the scenes, it’s always behind the curtain, and all the customer knows is that this is really simple, this was so easy, I had so little effort to get this transaction processed. The associate in the store, in the distribution center, in the corporate office is saying this system works so well, this is so intuitive and simple. So our innovation is focused on making things simple without putting it in front of the customer or the associate. That’s what good innovation looks like,” Ellison said.
For his part, Shah said he is looking at the past few months and the disruptive effects of the COVID-19 pandemic as a catalyst for change. He noted that technological advancement has been an enabling factor that will continue to build the market and define customer shopping options in ways that favor home goods sellers.
Shah pointed out that people once doubted that retailers could successfully sell products such as home furnishings online, but that consumers came to gradually accept and embrace digital shopping for goods in the category. He noted that such a process has occurred in many sectors of the market, but that the coronavirus crisis and movement restrictions meant to restrict the spread of COVID-19 has accelerated the growth of online purchasing within categories that already had begun to gain significant traction, such as home goods, and even those that suffered more resistance, such as grocery. Now, he said, the idea that you can’t sell household merchandise or groceries via the Internet seems obsolete. Change may happen gradually or quickly but consumers who step beyond their established habits and try new things can adapt to innovation quickly.
“It’s one of those things, you don’t actually understand whether you’re going to like it or not. It’s one of those things of fear of the unknown, and you’re comfortable with the other way. But perhaps you don’t really understand that the new way is going to be far preferable to you personally,” Shah said.
As the marketplace continues to evolve, categories are likely to reach an online/in-store purchasing balance. The most digitally advanced categories, such as electronics and office supplies, now sell 50% to 60% online, which may represent a balance between e-commerce and brick-and-mortar sales at least at the present time. Many other categories, with web-based sales constituting around 20% of market share, should continue advancing toward that balance with the boost they received in the pandemic having provided some extra momentum.
However, Shah said, behavioral changes in the pandemic are only part of the story, asserting that many people underestimate how technology will continue to energize digital commerce.
“For example, there’s technology that already exists today where you run your hand over a screen, and you can feel the fabric, you can feel texture,” Shah said. “Now, today, we have that screen that is up and running in our office and [that is]quite an expensive screen. It costs thousands of dollars, and the battery power is very significant. But the estimation is, in five years, that will be a screen that will be on your advanced smartphones. It will be a default screen. Think about some of these things that will happen, whether it’s visualization of items in your own space where you can just see a sofa in your living room through the phone, and it’s easy and it’s super high quality, or feeling the texture of the fabric.”
Such developments coupled with same- and next-day delivery and convenient reverse logistics can be transformative, Shah said, but how technological advancements will foster into a new, better proposition to consumers is hard for many people to discern.
Shah added, “We’re still in the early innings of the online journey.”