We conducted a Lowe's SWOT Analysis to see what internal and external factors affect the operations of Lowe's and find out their strengths and weaknesses.
Imagine it's Sunday, and you're chilling in your home. Suddenly you remember the kitchen sink is leaking or your bathroom shower is not working. What is the first thing that you will do? If I were in your place, I would drive straight to Lowe's because that's the best place to solve all your house-related problems.
All the people reading this article must have visited Lowe's to buy home improvement products at least once in their lifetime.
Since Lowe's is one of the most significant companies in the home improvement industry, let's conduct Lowe's SWOT Analysis to see what internal and external factors affect the operations of Lowe's.
However, before carrying out its SWOT analysis, it is essential to know Lowe's history and current operations. If we trace the origin of Lowe's, we come to know that a small hardware store in North Carolina named Lowe's North Wilkesboro Hardware later turned out to be one of the leading home improvement retailers after a few decades.
The first Lowe's North Wilkesboro Hardware store was opened in 1921. The store initially offered building materials, hardware, dry goods, and groceries. Due to the nature of the products it offered, customers kept the store alive.
Later in 1949, the second branch of the store was established. By 1955, six branches of the hardware store had been opened in different cities in North Carolina. In 1961, the home improvement company finally went public under the name of Lowe's.
Soon after going public, the customer base of Lowe's increased. In 1964, Lowe's served one million customers in a year. In the following years, Lowe's got listed on the New York and London Stock Exchanges as well.
Looking at the growth of Lowe's, it was decided to expand the company's operations internationally. So finally, Lowe's opened its first store in Canada in 2007 and later approached the Indian market.
After carrying out operations for more than a century in the market, Lowe's is considered the second biggest home improvement company in the U.S. In 2022, Lowe's managed to generate $96.2 billion.
Lowe's has managed to expand its operations significantly. Currently, Lowe's has 2,200 stores operating combined in the U.S. and Canada. To maintain the operations and carry out tasks in these stores, Lowe's has hired around 300,000 employees.
After getting its shares traded in the stock market In 1961, the price of Lowe's shares has gone up over the years due to its amazing performance in the market. Currently, Lowe's has a market cap of $119.52 billion. The house improvement company has become the 87th most valuable company in terms of market cap.
Now that we've discussed Lowe's history and current operations in detail. Let's proceed further and carry out Lowe's SWOT analysis. Before we head forward, you need to know what SWOT analysis is.
SWOT analysis is a tool businesses use to analyze the strengths, weaknesses, opportunities, and threats an organization faces. A SWOT template basically highlights the internal and external factors of an organization that impacts the organization's operations.
I am sure reading this has made it clear to you what SWOT analysis is and what is the purpose of conducting it. So now, without further ado, let's proceed and carry out Lowe's SWOT analysis.
Strengths Possessed by Lowe's
All the organizations that function in the market possess some strengths and some weaknesses. Strengths are the plus points of any organization, which help an organization to move forward. Similar to other organizations, Lowe's also possesses several strengths. Let's have a look at what they are.
Brand Name
Businesses spend years in the industry struggling to make their name significant. However, if the brand gets recognition, then it gets easy for the brand to increase its customer base and revenue.
One of Lowe's top strengths is its brand name, with over 2,200 stores and 300,000 employees across the U.S. and Canada. The company also has a large e-commerce store selling most of its products.
Due to its name recognition, Lowe's is the second-largest home improvement retailer in the U.S. It is considered a household name because of its affordable prices and quality products.
Heavy Budget for Marketing
Marketing is one of the key aspects that determine the success of a business. Moreover, In today's world, where everyone has access to media and social media, businesses need to spend on marketing.
Lowe's has been in the retail industry for over a century. This is why it knows the significance of marketing. Despite being a home improvement brand, Lowe's spends a significant amount of its revenue on marketing.
For example, in 2019, Lowe's spent $811 million on marketing. This helps the brand increase its reach, resulting in an increase in customer base and revenue.
Efficient Supply Chain
In today's fast-moving market, brands need an efficient supply chain. Therefore, businesses need to know the importance of having an efficient supply chain. Brands that are never short on products tend to attract more customers as they don't cause inconvenience.
Lowe's has an efficient supply chain responsible for offering customers high efficiency. In addition, it has several distribution centers across the U.S.
The company has a chain of stores and distribution systems that allow efficient product availability while simultaneously creating more reliable communication between all the parties involved in the business.
Weaknesses of Lowe's
Weaknesses are the internal factors that holdbacks an organization from achieving its potential. Organizations need to work on their weaknesses timely to get them solved. In this section, we will analyze some of the weaknesses possessed by Lowe's.
High Reliance on The US Market
Relying on one market is never considered smart in business since placing all eggs in one basket is always risky.
