Lowe's 1997 Annual Report Download - page 4

under construction.
Every Lowe’s store is now
served by one of these
high-tech rdc’s, and we’re
ready to leverage our
investment. We have
refined our inventory
and distribution systems
so that we can get
products to our customers faster while
reducing costs.
As our hub-and-spoke expansion
continues, we are taking Lowe’s into
selected metropolitan markets. New stores
in Atlanta, Dallas, Jacksonville, and Tampa
met with enthusiastic acceptance in 1997.
Our 1998 expansion will include be-
tween 75 and 80 new store projects, of
which nearly 40% will be relocations of existing
stores. Metro markets will be the target of more
than half of Lowe’s new market expansion over the
next eighteen months, as we penetrate and aggres-
sively develop metro areas with proximity to our
distribution centers.
Taking care of customers is our mandate and
our mission. It sounds simple, but to get the job
done we are using increasingly sophisticated meth-
ods of analysis, prediction, and planning. Through
our own research, as well as from prognosticators
such as Yankelovich, Peters, Nesbitt, and the Home
Improvement Research Institute, we have identified
trends that seem destined to have a profound
effect on Lowe’s and our industry as we enter the
next millennium. Of course, predicting the future is
always a gamble, but it beats closing your eyes and
hoping it will go away. And you can significantly
better your odds by doing your homework.
Homework begins at home, so last year we
intercepted more than 8,000 customers at the end
of a Lowe’s shopping experience and asked them to
complete a comprehensive questionnaire. Their
responses showed us where Lowe’s is in tune with
their evolving needs and
desires, and where we
could be serving them
better.
Another highly effec-
tive source of customer
feedback has been
Lowe’s Gold Advisory
Board. Gold Card hold-
ers are customers who
have earned a substan-
tial credit line and shop
our stores frequently. At
least once every month,
we randomly select a
market and invite a
group of these special
customers to join a
Lowe’s district manager and members of top man-
agement, including myself, for dinner.
What we have learned in these sessions has
confirmed and augmented our other research.
There is great opportunity out there if we have the
vision to identify trends, the wisdom to understand
them, and the intellectual and financial capital to
exploit them.
America is getting older. Not only are we living
longer in better health, but Baby Boomers are
pulling the age curve upward as they cross the half-
century mark. With increasing age and affluence,
consumers are less likely to be do-it-yourselfers and
more inclined to delegate projects to those with
professional skills and tools. Replacing windows or
installing a new floor is not how they choose to
spend their valuable free time. They hire profes-
sionals for lawn care, pest control, pool mainte-
nance, and furnace and air conditioner servicing.
This indicates a realignment in the patterns of
product distribution. We see it as an opportunity.
Since 1950, the majority of the U.S. population
has been female, but their current purchasing clout
is a more recent development. Roughly half of the
Bob Tillman gets valuable
input from customers at a Gold
Advisory Board meeting.
2