Lowe’s is the second largest retailer of home improvement and hardware goods in the United States and a member of the Fortune 500. Despite stiff competition from Home Depot and Target, the company remains a major player in the home improvement industry.
Lowe's is also one of the few companies that thrived during the Pandemic - with people staying at home more, it was natural for their focus to shift to home improvement, and changes needed to be made around the house to accommodate work-from-home needs as well. Despite this, the company's growth is slow, and any bottom-line success Lowe’s achieves comes at the expense of its employees' satisfaction. A high staff attrition rate, a lack of innovation, and seemingly no plans to expand all appear to be impeding Lowe’s long-term survival.
Industry Structure and economic feature
Lowe’s recognised the threat of competition and both Lowe's and some Depository stores started to invest in rapid expansion, growing their stores into large big-box retailers where customers could come to buy a variety of products ranging from appliances to tools, to paint, lumber, and nursery products to improve their homes. There have only been a few significant regional corporations that have been successful in penetrating this market, like Enars and Rona. His industry is largely restricted to North America, with the exception of the most recent transfer of some funds to China. Lowe's recognised the threat of competition and both Lowe's and some Depository stores started to invest in rapid expansion, growing their stores into large big-box retailers where customers could come to buy a variety of products ranging from appliances to tools, to paint, lumber, and nursery products to improve their homes. There have only been a few significant regional corporations that have been successful in penetrating this market, like Enars and Rona. His industry is largely restricted to North America, with the exception of the most recent transfer of some funds to China.
The factors that affect the industry include:
• Industry growth rate is slow
• Competitors are numerous
• Consumer switching cost is very low
• Fixed costs are high
• Products are largely undifferentiated.
• Consumer switching cost
Lowe’s Companies Strategies
Business Level Strategies
With a broad range of products and services available to both professionals and consumers, Lowe’s Total Home Strategy enables a Total Home solution for every need in the home. Providing clients with one of the most omnichannel, customer-centric retail experiences in the world is the cornerstone of its strategy.
The five main focus area of the company include
i. Accelerate Online Business
ii. Drive pro penetration
iii. Drive Localization
iv. Expand installation services
v. Elevate Assortment
• Corporate level Strategies
When Lowe’s acquired Washington-based Eagle Hardware & Garden, which had 41 stores, in 1999, it started its push into western states. It was renamed Lowe’s Companies, Inc. after it went public in 1960 and started trading on the New York Stock Exchange in 1979. Up until 1988, locations were roughly 20,000 square feet, but in 1989, when Home Depot passed Lowe's as the leading chain of home improvement stores, the firm started concentrating on developing larger stores of about 100,000 square feet and phased out the smaller stores. In 2004, Lowe's set a goal of expanding its domestic market share by 16–17% over the course of two to three years. For that time, increase stores by about 300.
To reach its customers, Lowe’s employs various customer segmentation. Radio advertisements are used to highlight significant events, while newspaper and magazine advertisements are used to reach customers and remind them of the company’s Everyday Low-Price guarantee and wide range of products. National television is utilised to increase brand awareness. To establish relationships with present and potential clients, such as first-time homebuyers, direct mail campaigns are used. Information is shared with clients and subscribers via the internet and email. Consumers can purchase gift cards as a practical alternative to cash. Businesses can also use accounts for business-to-business gift cards as incentives and rewards.
Competitive Analysis and Advantage in the industry
The elements that put Lowe’s ahead of its rivals in the eyes of the marketplace are referred to as the company’s competitive advantage. Greater consumer value, excellent service, and higher prices are all examples of competitive advantages. Making stores more appealing to unconventional customers who generally avoid home improvement centres is the main emphasis of Lowe’s approach to outperform its rival. The business also employs a retail approach that targets women.
According to each company’s annual report, Lowe's has, on average, larger stores and garden centres (113,000 and 32,000 square feet) than its primary chain store rival Home Depot (105,000 and 32,000 square feet). In one region of the country, Lowe’s tests a layout; if it is proved successful by other businesses.
1. Strong Brand Portfolio
2. Strong distribution network
3. Highly successful go to market for its products.
4. Successful track record of developing new products
5. Automation of activities
6. High level of customer satisfaction
7. Strong free cash flow
8. Good Returns on Capital expenditure
1. Net contribution margin and profitability ratio is less than most of the companies in the industry.
2. Limited success outside core business.
3. High Attrition rate in work force.
4. Organization structure is compatible with only current business model.
5. Unsuccessful in integrating firms.
1. New customers from online channel
2. Opening up of new markets
3. Decreasing cost of transportation
4. Stable free cash flow
5. Government green drive is beneficial for the company.
1. No regular supply of innovative products
2. Growing strengths of local distributors.
3. New technologies developed by the competitor
4. Shortage of skilled workforce
5. Increasing trend toward isolationism
6. Rising prices for profitability.
Political factors: The elements that can affect Lowe’s Companies, Inc.’s long-term profitability in a particular nation or market are heavily influenced by political issues. Operating Home Improvement Stores in more than a dozen nations, Lowe's Companies, Inc. exposes itself to various political system and environment hazards. Diversifying the systematic risks of the political environment is necessary for success in such a dynamic sector as the home improvement stores industry across international borders. The political factors include trade regulations, intellectual property protection, level of corruption, risk of military invasion and so on.
Economic factors: The aggregate demand and aggregate investment in an economy are determined by the macroenvironmental factors, such as the inflation rate, savings rate, interest rate, foreign exchange rate, and economic cycle. While microenvironmental elements like industry norms have an impact on the firm's competitive edge. The economic indicators of an industry, such as the growth rate of the home improvement stores sector, consumer spending, etc., as well as national economic indicators like growth rate and inflation, can be used by Lowe’s Companies, Inc.
Social factors: The manner of life and culture of the society have an effect on the organisational culture in a given setting. When creating a marketing message for consumers in the Home Improvement Stores industry, Lowe's Companies, Inc. marketers must take into account the shared views and attitudes of the wider population.
Technological factors: The technological factors that affects the Lowe’s company include technological impact on product offering, recent technological development, impact on Value Chain structure, rate of Technology diffusion and the impact on Cost structure in home improvement stores industry.
Legal factors: Some of the factors that affect the legal involvement of Lowe’s business include employment law, data protection, copyright, consumer protection, and health and safety law.
Environmental factors: The environment of factors that affect the company include weather, climatic changes, endangered species, waste management and service sector, attitude towards and support for renewable energy, loss regulating environmental pollution, recycling and attitude towards green product.
Target Market Analysis of Lowe’s Companies
Demographic Characteristics of Market
The age range of Lowe’s target market is between 24 and 36, often adults with higher incomes who can afford to engage Lowe’s house consultation and installation services. By introducing products for do-it-yourselves (DIY), the company has successfully positioned itself in the minds of its target market.
Psychological Characteristics of the Market
Examples of psychographic segmentation include luxury goods and products that cater to a specific lifestyle, such vegetarianism and pescatarians. The decision to select one product over another basedon variety or functionality is an example of behavioural segmentation.
Behaviours of The Target Market
The latest trend in the home improvement industry indicates that the consumers are preferring advanced and innovative technology for improving their lifestyle and making changes in their home.
Strategies appealing to the Market
The Lowe’s strategy that appealed to the market include the delivery of right home products at the affordable prices while providing excellent service and value across every community it serves.