It doesn’t hurt that Lowe’s has been able to capitalize on the rising consumer focus on home projects during the pandemic. Stuck in their houses during lockdown, many Americans have turned to hobbies including gardening and baking while also pursuing larger initiatives like home renovation, which has led to an uptick in sales for Lowe’s and its chief rival, Home Depot.
“Since the pandemic started, Lowe’s has clearly done a good job,” says Joe Feldman, a senior managing director at Telsey Advisory Group. “A lot of what they were lacking in their stores, in terms of the right level of inventory, the right type of inventory and the better marketing in stores, has been transformed in the last 12 to 18 months.”
For the nine months ended Oct. 30, Lowe’s generated $69.3 billion in sales, a 24% rise over the year-earlier period; online sales grew by triple digits in the most recent quarter. Despite such gains, Lowe’s missed analyst expectations slightly by reporting net income of $692 million, a decline from last year’s $1 billion, due to COVID-related support for workers and store changes.
Yet Lowe's marketing investments appear to be paying off in winning connections with consumers. Much of the new strategy can be traced back to a management team overhaul that began two years ago with the hire of Marvin Ellison, who ran JC Penney and also worked in senior positions at Home Depot and Target. The arrival of Thalberg, most recently global chief brand officer of Taco Bell, is the latest change under Ellison, who was credited for helping to turn around JC Penney. Thalberg says part of her remit was to strengthen and clarify Lowe’s as a brand—a directive that became imperative once the pandemic struck.
“Because of our quickly emerging role as an essential retailer, what became very clear was that this was an opportunity for us to really be present through marketing,” says Thalberg, who has diversified Lowe’s agency roster to now include Deutsch LA in addition to Via Agency, FleishmanHillard and Starcom.
However, while many consumers have turned to Lowe’s for their fix-it projects in recent months, experts warn that post COVID-19, the chain could be challenged by a reduction in sales as shoppers return to spending on things they’ve had to avoid this year, including travel.
“The concern for the industry—and not just Lowe’s—is that customers have pulled forward too many of those projects,” says Feldman. “At some point, people are going to say, ‘Hey, we didn’t take a trip in the past year-and-a-half, let’s go,' and there’s $3,000 or $5,000 they would have otherwise used on the house.”
But that’s where effective marketing and maintaining constant communication with customers is crucial, experts say. Early in the pandemic, Lowe’s was one of the earliest marketers to debut a campaign thanking frontline workers. Tapping into the DIY trend, the company encouraged customers to create thank-you signs to display in their homes and yards. The push helped cement loyalty and provided a springboard for other home-focused campaigns, including one in support of the virtual NFL draft in the spring or a current holiday promotion in which Lowe’s asks customers to write letters to home as they would write letters to Santa.
Lowe’s is also showing up in unexpected places in innovative ways. The chain is not typically a destination for Halloween—but it became one this year by hosting a curbside trick-or-treat offering in store parking lots for families. Reserved spots filled up within 48 hours, and Lowe’s gave out treats to more than 200,000 cars. Similarly, the Fashion Week partnership gave the brand a boost with new customers who might not have considered shopping there for home décor.
“It made their brand image a little more prestigious,” says Tom Meyvis, a professor of marketing at New York University’s Leonard N. Stern School of Business. “It’s also playing up that idea that you shouldn’t just buy home décor and furniture for comfort, but also as a way to express yourself.”
By also investing in services this year such as curbside pickup and stores with social distance ambassadors, Lowe’s is providing a more valuable offering to customers at a time when they need it most. For the holiday season, the company has hastened the rollout of self-serve lockers from which shoppers can pick up their online orders. All of Lowe’s 2,200 stores should have the lockers by the end of March, ahead of initial predictions. Over the summer, Lowe’s debuted a new loyalty program in an effort to court more professional contractor customers.
For the holidays, Lowe’s is again reinforcing the importance of home with a series of ads and initiatives that include expanding its merchandise assortment with items like bedding and fitness equipment. A campaign highlights the many roles a home can play, particularly during these COVID-era lockdowns. Lowe’s also introduced an online gift guide that includes a live chat gift advisor.
“We are certainly doing the things you’d expect us to do,” says Thalberg. “But hopefully we’re also doing the things you wouldn’t expect us to do, that are authentic and meaningful as opposed to gratuitous.”