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Home Depot Incorporated And Lowe's Market Report

2904 words - 12 pages

Home Depot Incorporated and Lowe's Market ReportThere are many competitors in the home improvement industry today and competition is at an all time high. There are two very strong leaders in the industry today and they are The Home Depot and Lowe's. An industry of competition, and tight margins these two companies still at it. Both of these companies stand now as the industry standard for the home improvement sector, and have extremely strong financial positions and a long future in the home improvement industry. This paper will cover each company's strengths and limitations, Home Depot's and Lowe's focus for the next year and next five years. This paper will also discuss the companies' strongest competitors, and their geographical expansion. Lastly, the weakening of the dollar will be discussed and how this issue affects these giants of the industry and how this will affect them within the next ten years.Companies' StrengthLowe's and Home Depot are both national builder supply chain stores. Both of these stores cater to the do-it-yourself market as well as retail establishments and independent contractors. Lowes and Home Depot pride themselves on their affordable prices and large selections. The large selections that both companies offer give them an advantage over smaller retail stores. Their large store plans give them much more room to display a variety of different products. Lowe's and Home Depot buy in large quantities. This gives them buying power which is another advantage over the smaller retailer. With Lowe's and Home Depot purchasing their inventory in bulk, they are able to sell their inventory at a lower price. Sometimes, smaller retailers can purchase business products at Lowe's or Home Depot at a cheaper price instead of their specific industry distributors. An excellent example of this would be the retail flooring stores. Materials needed for setting ceramic tile such as thin-set or grout can often times be found at Lowe's and Home Depot cheaper.Lowe's and Home Depot have built a reputation on selection and prices. This reputation gives the two companies great name recognition which is an advantage over a new or smaller building supply retailer.When one looks at financial information for the two companies, much information jumps out. Home Depot has been able to grow much faster than Lowe's. Yet for 2006, Home Depot showed no growth in net income. Lowe's had only a 12 percent growth versus the year of 2005 growth of 28%. Home Depot closed approximately 20 Expo stores in the last two years. An investor might want to look closely into financials in light of those two facts. Management is another area where Lowe's shines compared to Home Depot. Several attempts were made to contact a store manager at a Houston based Home Depot. Management which cannot be accessed by his or her customers is another serious problem for companies. However, Lowe's management was easily reached and helpful in answering any questions.Companies...

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