Lowe's CEO Discusses Industry Trends

At the American Architectural Manufacturers Association (AAMA) Annual Fall Meeting, October 17-20, 2004, Robert Tillman, chief executive officer and chairperson of the board of Lowe's Companies, Inc., spoke about industry trends at one of the luncheons.

In his speech, Tillman made the following points:

  • During fiscal 2003, profits rose 37 percent for Lowe's versus 21 percent for Home Depot. Tillman said he helped transform the supply chain by catering more to women, based on research indicating that women initiate 80 percent of home projects.
  • In 2003, there were $626 billion in sales in the home-improvement industry. It's a fast-growing segment of retail sales in general. The average home in the U.S. is 30 years old.
  • Lowe's is the second largest player in the industry. In 1989, it was the biggest chain in the industry with some of the smallest stores with $2 billion in sales, located in the Southeast predominantly. At that time, the company targeted new-home construction and male buyers instead of women. There have been fundamental changes in the market with price, selection and service as a result of the warehouse clubs and the onset of Home Depot stores.
  • In 1989, Tillman said the company created Vision One, which marked a new beginning for Lowe's. It became an all-new corporation from the ground up. They grew from fewer than 300 locations to more than 1,000 currently in existence. They went from stocking 1,200 items to over 50,000 in each store today. The focus shifted from homebuilders to homeowners, who benefit from low interest rates historically. Data shows that people will continue to spend to maintain their primary asset (their home), since they spend more time at home with loved ones.
  • Immigrants are changing the demographic structure, and that is changing demand. Twelve percent of new homebuyers are headed by someone born outside the United States. Fifteen states now report 10 percent or more of their population have homes headed by a foreign-born person.
  • Generation Y, the boomer's children, represent 71 million people between the ages of 10-28. There is estimated to be about $10 trillion in consumer spending by this group.
  • The average age of the second homeowner is 47 with an average household income of $86,000. The average drive time for a second home is 2 ½ hours away from the primary residence.
  • Women's role in becoming a homeowner is 2X the rate of single men, due to single career women and divorced women heading households.

    Tillman ended his talk with the following quote: "The best way to predict the future is to create it." The success of Lowe's is attributed to transforming the company to meet the needs of its customers, he said.

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