One week after taking over as Lowe’s CEO, Marvin Ellison sent a shockwave through the retailer’s executive leadership team. The retailer announced that effective immediately, it was eliminating the roles of chief operating officer, chief customer officer, corporate administration executive, and chief development officer and replacing them with a new executive structure. This new executive suite has several key roles reporting directly to Ellison. While these changes pave the way for Ellison to implement new ideas, they also signal clear goals for Lowe’s future strategic initiatives.
Lowe’s is serious about improving its results and creating a long-term growth strategy. Since January, Lowe’s has experienced a number of changes to its operations, including the influence of multiple activist investors, new appointments to its board of investors, and the new CEO. The restructuring is the culmination of these factors, solidifying the retailer’s commitment to driving future growth.
Known for his operationally focused leadership style and reputation as a turnaround specialist at J.C. Penney and Home Depot, Ellison wasted no time bringing his laser focus to Lowe’s. As Lowe’s performance has paled in comparison to its closest competitor, Home Depot, this move signals Ellison’s willingness to make the changes and investments necessary to realize the retailer’s potential.
Streamlined leadership positions point to Lowe’s top strategic priorities. Since 2016, Lowe’s has emphasized “focus” as a key strategic pillar, planning to invest in fewer, but more meaningful projects to drive growth. Despite this push, the retailer has acknowledged its tendency to roll out several projects at once, including promotional events, in-store technologies, and new staffing models. To maintain focus, Ellison has identified a pared-down list of executive roles that will report directly to him. Positions such as EVP of human resources remain unchanged; however, Ellison has created three new roles to be filled externally: EVP of merchandising, EVP of stores, and EVP of supply chain. Lowe’s newly streamlined executive structure marks a clear shift in the retailer’s commitment to refined corporate initiatives and highlights key areas of focus moving forward.
- Merchandising: In a role that encompasses assortment, digital strategy, and shopper insights, Ellison has appointed former Home Depot executive and colleague William Boltz. Ellison will look to Boltz, another highly operationally focused leader, to help bring efficiency and productivity to Lowe’s promotional cadence, discipline to its merchandising operations and supplier partnerships, and shopper insights to address profitability concerns regarding conversion.
- Stores: As Lowe’s continues to balance labor efficiency with associate accessibility in its staffing model, the retailer is conducting an external search to improve its customer service offerings for both pro and DIY shoppers. The new hire will replace longtime executive Richard Maltsbarger who stepped into the COO position less than a year ago.
- Supply chain: With omnichannel fulfillment options gaining popularity with shoppers and online sales accounting for nearly 10% of Lowe’s total sales by 2023, finding more efficiencies, both in terms of speed and cost, are top of mind for the retailer. As Home Depot and other retailers charge ahead with major supply-chain overhauls, Ellison will search for a candidate with a fresh perspective and a disciplined management style to build efficiency into Lowe’s logistics operations.
More changes are on the way. Just a week into the job, Ellison is showing that he is not afraid to make major changes. With continued pressure from activist investors, this restructuring will not be the only shakeup we see from Lowe’s in coming months. Ellison and his new team will evaluate all aspects of the business with an operationally focused perspective to assess the retailer’s future growth. As with any new leadership team, suppliers should expect to encounter new ways of working, especially as the retailer takes a tougher stance on financial productivity. Suppliers will need to remain vigilant about these new operational processes and understand Lowe’s key priorities. Suppliers that can demonstrate how their products and services help Lowe’s execute on its strategic goals and push the retailer’s performance potential will be the most valuable to this new leadership team.
Join us for our upcoming Home Improvement webinar on Aug. 3 when we will be unpacking all of the major strategic initiatives unfolding at Lowe’s and Home Depot and discussing how suppliers can best align themselves with these new initiatives.
For more information, please contact:
Hannah Hayes, Analyst