In separate conversations at NRF 2021: Retail’s Big Show – Chapter 1, two highly regarded industry leaders discussed their vision for their companies: what they regard as most important, and how to plan for the unknown road ahead. Marvin Ellison, president and CEO of Lowe’s, spoke with NRF president and CEO Matthew Shay; Niraj Shah, co-founder, president and CEO of online furniture giant Wayfair, discussed his company’s startling growth trajectory, and the foundation for maintaining it, with Bloomberg reporter and editor Matthew Townsend.
In introducing Ellison, Shay noted that the two years since Ellison became CEO of Lowe’s have been in many ways a time of rebuilding. What has it meant, he asked, to go back to the basics and focus on operational excellence?
“It’s like building a home,” Ellison said. “You need a sound, solid foundation. Two years ago, we couldn’t offer a customer an e-receipt. We couldn’t set up a schedule for associates in the stores that worked for both customer demand and the associates’ lifestyle. The ecommerce platform was running on a decade-old infrastructure. Our job was to put the foundation in place, so the superstructure could grow quickly and be stable.”
Wayfair was faced with similar issues, but from a very different starting place. The company, founded in 2002, has been guided by the founders’ belief that there was a big online opportunity in the home category — not just for furniture, but for everything else. There were many who doubted this, but events have proved them wrong: Wayfair has a market cap of $24 billion, up from $7 billion about three years ago; in December, 2020 sales were projected at $14 billion, a growth rate of over 40 percent.
Lowe’s, which under Ellison has also seen double-digit growth in both revenue and net income, has made a major effort to support its associates during the pandemic, as well as the community and small businesses. Noting that he was raised as the middle child of seven in a working-class family in rural Tennessee, Ellison said, “I know from experience that if you miss a day of work, it impacts your ability to pay your bills. So, we asked ourselves, what can we do?” During 2020 and to date, the company has spent $1.1 billion on direct support to its constituency — associates, first responders and small businesses.
The road ahead
If you’ve made things better, how do you keep them better? One important component in continual improvement, suggested Shah, is technology. If you fully embrace technology early on and embed it in your business, you end up being able to do things that you couldn’t otherwise do. And if you’re smart enough to care about what your customers want, you end up doing things that they value.
There is, he noted, a kind of straight-line process: well-adapted technology (and people — of his company’s 17,000 employees, 10,000 work in customer service or logistics) leads to better customer experiences, which makes the customers happy, which leads to growth.
Not that this is easy. “Ecommerce is a tough business,” Shah said. “You need to be good at everything — you can’t be great at merchandising and not so great at logistics. What you’re not good at is what limits your growth, and being great in other areas doesn’t make up for it.”
Both leaders agree the key is to understand what your customers want, and provide it. Ellison offered the same clarity of vision: “As we look to the future, we ask one single question: What is in the best interest of our customers?” This, he said, is the true role of technology.
“The most effective technology is technology that no one sees. All the customer knows is that the transaction was easy. All the associates and supply people know is that the system works well.
“And that,” Ellison said, “is what good innovation looks like.”