Lowe's 1998 Annual Report Download - page 5

Robert L. Tillman
Chairman and Chief Executive Officer
April 23, 1999 North Wilkesboro, NC
Best wishes,
of ways. For instance, we’re developing solid
partnerships with manufacturers to provide quality
products at tremendous value — products that are
available exclusively at Lowe’s. Harbor BreezeTM ceiling
fans and Top ChoiceTM lumber were two of the first lines.
The latest, KobaltTM Tools, debuted in September 1998.
KobaltTM Tools are professional-quality wrenches,
ratchets, sockets and mobile storage chests
manufactured in the U.S.A. by Snap-On®. Lowe’s is
excited to be the exclusive source for KobaltTM Tools,
which, our customers say, are an unbeatable value for
the price.
Another Lowe’s ” exclusive” is a feature that’s
invisible to our customers, but benefits them every day.
Lowe’s cutting-edge distribution system provides
efficient, direct product distribution to our stores,
eliminating the problems and expense of overstocking
while ensuring that customers get the products they
want, when they want them. The investments we’ve
made over the past several years in developing our
distribution network provide a springboard as our
national expansion continues.
But our most important asset — one that can’t be
duplicated, or matched, anywhere — is our workforce
of more than 65,000 employees. Lowe’s associates have
earned their reputations as some of the friendliest and
most helpful in the home improvement industry. They’re
the ones who embrace our programs and make them
meaningful to customers. They’re the ones that our
customers have come to trust and rely upon. Simply put,
they are the best, and they’re helping make Lowe’s
the best.
At the senior management level, we’ve made some
changes designed with the customer in mind. The newly
created position of Executive Vice President of
Merchandising and Marketing brings together two of
the most fundamental components of our success. This
integrated effort is driven by three principles —
innovation, differentiation and communication — and is
designed to globally formulate concepts and programs
while allowing local execution to benefit the customer.
Additionally, we have realigned our merchandising
organization into three separate businesses — Building
Materials, Hardlines and Home Decor. With this
alignment, our service and our orientation becomes
customer specific, not product specific. And finally, we
have split the U.S. into two operating divisions to better
manage the day-to-day operations in the field.
The landscape of the industry has changed
significantly over the past decade but Lowe’s has
remained nimble and changed as well. Our average
store size has increased five-fold in the past decade,
adjusting to the needs of our customers. The Home
Improvement Research Institute forecasts annual
industry growth of 4-5% over the next several years.
Couple that prediction with the ongoing consolidation
taking place in our industry and you can understand
why Lowe’s future is filled with opportunity.
To capitalize on this opportunity, our expansion
plans call for an additional 80 to 85 new stores in 1999,
of which approximately 40% will be relocations of
existing stores. The new markets we’ll enter include
Washington, D.C., Miami, FL and Los Angeles, CA - all of
which are growing, dynamic areas. As we survey the
areas of the country where Lowe’s doesn’t have a
significant presence, we’re positioning ourselves to
realize the opportunity that lies ahead.
Today, we’re significantly better at meeting our
customers’ needs and executing our business initiatives
than we were a few short years ago. And although
better is good, Lowe’s knows best is better. We’re proud
of our accomplishments, but we’re not sitting still. We
plan to be the best. As we enter the 21st century, we
remain focused on serving the customer and improving
our business. Our shareholders expect it… and our
customers demand it.
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