Lowe’s Boosts Promotions as It Starts to Lap 2020’s Buying Spree
(Bloomberg) -- Lowe’s Cos., determined to hang on to the customers it gained during the pandemic, is extending its spring-sales period while offering attractions like socially distanced grilling demonstrations and free saplings brought right to customers’ cars.
The strategy is a departure from the past, when Lowe’s has offered just a weekend of spring discounts. This year, the in-store and online events and promotions will last throughout April -- a bid by the Mooresville, North Carolina-based retailer to build on the momentum it captured over the last year as it heads into the crucial spring season. Last year, the company made almost one-third of its revenue in the May-to-July period alone.
The big push comes after a booming year for the retailer. In early 2020, when Covid-19 spread across the U.S. and many stores went dark because of lockdowns, Lowe’s and competitor Home Depot Inc. remained open as essential businesses. As a result, demand soared as Americans turned their homes into makeshift offices, entertainment centers and do-it-yourself construction zones. This helped to power a 134% stock gain for Lowe’s over the last 12 months -- more than double the rise in the S&P 500 Index.
That unexpected windfall creates a headache this year, however, with Lowe’s facing tough year-on-year comparisons given 2020’s wave of demand. Sales may be softer, said Neil Saunders, managing director of GlobalData, but he noted that’s not an indication that the business is in a bad place. He pointed to the company’s improved marketing strategy, including over the holiday season when a push into gifts like air fryers and electric scooters resonated with customers.
“Lowe’s in the past hasn’t been very good on capitalizing on occasions and I think that they really stepped up their game during the pandemic,” Saunders said. “If they can pull out all the stops again this spring as people start to think of garden and grilling and all sorts of outdoor activities, and Lowe’s can push all that seasonal stuff, I think it can do very well.”
Lowe’s revenue surged 30% in the second quarter of 2020 from a year earlier -- almost triple the gain of the previous quarter. Sales growth in the following two quarters remained over 25%. That boom makes repeating last year’s performance difficult.
Additionally, with vaccinations accelerating in the U.S. and warmer weather providing more opportunities to get out of the house, Americans may not place as much emphasis on home-improvement projects this year.
Still, a survey from Morning Consult and Lowe’s shows that 70% of U.S. households said they will not be traveling this spring. That will keep the home at the center of most people’s lives, Lowe’s executives said during a presentation this week.
“Even though vaccinations are opening up, it’s certainly not herd immunity yet,” said Bill Boltz, Lowe’s executive vice president of merchandising. “So we took what was a weekend-long event in the past and we had the opportunity to change it so that’s how SpringFest emerged.”
Lowe’s is also increasingly tailoring its merchandise to cater to local tastes and needs, Boltz said. City-dwellers, for example, will see more options for smaller bistro patio sets, while larger grills will be found in stores located in rural and suburban areas. This was part of CEO Marvin Ellison’s strategy when he took helm of the company in 2018.
“We wanted to offer customers different options and solutions to be creative,” Boltz said.
©2021 Bloomberg L.P.