Businessmodel of Lowe’s

Customer Segments

Lowe’s operates a broad network of retail outlets, selling home improvement products. The Company’s product line caters to customers that are interested in home improvement and DIY projects, as well to general consumers that are in the process of renovating or decorating their properties. The Company also caters to small business and individual professional contractors and workmen, who use the Company’s stores to purchase equipment.

Lowe’s operates a large number of retail stores across its home market of the US, which accounts for the majority of its sales, where it serves customers across all 50 states. The Company also serves a customer base across North America more broadly, with a physical retail presence in both Canada and Mexico.

Value Propositions

Lowe’s provides value to its customers in the following ways:

• Its accessibility, with the Company operating an extensive network of physical retail outlets cross the US, Canada, and Mexico, supported by the Company’s online sales channel, which combine to make the Company easily accessible to customers across North America;
• Its industry standing and reputation, with the Company established as one of the largest and most recognisable retailers of home improvement products in North America, having a track record as a provider of high-quality, reliable products and services;
• Its broad catalogue of products, with the Company offering products across numerous categories, including electrical items, flooring, appliances, bathroom fittings, plumbing, and tools, catering to a broad spectrum of customer home improvement needs; and
• Its industry expertise, with the Company employing staff that are capable of providing advice on products and services, as well as a team of experienced industry executives. ### Channels

Lowe’s operates a website at www.lowes.com, through which the Company provides information on its corporate activities, operating markets, and senior leadership. The Company’s website also serves as an online sales channel, which allows customers to browse products, make purchase orders, and locate physical stores. The Company offers similar functionality through a mobile application.

Lowe’s makes most of its sales through its chain of physical retail stores across North America. This comprises 1,857 stores located in the US, Canada, and Mexico, including around 80 Orchard Supply Hardware stores located in California and Oregon. The company’s physical retail spaces are staffed by specialist sales personnel who make sales and provide assistance to customers directly.

Lowe’s additionally operates its own storage and distribution infrastructure. This includes 15 highly-automated regional distribution centres in the US, each of which serves approximately 115 stores, as well as a dedicated distribution centre in Canada. In Mexico, the Company has a service agreement with a third party logistics provider to manage a distribution facility and serve its stores.

Customer Relationships

Lowe’s offers a large portion of its product catalogue to customers on a self-service basis through its online retail channel. This platform allows the Company’s customers to browse products, complete purchases, organises deliveries, and track orders without interacting directly with its sales and service personnel.

Lowe’s offers a more personalised services via it in-store sales personnel, who are based across the Company’s outlets and are available to provide direct assistance tailored to each individual customer’s needs. This includes staff handling complaints and product returns in person.

Lowe’s additionally operates a dedicated customer support team out of its office network. Customers are able to contact customer service representatives over the phone and online in order to receive personalised responses to queries and enquiries. This team is supported by a range of online resources, such as guides and FAQs, which can be accessed via the Lowe’s website.

Lowe’s also operates several social media accounts, including with Facebook, Twitter, Pinterest, Instagram, and YouTube, through which it is able to interact directly with customers.

Key Activities

Lowe’s operates as a retailer of home improvement products. The Company controls a network of approximately 1,860 home improvement and hardware stores, representing approximately 200 million square feet of retail selling space, across North America. This principally comprises the Company’s extensive domestic network spanning all US 50 states, including approximately 80 Orchard Supply Hardware stores in California and Oregon.

The Company also operates directly in Canada and Mexico. Lowe’s offers a broad catalogue of home improvement products, including maintenance, repair, remodeling and decorating products. The Company core product categories include lumber and building materials, tools and hardware, appliances, fashion fixtures, plumbing and electrical fittings, and lawn and garden equipment.

Key Partners

Lowe’s works in close conjunction with a range of partners across multiple business sectors that support the Company’s operations. These partners can be organised broadly into the following categories:

• Supplier and Vendor Partners, comprising specialist suppliers of home improvement products and merchandise that is resold across the Company’s physical and digital retail channels, as well as suppliers of services, technologies, and equipment that are utilised more broadly across the Company;
• Channel and Distribution Partners, comprising logistics and distribution companies that support the Company’s internal distribution and supply chain operations, notably its third party logistics provider in Mexico;
• Social and Community Partners, comprising various non-profits and charitable organisations with which the Company collaborates on community and social projects across North America; and
• Strategic and Alliance Partners, including various market-leading enterprises across multiple sectors, with which the Company works on joint marketing, branding, and other projects. Lowe’s has a number of partnerships in place. According to its website, this includes current partnerships with Sunbelt Rentals, Comcast business, and Deluxe. The Company has also partnered with Seattle-based home improvement startup Porch.com.

Key Resources

Lowe’s key resources are its inventory of products and merchandise, its supply chain, its online sales platform, its IT and communications infrastructure, its physical sales and distribution infrastructure, its partnerships, and its personnel.

Lowe’s owns and or leases a number properties that are key to its operations. This principally comprises the Company’s network of 1,857 stores in the US, Canada, and Mexico, as well as its regional distribution centres, administrative offices, and other facilities.

Cost Structure

Lowe’s incurs costs in relation to the procurement of products and merchandise, the procurement of services and equipment, the management and operation of its supply chain and distribution infrastructure, the operation of its physical retail outlets, the development of its online sales platform, the maintenance of its IT and communications infrastructure, the implementation of marketing and advertising campaigns, the management of its partnerships, and the retention of its personnel.

In 2015 the Company’s largest expense was its cost of sales, which amounted to $38.50 billion for the year. The Company also recorded total selling, general, and administrative expenses in the amount of $14.12 billion.

Revenue Streams

Lowe’s generates revenue through the sale of home improvement products through both physical retail outlets and a digital sales channel. The Company’s revenue is principally derived in the form of sale fees, as well as in the form of services fees related to certain installation and other ancillary services.

In 2015 Lowe’s generated net sales for the year in the amount of $59.07 billion, up on the $56.22 billion recorded by the Company the previous year. The majority of the Company’s sales generated in the US.