Home Depot has promised to open 200 new stores this year and next year, and Wilkesboro, North Carolina-based Lowe’s is opening stores in many Home Depot markets. The two companies are opening stores so close to each other, they “cannibalize” each other’s sales — and their own. Home Depot’s CFO, Carol Tome, recently told the Home Channel News: “We’re seeing cannibalization rates of more than 30% in some of our markets, such as New England.” At this point in their growth curves, Home Depot with 1,503 stores, has nearly twice as many units as Lowe’s (854), and its revenue at $58.2 billion is more than twice that of Lowe’s at $26.5 billion. But Home Depot’s same store sales fell 2% in the August-October quarter in 2002, and its third quarter sales dropped -11%. Depot stock price plummet almost in half in 2002. Home Depot has begun a $250 million store remodeling plan this year, and according to the Associated Press, plans to hire 40,000 more employees and is increasing training for workers to improve customer service. But the company had to sharply cut back on sales and earnings expectations for 2003. “We were overly optimistic,” said CEO Bob Nardelli, “and we underdelivered.” Meanwhile, Lowe’s and Home Depot brag about turf conquests: Lowe’s wants to open 60 new stores in the New York city metro area, and Home Depot boasts that it has 63 stores in New York, New Jersey and Long Island. The Depot has said “we own Boston” with its 36 stores there. Marshall Croom, Lowe’s treasurer and vice president of finance. told the AP: “We knew we had to be better and different to give a person a reason to take a left turn into Lowe’s rather than a right turn into Home Depot.” Some consumers worry however, that their choice in home improvement stores in being narrowed down to two giants, as many smaller companies disappear. Pretty soon, the left turn/right turn option will be all that’s left.
There still is another choice. Don’t turn left into Lowe’s, and don’t turn right into Home Depot. As these companies saturate our landscape with redundant stores, and cannibalize one another, consumes should “keep going straight” to their locally-owned or co-op hardware stores.
