January 11, 2007
HD Challenge: Will LOW Continue to Outperform?
As a former Director and Executive of HD, I make observations based on my research of how the customer is rating the shopping experience compared to that of LOW. I have noted a significant shift in culture and attitude at HD under Nardelli's leadership and have marked changes in several categories within the store's assortments and presentations.
While advising clients of my findings, I am ever mindful of the dynamics of retailing and wonder if positive change is imminent or not.
The pay package and the operating style of Nardelli has not matched the challenges of the leadership mandate at the company and yet the Board extends the mandatory retirement age to assure "continuity"?
Analysis:
I've followed HD for twenty years. Ditto LOW.
My research covering the Company has been focused on what the customer is thinking and how he (she) is likely to return to the store for future shopping opportunities.
While touring several stores, I have been most unnerved by the lack of customer cultivation, a concept adhered to passionately by the Founders of the business "back in the day". While advising clients of my research, I have noted a particular disdain attached to the management style put in place by the now departed CEO. The top down management style was in great contrast to the bottom up culture that made the Company outperform others in the industry.
When CEO Nardelli refused to acknowledge shareholder issues at the last annual meeting, I reflected on the same attitude being demonstrated at store level. The militaristic, autocratic method of management seldom, if ever, motivates those who make their living serving customers. It appeared that Shareholder concerns and employee concerns were overlooked as if there was no basis or thought put into them.
I note the stance by the Board of Directors re mandatory retirement age and find that it's important to ask "Will the Board continue to function as it has and assign the CEO role to another non-retailer?"
Because the Board has the "experience" it noted as a reason for the waiver of said mandatory retirement, will it suddenly become more ardent in it's dedication to shareholders and employees alike?
Additionally, should investors believe in this very same Board who appointed Nardelli to begin with? Will the Board embrace (or not) change in culture and attitude at all levels of the retail business? Will the store experience improve or remain the same? Will Lowe's continue to outperform HD?
Report a Concern
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