Lowe's Expand Into Canada Case Analysis

Lowe’s has entered into the Canadian and Australian market in attempts to gain unclaimed market shares. It has not gained enough traction in the Australian market but has done well in Canada. Lowe’s should focus more on expansion in Canada because of the strong need for Home Improvement stores. Lowe’s has the opportunity to gain more market share by developing a mobile application that allows users to view all items offered and what deals are taking place. Customer service is a top priority in any retail industry, Lowe’s needs to improve this dramatically. Lowe’s needs knowledgeable, friendly-staff that go beyond just showing a customer where a product is in the store. By doing so, Lowe’s will retain more customers and its competitors will lose shares of the market.

The home improvement sector of the economy is large with two major players in the industry and with many smaller local and regional competitors. These two major competitors are Home Depot and Lowe’s. These two companies account for over $110 billion in total sales each year. Even though sales have gone down over the past few years due to the downturn in the economy they have not gone down nearly as much as home sales and this is due to more people deciding to do more home improvements to their own home then buying a new home. Both of these companies have been able to keep up sales and increase them year over year by improving current

Lowe’s (LOW) and Home Depot (HD) are competitors in the every growing market of Home Improvement. The following analysis of each company will examine the home improvement industry, the individual companies, their operating philosophies, their financial strengths or weaknesses, and a final conclusion on which company would be a better long-term investment.

Lowe’s is part of an oligopoly type market structure. An oligopoly is a situation in which a particular market is controlled by a small group of firms with at least two firms controlling the market. The main key to behavior in an oligopoly is that companies must take into account what other companies will do. In perfect competition, firms are price-takers and can ignore other firms (Basic Economics, 2009). The home improvement retail stores are an industry that includes Home Depot, Lowe’s, Builders Square, and in other states, Menards.  Smaller companies have to try to compete with them to stay in business.

However, in 1999, Lowe’s recorded very high sales growth alongside its expansion in preparation for the new millennium. From 1999 to 2001, Lowe’s began to assert itself as a worthy competitor for Home Depot, embodied in its significantly better margins and turnover ratios despite the recessionary economic environment. This improvement in ratios is indicative of positive change in the management of the

Lowe’s is the world’s second largest home improvement retailer and operated 952 stores in forty five states at their fiscal year ending January 30, 2004. The company is currently in the midst of the most aggressive expansion in its history with 130 new stores opened in 2003 and another 140 slated for this year. Lowe’s saw 2003 sales reach approximately $30.8 billion, due largely to their focus on the retail customers and home-improvement projects.

Supplier Power. With a vast variety of products available to Lowe’s, the supplier power is low. Lowe’s can choose from different vendors the products mix that differ from their competition. In addition, entering contractual agreements with vendors helps in lowering this risk.

In order to further strengthen its holdings on the home improvement market, Lowe’s Companies, Inc. has restructured the company’s vision to conform to meet the ever-changing needs of its customers. Lowe’s extensive research has led it to include a well lit sales floor, informative in-store displays, exclusive and proprietary brands, and an ingenious store layout just to name of the few changes. This new vision is not only centered on the store itself, Do-It-Yourselfers and Commercial Business Customers have many ways to satisfy their needs conveniently though stores nationwide by placing orders over the phone, fax, or from the improved Lowe’s web site.

Loblaw’s is one of the most successful companies in the grocery retail industry in Canada, in order for Loblaw’s to penetrate a global market they must identify, plan and execute a strategy. Loblaw’s needs to identify new market potential internationally which in turn increase profit and gross margins, in order to continue expanding. Such starting locations for expansion that seem feasible are developing cities in the United States that are relatively close to the Canadian boarder. This will make it easier to control and monitor this project closely, because since this is the first global expansion, Loblaw’s should keep a close eye on their productivity to determine if they can compete globally. Their financial records indicate that they can expand. Their gross margins and profits are in relatively good standing indicating that they have more money to payoff expenses and potentially expand. The Loblaw’s philosophy of not acquiring debt and using cash flow to purchase new real estate

Through analysis, it is evident that the company must be restructured entirely through the implementation of a differentiation strategy. This strategy will focus solely on transforming the company into a retail chain providing competitively priced appliances, electronics, furniture and home décor. While maintaining a strategically competitive price point, Sears will be able to maintain competitive prices to draw consumers

Home Depot has been expanding their markets by opening new stores and new formats. Home Depot operates under four different business segments:

Lowe 's is the world 's second largest home improvement retailer and the 14th largest retailer in the U.S. Lowe 's is in the midst of an aggressive expansion plan, opening a new store on average every three days. Lowe 's is an active supporter of the communities it serves. Through the Lowe 's Heroes volunteer programs and the Home Safety Council, it provides help to civic groups with public safety projects and share important home safety and fire prevention information with neighborhoods across the country. Lowe 's has been a publicly held company since October 10, 1961. Its stock is listed on the New York Stock Exchange, with shares trading under the ticker symbol LOW.Lowe’s Companies, Inc., together with its subsidiaries, operates as a home improvement retailer in the United States and Canada. The company provides a range of products and services for home decoration, maintenance, repair, remodeling, and property maintenance. It offers home improvement products in various categories, such as appliances, lumber, paint, flooring, building materials, millwork, lawn and landscape products, fashion plumbing, hardware, lighting, tools, seasonal living, rough plumbing, outdoor power equipment, cabinets and countertops, nursery, rough electrical, home environment, home organization, and windows and walls. The company’s products also include boards, panel products, irrigation pipes, vinyl sidings, and ladders. It serves

1. Williams-Sonoma has experienced strong growth in the past year, but this is on the back of a strong economy and in particular a strong new home market. The furniture business is strongly correlated with the strength of the real estate market. In this respect, the company's strategy is largely irrelevant, because within the next five years the real estate bubble will burst and Williams-Sonoma will suffer a major downturn in its own results as a consequence. However, this reality shows that the company perhaps lacks sufficient differentiation, and can only be expected to perform roughly in line with the housing market. It is neither outperforming competitors nor is it underperforming. W-S has sufficient differentiation within the furnishings and home products segment, and has a fairly strong brand name in the segment. The company's status as a mass-market premium company allows it to grow strongly in strong economic times, but also makes it particularly vulnerable to economic downturn, because not only do consumers redecorate at greater intervals, but they will trade down to more affordable stores when they do.

Although times have changed since Lowe's first opened its doors in 1946, Lowe's values have not: the company remains committed to offering quality home improvement products at the lowest prices, while delivering superior customer service. Lowe's utilizes both strategic and financial planning in order to further their business and to stay in the competition with other home improvements stores for many years. Using strategic planning, the company has been able to make changes that allowed saving money and improving customers' experience. As diligent as Lowe's has been over the years, Lowe's reported a slight decrease in its sales and its earnings in its 2008 annual report. For 2009, the company plans to increase its revenues by using a

At the event of any change to the company may it be negative or positive, profitable or non-profitable their will be an adverse effect to the stakeholders. Such effects are as follows: increase on overall sales of the company will yield increase on shares and earnings to either shareholders, employees and business owners; which in-turn will create profit that could be use for company expansion and purchasing of additional tools to use for improvement; that will lead in helping increase customers service elevating the aid provided to our customers; and also by increasing sales will also mean profit for Lowe’s vendors and suppliers, and so on…