Lowe’s has converted eight of its regions, covering more than half its nearly 1,800 U.S. stores, to distribution center-based fulfillment of large items like riding mowers, grills and furniture. CEO Marvin Ellison, speaking during a recent conference call discussing the home improvement retailer’s Q3 financial results, revealed that Lowe’s is on track to change over its entire store base to this model by the end of 2023.
The retailer’s legacy distribution model had stores operating as nodes in the fulfillment process. Under the new market delivery model, large items are shipped directly from DCs to the customer, reducing the number of “touches” for each order and freeing up space at brick-and-mortar stores. Lowe’s kicked off the transition to the market delivery model in 2021 in its Florida and Ohio Valley regions.
During the call on Nov. 16, 2022, Ellison noted that “we’ve made significant strides in our rollout of our market delivery model for big and bulky products this quarter, spanning the country from Southern California to Southern Illinois to Atlanta, Georgia. This is a centerpiece of our supply chain transformation, as the market delivery model will enable us to further consolidate our industry leadership position in appliances and position us for profitable growth in other big and bulky products.
“This also improves the customer experience through expanded fulfillment options and a seamless omnichannel shopping experience powered by technology,” Ellison added.
The retailer also is guarding against supply chain shocks by expanding its network of coastal holding facilities, including a new one Lowe’s plans to open in Suffolk, Va. This network “is opening up capacity for us to hold product upstream from our distribution centers, which creates the flexibility we need to flow the products quickly where and when it is needed,” said Ellison. “This helps us to not only capture sales, but also mitigates markdown risk because we avoid stranding product unnecessarily in our stores.
“There’s not a great retailer in the world that doesn’t have a great supply chain, and we’re committed to having a great supply chain,” noted Ellison.