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Lowe's Case Study

Essay by   •  July 28, 2012  •  Case Study  •  1,809 Words (8 Pages)  •  1,873 Views

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Strengths

Lowe's is the second largest home improvement retailer in the world with net earnings of $1.9 billion in 2003. Lowe's strong market position enables them to attract more customers, new as well as the existing markets, thus gaining an advantage in the home improvement market. Lowe's demonstrates an advantage in virtually all core retailing abilities including merchandising, customer service, technology and distribution. To put in another way, while the competition tends to focus more on the building side of home improvement, Lowe's emphasizes improving the look and feel of the home. "The easy to navigate Lowe's website was a key element in its promotional strategy. The site allowed customers to search the company's inventory on a store-by-store basis, compare products and prices, and order online or for store pickup" (Wheelen & Hunger, 2010). This adds to customer convenience which is one of the main ways Lowe's can utilize to stand out.

Lowe's caters to both retail and business customers. "To help maintain appropriate inventory levels in stores and to improve distribution efficiency, Lowe's operated 10 highly automated regional distribution centers" (Wheelen & Hunger, 2010). The company also had nine smaller facilities to help distribute merchandise efficiently. Currently, more than 50 percent of the company's inventory moves through its distribution centers. Lowe's executives aim to add even more inventory to their distribution center network, sending more trucks more often to each store.

Weaknesses

While there are many different threats a company can face in its lifetime, one of the biggest ones that Lowe's faces many be the lack of stores it has compared to its highest competitor Home Depot. Lowes has many locations available for its customers however they are more spread apart and harder to find then the locations of the Home Depot. The market share for the companies shows a great amount of difference proving that the Home Depot right now is more popular than Lowes, Home Depots overall market share is 18% while Lowes has a market share of almost half at 9%.

Another issue Lowes faces is the fact that there brand image may not be as high as its competitors due to recalls and brand loyalty. Lowes came in the market as a small home goods store created an image to satisfy every customer and make sure they provide great quality products for their customers. Over the years once Home Depot came in the market as well, Lowes had to make sure to keep its image up and provide the same great services as it has in years past. Within recent years it seems that Lowes has had many more recalls and issues with their products which could be caused by the variety of vendors it uses. This may cause customers to second guess their choice when it comes to purchasing a product from one of the two stores.

Lowes has to take into consideration the opportunity to expand into different markets worldwide. They are very focused on the US market that it may end up hurting them because of all the different economic factors. Lowes has to think about the declining home values and all the issues people are having with homes currently in the United States. With that as a big factor Lows should consider entering into other markets where the economy is more stable allowing people to still spend money on things they need fro their home and garden. Right now Lowes has not yet entered any different market in comparison to their competitor Home Depot who has acquired The Home Way which is a Chinese home improvement retailer, the acquisition happened in 2006 giving the Home Depot entry into a huge market in one of the fastest-growing home improvement markets.

Lowes needs to look at different ways to grab the attention of new customers by offering product to fit all lifestyles, while it's a renter or a homeowner. Home improvement stores focus primarily on home owners by giving them a lot of gardening, paint and new appliances and fixtures. As important as all of these things are to a homeowner, where does it leave a renter? A person that rents may still come to Lowes for things such as paint and maybe a few gardening items depending on the size of their rental property, but Lowes should focus on offering a bigger variety of carpets or smaller home items that may bring renters into the store as well.

Opportunities

In 2003, there was an optimistic national economy and an expanding number of "buy-it-yourself" consumers that were generating a wave of growth in the home improvement retail industry. As a result, major home improvement superstores were expanding. "Lowe's developed and installed a sales program that allowed customers to arrange for installation in over 30 categories" (Wheelen & Hunger, 2010). The company began offering classes on various home improvement projects as well as self-service kiosks available in stores for customers to specially order products. Those special items are available for customers to order however, Lowe's does not have to hold that inventory as discussed earlier. Instead they utilize their company owned distribution centers and smaller support facilities.

Lowe's recognizes that a large portion of their customers are women. Lowe's insists their stores to be pristine, sparkling, brightly lit with wide, uncluttered aisles; in short, more attractive to women. The store also sells a variety of home decorating products such as lamps, window treatments and designer towels, and these items cater primarily to women. In an effort to gain commercial business customers, Lowe's developed a

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