New York, NY, June 3 - Lowe’s chairman and CEO Robert Tillman told analysts he's not concerned about big boxes overruning the American landscape. Speaking at the Sanford C. Bernstein & Co. 19th Annual Strategic Decisions Conference, Tillman said the $400 billion-per-year home improvement industry is so fragmented that saturation is not a concern.
Tillman said the three major players and thousands of independent dealers vy for control of 18 core categories. Lowe’s, Home Depot and Menard together hold the largest market share in only 5 of the 18 categories, and 40 percent in just one — hardware.
"Home improvement is truly the sweet spot of all retailing," Tillman said.
"I’m convinced that the phenomenon of cocooning will continue in the U.S.," Tillman said.He noted that increased immigration, a growing sense of comfort in the home and an aging baby-boomer generation continue to propel the home channel industry. "The home has increased up the hierarchy of human needs, more strongly than in the past."
Tillman said the demands of analysts have forced his biggest competitor to drive comp sales — not earnings, sales or inventory turnover. "It’s a comp issue," he said.
He also addressed questions on whether Home Depot has tried to emulate Lowe’s in reformating its stores, with a focus on female shoppers and better lighting. "First of all, good luck in reformatting," Tillman said. "My dream would be that they'd reformat all of their stores. When you reformat a store, you lose a million bucks just in inventory strength.
"You can’t go 15 years of burning up stores and not maintaining them, and then all of sudden in the middle of the night fix them," Tillman added. However, Tillman said Depot did get the better of Lowe’s during the first quarter. Given the poor weather in the Northeast, which continues into the second quarter, Tillman said he wished he had another 200 stores in California and 100 more in Florida, which would offset Lowe’s poor Northeast, Atlantic and Midwest sales. "Our competitor has four times the stores in those states," he said. "But you know, weather goes away, weather improves."
