- The Washington Times - Wednesday, March 5, 2003

SNELLVILLE, Ga.
Home Depot became a retail giant with a do-it-yourself, warehouse style that made homeowners feel like contractors. Its closest competitor, Lowe's, took a different tack, with brighter stores and cleaner floors, hoping to make home improvement a little less intimidating.
Now Lowe's prospects are looking as bright as its stores, while Home Depot recently reported its first-ever quarterly drop in sales.
Nowhere is the contrast in styles more visible than in Snellville, where the Lowe's that sits right across from Home Depot is more brightly lit, with cheerful white and blue signs.
Home Depot, dominant in the home-improvement industry for more than a decade, is still twice as big as Lowe's. But its top executives acknowledge what some industry analysts see a need for change and renewed emphasis on service.
"What worked when you were smaller doesn't necessarily work when you're bigger," said analyst Mark Mandel of Blaylock & Partners in New York. "If you don't reinvest in your business and reinvent yourself, this is what happens."
Home Depot and Lowe's once shared a contractor-oriented look. Then Lowe's took a different course in 1994, when it started opening 115,000-square-foot stores that included home decor and appealed to women as well as men. The approach, less intimidating to people who are not experienced do-it-yourselfers, has helped Lowe's thrive in recent years despite a weak economy.
In Snellville, 25 miles east of Atlanta, 62-year-old Don Lunday, a marketing director, was getting help at Lowe's for remodeling a bathroom in his home in Lilburn, Ga. He said he likes the service at the store.
"Until recently, I preferred Home Depot, but I'm not so sure anymore," he said. "At Lowe's, it seems that people are more knowledgeable and can talk to me."
Across the street in the Home Depot, 50-year-old Beverly Seal acknowledged she sometimes has had to look around for a while to find an employee to help her. But she said she found a better deal on a dishwasher.
"Price is most important," she said. "I'll hunt somebody down if I need help."
Lowe's, based in Wilkesboro, N.C., this week reported a 46 percent increase in its fourth-quarter earnings over those of last year. It also offered an upbeat profit outlook, projecting that earnings for the year will beat forecasts by analysts.
Lowe's, founded in 1946, has 854 stores. It had $26.5 billion in revenue and tallied up 460 million customer transactions last year.
Home Depot, founded in 1978, has 1,502 stores. It had $58.25 billion in revenue last year and 1 billion customer transactions.
Based in Atlanta, it reported its profit slipped 3.4 percent in the fourth quarter as sales dropped for the first time ever. It also said the sales outlook for the year is not promising.
Nancy Aversa of Victory Capital Management in Cleveland, which owns 5.6 million Home Depot shares, said the shopping experience at Home Depot is completely different from that at Lowe's, but that's not necessarily a bad thing.
"Home Depot has always been less pretty, but that's by design," Miss Aversa said. "The pro customer is pretty important to them. Even as we see them make changes to their stores, I don't think they will ever look like Lowe's. That's not who they are or who they want to be."
"I'm not convinced that the Home Depot concept is passe and Lowe's is where it is at," Miss Aversa said.
Home Depot Chief Financial Officer Carol Tome said part of the reason the company has slumped lately is because it is working to transform itself. It is planning a $250 million store remodeling project this year, is hoping to hire 40,000 more employees and is increasing training for workers to improve customer service.
Miss Tome said Home Depot is committed to giving better point-of-purchase information details about how to use a product. The signs around the store also will be easier to read and will provide more details.
Lowe's executives see their success as the product of years of effort and forethought.
"We knew back in 1989, when we were trying to lay the vision and framework for future growth, that we couldn't just open another big box like Home Depot," said Marshall Croom, Lowe's treasurer and vice president of finance. "We knew we had to be better and different to give a person a reason to take a left turn into Lowe's rather than a right turn into Home Depot."
Lowe's traditionally has located its stores in small towns, but it is now expanding into urban areas where Home Depot already has a presence and could start feeling more pressure, said Mr. Mandel, the Blaylock & Partners analyst.
"This is an important year, no question," he said. "I don't know where you really start to see the evidence of the turn, but by the end of this year certainly things need to look a lot brighter."

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide