It’s not easy being number two. Ask Avis or Pepsi…or for that matter Gimbel’s. Second place been the retail cross that Lowe’s has had to bear for much of its existence. Lowe’s is a good retailer that is increasingly becoming a very good retailer, but it has the misfortune to have to compete against one of the best retailers in the country: Home Depot. No matter how much Lowe’s advances, it always seems like Depot remains just out of reach.
That gap however could get much smaller as Lowe’s picks up the pace of its Total Home merchandising strategy focused on offering shoppers a complete solution to their home improvement and home decorating needs. That effort gained a huge leap with the announcement a few days ago that Lowe’s bought the Stainmaster brand, making it perhaps its single most important private label in its history.
Putting it simply, the Stainmaster deal is a huge game-changer for Lowe’s.
[callout]Lowe’s $90 billion in annual sales is still trailing Home Depot’s $132 billion. But over the past year when the entire home improvement channel saw outstanding growth, Lowe’s consistently outperformed Depot in same-store comp sales, ecommerce, earnings gains and other key metrics.[/callout]
What Is Stainmaster Exactly?
If you haven’t been out shopping for floor coverings — the industry term for what regular people call carpets, rugs and hard flooring — you should know that Stainmaster is unquestionably the best-known brand name in the sector. That standing takes on even more significance when you realize that Stainmaster was originally a treatment from the old DuPont company used on wall-to-wall carpeting for…well, for stains, of course. It was not a specific product made by a specific company, it was a treatment ingredient and the Stainmaster name could be used by any carpet manufacturer who bought the stuff.
In 2010 Lowe’s got the exclusive rights from Invista, a former division of Dupont, to use the Stainmaster name in the home improvement channel. Invista is owed by Koch Industries, the giant under-the-radar privately held agricultural conglomerate that if it’s known by anybody at all, it’s probably because of the libertarian political views of its family owners. It was from Koch that Lowe’s bought the Stainmaster brand (terms have not been announced in case you’re curious).
Rebuilding a Brand
With Lowe’s now controlling the brand, it represents both a huge advantage over other retailers in the flooring business and a trusted name that can be used elsewhere in the store. (More on that in a minute.) Buying national brands, as opposed to licensing them or developing your own names, is still a relatively rare occurrence — so the Lowe’s move is unusual. Back in the day, retailers like Sears owned names like Craftsman and Kenmore that many consumers probably never realized were private labels. Marshall Fields, in its heyday, owned the Fieldcrest name for soft home products, eventually licensing it out and then spinning it off as a separate entity. One of the few examples of a national brand being bought by a retailer occurred 10 years ago when Bed Bath & Beyond bought the Wamsutta brand from its manufacturer and adapted it as a house brand. So, this Stainmaster deal is certainly the exception to the rule.
The Grand Brand Slam
Stainmaster now becomes the highest profile name in the Lowe’s portfolio of private labels. Sarah Dodd, Lowe’s senior vice president of global merchandising told The Robin Report she refers to the portfolio as “The Lowe’s House of Brands.” It’s a key element of the company’s Total Home effort initiated by CEO Marvin Ellison, who came on board in 2018 after a long career with Home Depot (and a short, ill-advised detour heading up JCPenney).
Total Home means doubling down on the home improvement business, both for homeowners and professional contractors and an increased focus on home décor and furnishings. “We want to be able to offer our customers a one-stop solution and with Stainmaster we saw an opportunity to take the brand into other parts of the house,” said Dodd, who remained tantalizingly mysterious on exactly what rooms that would be. Right now, Lowe’s uses the Stainmaster name on luxury vinyl flooring, but she said additional extensions remain under consideration.
One can speculate that rugs and other hard flooring surfaces would be natural areas to go to next, but theoretically any home furnishings product where stain resistance, durability and cleanability are important (did we hear someone say home textiles, kitchen and bath countertops and outdoor furniture?) would be obvious choices. Dodd would only say “we’re exploring other areas where we can bring this brand to.”
While Stainmaster is probably the best-known label the retailer has taken over, Lowe’s has a lengthy list of brands it has developed internally as well as licensed from national companies. Its 2019 deal with the National Football League as its exclusive home improvement sponsor is still quite prominent but it also has any number of lesser-known labels from allen + roth Home Décor to Moxie cleaning products.
The mix, says Dodd, is critical to the company’s overall plan, “strategizing national brands with our own private labels.” That is especially important in the home décor side of the store, an area clearly underdeveloped compared to lumber and plumbing fixtures. Lowe’s has begun selling more traditional furnishings like bedding, kitchenware and décor accessories online even as its in-store presentation remains focused on flooring, window treatments and seasonal goods like outdoor furniture and patio sets. Lowe’s has not broken out its sales in décor but across the highway, Home Depot says it now does over $1 billion a year in the category, helped by its 2019 acquisition of soft home direct seller The Company Store.
Totaling Up Total Home
If brands are the vehicle to drive a retailer, Lowe’s Total Home strategy is a big picture promise. Unveiled to analysts last December by Ellison, the plan clearly has as its ultimate objective to close the gap with Home Depot. It remains a sizeable gap too, with Lowe’s $90 billion in annual sales still trailing its larger competitor’s $132 billion. But over the past year when the entire home improvement channel saw outstanding growth, Lowe’s consistently outperformed Depot in same-store comp sales, ecommerce, earnings gains and other metrics.
“Our Total Home strategy will enhance customer engagement and grow market share,” Ellison said when unveiling the program. He mentioned specifically “intensifying our focus on the pro customer, expanding our online business, modernizing installation services, improving localization efforts and elevating our product assortment.\”
Of course, Depot is not sitting by idlily waiting to get picked off. It has stepped up its efforts in the home décor and pro sector, as well as in ecommerce. But owning a brand like Stainmaster gives Lowe’s a real competitive advantage in certain categories. One suspects the retailer is not done stepping up its branding game.
Being second at anything can be difficult. But getting to number-one is never impossible. It’s even been done in retailing. Just ask a company from Bentonville called Walmart.