New York, September 29--Lowe's Cos. suppliers are seeking price increases more often these days, but vendors aren't necessarily getting them, a company official said Tuesday.
"Thus far, we've really held the line pretty firmly on price increases," said Dale Pond, senior executive vice president of merchandising and marketing for the Mooresville, N.C., home-improvement retailer.
During the company's annual analyst and investor conference, held in New York and broadcast on the Internet, Pond was asked if suppliers are pointing to rising costs for such raw materials as steel and resin as they seek price increases.
Pond said "there's been a lot more activity" in terms of requests. But he and other managers generally respond by suggesting Lowe's review its product line in the category in question. "It's amazing, when the line review is held out there as an option for us to look at ways in which to reduce costs...those price increases typically disappear pretty quickly," he said.
Lowe's has accepted price increases "in very, very select areas," he said. But the company is locking them in with raw materials pricing and expects to receive rebates or price cuts when suppliers' costs fall, he said.
The company also said it was adding a program similar to Wal-Mart Stores Inc.'s "rollback pricing" strategy intended to boost customer traffic in stores.
Executives with the the company said it has already has put about 1,400 to 1,600 products in its "New! Lower Price" program.
"These are permanent price reductions" that are "not necessarily large, not 20% to 30%," said Pond.
The price cuts represent savings from logistics improvements, from lower-cost imports or from the ability of a supplier to pass along part of its expected gains from volume increases, Pond said. In some cases, Lowe's can offer lower prices on flashlights, for example, because it knows it will sell more batteries at full price as a result of the rollback, which will also generate more sales of flashlights, Pond said.
The program is part of Lowe's "everyday low pricing strategy," which is intended to offer low prices every day rather than holding sales events, said Bob Gfeller, head of marketing.
"It's not a reduction of price that has a window of sale opportunity," Pond said. "It's really a lower price." So far, he said, "the customer's responding very positively, as they do with other everyday low price retailers when they roll back prices."
