Home Depot vs. Lowe’s—home improvement rivalry heats up as shoppers pull back

Brand Battles is a new regular feature from Ad Age profiling competing brands and the ways they are going to market, including marketing, media and agency strategies. Read previous installments here. Along with the early shoots of daffodils, tulips and crocuses, spring also ushers in the marketing campaigns of home improvement retailers, each eager to capture market share from consumers starting house projects or seasonal yard work. While the landscape is littered with several players—including Ace Hardware, True Value and 84 Lumber—the two largest names, each with global reach, are Home Depot, which has 2,335 locations, and Lowe’s, which has 1,700. After the category exploded during the early stages of the pandemic, when consumers under lockdown with cash to spare turned to home renovations, shoppers are now pulling back as higher prices force them to only invest in small projects. The lessened demand is putting pressure on Home Depot and Lowe’s, as each is challenged to attract consumers through creative merchandising, marketing and prices. Check out the latest Ad Age events and award programs “At the end of the day they’re competing for the same customers,” said Greg Melich, a retail analyst at Evercore ISI, noting that many items consumers bought during COVID lockdowns, like a fire pit, have long life cycles so Home Depot and Lowe’s are under pressure to bring newness to customer expectations. “Everybody is leaning into value—the consumer is cautious,” he said. “How do you get people to look at newness and innovation and do it in a way that is value-focused?” Below, Ad Age takes a closer look at how each brand has expanded its reach and what role recent changes in marketing strategies are playing: How do Home Depot and Lowe's measure up historically? Founded over a century ago, Lowe’s has grown from its small-town hardware store roots in North Carolina into a publicly traded company that now boasts around $86.4 billion in annual sales. Commonly associated with blue and red colors, the Lowe’s brand has a history of catering to do-it-yourself customers. In addition, their stores, at 112,000 square feet on average—slightly larger than Home Depot’s 104,000 square-square-foot shops—typically lend themselves to a showroom environment where the brand can highlight different bathroom or kitchen situations, according to Melich, who noted that Lowe’s also tends to attract more female shoppers than its rival. View this post on Instagram A post shared by Lowe's Home Improvement (@loweshomeimprovement) During the pandemic, Lowe’s began taking advantage of such larger store sizes by hosting Petco shop-in-shops, for example, in an effort to attract new customers. In addition, the retailer also experimented with new initiatives, such as a Fashion Week collaboration in 2020, and a Valentine’s Day pop-up offering, under then-top marketer Marisa Thalberg. In contrast, 46-year-old Home Depot, which generates around $152.7 billion in annual sales, has steadily focused on its professional, or pro, construction customers. In March, the retailer announced an agreement to acquire SRS Distribution for $18.3 billion, a building products distributor, in a move meant to expand Home Depot’s reach among residential professional customers. The Atlanta-based retailer, whose store associates wear orange aprons, emphasizes its pro product mix in its stores, Melich said. “Their stores tend to be a bit smaller than Lowe’s, but they make sure they’re in stock with the right product at the right price,” he said. In recent years, Home Depot has also leaned heavily into its Halloween business, after first gaining widespread popularity for a 12-foot skeleton in 2020. Now, the home improvement brand has become a Halloween décor destination, a push that does not include paid media but does involve Home Depot tapping into current popular trends on social media, such as putting the skeleton in a Barbie box last summer. How do their marketing strategies differ? Both Home Depot and Lowe’s have had marketing management turnover in recent years. After the high-profile departure in 2022 of Thalberg, who held the chief brand and marketing officer role and shepherded the company through several pandemic-era outside-the-box programs including the Petco partnership and Valentine’s Day push, Lowe’s marketing is now led by Jennifer Wilson, senior VP, enterprise brand and marketing. The company no longer has the CMO position. Lowe’s last large-scale marketing push, “Lowe’s Knows,” released a year ago, emphasized the company’s red color and knowledgeable store associates. At the time, Wilson told Ad Age that the theme replaces the six to 12 individual campaigns Lowe’s used to run—“Lowe’s Knows” now permeates all of the brand’s marketing, including in a recent activation the retailer ran at the Sphere in Las Vegas ahead of the Super Bowl this year. @lowes We know it takes a team to win the home🏡 games, and with the Lowe’s Home Team on your side, you’ve got everything you need to make big DIY plays. #lowessmm #lowes #spherevegas ♬ original sound - Lowe’s “Lowe’s traditionally ran a lot of seasonal campaigns, but these