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Lowe’s tweaks store formula in attempt to narrow gap with competitors

Lowe’s Canada president Sylvain Prud’homme shows off the new eye-level displays.

FRED LUM/THE GLOBE AND MAIL

Sylvain Prud'homme arrived at home-improvement retailer Lowe's Canada at a critical time last March.

The previous summer, its U.S. parent Lowe's Cos. Inc. lost a highly political battle to buy Quebec-based rival Rona Inc. for $1.8-billion. Lowe's leadership team had underestimated the provincial government's determination to keep Rona out of foreign hands.

And Lowe's, a giant south of the border, had a huge job to catch up in this country, with just over 30 stores compared with Home Depot's 180.

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But Mr. Prud'homme, a seasoned retailer and bilingual francophone, had the credentials to hit the ground running – and to understand any political sensitivities in Quebec, should Lowe's take another stab at an acquisition.

His first move was revamping stores to improve product availability and the effectiveness of promotions. It appears to be bearing fruit: In the past two quarters, Lowe's reported double-digit sales gains at its Canadian outlets open a year or more, an important industry metric.

Now, he's pushing to further narrow the gap with his competitors.

On Feb. 6, Mr. Prud'homme, president of Lowe's Canada, will unveil two new stores, in Burlington and Cambridge, Ont., which will test changes to upgrade the shopping experience and bring its total store count to 37.

"The last nine months have not been about changing the recipe – it's about understanding even more our customers and reacting to what's in the market, to what our competitors are not doing well that we can do better," Mr. Prud'homme said in an interview on Wednesday as he toured the almost-finished Burlington store.

He hasn't ruled out an acquisition in Canada and has no short-term plans to build Lowe's stores in Quebec, where it has none. The company's Canadian outlets are mostly in Ontario; it has six in Alberta, one in Saskatchewan and one in British Columbia.

"We are very serious about this market and we believe there is strong potential for growth," he said. "The customer will decide who is going to win."

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Mr. Prud'homme, who previously held senior positions at Loblaw Cos. Ltd. and Wal-Mart Canada Corp., likes to keep close to customers. He often dons a baseball cap as a disguise and wanders through Lowe's stores to examine their operations and chat with customers. And he schedules regular store walk-throughs with customers to get their unvarnished feedback.

His research uncovered several findings: Contractors complained it took too long to find the products they needed, while many female customers found the displays of certain items such as kitchen cabinets and faucets too high to touch or examine closely.

Armed with those results, Mr. Prud'homme made changes that will show up in the two prototype stores that will open next week.

They stock items that contractors might need in one space, while moving "fashion" items such as faucets to another section. The shelving in the company's internally dubbed "fashion alley" – faucets and kitchen cabinets, for example – is lower and the products are displayed at eye level.

The research also found that many customers are seeking good deals. Mr. Prud'homme is borrowing from the Wal-Mart playbook by adding a "power aisle" near the entrance of the store with special offers to encourage impulse purchases. His team is working closely with suppliers to get new items at attractive prices, he said.

And the new stores have signs in value-denoted red and yellow touting "Lowe's lower price."

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Signs in kitchen displays now provide the makeover's cost. The kitchen section stocks 30 per cent more granite samples, and each sample is about four or five times larger than current ones.

And with a nod to the upcoming spring season, despite frigid temperatures outside, the new stores are testing prominent displays of patio sets and barbecues near the entrance, about a month earlier than usual.

"If you stay still in retail, your competitors will catch up," he said.

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About the Author
Retailing Reporter

Marina Strauss covers retailing for The Globe and Mail's Report on Business. She follows a wide range of topics in the sector, from the fallout of foreign retailers invading Canada to how a merchant such as the Swedish Ikea gets its mojo. She has probed the rise and fall (and revival efforts) of Loblaw Cos., Hudson's Bay and others. More

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