Lowe’s Home Improvement Heading West
Competition for Southern California’s lucrative home-improvement market got fiercer Tuesday with the announcement that a North Carolina-based home-and-garden chain plans to expand into the region by late 1999.
The proposed move by Lowe’s Home Improvement Warehouse is part of a $1.5-billion push to open 100 stores in California, Arizona and Nevada--most of them in the Southland--by 2003. Lowe’s said it plans to open the first expansion store in late 1999 in Southern California.
The chain, considered the nation’s second-largest retailer of home-improvement products, with 1997 sales of $10.1 billion, currently reaches only as far west as Lubbock, Texas. It has 449 stores in 26 states. Each store typically employs 200.
Tom Whiddon, Lowe’s chief financial officer, said part of the impetus for the expansion was company research that showed the Western United States boasts annual home-improvement spending of $38 billion, a third of which comes from Southern California. The research also indicated growth potential in the region of at least 4% annually, he said.
“Heading west means introducing Lowe’s to one of the home-improvement industry’s strongest growth regions,” said Robert Tillman, chairman and CEO of Lowe’s. “Moving now allows Lowe’s to establish a beachhead on the West Coast, enabling our company to continue growing into new markets throughout the United States.”
The company is entering an arena dominated by Home Depot and HomeBase, the state’s two largest home-improvement chains. Atlanta-based Home Depot now operates 95 stores in California alone and plans to add 61 outlets in the Golden State over the next three years. HomeBase, headquartered in Irvine, also has extensive penetration, with 48 stores in California and 37 more in 10 other Western states.
Last year, two other regional chains, San Jose-based Orchard Supply Hardware, owned by Sears Roebuck, and Eagle Building & Garden of Renton, Wash., announced California expansion plans.
In a Tuesday conference call, Lowe’s executives brushed aside suggestions that the company is wading into a saturated market.
Whiddon said company research shows that the top three home-improvement chains nationwide--Lowe’s, Home Depot and Builders Square--together accounted for no more than 30% of all domestic home-improvement sales last year.
“We have done extensive research looking at the competitive landscape,” he said. “The home-improvement business is very fragmented. The market has tremendous potential for us.”
The company plans to set itself apart from its competitors by heeding customer suggestions and building roomier stores with wider aisles, among other strategies, said Larry Stone, Lowe’s chief operating officer.
Whiddon added that Lowe’s plans to aggressively target women, who make up half the chain’s customers, he said. “Research shows us that female customers today have a lot of say over what goes into their houses.”
Home Depot spokeswoman Amy Friend said store appearance is not a major component of her company’s business strategy.
“We don’t focus as much on making our stores look pretty,” she said. “We’re more concerned that the people working in our stores have the knowledge to help our customers. We’d rather provide good advice and low-priced products than spend a lot of money on the interior of our stores.”
Representatives from HomeBase could not be reached for comment.
Within the next couple of months, Lowe’s plans to open a Southern California real estate and development office that will coordinate store locations throughout its initial target area of Southern California, Las Vegas, Phoenix and Tucson.
