Home Depot and Lowe's competition in home improvement retail

Home Depot is the giant do-it-yourself home improvement chain selling a huge assortment of items. The customer driven company is known for its excellent customer service, helpful employees, professional clinics and in-store clinics building lasting relationships with customers by helping them to solve their problems. Today Home Depot is the largest in the U.S.A. with more than 355,000 employees and 2,114 stores.

Competitors

Lowe Companies Inc. is the direct as well as major competitor of Home Depot. Lowe started as a regional hardware store and today has become number two home improvement chain. Lowe over the years has given stiff competition to Home Depot resulting in the resignation of its CEO Robert Nardelli this year due to stock's poor performance as compared to Lowe's. "Though Home Depot is the No. 1 home-improvement retailer, No. 2 Lowe's has been growing faster. Lowe's posted a 4% rise in third-quarter sales at stores open at least a year and expects fourth-quarter sales to rise 2% to 4%. Meanwhile, Home Depot's same-store sales fell 2% in the third quarter, and fourth-quarter sales are forecast to be down 3% to 5%. But Lowe's has far to go to close the gap. Lowe's has 800 stores and posted $22 billion in 2001 sales. Home Depot has 1,400 stores and tallied $54 billion in 2001" (Howard, 2002).

Both Home Depot and Lowe are on the Fortune 500 companies list. Other competitors for Home Depot in home imporovement market include Wolseley plc, CCA Global Partners & Menard, Inc. Other than Lowe Home Depot also considers Wal-Mart as its major competitor as they both are in the retail market but Home Depot has its focus on home improvement.

Target Market

Home depot target market is do-it-yourselfers and professionals for home improvement. Other than these there are BIY or Buy it yourself customers who do not have enough time. Both Lowe and Home Depot target the same market. The difference comes in the product line of Lowe as it also offers appliances and home electronics which Home Depot does not offer.

Products wide range of goods and services are offer by home improvement chain that include construction products, building materials, gardening products, home fashion items, lumber, millwork, plumbing & electrical supplies, tools, appliances, and furniture. Home Depot sells its products in unique big-box format stores where a wide variety of products are grouped in complementary product categories.The company maintains its uniqueness through its color startegy as its typical orange color became its brand identity, products and can be seen on signs, equipment and employee aprons.

Home Depot differentiates itself from the rest by diversing and focusing on aprticular areas. They have a wide range of exclusive brands available in their sttores specifically for different purposes. For example Hampton Bay is their brand for lighting, ceiling fans & patio furniture, Pegasus for kitchen and bath items, Glacier Bay for faucets and bath, RIDGID for power tools, Husky for tools, Vigoro for fertilizer & Ryobi for power tools, among others.

Both Lowe & Home Depot hace the same style of Big-box stores to create the environment of a warehouse. In order to differentiate and make a distinctive and better position Lowe has had the slogan of 'Improving Home Improvement.' Both Home Depot and Lowe have similar range of products where's Lowe differentiates in home appliances making it a senond largest home appliance chain after Sears.

Pricing Strategy

In retail business the overall pricing strategy could be high-end pricing philosophy because of unique products or wonderful customer service etc. Or low-end pricing philosophy due to low operating costs, special buys etc. Or medium pricing. Companies like Wal-Mart Company offers low prices and when it comes to home improvement and low prices than the name of Home Depot comes to mind. It is because of their pricing that they adopted the slogan of 'The Home Depot, Low prices are just the beginning' in the early 1990's. Prices run 20 to 30% below those of local hardware stores. However, there are certain categories in which they charge premium prices for example Home Depot is expensive retailerswhen it comes to home construction supplies.

Marketing Strategy

In order to avail the first movers' advantage Home Depot first adopted the slogan of 'The Home Depot: First in Home Improvement!'. Since Home Depot specializes in customer service they later adopted the slogan of 'You can do it. We can help'. Their advertisements and overall advertising startegy also revolves around the theme that you can do-it-yourself with help from Home Depot staff. Their overall budget is also distributed in a way that they give prime importance to customer service so that service remains its competitive edge. Home Depot has believed in extensive advertisement especially when Lowe started gaining market share. "In year 2002, Home Depot spent $895 million on advertising, 9.5% more than the $817 million it spent in 2001 and 24% more than the $722 million it spent in 2000. Home Depot is one of the nation's largest retail advertisers and spends far more on advertising than comparable stores. Home Depot spent nearly eight times as much on advertising in 2002 than its nearest competitor, Lowe" (Lovel, 2003).

A strong publicity strategy has been their sponsorship of Olympic teams in both USA & Canada. Considering the association of Sport and do-it-yourselfers, Home Depot has been actively pursuing the strategy of sponsoring different sports and sportsmen in the United Sates.

The company believes in investing heavily in new product development as an aggressive market strategy. Since the company philosophy is to believe in customer relationship they offer complete solution to their problems as well as different facilities like warranties, rebates and discounts. "The company expects to spend $415 million in 2007 on programs such as loyalty programs, a pro-bid room to handle large customer orders with volume discounts, direct ship programs, credit programs and other specialty sales initiatives" ('Home Depot details strategy for 2007', 2007).