Lowe’s Upgrades Website, Adds 42,000 IPhones to Spur Sales

Lowe’s Cos. is enhancing its website and equipping store employees with iPhones as the second-largest U.S. home-improvement retailer seeks to catch up to Home Depot Inc. (HD) and boost sales from its existing locations.

Next month, Lowe’s will introduce its MyLowes online tool that customers will be able to use to store owner’s manuals, warranties and paint formulas, Chief Information Officer Mike Brown said in an interview. The Mooresville, North Carolina- based company is arming workers with 42,000 iPhone 4s to answer shoppers’ questions and ring up purchases.

The company is working to catch larger Home Depot, which gave employees Motorola Inc. handheld devices last year to let them spend more time helping customers and less on behind-the- scene duties. Atlanta-based Home Depot has had stronger same- store sales than Lowe’s for nine straight quarters.

“Home Depot is ahead of Lowe’s in that regard,” said Tim Hoyle, research director for Radnor, Pennsylvania-based Haverford Investments, which oversees $6.5 billion, including 370,000 Home Depot shares and 20,000 Lowe’s shares. “The two are fierce competitors. To believe that Lowe’s can’t catch up would be naive.”

After years of expansion, Lowe’s and Home Depot have saturated many markets and are shifting capital spending from opening new stores to technology that can help them squeeze more sales and profit from existing outlets.

Capital Spending

Home Depot spent $60 million last year on the handheld devices from Schaumburg, Illinois-based Motorola, which has since been split into two companies. Total capital spending for Home Depot was $1.1 billion last year.

Lowe’s will spend a record amount on technology in the fiscal year through January, Brown said, while declining to say how much. The company has said it will boost overall capital spending 20 percent to $1.6 billion this year.

The retailer is replacing 72,000 computer screens with flat panels in more than 1,700 stores, increasing bandwidth for transmitting data and adding Wifi for shoppers’ smartphones, Brown said. It’s adding thousands of items for sale online and last month introduced a Spanish-language version of lowes.com and an app for the iPhone and the iPod Touch.

“Forget about the competition, we are playing catch-up with the customer psyche,” Brown, 48, said in an interview last week at a store in Mooresville, North Carolina, where Lowe’s tested the iPhone.

‘Help Me Manage’

Almost three years ago, Brown brought two boxes of his personal receipts, appliance manuals and service warranties and told a group of employees, “Help me manage” this paperwork. The result was MyLowes, which will debut on lowes.com in October.

Customers will be able to scan a special card to monitor transactions, create room-by-room profiles of their homes and plan projects with store employees.

“This is for people who want to organize their homes,” said Jeff Chang, who has led the project since joining Lowe’s last year from Office Depot Inc. (ODP), where he was in charge of global e-commerce. It will keep “your paint details all recorded in one place as opposed to having all of these cans in your garage,” he said.

The Apple Inc. (AAPL) iPhones replace scanner guns based on technology dating back to the early 1990s. Employees who previously jotted down item numbers and logged into computer terminals can now check product information, view how-to plumbing videos and connect to lowes.com as they help shoppers, said Brown, who was named chief information officer in January after five years running store operations and lowes.com.

Store iPhones

Each store is getting about 25 of the devices which eventually will be enabled for mobile calling, e-emailing and text-messaging as well as processing credit and debit card purchases, said Brown, who has been with Lowe’s for 26 years.

Home Depot customers can save shopping and project lists under their My HomeDepot.com accounts. The company recently starting shipping paint online, enabling customers to keep track of formulas, said Jean Niemi, a company spokeswoman.

Lowe’s opportunity to win back sales may be smaller than several years ago, with Home Depot now executing at a “much higher level,” Gary Balter, a Credit Suisse Group AG analyst in New York, wrote in a note to clients Sept. 7. He rates both stocks as “outperform.”

“The reality is that Lowe’s will likely continue to trail Home Depot comps going forward,” Balter said.

Lowe’s fell 8 cents to $19.58 at 4 p.m. in New York Stock Exchange composite trading. The shares have tumbled 22 percent this year. Home Depot has declined 7.4 percent.

To contact the reporter on this story: Chris Burritt in Greensboro at cburritt@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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