Retails Well Told

From April 1992 until February 2001, Bill Irons was senior vice president and CIO at North Carolina-based home improvement retailer Lowe's Companies. Like Wal-Mart, Lowe's was an early user of technology, but the company had drifted for a while, according to Irons, as it had in-store layout and design for product placement.

When Irons joined the company the then chief executive and one of the early founders was forward looking enough to decree that if Lowe's didn't learn how to deploy technology effectively by 2000 it would cease to be in business. IT was consequently made a key initiative and Irons himself was appointed to Lowe's policy making group, the executive management committee,.

Irons says that during his time at Lowe's the company undertook a substantial amount of systems development which included a brand new logistics system for the company's new and state-of-the-art distribution centres.

"Lowe's had always used a central warehouse. However, we were embarking on a plan to double the average store size, and to support the [new] volumes we decided to fully automate and expand the distribution process. We came up with the concept of regional distribution centres and we built the systems to support that effort. We also did a lot of work on inventory replenishment and merchandising management systems and made many changes to our in-store systems, " Irons says.

Perhaps the most impressive initiative during Irons' tenure at Lowe's, though, was its CRM program, even though it didn't actually use the terminology, preferring to simply call it "direct marketing ".

In late 1993 Lowe's set about building a data warehouse, which Irons considers a prerequisite to a CRM program. In particular, he says it wanted to do a better job of managing product assortment as it moved into new markets and set its sights on becoming a national chain as opposed to a regional south-eastern US chain. Much of the company's legacy data was unreliable so Lowe's created a managerial accounting group to help IT validate the numbers with which it wanted to populate the data warehouse. Irons admits there were many "moments of truth " throughout the process.

Lowe's collected and stored over two years of transaction information in the data warehouse. Irons says this level of detail opened a lot of eyes in the company. For the first time, people were able to look at what drove sales and what didn't; which products sold with which other products; and what unforeseen product affinities existed. This in turn enabled the company to make product placement decisions in the stores.

For example, the company was surprised to learn that one of the biggest affinities with paint was not brushes, sandpaper or disposable gloves but electrical switch belt covers. "That makes a lot of sense; but we had never thought about it until we had the data in the warehouse where we could [study it], " he says.

"Another product we sold was called Qwikcrete — essentially instant concrete. It was a low-margin item that instinctively you wouldn't advertise or promote. We discovered that it was in a surprising number of shopping carts with very high-margin items. So even though it was a commodity, it was supporting the sales of other products that we did make good money on. It was a project starter. We changed our approach on Qwikcrete and started promoting it. We stacked it up high in the stores, and the sales came along with it. Those were the kinds of insights we were able to draw from the data warehouse, " Irons says.

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