Atlanta, GA, July 17--Lowe's and Home Depot want to bring their battle for home improvement supremacy into your house or condo, according to the Atlanta Journal-Constitution. Call it "Install Wars," with big bucks at stake.
The arch rivals are seeking to expand the amount of business they get from customers willing to pay someone to install wall-to-wall carpet, floors, roofing, kitchen cabinets and other home improvement products.
Atlanta-based Home Depot, which began pushing its at-home services nearly two years ago, currently has a comfortable cushion in installation sales. It typically arranges installation for its customers by third-party professionals.
"We see at-home services and the service sector as a tremendous opportunity to continue to grow our penetration and our sales using the platform we have in place," said Bob Nardelli, chairman, chief executive and president of Home Depot.
But it's North Carolina-based Lowe's that plans to make a splash this summer, when it rolls out a new installation sales model at locations across the country. The new system will enhance the services it offers and improve customer experiences, said Bob Tillman, chairman and chief executive of Lowe's.
Most importantly, he said, the new installation sales model will allow Lowe's to capitalize on the industry's "explosive growth."
Citing competitive reasons, Tillman would not divulge details about the new installation sales model or how it would appear to customers--whether it involves kiosks or displays in stores.
He did, however, say the model would use infrastructure and technology to provide customers with consistent support and communication throughout the installation process.
Lowe's aggressive play comes as Home Depot itself is counting on more revenue from installation services. Executives from both companies touted their installation services programs during recent meetings with Wall Street analysts.
Installation services, currently a $32 billion market, are becoming more popular, even among the do-it-yourself set, according to Home Depot and Lowe's. The industry has blossomed as more customers decide they'd rather pay someone to do installation work for them.
"This business is a perfect fit for the changing demographics in our country," said Carol Tome, Home Depot's chief financial officer. "We're going after the do-it-for-me, or the delegator, segment."
Home Depot does 2.2 million installations a year, or 10,000 each weekday, Tome said. In 2002, net service revenue was $2 billion.
But in the first quarter of 2003, service revenue at Home Depot jumped more than 35 percent, to $562 million from $414 million.
Lowe's, which had $1.1 billion in installation sales in 2002, is counting on similar success, CEO Tillman said.
"Our goal is to double this business by the end of 2005," he said.
Lowe's is counting on the new installation sales model, which currently is being tested in 128 stores, to produce. The company hired high-paid consultants including McKinsey & Co. to create the new program. It took 18 months to come up with it, Tillman said.
"We're not tweaking a model," he said. "We started all over."
Tillman said results have been strong at the six Charlotte-area markets where the model has been tested. Sales have jumped 55 percent, and complaints have fallen 95 percent at those stores, he said.
It will take more than a year to complete the program's national rollout. Lowe's declined to say whether the new installation sales model will come to Atlanta.
