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Battle of the Retail Heavyweights: Lowe's vs. The Home Depot

June 23, 2011

Since RetailWire is all about discussion, we thought it might be fun to have a good, old-fashioned "retail rumble" - take a pair of notable retailers, and ask our expert BrainTrust panel and readers to tell us who does the better job. For our first effort, we'll take a look at a pair of real heavyweights, Lowe's and The Home Depot.

First, here's the "Tale of the Tape":

The Home Depot and Lowe's are both clearly success stories, with nearly 4,000 stores between them. While "The Great Recession" wasn't kind to either retailer or the home improvement category, it gave each the opportunity to get back to basics. In its most recent annual report, The Home Depot noted that comp sales were up nearly three percent in 2010, the first increase in several years, and that it had undertaken major initiatives including providing employees with mobile capabilities via its FIRST phone program; completed 19 Rapid Deployment Centers to improve the supply chain; and made strides in multi-channel retailing. They also issued "Success Sharing" checks totaling over $16 million to employees, which was five times more than in 2006.

For its part, Lowe's said it grew market share in 10 of 19 product categories in FY 2010; provided consumers with better credit, delivery, and installation options; and rolled out programs to reach customers at their job sites and homes. Lowe's also slowed store expansion to focus on improving the customer experience in stores they already operate.

Personally, I like both retailers and haven't had a bad experience in either one over the past several years. Prior to that, I thought the major differentiation between the two was that the service at Lowe's was better, but I'd say the companies are now on par, at least in my market, with associates fairly accessible, friendly, and willing to help.

One of the differences I find at local stores is the self checkout option. It's available in the local Home Depot, but not Lowe's. Personally, I don't think self-checkout is a great option for many large/bulky items that one tends to purchase in home improvement stores. Overall, I'd give a slight edge to Lowe's on years of good customer service, but the edge to The Home Depot on building a larger company and years of financial performance.

What do you think?

FINANCIALS:     [NYSE:HD] [NYSE:LOW]

Discussion Questions:

Discussion Questions: What do you see as the pluses and minuses of Home Depot and Lowe's? Which is doing the better job at the moment?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Which of the following choices is currently doing the best job in home improvement retailing?

Comments:

Pound for pound, Lowe's is doing a better job of reaching and appealing to the female consumer (the center of the home improvement decision process). Their stores are more comfortable, better lit and contain fixtures and shelving more conducive to a pleasant shopping experience.

Neither Lowe's nor Home Depot is exactly setting the world on fire in terms of innovation but in the war of attrition, I'd have to give the edge to Lowe's.

Doug Stephens, President, Retail Prophet

I shop Home Depot for lumber and DIY stuff and Lowe's for in-home stuff such as appliances plus their nursery stock and lawn products. Lowe's presents a more comfortable atmosphere for the non-professional contractor. Because of that, my guess is that women would prefer Lowe's.

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Gene Hoffman, President/CEO, Corporate Strategies International

So, RetailWire is going all "NASCAR" on us? Think readers just tune in to watch the rubbin' and wrecks that make racin'? Well, let's see if this sets up a pile up in Turn Three.

I'll take Lowe's. For one thing, they have been sponsoring NASCAR for longer than HD. For another, they "got" the fact that DIY was going to be about consumers instead of contractors faster than HD.

HD definitely had a more aggressive business model, more capital and a more visionary leader in the early days. And they were creative in trying to manage contractor + consumer business by offering things like early hours for contractors only and Dunkin' Donuts coffee shops in the store for contractors.

But in the end, Lowe's focus on the consumer as the DIY driver of choice led to steady performance while HD had to weather years of strategic turmoil. Lowe's also never got ahead of themselves with their store expansion plan. Oh, and Lowe's does have self-scan in their Vernon Hills, IL outlet at least.

So it's the Lowe's car by a length as we enter lap 221 folks. It will be interesting to see who has the fastest pit time as we set up for the final 29 laps here at RetailWire Speedway!

