Lowe’s vs Home Depot: A Tale of Two Strategies for Professional Builders

The everyday American consumer is dealing with an increasingly strained household budget.

And, according to home improvement retailer Lowe’s Tuesday (Nov. 19) third-quarter 2024 earnings call, this ongoing economic environment has resulted in ongoing weak home improvement demand.

“The reality is we are a DIY dominant business … the macro environment puts a lot of pressure on our DIY business, think of larger discretionary spend like bath, kitchen, and more,” Lowe’s Chairman, President and CEO Marvin R. Ellison said on the call.

Historically perceived as more consumer-oriented, Lowe’s has recalibrated its strategy over the past several years to deepen its relationship with professional builders — a critical, high-margin audience.

“Our results this quarter were modestly better-than-expected, even excluding storm-related activity, driven by high-single-digit positive comps in Pro, strong online sales and smaller-ticket outdoor DIY projects,” Ellison told investors, noting that Lowe’s is “going to continue to invest in Pro and online … if we can continue to grow Pro at 2x market we will find ourselves in a good position.”

Lowe’s did not start targeting the professional segment until 2018. By serving both professionals and consumers, Lowe’s maintains its core identity as a DIY-friendly brand while expanding its Pro offerings. This duality allows it to tap into the lucrative contractor market without alienating its significant consumer base.

“This is the small-to-medium Pro customer, which has a TAM of about $250 billion, just that small to medium Pro,” said Ellison, stressing Lowe’s focus on expanding its professional product assortment and customer services. “Digital underlies our Pro growth and fulfilment capabilities.”

See also: Cautious Consumers, Hurricane Spend Define Home Depot’s B2B-Focused Third Quarter

The Battle for Professional Builders

As housing market dynamics evolve — with rising demand for renovations and homebuilding amid a constrained housing supply — capturing and retaining the loyalty of contractors could be the key to sustaining long-term growth.

Lowe’s has made subtle but significant changes to its stores to better accommodate professionals, executives told investors Tuesday, such as creating distinct Pro Zones near store entrances. This streamlining aims to reduce friction for contractors who value speed and convenience.

In a departure from its previous one-size-fits-all model, Lowe’s now provides Pro-customized services, such as priority checkout lanes, flexible delivery options and a revamped loyalty program. The company also emphasizes credit offerings tailored to small and medium-sized businesses, including deferred payment options and rewards tied to frequent purchases.

When PYMNTS sat down with Radar CEO and co-founder Nick Patrick to discuss retail innovations being driven by ongoing digital innovation, he said, “If you really want to send a personalized, targeted message when somebody is at this store versus that store in a mall, you have to nail the details. One area of innovation for us is pushing the limits of what’s possible with location accuracy.”

Read more: Lowe’s Looks to Grow With Pros as Consumer Demand Dwindles

Still, while Lowe’s beat expectations for the most recent quarter, it still missed on sales and cut its full-year outlook, blaming softer demand. Per the company’s financials, total sales for the quarter were $20.2 billion, compared to $20.5 billion in the prior-year quarter. Comparable sales for the quarter decreased 1.1%, driven by continued softness in DIY bigger-ticket discretionary demand, which was partly offset by storm-related sales and positive comparable sales in Pro and online.

PYMNTS covered earlier how the situation of weak consumer demand and a heightened focus on B2B sales facing the home improvement market is also similar at Lowe’s rival Home Depot.

Both companies, however, recognize that the battle for professional builders will be won not just on pricing or inventory but on the ability to provide a seamless, end-to-end experience tailored to the unique needs of this lucrative customer base.

Lowe’s places a premium on high-touch relationships, leveraging its Pro customer account managers to provide personalized service and deeper engagement. This people-driven strategy is designed to differentiate it from Home Depot’s operationally-focused approach. Home Depot’s stores are often seen as contractor hubs, featuring extensive inventory availability, streamlined purchasing systems, and an emphasis on operational efficiency.

“We are laser focused on giving more to the small to medium pros, which is a fragmented segment that we believe is up for grabs,” Lowe’s CEO Ellison said.