Lowes SWOT and PESTLE Analysis

Strength

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Weakness

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Opportunity

1. Rising trend of DIY in home improvement: The home improvement market is expected to cross $1120 billion by 2025, of which DIY based home improvement market is estimated to be worth $680 billion as per leading industry estimates. The major driver of this trend is the high cost of hiring professionals. People with tight budget constraints prefer to opt for the cheaper option of watching a DIY tutorial and carrying out home improvement work themselves. A survey result shows that 80% of Americans found hiring professionals to be costly and 73% felt there is enough information available for them to do the work by themselves. Lowe’s is capitalizing on this trend to position itself as a trusted source of DIY material by posting helpful tips about many home improvement projects on the company website. There are tips for bathroom, kitchen, dining room, garden, etc.

2. Baby boomers are looking to make their homes old age friendly: As baby boomers are entering their 70s and 80s, they are realizing the need to make their homes old age friendly. This is one of the major drivers of the home improvement market, with households having people aged 55 and above accounting for half of the spending on home improvement of $424 billion in 2017. These people wish to grow old in the same place and are willing to spend on making the place accessible even in old age. People who are doing home improvement projects to increase accessibility spend more than those doing home improvement for other purposes. So, baby boomers are an important target group for companies like Lowe’s to generate significant revenues. However, Lowe’s seems to be focusing more on millennials and the DIY generation like its competitors. As the company struggles to fight off competition, it might be good to put some investment in targeting baby boomers, which is the segment that other companies do not seem to be focusing much on.

3. Booming home improvement market in Asia offers a great expansion opportunity: The strong housing market in Asia Pacific and introduction of innovative high-margin products in the Asian market has led to this region becoming the fastest growing home improvement products market in the world. The Asia Pacific home improvement market was worth $91 billion in 2016, which was 35% of global sales. The growth rate was 30% during 2011-2016, surpassing North America in 2012, and is expected to be high in future too. There is great potential in this region for retailers who can come up with comprehensive packages to cater to the do-it-for-me nature of customers in this region. Major countries for home improvement products in this region are China, India, Malaysia, Japan, Thailand, Taiwan, Philippines, South Korea and Singapore. Lowe’s had a joint venture in this region with an Australian company Woolworth, but withdrew due to lack of growth. The company can make another attempt in this region by focusing on the above-mentioned countries that have better growth opportunities than Australia. In these countries, Lowe’s presence is currently limited to a Global Innovation Centre in India that supports the customer experience enhancement efforts of Lowe’s through analytics. It is time to launch stores and internet retailing options in this region too.

4. Strategic acquisitions to enhance operational capabilities: Lowe’s acquires companies that provide services that can complement its existing products and services in order to provide better service to customers. In 2017, the company acquired Maintenance Supply Headquarters, a top distributor of products related maintenance, repair and operations (MRO) for multifamily housing industry. This was an important part of Lowe’s strategy to better serve the needs of Pro customers. In 2016, the company had acquired another MRO distributor named Central Wholesalers. To strengthen its data-driven merchandise assortment and pricing decisions, the company also acquired Boomerang Commerce’s Retail Analytics platform. Assortment and pricing were key areas of Lowe’s strategy that needed modernization.

Threat

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Political

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Economic

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Social

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Technological

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Legal

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Environmental

1. Natural disasters increase the demand for home improvement products: Natural disasters have been increasing in frequency and intensity in recent years. Hurricanes, wildfires and other disasters have caused widespread destruction in USA over the years. Due to global warming, disasters are expected to further increase in the near future. In the aftermath of disasters, the demand for home improvement products and services shoots up due to the repairs required for damaged homes. Predictable disasters like hurricanes lead to a boost in store sales due to pre-catastrophe preparation. Lowe’s has an emergency command centre to help fund disaster relief in operational areas.

2. Sustainable practices in home improvement: The rising concern about the environment has led to people moving towards sustainable home improvement practices. Some trends in sustainable home improvement are: tankless water heaters, energy star appliances, non-toxic carpets, solar panels and energy efficient doors. Lowe’s does its bit to promote sustainability. In 2018, a Sustainability Committee was created to oversee sustainable practices and monitor latest trends. The company aims to achieve the following sustainability goals by 2025: $350 million investment in local communities, 3 million volunteer hours by employees, encouraging suppliers to come up with sustainability goals, saving $40 billion in costs for customers through sale of energy star products, and responsible sourcing of wood products. Lowe’s has stopped selling products that contain methylene chloride and N-methyl-2-Pyrrolidone. The company’s initiative of promoting sustainable practices in transportation industry by incentivizing freight contractors to achieve efficiency has led to Lowe’s being the only retailer to win the Smartway Excellence Award by the Environmental Protection Agency for 10 years consecutively.