Charlotte, NC, May 31--Lowe's Cos. younger portfolio of retail stores and new programs will help distinguish it from larger rival Home Depot Inc. as that home-improvement retailer adopts some of the same strategies Lowe's has used for years, top executives with the smaller chain said Friday.
In interviews after Lowe's annual shareholder meeting in Charlotte, Chairman and Chief Executive Robert Tillman and company President Robert Niblock said it's true Home Depot is doing some of the same things as Lowe's, such as placing a stronger emphasis on reaching female customers and adding higher-end merchandise that is boosting average sales tickets.
Home Depot centralized its buying back in 2002, while Lowe's had already had centralized purchasing. And at its annual meeting Thursday, Home Depot reported some of its initiatives to improve customer service are also starting to take hold.
Meanwhile at Lowe's, "We're not exactly standing still," Niblock said in an interview after the meeting.
The Mooresville, NC company is focusing on improving operations, merchandising and logistics to differentiate itself from competitors, Niblock told shareholders.
Lowe's new program for offering installation services for its products "is better than anything out there in the industry," Niblock said. And its increasingly electronic special-order system is also setting the company apart, he said.
But he and Tillman said Home Depot's signature orange stores and Lowe's blue stores themselves will remain a key distinction between the chains.
Niblock said Lowe's 952 stores, which are on average 114,000 square feet, have an average age of about 4.5 years, and the company has "always had a focus on maintaining those stores," Niblock said.
Lowe's plans to spend about $3.4 billion this year on capital expenditures, including adding 140 stores and spending $450 million on updating and renovating older stores. It will spend a similar amount next year as part of $3.6 billion in capital spending, a company spokeswoman said.
Meanwhile, Home Depot's average store is 107,000 square feet, and the company last year launched a major program to renovate stores, saying the average age then was five years, with about 26% of stores more than seven years old. Home Depot is spending $1 billion this year on store-modernization efforts and plans to give every store over the next three years a minimum of new signing, lighting, paint and floor finishes. The Atlanta retailer operates 1,700 stores in the U.S., Canada and Mexico.
Tillman said that when Lowe's began transforming itself in 1989 from a small regional retailer to a national chain, the company built bigger stores than Home Depot in part to maintain wider aisles and a less cluttered, brighter look, which customers said they wanted. "That's part of our culture," he said.
Home Depot's more limited selling space will make it more difficult to add new merchandise, he said.
In addition, any change, including big renovations or merchandise resets, carries risk. "What does that do to your business momentum and do you disenfranchise your core customer?" he said.
Home Depot's core customer has historically been in commercial construction--"that guy in the pickup truck with a tool belt," Tillman said, while Lowe's for years has tried to cater to women.