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Ben Ball, Senior Vice President, Dechert-Hampe

I shop at both Home Depot and Lowe's (occasionally one will have something the other doesn't). I have found the service at Home Depot to have been greatly improved in the past year, which brings it up to the level of Lowe's.

Both locations where I shop offer self checkout which I find handy. I think it helps keep people like me who may be buying smaller items out of the lines of people buying bulky items and results in faster transaction times for both.

I agree with Doug regarding the female shopper. Not exactly scientific research, my wife will shop at Lowe's but not at Home Depot.

Not sure which is doing a better job overall but am pleased to say it is far closer today than it was in the past.

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Steve Montgomery, President, b2b Solutions, LLC

I have read reports in the past that broke down these two competitors by gender and consumer types. Lowes seemed to be the choice for most women and for men that are not "build it" and "fix it" type guys. Home Depot seemed more appealing for men that like to construct it, build it, and fix it!

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David Biernbaum, Senior Marketing and Business Development Consultant, David Biernbaum Associates LLC

Home Depot - less expensive, friendly employees, but more of a warehouse feel

Lowes - more upscale.

Joanna Kreider, Research Analyst, Ahold USA

Interestingly, our experience here in NW Arkansas (yes, home of the other big player in some of the diy smaller goods!) is that Lowes is much stronger. Part of this, as in many cases, is the location. Lowes is just easier to get in and out of as far as traffic: just off a main street. Home Depot is tucked away and feels harder to get to.

Also very interesting is that my husband is a contractor and by far prefers Lowes for its customer service on his terms. Not the upscale experience, just the employees are much more knowledgeable about the products and uses and can direct him more quickly to his specific needs.

It does come down to one's own experience, one of those retail truths that is enduring. Serve a customer well and you will earn loyalty!

'llp1986'

While two home improvement retailers, they have different target audiences. THD, legacy HI warehouse, is focused on behind the wall. While Lowe's, drafting on THD, saw an opportunity with in front of the wall focus.
Both make forays into each other's expertise (THD brought in Martha; Lowe's management of Kobalt) but do what they know better. They are operational peers. In terms of merchandise, it depends upon the project.

'IMRetail'

Home Depot has the easiest location to reach from my home but Lowes provides a better service experience. Their associates are in their departments to help you locate what you are looking for. Home Depot has enough associates to provide good service but they are either lined up along the entrance's main aisle to direct you to a specific area or when you get there, preoccupied stocking the shelves. In Lowe's, merchandise is better presented, organized and they appear to have a better in stock position within the department. As a customer I do not have the time to run around trying to find an item, be told what aisle to find it in, then get there and find no one is there to help you or they are out of stock. That is what occurs many times when I do shop at Home Depot. That is the reason I voted for Lowes.

'RHS'

Lowe's vs. Home Depot is pretty much a gender issue, as several folks here have observed. I'm happy they are rivals, as I believe this motivates good prices and service.

If I'm looking for a nice feminine light fixture, closet organizers or a kitchen appliance--Lowe's soothing blue comes to mind first. If I need a few manly sheets of flake board, a dusty sack of concrete mix or some lag screws, I see orange and head straight to HD.

This analysis is probably influenced by past bias as much as present facts, but here it is: Guys go orange; gals go blue.

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James Tenser, Principal, VSN Strategies

As a guy who actually does DIY stuff, it's a wash to me. Add my wife into the mix and Lowe's gets the nod.

Depot is two lights away, Lowe's is three, so it's Home Depot for pretty much everything unless I know something specific is available only at Lowe's.

That being said, not sure I think the "shopping experience" is really any different--the whole "caters to females" argument is a little tough to embrace when it would be tough to tell which of the two you're in if you were to use the same color shelving.

I just conducted a series of store audits in outdoor lighting and had trouble figuring out which reference pictures connected to which retailer!

Of course, I'm seeing it all thru male eyes!

