Jackson, S. E., Joshi, A., & Erhardt, N. L. (2003). Lowe's. When speaking to Emory University's Goizueta Business School students four years ago, Menear said, "One of the true competitive advantages we have in our business is our culture. "2018 Annual Report," Page 2 of PDF file. Home Depot. See our Privacy Policy page to find out more about cookies or to switch them off. Although this decentralized approach did offer some advantages, it also had significant drawbacks, such as having to use large trucks to ship relatively small amounts of cargo. Lowe’s has the reputation of being less intimidating for first-time home improvement customers. Online-to-offline (O2O) commerce is a business strategy that draws potential customers from online channels to make purchases in physical stores. Lowe's. As examples the company listed things like cordless outdoor power tools and SMART LED light bulbs that were popular in fiscal 2015. Home Depot's response to COVID-19 demonstrated its core value of Taking Care of Our People. The expert examines leadership at Home Depot for Competitive advantages. "Form 10-K 2019." That all adds up to evidence of a significant competitive advantage for the leading retailer in the home improvement industry. Finance. Retail customers consist of two distinct types. © BrainMass Inc. brainmass.com October 2, 2020, 2:19 am ad1c9bdddf, Impact of cultural change; effect on competitive advantage. We use cookies for website functionality and to combat advertising fraud. One major objective that both companies do share is the desire to cater to a customer base that is increasingly active online. Accessed March 21, 2020. Lowe's. That has been reflected in the share price movement: Lowe’s was trouncing Home Depot by as much as 16.7 percentage points earlier this year, but the gap has narrowed considerably. "Lowe's Break Ground On First Stores In Mexico." Returns as of 11/25/2020. Valentin, E. K. (2001). See you at the top! "Lowe’s Plans to Exit Home Improvement Joint Venture in Australia." This aspect of the SWOT analysis framework deals with industry or market characteristics that support business development. Cumulative Growth of a $10,000 Investment in Stock Advisor, What Is Home Depot Inc's Competitive Advantage? This industrial aesthetic gives the impression that the store is geared toward home improvement professionals. "Form 10-K For the fiscal year ended February 1, 2019 Lowe's Companies, Inc." Accessed March 21, 2020. Home Depot Starts Looking Better Equipped Than Lowe’s Lowe’s had a competitive advantage over Home Depot during the pandemic but the tables could turn "History." Hill, T., & Westbrook, R. (1997). "2018 Annual Report," Page 1. It's no surprise that the retail industry is extremely difficult to survive in, let alone thrive in. We also reference original research from other reputable publishers where appropriate. Market data powered by FactSet and Web Financial Group. Accessed March 21, 2020. 1. None of these strengths completely protect the business from the next downturn in the housing market. In addition, any slowdown of the U.S. economy is a major threat because the vast majority of Home Depot’s revenues are generated in the American market. The issues identified in this SWOT analysis of Home Depot show that the company must focus on global growth and expansion. Making SWOT analysis work. Discuss the critical programs used by Home Depot to keep talent in their pipeline. "The Home Depot builds an omni-channel supply chain." "2007 Annual Report," Page 4. Accessed March 21, 2020. SWOT analysis from a resource-based view. Also, the firm’s market leadership and strong brand image are strengths because they help attract the biggest market share. ?s Leading corporations manage, develop, and retain top talent. Best practices in talent management: How the worldâ? The Home Depot faces issues identifiable in its SWOT analysis. Home Depot identified the fact that employees are the face of the organization since they are the ones who interact with stakeholders. Neither experienced much of a slowdown in sales growth last quarter, as consumers continued spending more time and money on their homes. This contrasts with the typical top-down hierarchy of many other large organizations. San Francisco: Jossey-Bass. U.S. Securities and Exchange Commission. "Lowe’s to Close Underperforming Stores." Lowe's. See you at the top! Another weakness of Home Depot is the relative ease of imitating its business. The company’s high quality human resources are the only factor that makes it difficult to completely copy. That's why Home Depot says its digital strategy is critical to its survival and helps separate it from the competition. Image source: Home Depot investor presentation. Home Depot is also weak because it is largely dependent on the U.S. market, thereby making the company vulnerable to downturns of the American economy. Despite their distinctive brands, Home Depot and Lowe’s regard themselves as competing for the same customers. In this regard, the threats identified in this SWOT analysis show that Home Depot must emphasize stronger competitive advantage and global expansion. For most of its history, Home Depot has had the reputation of lagging behind its main rival in terms of supply-chain efficiency, relying primarily on a decentralized supply chain in which suppliers shipped products directly to Home Depot stores. That isn’t to dismiss the gains that both retailers have seen. Its net income has doubled in the last decade, compared to a 55% boost for Lowe's. Accessed March 21, 2020. They compete for a shared customer base across the U.S. and Canada. Despite the onslaught of the novel coronavirus that began in March, the largest home improvement retailer in the United States still managed to have a solid quarter ending May 3, 2020. This is a major concern, especially because the company currently has minimal presence in overseas markets. Accessed March 22, 2020. The company also offers -- in addition to traditional delivery options from fulfillment centers -- conveniences like buy-online, pick-up-at-store. More recently, this strategy includes an animated display kit that projects images on screens and windows, just in time for Halloween. Modern Materials Handling. Accessed March 21, 2020. Stock Advisor launched in February of 2002. This aspect of the SWOT analysis framework points to external strategic factors in the industry or market that could reduce business capabilities. Yes, it aims to provide the lowest possible prices. 2. Oftentimes, the strongest competitive advantages we see in the world of business are built from intangible assets. Outdoor and garden categories proved popular; Home Depot noted that its 12-foot skeletons sold out before October. The format of the report is to be as follows: Silzer, R., & Dowell, B. To outdo the rest of its competitors, Home Depot employs the product differentiation strategy that enables it to supply a wide range of products and services. "Form 10-K 2018." Lowe’s saw sales increase 28% in its latest quarter, after growing 30% in the previous period. Accessed March 21, 2020. Return on invested capital has surged to twice Lowe's figure, and its revenue growth has beat Lowe's since 2011 -- despite the fact that it isn't opening new stores. Lowe's. Home Depot is credited with having revolutionized the American home improvement industry. As of 2020, the average Home Depot store has about 105,000 square feet of enclosed space and about 24,000 square feet of outdoor space for garden products. Lowe’s stores are even larger, with an average enclosed space of about 112,000 square feet and about 32,000 square feet of garden space., In 2019, Home Depot operated 18 mechanized distribution centers in the U.S. and one in Canada. By comparison, Lowe’s operates 15 mechanized regional distribution centers in the U.S. and 7 in Canada. When Home Depot launched its modernization program in 2007, almost all of Lowe’s mechanized distribution centers were already in place, giving credence to the perception that Lowe’s had enjoyed a logistical advantage over its rival for many years., Despite being larger by market capitalization, The Home Depot, Inc. is the newer market entrant. Lowe's was founded in 1946 and Home Depot in 1978. As of March. Home Depot’s revenue rose 23% from a year earlier in its third quarter, basically the same growth it enjoyed the prior quarter. 4. Accessed March 22, 2020. A rising home improvement market has made winners out of both Home Depot (NYSE:HD) and its smaller rival Lowe's (NYSE:LOW). For GDPR compliance, we do not use personally identifiable information to serve ads in the EU and the EEA. To remain competitive, Home Depot is investing $1.2 billion over the next five years to transform its supply chain. This is the case for Home Depot (NYSE:HD), which has a robust organizational culture that has played a key role in the stock's sevenfold rise over the past decade. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.
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