Two strategies for digital success

Home Depot and Lowe’s are two of the most recognizable names in retail. While Home Depot ranks No. 4 in Digital Commerce 360’s Top 1000 Database, Lowe’s comes in shortly after that at No. 11. The database ranks retailers in North America by annual web sales.
Nevertheless, both retailers have made important strategic choices in their approaches to ecommerce, setting themselves apart in an important category.
Hardware & Home Improvement ecommerce market
The Hardware and Home Improvement category is a significant online market, generating over $50 billion in global web sales annually for companies ranked in Digital Commerce 360’s Top 2000 North American online retailers. Major players like Home Depot, Lowe’s, Menards and Ace Hardware, along with 135 other companies, contribute to this growing sector. This industry has experienced substantial growth, surging from $24.0 billion in web sales pre-pandemic (2019) to a projected $54.3 billion by the end of 2024.
As the two largest players in the Hardware & Home Improvement category, both companies feature prominently in North American online retail. These giants have consistently controlled at least 60% of web sales in this category for the past five years, a testament to their market dominance. While Home Depot has maintained a steady market share of around 43%, Lowe’s has gained ground, increasing its share from 17% in 2019 to 21% in 2024.
When delving deeper into the category, we find 14 online retailers within the General Home Improvement sub-category that rank among the Top 2000. These two category leaders are projected to own 90.8% market share by the end of 2024 in this sub-category, a 5.5 percentage point increase since 2019, when they controlled 85.3% of the market combined.
Home Depot vs. Lowe’s in web sales and total sales
When comparing online and total sales, Home Depot significantly outperforms Lowe’s in both categories.
Between 2020 and 2023, Home Depot experienced significant growth, increasing its total sales from $132.1 billion to $152.7 billion. In contrast, Lowe’s saw a decline, dropping from $89.6 billion to $86.4 billion. As a result, Home Depot’s market share increased from 60% to 64% in 2023. That growth solidified its position as the dominant player in the industry.
Home Depot, the fourth-ranked retailer in the Top 2000, is on pace to achieve $23.6 billion in web sales by the end of 2024, while Lowe’s, ranked No. 11, is projected to reach $11.3 billion. Both companies have demonstrated significant growth in online sales over the past five years (not including 2024), with Home Depot achieving a 21.5% compound annual growth rate (five-year CAGR) and Lowe’s recording an even more impressive 23.1% CAGR. However, Home Depot’s larger market share has allowed it to maintain a significant lead in absolute dollar terms. Since 2017, Home Depot’s ecommerce lead over Lowe’s has expanded from $3.7 billion to a projected $12.3 billion by the end of 2024. While Lowe’s has experienced faster percentage growth in five of the past seven years, including a remarkable 111% surge in 2020 compared to Home Depot’s 86%, Home Depot’s larger base and consistent growth have enabled it to maintain its dominance in the online home improvement market.
Home Depot vs Lowe’s in online penetration
Over the past seven years, both of these retailers have significantly increased their online penetration rates. Home Depot took an early lead, reaching a 14.4% online penetration rate by 2020, while Lowe’s has yet to reach that level. This early advantage may have contributed to Home Depot’s higher ranking in the Top 2000. However, Lowe’s has demonstrated stronger recent growth, outpacing Home Depot by 2 percentage points in online penetration (ecommerce sales/total sales) since 2018.
Home Depot vs Lowe’s: The effect of store openings and closings on online sales
In 2017, a mere 132 stores separated retail giants Lowe’s and Home Depot. Over the past seven years, however, the two companies have adopted divergent strategies. While Home Depot expanded its physical footprint by adding 56 new stores, Lowe’s closed 406 locations. This strategic divergence has led to a significant gap, with Home Depot now operating 594 more stores.
Surprisingly, Home Depot’s store expansion has positively impacted its online operations. Each store generates approximately $10.1 million in online sales, significantly outpacing Lowe’s $6.5 million. Lowe’s, despite closing stores, has experienced substantial online growth, increasing from $3.1 billion in 2017 to a projected $11.3 billion in 2024, and overall sales from $68.6 billion to $83.0 billion. Yet, Home Depot’s top-line growth of $56.3 billion since 2017 surpasses Lowe’s $14.4 billion.
Nevertheless, a deeper dive reveals a different story. When comparing web sales per store on a five-year CAGR basis, Lowe’s outperforms Home Depot (26.5% vs. 21.0%). This suggests that Lowe’s focus on omnichannel strategies and store optimizations, as highlighted by CEO Marvin Ellison, is paying off, despite store closures.
Conclusion
Home Depot and Lowe’s dominate the hardware and home improvement market. Still, while companies have experienced significant growth, their strategies have diverged in recent years.
Home Depot’s extensive store network and strong brand recognition have solidified its position as the market leader. Coupled with its robust ecommerce operations, Home Depot has maintained a significant lead over Lowe’s.
Lowe’s, on the other hand, has adopted a more focused approach, closing underperforming stores and investing heavily in ecommerce and omnichannel strategies. This strategy has yielded impressive results, with Lowe’s demonstrating strong growth in online sales and improving its overall performance.
However, Home Depot’s larger scale, strong brand reputation, and efficient operations continue to give it a competitive edge. As the industry evolves, both retailers will need to adapt to changing consumer preferences and technological advancements to maintain their market positions.
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