Lowe's CEO shares pricing strategy

Lowe’s is competing in the price wars -- especially with Internet retailers -- by using the merchant mind-set of “dead net pricing.”

Speaking at the UBS Global Consumer Conference Wednesday, Lowe’s CEO Robert Niblock described his company’s improvements in the price wars.

“In 2010, late 2010, 2011, we did some pricing work. And we determined that our pricing had gotten out of line with where it need to be from a competitive standpoint. So we then took some pricing actions later in 2011 and a year later in all of our competitive shops, so those big-box competitors, we're at price parity, which is where we want to be,” he said.

Responding to a question about investing in the retailer’s price position, Niblock introduced the term “dead net pricing” during the line review process as a merchant strategy to keep prices low.

“I think one of the things that will likely help there when you think about our merchants now as they go through the line review process, they're really going to more dead net pricing,” he said.

He described this term thus: “That's the price perception in their mind that they're gauging their margin off of.” It differs from the previous approach of “having a price from a vendor and having other holdback allowances that were utilized for other promotions and those types of things,” he said.

Niblock stressed that Lowe’s intends to be price competitive, whether the competitor is another store or an online retailer.