The home improvement retail industry is a dynamic and competitive sector of the retail market, where giants like Home Depot and Lowe’s have long been vying for dominance. These retail giants are household names, with a ubiquitous presence in countless communities across the United States and beyond.
One of the key metrics that often measure their success and influence in this industry is their market share. Market share reflects the percentage of total industry sales that a particular company or retailer commands. It is a critical indicator of a company’s position within the market and its ability to attract and retain customers. In this essay, we will delve into the world of Home Depot and Lowe’s, two industry titans, to examine and compare their market share, exploring the factors that have shaped their positions and the implications of their market dominance in the realm of home improvement retail.
By understanding their market share, we gain valuable insights into the strategies, strengths, and challenges these companies face in their quest for supremacy in the home improvement industry.
Table of contents
The Home Depot, Inc.
Established in 1978, The Home Depot stands as the world’s largest home improvement retailer renowned for its competitive prices. This company is publicly traded on the New York Stock Exchange and boasts an extensive product range, aiming to serve as a comprehensive destination for customers seeking building materials, home improvement goods, garden supplies, and decorative items. The Home Depot operates a vast network of over 2,300 stores throughout the United States, Canada, Mexico, and three U.S. territories.
Typically, a Home Depot store encompasses approximately 104,000 square feet of indoor space and roughly 24,000 square feet of outdoor garden area, a size roughly equivalent to two football fields. The company also possesses distribution and fulfillment centers in its operational infrastructure.
READ ALSO: When Does Home Depot Charge for Online Orders?
Lowe’s Companies, Inc.
Founded in 1921, Lowe’s currently ranks as the second-largest home improvement retailer globally, having ceded its position as the sector’s largest retailer to its more recent competitor, The Home Depot.
Lowe’s is a publicly-traded company listed on the New York Stock Exchange, with its primary business operations concentrated in the United States. Notably, Lowe’s stores typically have larger footprints compared to Home Depot’s outlets. Similar to The Home Depot, Lowe’s provides an extensive array of home improvement tools and services, including its own branded products such as Stainmaster carpets and Kobalt tools.
SEE ALSO: How Much Does Home Depot Pay?
According to a report by Statista, as of 2021, Home Depot has a market share of approximately 30%, while Lowe’s has a market share of around 20%.
Lowe’s Net Profit and Revenue
Lowe’s revenue and net profit grew at a CAGR of 8.9% and 25.4% respectively between 2017 and 2021. The drop in the net profit in 2018 was due to a one-off elimination of underperforming stores and non-core assets.
In the first nine months of 2022, there was a 0.4% decrease in revenue and a significant 24.3% decrease in net profit compared to the same period the previous year. The decline in net profit for the nine-month period in 2022 can be attributed to a substantial US$2.1 billion impairment charge associated with the sale of its Canadian retail division. It’s worth noting that the Canadian retail business is anticipated to contribute less than 6% of the company’s total revenue for the year 2022.
READ ALSO: Does Home Depot Give 11% Off?
Home Depot’s Net Profit and Revenue
Despite marginal expansion in the number of stores from 2,284 in 2017 to 2,317 in 2021, Home Depot’s revenue and net profit grew at a compound annual growth rate (CAGR) of 10.6% and 17.5% respectively between the same period.
The company appears well-positioned to have another successful year in FY2022. Despite an inflationary business environment, the company was able to pass on the cost increases to consumers. Consequently, the number of customer transactions decreased by 5.3% year-on-year in 9M 2022. However, consumers are still willing to spend on home improvements. In fact, the average customer ticket increased by 9.7% YoY during the same period.
Home Depot Vs Lowe’s
Both The Home Depot and Lowe’s possess strong brand recognition, enabling them to transfer the impact of inflation, supply chain disruptions, and fluctuations in raw material prices to their customers. This is evident in their consistent gross profit margins throughout the pandemic.
As these companies continue to expand and enhance operational efficiency through measures like investing in supply chain infrastructure and establishing distribution centers, they will maintain their competitiveness within the home improvement market. This is exemplified by their improved net profit margins during the pandemic.
The Home Depot, being the larger market player at present, enjoys an advantage in achieving economies of scale, which contributes to a higher net profit margin compared to Lowe’s.
FAQs On Home Depot And Lowe’s
Home Depot is a well-known American home improvement and construction supply retail company. It offers a wide range of products and services for home improvement, renovation, and construction projects.
Lowe’s is another prominent American home improvement and appliance retail company that provides various products and services for home improvement, construction, and remodeling needs.
Both Home Depot and Lowe’s have a vast network of stores across the United States and, to some extent, in other countries. They typically have stores in urban and suburban areas, making them easily accessible to customers.
Conclusion
When Americans consider home improvement, the first names that often come to mind are likely The Home Depot and Lowe’s. These corporations have rapidly acquired a significant portion of the market in this industry, outpacing their rivals. Collectively, in 2017, they commanded a remarkable 81% of the market share in the home improvement retail sector.
References
- fifthperson.com – The U.S. Duopoly of Home Improvement: The Home Depot vs Lowe’s
- investopedia.com – Home Depot vs. Lowe’s: What’s the Difference?
- seekingalpha.com – Home Depot Vs. Lowe’s: The Clear Winner
We Also Recommend
