Porter’s Five Forces Analysis of Lowe’s Companies
|Industry||Retail and Wholesale|
|Headquarters||Mooresville, North Carolina|
|Revenues||US$ 96.2 billion,FY 2022 Ending January 2022 – Annual Report|
|Profit||$ 8.4 billion, FY 2022 Ending January 2022 –Annual Report|
|Competitors||IKEA,The Home Depot, Walmart, Target, Sam’s Club, Costco,|
Lowe’s Cos., Inc. engages in retail home improvement selling of various products including materials for house care, house repairs, remodels, and decoration.Almost 2,100 retail locations are owned and operated by Lowe’s in all 50 states and Canada.The company was founded in 1946 by Carl Buchan.The company has a brand value of US$ 30.4 billion in Year 2021 declared by Statista.The Lowe’s Company ranked 37th by Fortune 500 and on 162nd number by Forbes Global 2000 Year 2022 list.
Porter’s Five Forces Analysis
Porter’s Five Forces Analysis of Lowe’s Company is used to determine the company’s competitive position reference to it’s Industry for better strategizing the companies’ operations for higher profits and less competition.
Lowe’s Rivalry among Existing Competitor
- Lowe’s Business Segments: The Company provides goods for home improvement, remodeling, and maintenance including items offered are in the categories of lighting & fans, windows, outdoor living, doors, flooring, paint, electrical, plumbing, bathrooms, appliances, construction supplies, and electricity.The Business Segment Reporting Lines are Home Décor which generated US$ 34.02 billion which is 35.3% of the total revenue,Building Products which generated US$ 15 billion which is 32.4% of the total revenue ,Hardlines which generated US$ 28.7 billion which is 29.7% of the total revenue and Other generated US$ 2.5 billion which is 2.6 % respectively.
- Lowe’s Operations & Revenues FY 2020 – FY 20222: The Company generated a record revenue of 96.3 billion in FY 2022 which is an increase of 7.4% from FY 2021 when revenues were US$ 89.59 billion. The Company produced a revenue of US$ 72.14 billion in FY 2020.
The Company reported a record profit of US$ 8.4 billion FY 2022 which is a 45% growth rate from previous year, while US$ 5.83 billion in FY 2021 and US$ 4.28 billion in FY 2020.
- Lowe’s OperationsEach week, Lowe’s conducts more than 19 million consumer transactions in the US and Canada.Lowe’s is the country’s second-largest hardware retailer, just below Home Depot. In 2021 the most renowned and trustworthy carpet brand Stainmaster, was acquired by Lowe’s. During the global pandemic in 2020-2021, when millions of Americans were trapped indoors and chose to make their homes more functional for a lifestyle of working from home, Lowe’s had a commercial boom.
- Investment in Research & Development-Marketing Cost and Brand Image: The business offers its products under a number of private brands, including Kobalt, Project Source, Utilitech, Allen+roth, Harbor Breeze and Reliabilt. For the company’s 100th anniversary in 2021, Lowe’s announced in month of March that it will fund neighborhood restoration projects in 100 American cities and towns, providing a total of $10 million for chosen initiatives.
- The Home Depot: The Home Depot is the top leading home improvement specialty store around the globe.The company made $16.4 billion in profit and $151.2 billion in revenue in 2022.The assets are valued $71.9B in total. There are 2,298 Home Depot retail stores in the United States and Canada.Home Depot considered one of the direct competitors of Lowes having a brand value of US$ 52.9 billion as of Year 2020 declared by Statista.
- Menards: The third-largest home improvement retailer in the US, after Lowe’s and Home Depot, is Menard. Menard is also active in the residential and real estate industry. In 1962 John Menard Jr. founded the business, which now has over 300 locations spread over 15 states in the Midwest. Revenue for the business was $13 billion in 2022 compared to $11.8 billion in 2021.
- Costco:Costco Wholesale Corp., operates membership warehouses as commercial operation. based in Issaquah, Washington in USA. In 2022, the company had a $5.5 billion profit and revenues of $210.2 billion. Assets are valued at $63.1 billion in 2022.
Lowe’s Threat of New Entrants
- Global Home Improvement Industry: The market for home improvements was projected to be worth $763 billion USD in 2020. According to Statista, the home improvement market is expected to reach $1 trillion in value by 2027, growing at a compound annual growth rate (CAGR) of more than 4%. Comparable yearly increase for this sector has been noted in many other economies, including Mexico, France, Germany, and others.
- High Capital Investment- Trained Human Resources: According to Lowe’s, it seeks outstanding thinkers and doers with a depth of product and project expertise for all positions, from store workers to Lowe’s contact centers and corporate teammates. Associates at Lowe’s provide assistance in-store, at homes, and on the construction site. They are specialists in remodeling, repair, and installation.
