Lowe’s

SWOT Analysis

SWOT Diagram

Strengths

Weaknesses

One of the weaknesses of Lowe’s is the lack of physical stores in other countries. Physical stores are critical for the business operation of Lowe’s Home Improvement Company since many customers prefer to visualize the home improvement products they want before making a purchase. The physical stores provide an opportunity to view and compare a variety of options physically to make the correct decision on what to buy. The lack of physical stores in other countries is therefore a weakness for Lowe’s Home Improvement as they are not able to reach more customers. The company loses competitive advantage over other rival companies in the same business that have invested in physical stores.

Lowe's is a retail business, which means that it receives products from manufactures to resell to its consumers. Since Lowe's provide many name brand products, that means these products come from all around. For a long time, the company has been struggling with its supply chain, which could have been due to its outdated system. Recently the company invested $1.6 billion in capital to modernize it. The company has made some improvements, but there are still issues to resolve; for example, at the 2020Annual Shareholders Meeting, Marvin Ellison CEO of Lowes stated, "We went into this year with our best in-stock position in probably ten years. But as you think about our global supply chain, the first COVID impact in the global community started in Asia. And so, we saw early disruption in Asia, but the Asian market has really recovered well, and we're basically back at normal production capacity. And although we have sporadic merchandising categories that we're dealing with supply and demand-related issues, overall, we feel really good about our ability to serve our customers…". Also, at that meeting, a question was asked "My store has more inventory than the footprint allows. Is there a way for you to determine the level of inventory each store needs to be in stock without having excess inventory?" Ellison replied," The short answer is yes... This is something that we spend a lot of time on. This is something that is part of our supply chain transformation and is something that I also believe we'll continue to get better at as a company."

Opportunities

One opportunity that Lowe’s could capitalize on is the rising trend of the DIY millennial. Surveys conducted among homeowners shows that the DIY trend on various projects is on the rise with millennials reporting high confidence on their ability to carry out projects on their own. The rising trend of DIY projects is driven by the need of the young generation to save some money in their home projects. Others report getting a high satisfaction from taking on DIY projects for their homes. The development of the internet today also means there are various information sources such as forums, YouTube videos and others that a person can use to learn the skills to complete most projects. Lowe’s Home Improvement can take the opportunity to offer some of their products for DIY at a lower cost than fully assembled products.

With a Rise in consumer spending and more people are moving into urban areas worldwide; The Global Home Improvement Market is on the rise. The Asia Pacific market is becoming the fastest growing home improvement market in the world. As of 2019, the Global Home Improvement Market is valued at USD 849.31 Billion, and this market is projected to increase to over 4.5% CAGR from 2019 to 2025, projected the 2025 Value would be at 1120 Billion (USD). In 2016, the Pacific home improvement market was worth $91 billion USD, which equaled 35 percent of global sales. There are many excellent potential countries in this region for retailers to expand to countries like China, India, Japan, Thailand, Taiwan, Philippines, South Korea, and Singapore. In 2009 Lowes forged a joint venture with an Australian retail giant Woolworths Ltd but withdrew due to lack of growth. The company can make another attempt in the Asia Pacific region since those countries have a better growth opportunity than Australia had. Lowe's only International presence is a Global Innovation Centre in India that supports customer experience enhancement. It will be great for Lowe's to launch stores and internet retailing in this region as well.

Baby boomers prefer home improvements over downsizing. As about 10,000 baby boomers reaching retirement age each day, the need to make their homes more accommodating is increasing. Of the 6% of baby boomers that own a home, 88% are looking to renovate in the next three years. In 2017 households with 55 and over accounted for half the total spending on home improvement, which equaled $424 billion. However, Lowe's and its competitors seem to be focusing more on millennials, and unlike Millennials, baby boomers are more willing to spend extra on professional installation. With Baby boomers being an important target group, companies like Lowe's need to shift some of its focus to them to generate significant revenues.

Threats

With the threat of breach of system and cybersecurity attack on the rise in the united states, its latest victim being Barnes & Noble. The attack on Barnes & Noble happened on Oct 10, 2020; this attack denied many readers access to their libraries and leaked their personal information, including transaction history and email addresses. Many U.S. companies are falling victim to these incidents despite the increased awareness and improved security measures. Like Barnes & Noble and other retailers, Lowe’s stores’ personal information about its vendors, employees, and customers and later provided to third-party service providers. In 2014, Lowe also experienced a data breach; this breach was by a third-party vendor. The results of this breach led to the leak of personal information of many current and former employees. Lowe’s alerted its employees of the breach, and the vendor took steps to secure its servers to prevent another breach.

In an Intense growing Market Competition, locally and internationally poses a threat to the company. With Lowe’s being the second-largest home improvement company in the U.S., it has much ground to make up if it wants to catch up with its top competitor Home Depot. In 2019 Lowe’s reported sales of $72.2 billion, and Home Depot reported $110.2 billion. Menards, the third-largest retailer in the country, does not release its financial reports. Still, according to Forbes, Menards reported $10 billion in sales during its Fiscal year ending Dec 31, 2018, also during 2018, Menards was the leading contender in terms of customer satisfaction according to J.D. Power. However, in 2019, Lowe’s overtake Menards but was beaten by Ace Hardware and True Value, whom both scored 840 out of 1000.

Lowe’s Home Improvement faces threats such as an economic recession. Economic recession is a threat to the business as they lead to a decline of the economy, loss of jobs, low production, low consumer spending, and income reduction. During an economic recession, consumers prioritize their basic needs, which means that industries such as home improvement do not get many sales. The reduced income in a recession means that the customers do not have much to spend on home improvement, which threatens Lowe’s business.

S.W.O.T. Matrix

Recommendations

References

Lowe's Companies, Inc.2020. Fort Mill: Mergent (https://ezproxy.utm.edu/login?url=https://www-proquest-com.ezproxy.utm.edu/docview/1860751899?accountid=29025).

Companies, L. (2020, August 19). Lowe’s reports second-quarter 2020 sales and earnings results. PR Newswire: press release distribution, targeting, monitoring, and marketing. https://www.prnewswire.com/news-releases/lowes-reports-second-quarter-2020-sales-and-earnings-results-301114513.html

"Lowe's Companies Inc Annual Shareholders Meeting - Final." Fair Disclosure Wire, 29 May 2020, p. NA. Gale OneFile: Business, https://link.gale.com/apps/doc/A626452981/ITBC?u=tel_a_pml&sid=ITBC&xid=6097aa0f. Accessed 8 Nov. 2020.