Lowe's 2012 Annual Report Download - page 17

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3
Products and Services
Our Products
Product Selection
To meet customers’ varying home improvement needs, we offer a complete line of products for maintenance, repair,
remodeling, and home decorating. We offer home improvement products in the following categories: Plumbing;
Appliances; Tools & Outdoor Power Equipment; Lawn & Garden; Fashion Electrical; Lumber; Seasonal Living; Paint;
Home Fashions, Storage & Cleaning; Flooring; Millwork; Building Materials; Hardware; and Cabinets & Countertops. A
typical Lowe’s store stocks approximately 40,000 items, with hundreds of thousands of items available through our Special
Order Sales system, Lowes.com, Lowes.ca and ATGstores.com. In 2012, Lowe’s implemented flexible fulfillment, which
allows the customer to order parcel post eligible products that are stocked in a regional distribution center (RDC), a store,
or in a vendor’s distribution center, and have them shipped directly to a home or place of business. Most items can be
ordered and delivered within two days. See Note 16 of the Notes to Consolidated Financial Statements included in Item 8,
“Financial Statements and Supplementary Data”, of this Annual Report on Form 10-K for historical revenues by product
category for each of the last three fiscal years.
We are committed to offering a wide selection of national brand name merchandise, as well as building long-term value for
Lowe’s through the development of private brands. In addition, we are dedicated to ensuring product is sourced in a
responsible, efficient, and cost effective manner through our supply chain.
National Brand Name Merchandise
In many product categories, customers look for a brand they know and trust to instill confidence in their purchase. Each
Lowe’s store carries a wide selection of national brand-name merchandise such as Whirlpool® appliances and water
heaters, GE® and Samsung® appliances, Stainmaster® carpets, Valspar® paints and stains, Pella® windows and doors,
Sylvania® light bulbs, Dewalt® power tools, Owens Corning® roofing, Johns Manville® insulation, James Hardie® fiber
cement siding, Husqvarna® outdoor power equipment, Werner® ladders and many more. Our merchandise selection
provides the DIY, DIFM and Pro customer a one-stop shop for a wide variety of national brand name merchandise needed
to complete home improvement, repair, maintenance or construction projects.
Private Brands
Private brands are an important element of our overall portfolio, helping to differentiate us from the competition with
unique innovations and designs and providing a value alternative to national brands. We sell private brands throughout our
stores including Tools, Seasonal Living, Home Fashions, Storage & Cleaning, Paint, Fashion Plumbing, Flooring,
Millwork, Hardware, Fashion Electrical and Lumber. Some of Lowe’s most important private brands include Kobalt®
tools, allen+roth® home décor products, Blue Hawk® home improvement products, Portfolio® lighting products, Garden
Treasures® lawn and patio products, Utilitech® electrical and utility products, Reliabilt® doors and windows,
Aquasource® faucets, sinks and toilets, Harbor Breeze® ceiling fans, Top Choice® lumber products and Iris® home
automation and management products.
Supply Chain
We source our products from over 7,000 vendors worldwide with no single vendor accounting for more than 7% of total
purchases. We believe that alternative and competitive suppliers are available for virtually all of our products. Whenever
possible, we purchase directly from manufacturers to provide savings for customers and improve our gross margin.
To efficiently move product from our vendors to our stores and maintain in-stock levels, we own and operate 14 highly-
automated RDCs in the United States, with a fifteenth RDC expected to open in the first quarter of 2013. On average, each
domestic RDC currently serves approximately 120 stores. In addition, we lease and operate a distribution facility to serve
our Canadian stores.
We also operate 15 flatbed distribution centers to distribute merchandise that requires special handling due to size or type
of packaging such as lumber, boards, panel products, pipe, siding, ladders and building materials. Additionally, we operate
four facilities to support our import business and flexible fulfillment capabilities. We also utilize three third-party transload
facilities, which are the first point of receipt for imported products. The transload facilities sort and allocate products to
RDCs based on individual store demand and forecasts.
On average, in fiscal 2012, approximately 75% of the total dollar amount of stock merchandise we purchased was shipped
through our distribution network, while the remaining portion was shipped directly to our stores from vendors.