- High Research & Development Cost: Lowe’s had a 28.1% rise in same-store sales due to increased consumer spending on home renovation projects during the pandemic. In order to increase sales, Lowe’s has also implemented turnaround strategies, such as rebuilding its website, upgrading its stores, strengthening in its supply chain and gaining the business of contractors and electricians.
- Technological Advancement: With its MyLowe’s programme, the brand also offers installation services for goods like siding, roofing and flooring in addition to on-site repair and maintenance services.
Lowe’s Bargaining Power of Suppliers
- Supplies Industry Leader and Influencer: For heavier items like appliances and grills, Lowe’s switched to a market-based delivery strategy in three locations. Due to the new strategy these items are delivered directly from bulk distribution hubs to customers’ homes, completely bypassing shops. It resulted in higher customer satisfaction and profitability. By 2023, Lowe’s aims to implement the new supply chain model throughout all of its U.S. markets.
- Suppliers Strategic Collaboration:The Company has 7,000 vendors and suppliers work with Lowe’s Companies, a major home improvement store.One of the biggest suppliers to Lowe’s is Avery Dennison, a company that creates fastening, labelling and RFID solutions. Illinois Tool Company supplies with cleaning supplies and gear. Stanley Black & Decker sends parts and power equipment to Lowe’s. Deere & Company provides variety of components and accessories for lawn care.
- Supplier Categories – Diversity and Inclusion
The Company has 2 main categories for it’s suppliers one is Merchandising (Retailing and Reselling) and Sourcing (for internal use and not for reselling) .The Company has practice diversity have inclusions from all sectors of the society including women, minorities, veterans, LGBTQ and persons with disabilities.
Lowe’s Bargaining Power of Buyers
- Customer Satisfaction & Increasing Spending: The Lowe’s company experienced 1 billion customer transaction in 2021 in comparison of Home Depot which experienced 1.8 billion customer transactions. In Year 2021 an average customer is spending is 96.09 U.S dollars from Lowe’s stores which is an increase of US$ 10 respectively.
- Increasing Brand Loyalty:The Company has strong brand loyalty and growing continuously as it has a brand value of US$ 12.7 billion in FY 2016, increased to US$ 13.9 billion in FY 2017, increasedto US$ 16.02 billion in FY 2018, reached to US$ 23.93 billion in FY 2019 .The company reached a brand value of US$ 24.75 billion in FY 2020 and 30.37 billion in FY 2021 which is an increase of 23% respectively.
Lowe’s Threat of Substitute Products or Services
- Digital Business Trending in Home décor and maintenance: Almost two million additional goods are available through online selling channels, with the average Lowe’s-branded home improvement store stocking around 40,000 items. According to forecasts, the US home décor industry will be worth 202 billion dollars in 2024. Any new digital business trending may impact the sales and purchase patterns of the consumers.
- Post-COVID 19 Recovery Market, Online Sales Channels and Design Innovation: Lowe’s owns or manages around 2,200 hardware and home improvement outlets. Over 300,000 people were employed by these stores. Sales of home improvement items through physical retail locations and online sales channels include how Lowe’s makes money. Origin2 is a brand-new, high-end home décor line introduced by Lowe’s in 2021 to offer accessible, contemporary style for everyday use.
There are rooms for improvement and construction market is experiencing a recovery growth with digital disruptions and product design and innovations are important factors to keep retaining the existing market share and customer base.
- Forbes, Profile, Lowe’s
- Forbes, Profile, Costco
- Forbes, Profile, HomeDepot
- Forbes, Profile, Menards
- Fortune, company profile, Lowe’s
- Lowe’s, Our business. Available at Lowe’s
- 10 Biggest Retail Companies –Investopedia. Available at Investopedia.
- The Top 4 Suppliers of Lowe’s–Investopedia. Available at Investopedia.
- Home Depot vs. Lowe’s: What’s the Difference? Investopedia. Available at Investopedia.
- Lowe’s 2021 Annual Report. Available at Lowe’s
- Statista – Home Improvement.Availableat.Statista
- Statista (May 2021) Worldwide home improvement market value from 2020 to 2027(in billion USD) | Statista. Availableat.Statista.
- Statista (December 21,2022) Lowe’s brand value worldwide from 2017 to 2021 (in million U.S. dollars).Available at Statista
- Forbes 2022, The Global 2000
- Lowe’s Annual Report FY 2021
- Statista (July 27, 2022) Global net sales of Lowe’s from 2017 to 2021, by product category (in million U.S. dollar).Available at Statista
- Lowe’s Company History
- Statista, (July 27, 2022) Number of transaction by Lowe’s customers worldwide from 2003 to 2021 (in millions).Available at Statista
- Statista, (July 27, 2022) Average amount spent by Lowe’s customers worldwide from 2003 to 2021 (in U.S dollars).Available at Statista
- Lowe’s Supplier Registration