This is why brands are always looking forward to expanding their operations internationally. However, Lowe's is one of the brands that primarily depend on only one market, the U.S. market, for generating revenue.
Lowe's generates almost 93% of its total revenues from the U.S. market, which poses a problem for the company since relying on one market can be risky. In the past, it has failed to expand overseas and relied too heavily on this market.
High reliance on one market can be risky for Lowe's. For example, Lowe's will suffer financially if the economic activity goes down in the U.S. market.
Lack of International Presence
Organizations tend to spread their operations internationally to increase their customer base so that their revenue can be increased.
Although Lowe's is one of the top home improvement brands in the U.S., it doesn't have any operations internationally besides a few stores in Canada.
The choice of not going international has damaged Lowe's significantly as it has hindered the growth and revenue of the home improvement company.
High Prices
Pricing has a significant impact on the sales of a company. This is because customers always prefer low-priced products. This is why many brands keep their prices low compared to their competitors so that more customers are attracted to their brand.
Many consumers avoid buying Lowe's products because they are priced much higher than other brands. As a result, many consumers decide to cut down their commitments with this company and shop at competitor brands.
Although Lowe's understands that its customers often compare the price of Lowe's products to the prices offered by other companies, they have not taken any action or appropriate steps to reduce their prices.
Opportunities Present for Lowe's
The market provides opportunities to every brand. However, the brands need to avail of these opportunities timely to achieve growth. Under this heading, we will analyze some of the current opportunities for Lowe's that can help it dominate the market.
Increasing Frequency of Natural Disasters
One of the biggest challenges that the world is facing today is climate change. In addition, natural disasters have increased globally in the past few decades. Although natural disasters are devastating, they do provide opportunities to some companies like Lowe's.
Natural disasters are an unpredictable part of life, which means they can cause significant damage and disruption to a community.
This can significantly impact individuals, businesses, and the overall economy. However, companies like Lowe's thrive in such environments as they benefit from increased demand for home improvement products and services.
Diversify Portfolio
Brands look forward to diversifying their portfolio after spending some time in the market to stay relevant. For example, Lowe's has been offering home improvement products for over a century. However, the home improvement brand can now diversify its portfolio by adding construction services to its portfolio.
This will help the brand increase its customer base as the market will now target construction industry customers. As a result, diversifying the portfolio will help Lowe's generate more revenue and tap into the untapped markets.
Expanding Internationally
International expansion provides opportunities for brands to increase their customer base and revenue. So far, Lowe's hasn't spread much of its operations internationally. This allows Lowe's to tap the untapped international markets to widen its profit margins.
Lowe's can expand its operations in developing economies where the demand for construction is high. Besides that, opening stores in countries where natural disasters occur frequently can benefit the brand.
Threats Faced by Lowe's
Every organization faces threats from the external environment. Businesses look forward to countering these threats on time so that they don't create problems for the brand in the future. This last section of the SWOT analysis will analyze the threats faced by Lowe's.
High Competition
Like many other industries, the home improvement industry also has significant competition in the market. For example, Lowe's dominated the U.S. market for decades until Home Depot arrived in the 1980s.
Since then, besides competing with the other companies, Lowe's has been competing with its rival, Home Depot. Looking at the operations of Home Depot, Lowe's has to perform really well to maintain its position in the market.
Global Recession
A recession always brings troubles for businesses because it lowers market demand. As a result, the profits of businesses shrink. Unfortunately, the world is about to experience a recession due to the post-COVID-19 effect and the Russia-Ukraine war.
The news of the global recession poses a threat to Lowe's since it'll lower the demand for the products of the home improvement brand.
High Inflation
The world is currently observing a commodity supercycle due to rising inflation. In addition, the current global economic situation is pushing businesses to lower their profit margins as their operating costs are increasing.
As the operating costs of Lowe's have increased in the past two years, the brand's profit margins are narrowing. This threatens the home improvement brand since such scenarios can push Lowe's into financial losses.
Lowe's SWOT Analysis: Final Word
Lowe's is one of the most significant home improvement brands in the U.S. This article sheds light on the early beginnings of Lowe's. We discussed how the brand came into being and how it expanded its operations over the years.
After that, we discussed the current operations of Lowe's, including its revenue, number of employees, and stores.
Once we finished that, we proceeded further and conducted Lowe's SWOT analysis. The SWOT analysis helped us analyze some of the strengths and weaknesses that were possessed by Lowe's.
Besides that, we also looked at some of the opportunities and threats Lowe's faces. In this article, we carried out the SWOT analysis as an essay. However, the findings of this SWOT analysis can also be represented through a SWOT Matrix or a table.
In the end, we hope that you would have found this article very informative. We expect that by reading this article, you are now fully aware of how to conduct a SWOT analysis. However, do look at some of the SWOT analysis examples to solidify your concepts.
