Lowe’s Wants to Light up Sales Online

August 16th, 2011 by Trefis Team
+3.40%
Upside
232
Market
240
Trefis
LOW: Lowe's logo
LOW
Lowe's

Lowe’s (NYSE: LOW) plans on selling more home repair and materials for do-it-yourself (DIY) projects online. This move follows similar online initiatives at its larger competitor Home Depot (NYSE:HD). Lowe’s offers a wide range of home improvement products and installation services for individual home owners as well as for professional builders through its 1,700 plus stores spread across the U.S., Canada and Mexico. It competes other players such as Builders FirstSource (NASDAQ:BLDR), Sherwin Williams (NYSE:SHW) and Sears (NASDAQ:SHLD) in addition  to Home Depot.

We currently have a $25 Trefis price estimate for Lowe’s Companies, which is about 25% ahead of the current market price.

Focus on online presence and web sales

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Lowe’s is focusing on its improving its online presence and web sales and has recently started to aggressively hire for its e-commerce division. It plans to enhance its e-commerce website in 2011 with features to allow customers to track their transaction histories and share project information with Lowe’s employees and others through state of the art technology infrastructure. By presenting more information and catalogs online and helping customers plan projects, the company hopes to draw more shoppers into its physical locations. Home Depot has also recently rolled out its “Buy Online Pickup In-Store” capability.

We wrote about this in a recent note Home Depot Takes Home Improvement Shopping Online.

Lowe’s has recently launched a Home 101 web portal primarily targeting the so-called Millennial homeowners – young adults purchasing homes. It has also added LowesCreativeIdeas.com as an extension of its Creative Ideas magazine to engage greater number of potential customers.

Since web sales are gradually taking a larger share in many retail categories like 15% in apparel sales and up to 30% in consumer electronic sales in the U.S, we expect such moves in the home improvement sector to stimulate web sales over the next few years as well as attract more customers to its brick and mortar stores. These web sales will also provide Lowe’s with higher profit margins than store-based sales.


See our full analysis here.