Lowe's CEO Marvin Ellison doesn't believe physical stores are a thing of the past. In fact, he says they are the key to staying competitive in today's retail environment.
"The biggest central competitive advantage of brick-and-mortar retail is your physical stores and your employees that work in those stores," Ellison said during a keynote session at the National Retail Federation's 2023 expo in New York City on Monday.
Ellison said that he has frequently discussed this with FedEx founder and former CEO Fred Smith over the years even as talk about the retail apocalypse gained steam and e-commerce started to grow.
"I believe that even during retail apocalypse discussions that the biggest central competitive advantage of retail is, do you have brick-and-mortar stores, and can you connect those stores digitally to your online site," Ellison said.
The chief executive's comments bolster earlier statements made by the NRF that physical stores "remain pivotal, especially now that a significant proportion of e-commerce orders are fulfilled by stores."
The trade group further noted that the "retail store counts continue to grow with the industry and the broader economy, despite the growing share of e-commerce," and that "the role of the store is evolving to support buying across all channels."
Lowe's has roughly 2,200 physical stores nationwide, according to Ellison. This means the company essentially has 2,200 distribution centers connected to its domestic and global supply chain, he said.
Ellison underscored how important these locations are, particularly when customers need to address an urgent home repair.
"Next-day delivery doesn't sound nearly as good to you at the moment," he said. "At that moment, you need same-hour delivery."
Its vast footprint allows Lowe's customers to place an emergency order online and grab it within an hour through its buy online and pickup in-store or curbside services, according to Ellison.
He also said the company's partnership with Instacart allows for tens of thousands of products to be delivered within an hour.
"We can't do that without our stores because those stores are the essential node that will pick and get that product ready either for the customer to come in and pick it up or for us to do a quick…gig network-type delivery," Ellison said.
He said stores are both essential and the key to creating an omnichannel network "where everything is connected."
Ellison said they allow for the company to make "a decision based on the location of the store, location of a supply chain facility to get that product to the customer in the most efficient way."
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"That cannot happen without the central availability of the stores," he continued.
Moving forward, Ellison said that the one thing the customer "will demand from this point on is convenience, but convenience without friction."