seem to have come to an end in favor of a more cohesive brand message, similar to how Home Depot executes,” said Neil Saunders, managing director at GlobalData Retail. This spring, Lowe’s began running its “Lowe’s Knows campaign for Pros,” which touts the chain’s rewards program specifically designed to court professionals. The chain is also focusing on its new MyLowe’s Rewards loyalty program, which rolled out in March. It also deployed hyper-local marketing that was weather-triggered for different geographic regions on connected TV, streaming radio, digital display and social channels. In contrast, Home Depot, which leans into the color orange, for five years has maintained its “How doers get more done” tagline, typically voiced by actor Josh Lucas in TV ads, as it seeks to maintain connections with both pros and DIY customers aspiring to be experts. The retailer hired Molly Battin, formerly a marketer at Delta Air Lines, as CMO in 2022. More recently, Home Depot has invested in aligning its marketing with major sports events such as March Madness. The retailer became the official corporate partner of the NCAA last month. As part of the program, the chain is running a series of “tool tip” ads featuring Shaquille O’Neal that got heavy play during March Madness. View this post on Instagram A post shared by The Home Depot (@homedepot) While both chains have retail media networks, Home Depot has been vocal recently about making its retail media a focus. For example, last month it hosted an upfront-style pitch to advertisers in Atlanta, at which it announced a rebrand of the network to Orange Apron Media from Retail Media+ after six years of growth. At the event, the brand talked about new marketing investments including in sports. Also read: A guide to retail media networks “We’re a retailer and retailers love performance marketing because it drives traffic and sales,” said Melanie Babcock, VP of Orange Apron Media and monetization. “But we also need to start investing in other things like our brand, own the conversation around home improvement and not just talk about great promotions at Home Depot.” Battle on the home front Getting a fix on ad spending and sales at the two big home improvement retailers. Dollars in millions. Worldwide ad spend Worldwide ad spend as % of sales Worldwide sales U.S. sales U.S. as % of worldwide sales Home Depot 2019 $904 0.8% $110,225 $101,333 92% 2020 909 0.7% 132,110 122,158 92% 2021 1,000 0.7% 151,157 138,920 92% 2022 1,100 0.7% 157,403 144,840 92% 2023 1,100 0.7% 152,669 140,083 92% Lowe's Cos. 2019 $871 1.2% $72,148 $67,147 93% 2020 798 0.9% 89,597 84,303 94% 2021 877 0.9% 96,250 90,348 94% 2022 869 0.9% 97,059 92,010 95% 2023 831 1.0% 86,377 86,377 100% Source: Ad Age Datacenter based on company filings for fiscal years. Home Depot operates in the U.S. (including Puerto Rico, U.S. Virgin Islands and Guam), Canada and Mexico. Lowe's operates in the U.S.; Lowe's in February 2023 sold its Canadian retail business so it could focus on the U.S. home improvement business. How much do Home Depot and Lowe’s spend on advertising? In the last five years, Home Depot’s worldwide ad spend has ticked upwards, remaining at a steady 0.7% of global sales, which have also risen. For example, in 2023, the company spent $1.1 billion on advertising, which represents a 22% rise over 2019, according to Ad Age Datacenter, which analyzed company filings. Lowe’s dedicated 1% of its global sales to advertising last year, spending $831 million. That’s a slight decline from 2019, when Lowe’s spent $871 million on advertising, representing 1.2% of its sales that year. What agencies are on their roster? The bulk of Home Depot’s creative is done by lead creative agency BBDO Worldwide, which has had the account since 2021. The retailer also works with Lerma/, Octagon, Trade School and Walton Isaacson. OMD Worldwide handles Home Depot’s media buying. Lowe’s in March appointed Dentsu Creative as its lead creative agency in the U.S., following a four-month review. The chain continues to work with Deutsch LA on creative. Lowe’s also recently began working with Spark Media; in addition, it partners with Genesco Sports Enterprises and FleishmanHillard. Who is winning? Mirroring the overall decline in consumer spending in the home improvement category, sales fell at both Lowe’s and Home Depot last year. Yet Home Depot showed the smaller drop, generating sales of $152.7 billion, a 3% decline over 2022. Lowe’s $86.4 billion revenue last year decreased 11% over 2022. What’s ahead? This year, Home Depot plans to focus on how it can help customers save money. It is running its annual “Spring Black Friday” sales event through April 28, pushing deals around landscaping and outdoor power tools. The retailer will also host its yearly summer sales events around Memorial Day, Fourth of July and Labor Day. Lowe’s says it will continue to promote its loyalty rewards program, in which customers can earn points for purchases and receive personalized gifts and offers. The company is also highlighting its same-day delivery service partnerships with Shipt and Doordash.

Home Depot vs. Lowe’s—home improvement rivalry heats up as shoppers pull back

Featured Stories