THE top executive at Lowe’s has offered a simple solution to retail crime, which focuses on customer service.
Lowe’s CEO Marvin Ellison said that the company saw no major negative impact from theft, “from a margin rate standpoint,” while speaking at the 30th annual Goldman Sachs Global Retailing Conference.
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“It’s one of the areas of the business that we’re most pleased with.
“As a major big-box retailer, you’re right, we’re one of the few who’ve not flagged shrink as something that is having a material impact on gross margin or operating profit,” Ellison said when asked about shrinkage issues.
Ellison seemed to quietly call out his company’s rivals like Target and Walmart who have had an increase in retail crime.
“It’s a difficult environment,” he said. “I’ve never seen anything like it, and we’re incredibly pleased that we’re able to have a differentiated performance relative to the other major retailers.”
In December, Walmart CEO Doug McMillion told CNBC: “Theft is an issue. It’s higher than what it has historically been.”
While Target’s CEO, Brian Cornell, warned in May that the company was expected to lose $500million in profits in 2023 as a result of missing inventory from theft.
“It’s an urgent issue,” Cornell said during an earnings call “Not just for Target, but across the entire retail industry.”
Many major retailers have focused anti-theft measures around new tech to detect and thwart thieves, like cameras and plexiglass cases.
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“We’ve invested quite a bit of technology at different parts of the business in front of the customer and behind the scenes to help us to manage this, and we take a unique and differentiated way,” Ellison admitted.
However, Ellison said that it is great customer service at Lowe’s that has the largest impact.
“Having spent my entire adult life in retail, at every level, the one thing that I understand clearly is that the greatest deterrent for any theft activity is effective customer service and making sure that you have the right type of merchandising display,” he said.
Ellison explained that having workers help customers on the store floors at Lowe’s leads to fewer theft incidents.
“Our margin rate was up year-over-year, and we had very strong operating-margin performance,” Ellison said.
“And we don’t anticipate that shrink is going to be a material negative impact to our business for the balance of this year.”
To lower theft within your stores, companies have to pay workers well and train them, according to Ellison.
Lowe’s is at the higher end of the wage scale for retailers, the outlet reports.
The average hourly pay for a Lowe’s employee in the New York City borough of Brooklyn is $16.81 an hour, according to ZipRecruiter.
The company had a shrink rate of about one percent in its most recent quarter, according to The Street, which is below industry averages.
With fewer customers trying to steal, the company’s security team can operate more efficiently.
Ellison said: “We have a dedicated asset-protection team that I think is best-in-class in retail.”
“They have great partnerships with law-enforcement communities and the like.
“And we spend a lot of time on associate training,” he explained.
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