So hmmm...is the male/female difference still real or has that positioning stuck in everyone's minds since of course, Depot was originally more interested in a pro-like model and has been trying to soften that for years?

It would be fun to evaluate specific examples of areas where some feel "Lowe's is doing a better job of reaching and appealing to the female consumer"--of course, thru female eyes! ;)

William Carlson, President, Kestrel Marketing, Inc.

What everyone said; there's just something about HD I don't like--not that it stops me from shopping there, mind you--and I'd love to gives Lowe's a try, but for me it's proximity: the former has no fewer than 2 stores in my fair burgh, while the nearest Lowe's is...well, I don't even know. And on a side note, I think the brief recap of the two companies is an excellent idea worth repeating with other company specific discussions...who the heck has time to look up Debenhams (or whoever)?

'notcom'

While I acknowledge that Lowe's appears to appeal more to women and HD to contractors, for me I find these two pretty much in a dead heat. For me, that pretty much brings it down to location and convenience. Here in New England, HD has been in place longer, and tends to have the better, more convenient locations. I think that tips the scale a little bit in their favor.

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Ted Hurlbut, Principal, Hurlbut & Associates

Well, I just finished mowing the lawn and decided to check back in on the race. It looks like the Lowe's car cleared the pits in style and may have even picked up a half-car length on its lead. But it's still anyone's race as we head to the checkered flag.

Seriously though, the main reason I jumped back in with a second post today is to say how great it is to see so many posts from people who aren't saddled with the "BrainTrust" label. I'm probably in the minority opinion on this (as on most things it seems alas)--but sometimes I feel as conspicuous as Clayton Moore in pale blue spandex on these posts. (That's a reference to "The Lone Ranger" for those readers under 40.) It is wonderful to see so many folks contributing great perspective and opinion.

Great discussion, Al!

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Ben Ball, Senior Vice President, Dechert-Hampe

Important question to ask, Al, particularly among leading retailers. And, both of these Big Box operators are solid performers in numerous ways.

The "Brain" in this "Trust" is focused on a couple of other topics today, so I'll share the "Wisdom of the Crowd" -- in other words, some of the responses from the May, 2011 and May, 2010 Consumer Intentions & Actions (CIA) Survey from BIGresearch. Here's what 8,500+ adults had to say about their respective Home Improvement/Hardware Store they shop MOST often":

Demographically, these shoppers look similar. A slightly higher percentage of Lowe's shoppers are married -- 55.3% to 49.0%. Home Depot shoppers are slightly younger at an average age of 45.8 years vs. 48.3 years at Lowes. Home Depot mirrors the U.S. population in terms of race, while Lowes has a loyal shopper that is 86.7% Caucasian. H.D. does a better job of counting Hispanics in their corner, and they have a household income that is about +2% higher than Lowes.

On the ticket front, both chains made progress in growing the average check over the past 12 months. The typical U.S. consumer reports that they spend $38.55 on home improvement items this year vs. $36.10 last May. At Home Depot, their customers will spend $42.58 per month in 2011 vs. $41.45 in 2010, while Lowes customers maintain that they spend $41.70 per month this year compared to $40.30 in May, 2010.

Loyalty is strong for both concerns, well above that enjoyed by other hardware store averages. H.D. customers have chosen that destination MOST often for 10 solid years, compared to Lowe's customers following them for 9 years. Lowe's, however, has an impressive Net Promoter Score of +28.3 vs. Home Depot's NPS of +22.8. The average home improvement shopper rates their store's NPS at a mere +7.6.

Overall preference share for store shopped MOST often is moving up for Lowe's in May, 2011 compared to May, 2010 -- 26.3% to 24.3%, while H.D. is down slightly during that 12 month period.

Shoppers of both of these chains cross shop to the other competitor -- that puts pressure on customer and in-store experiences. In this area, the consumer is maintaining that Home Depot is doing a better job on location, tips within the store, and knowledgeable sales people. Lowe's comes out on top in terms of selection, quality, service, and in-store experiences of appearance and layout. In every instance, both chains are well above the ratings they give to other home improvement stores.

