A continued focus on the pro customer at Lowe's was a catalyst for sales growth at the home-improvement retailer in the fourth quarter of 2019. Sales growth with pro comps outpaced DIY comps in the final quarter, according to CEO and president Marvin Ellison. Pro business has been a point of emphasis for Lowe's since Ellison joined the company in July of 2018. Lowe's spent much of 2019 improving retail fundamentals, which helped grow pro business significantly for the retailer. As the company enters 2020, Lowe's will begin to transition its efforts on the pro market towards strategic investments including a designated loyalty and CRM program, Ellison said on the company's fourth quarter earnings call.
In 2019, Lowe's improved its pro presence by executing on several fundamental areas, including improving job lot quantities, improving associate service levels, adding dedicated pro loaders and pro department supervisors, and improving consistent volume pricing. In the fourth quarter, Lowe's added dedicated point-of-sales terminals for pros to allow for more convenient and quick service. Ellison said these efforts not only drove improved trends in pro comp sales, but also drove a 400 basis point improvement in pro customer service scores in the fourth quarter of 2019. To further drive customer experience in 2020, Lowe's plans to reinvest savings garnered from improved efficiency in nearly 2,000 additional leadership roles, including 650 additional pro supervisors, Joseph McFarland, executive vice president of stores, said.
"Our commitment to retail basics drove strong Pro comps and significant improvement in customer service scores in Q4," McFarland said on the earnings call. "In the first half of 2020, we will launch our Pro loyalty program nationally, integrated with the CRM program, which will allow us to deploy more surgical strategic marketing to the Pro and expand our share of wallet through suggestive selling and improved account management."
McFarland said the company is confident its partnership with Salesforce.com will allow Lowe's to build a "best-in-class" platform to better serve pros. Lowe's has tested its pro loyalty program in several markets and customer response has been overwhelmingly positive, according to McFarland.
"As we think about personalized offers, as we think about being able to attract spending, as we think about business management tools for the Pro, none of that was available [before]," McFarland said. "We're really excited about all the things we're rolling out from a Pro standpoint in 2020 and we'll continue to capture market share and gain traction."
Ellison said that Lowe's pro penetration has not materially changed since earlier in 2019, but the company believes the pro loyalty and CRM strategic initiatives will help pro penetration improve in 2020. The retailer believes the efforts will help generate new customers, stimulate average ticket growth, and frequency of pro visits.
Ellison said the construction of the Lowes.com platform will also be a major strategic initiative in 2020. The company is in the process of transitioning the website to Google Cloud from a decade-old platform. Ellison said the transition will be completed in the second quarter of 2020 and the update should increase online sales growth for the retailer, which lagged in the final quarter of 2019. In addition to improving Lowes.com, the company is working to transform its supply chain. The retailer is investing $1.7 billion in the supply chain over a five year period. Lowe's opened three bulk distribution facilities and four cross-dock terminals in 2019, according to Ellison, with more openings planned in the near-term future.
