After Store Closures, Is Lowe’s Building an Online Future?
Lowe’s recently announced it is closing 51 stores (20 in the US, 31 in Canada.) While this is due to poor performance at the targeted stores, Lowe’s is far from struggling as a whole: the brand’s online sales remain solid, and online sales volumes through October are 16.2% higher than they were last year, using data from Jumpshot Insights.
The question is: is competition online forcing brick-and-mortars to shut down?
A Rising Trend
Lowe’s isn’t the only brick-and-mortar suffering right now. Bookstores like Books A Million, Family Christian Stores, and Hastings Entertainment have experienced great decline, if not filed bankruptcy and disappeared completely. Sears also recently declared bankruptcy, though the difference between Sears and Lowe’s is that Sears wasn’t on top of its online strategy. And Toys R Us, while filing bankruptcy and shutting down all US stores this past summer, is retaining the brand name in hopes of rejuvenating it somehow. It’s anyone’s guess what that particular strategy will be, but we can speculate eCommerce could be a part of it. Office Depot is also a brand in flux. After its 2013 merger with OfficeMax, the brand began aggressively closing 300 stores. The FTC blocked Staples from purchasing the brand in 2016, and since then, Office Depot has worked to find a new equilibrium, but isn’t quite there yet.
Lowe’s Seems to Understand the Value of Online
What makes Lowe’s stand out from these other brands in turmoil is its comprehension of the power that online commerce has. Lowe’s has been steadily increasing the amount of traffic it sources from paid search campaigns.
In February 2017, it averaged about 2 million visits a month from paid search, and in October, that number was more than 4.4 million visits, just about 30% of all its search traffic.
Lowes has also shown the ability to capitalize off of Amazon’s dominance, leveraging Prime Day this year to more than double its sales during Amazon’s promotions. Usually, Lowe’s sits at about fourth place in the Home Improvement category behind Home Depot and Walmart, and, of course, Amazon. But on Prime Day, Lowe’s surged to second place behind Amazon.
The Jury is Out Until Christmas
The chain drives almost 30% of its sales in the last two months of the year, so a great deal will depend on how well the retailer capitalizes on Black Friday and the rest of the holiday shopping season. We expect that 2019 will be the year the brand either sinks or swims.