Home Depot Challenges Lowe’s And Sears With Its Expanded Appliance Range

Home Depot (NYSE:HD), the world’s largest home improvement retailer, has expanded its appliance range to include more brands like Whirlpool, Electrolux and Frigidaire across several stores as well as its online retail channel, homedepot.com. The appliances will also be available throughout the U.S. through the Depot Direct delivery network that includes free delivery and installation of more than 3,000 appliances in the customer’s homes within 1-5 days of purchase. Home Depot’s expanded assortment comes at a time when appliance sales have shown trends of weakening at Sears (NYSE:SHLD) and Lowe’s (NYSE:LOW) – its main competitors in this category.

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Strategic Shift On Appliances?

So far, Home Depot has had a minimal presence in the appliances segment compared to Lowe’s because of its lower margins. Despite a much wider geographical footprint with over 2,250 stores across North America compared to Lowe’s (which has 1,750 stores), Home Depot currently occupies just 10% of the appliances market, compared to high teens for Lowe’s and more than 20% for Sears. ^[1]

Even though the new additions are not expected to have much impact on sales in the near term, the development could be a prelude to a strategic shift in Home Depot’s appliances strategy. For now, this is a competitive move by the company to take advantage of the recent weakness at its competitors that are more dependent on the appliances segment. Sears’ same store sales have continued to wane over the last few years due to weak demand and promotions in the appliances and consumer electronics categories. Also, Lowe’s sales have suffered due to its recent disruptive decision to retract promotions and discounts on big-ticket sales and appliances and transition to a new everyday low pricing strategy that is yet to gain traction.

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1. Home Depot Broadens Appliances Range As Rivals Sales Drain, Wall Street Journal, July 2012 [↩]