When you're VERY GOOD -- and both of these chains are -- the last experience is often the tie-breaker. Making retail work is a never-ending opportunity and battle.

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Roger Saunders, Managing Director, Prosper Business Development

A simple shopping experience can tell you little about a big box fortune 100 company and its ability to address market conditions in this "GREATER DEPRESSION" or any economy for that matter. One must look under the hood and know what they are looking at to see what they are built to win and if they are really racing against one another on the same track. In this case I think not. Home Depot started as a big box needing big ticket sales to expand and same store grow. The contractor business in a build crazy economy was easy play for the real key executive in this company and the needed personalities and executive capabilities were bought, put in place and performed to the economy. The first "CEO" took them to $40+ billion, the second to $90+ billion, and the newest damage control executive group is keeping them at about $65+ billion. Not bad for what happened to the economy.

Lowe's on the other hand started quite small and has maintained the small store "get to know and service your DIY customer" approach to business. This is a more fiscally conservative executive group that is in its element with a slower paced, minimum risk growth plan. A very keen awareness of how to cater to and capture the DIY shopper market is used to insure success and maintain constant growth. I am sure they both would love a bigger piece of each others focus markets but they are what they are and simply put there is a world of difference.

'gjarnoldjr'

Both Home Depot and Lowe's suffer from expansion. The orginal format was that the employees would be experts and could guide customers. Both lag in that area now with around 2,000 store each in operation. Lowe's tactics are the wisest. Slow expansion, improve customer experience, new ways to reach customers.

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Roy White, Editor-at-large, RetailWire

And a fickle lot we are, we DIY consumers....

Roger/BIGresearch's numbers are, to me, more or less a wash--pretty equivalent give or take a couple of percentage points.

Interestingly, however, "Loyalty is strong for both concerns" and yet "Shoppers of both of these chains cross shop to the other competitor."

True to that point, I almost don't see them as two distinct retailers as much as one source of similar materials in two locations that are so close in proximity (in my neighborhood, so sample=1, though true elsewhere as well) that I go to the closer one first and the other second if I can't find what I'm looking for. (And we aren't getting regional here but Menard's third--or first if I happen to pass by it when thinking about something I need!)

So that could be interpreted as loyalty based on frequency but it's really frequency based on (perceived) convenience.

Again, my wife would differ as she would direct me to Lowe's first. Perhaps explains Roger's data suggesting a small skew of Lowe's customers being married? Roger: slice that again, choices of singles vs. choices of married--maybe even married shopping by myself vs. married shopping with bride--oops, sorry, just love the data-crunching....

But gjarnoldjr makes an important point, which is to consider their different strategies and compare based on that--to me this means that the up, then down, and likely imminent up for Depot (as homebuilding eventually rebounds and construction work increases) is an approach dependent on the pro trade with consumer sales being gravy vs. Lowe's targeting the steadier spending DIYer and picking up pros as gravy? Yes, some exaggeration/simplification to make a point, but we're all judging based on a consumer perspective and that's perhaps not the only basis?

William Carlson, President, Kestrel Marketing, Inc.

If it's indeed true that HD has self-checkout and Lowe's chooses not to, then on that customer service fact alone I'd say that Lowe's definitely has a plus over HD. Who wants to self-check out lumber, huge garbage bins and bags of sand? I prefer to shop at smaller hardware and appliance stores overall, anyway. Nothing frustrates me more than some kid at Home Depot who knows nothing about the store's inventory!

'Jini'

Of course, Home Depot. From India, the reason seems to be that Lowe's does not have a direct office here.

ADEESH JAIN, Prop, ANK EXPORTS

The Home Improvement industry generates annual revenues of about $129 billion. Home Depot rakes in 58% of the industry's annual revenues, while Lowe's which is the second-largest company, takes 39% http://bit.ly/1fVu5JY

catherine kylie, CEO, ABC

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