National Post (National Edition)
Logistics still limit the number of online transactions
Home Depot and Lowe’s are both embracing so-called omnichannel strategies, said Michael McLarney, managing director of the North American Retail Hardware Association’s Canadian division, and president of the Toronto-based industry publication Hardlines, a term that refers to the blending of online and in-store modes of shopping.
“Home improvement retailers are somewhat sheltered from Internet sales, but not completely protected, by virtue of the fact that they sell a lot of high ticket, large-sized items that require a lot of expertise to purchase and use,” he said.
“Despite people’s best efforts to do research, that level of expertise is not always easily available on the Internet — it comes from the store.”
While Lowe’s and Home Depot aggressively court the contractor market, logistics still limit the number of online transactions, McLarney added.
“Home Depot and Lowe’s are both busy trying to figure out how to service the contractor customers and get those products right to the job site. A lot of them can be unwieldy to ship.”
Home Depot, which opened in Canada in 1984, has a fairly saturated store network in the U.S. and Canada, where it has no current plans to build more stores.
To that end, Home Depot Canada has added two million new square feet of supply chain space over the last three years and optimized its warehousing and delivery capabilities, Kinnaird said.
“We transformed our supply chain so that we can bring greater value to our customers, and we continue to expand the supply chain for e-commerce. We are really working to connect our stores to our website and to connect our website to our stores.”
Sylvain Prud’homme, president of Lowe’s Canada, said figuring out how to better serve customers is critical in the digital era, because customers who are price-driven are not particularly loyal. “The average consumer in our sector will shop at four different (home improvement) stores in one year,” Prud’homme told a Retail Council of Canada convention last month. “The Internet gives them the ability to pick and choose the experience they need.”
Lowe’s Canada has estimated annual sales of $6.9 billion and more than 600 stores across Canada, including 54 big box locations.
It made a wise move in hiring the Quebec-born Prud’homme in 2013, said Maureen Atkinson, a retail consultant at J.C. Williams Group, given that the company’s end game was to acquire Quebec-based Rona, which came to fruition in 2016.
“They did what Target didn’t do. They recognized that maybe Canada was a country that they didn’t know very well and put in someone at the helm who wasn’t just dropped in from head office.”
While Home Depot is performing well and focused on improving its distribution model, Lowe’s could prove to be the more adaptable retailer in the future, McLarney said.
“In the near term, Home Depot is embracing the future in terms of online and it has a very clear vision, and Bay St. and Wall St. like that,” McLarney said. The retailer’s shares have risen 14 per cent year to date, compared with 7.5 per cent at Lowe’s.
“What is going on at Lowe’s in Canada, in buying up a company that had different-sized stores and a wholesale business selling to independent dealers, could be a skunkworks for the future at Lowe’s. Long term, where there are so many more variables, Lowe’s is hedging its bets with a greater variety of store formats and store-ownership models which could prove to be very successful and put them ahead of the game.”