This morning, CNBC analysts were slicing and dicing the latest sales numbers from both Home Depot and Lowe’s. The short version of the story is that Home Depot’s numbers are up and Lowe’s numbers are off. The question is why?
Both companies work on the big ticket items that go with new home sales. Yes, like Tim Allen used to say on Tool Time, they like men who walk around in both stores staring at tools they imagine they can use to fix or create something. (Out of deference, Tim really talked about Sears, but that is a story for a different time.) But what Lowe’s and Home Depot thrive on is not some schmo like me aimlessly wandering their aisles in an ill-fated attempt to repaint something.
What these suppliers need are contractors. They are the ones who come in to place big remodelling and new home sales construction orders. These customers are the meat and potatoes of the business. (Apologies to all you vegans and vegetarians.)
So with Home Depot up, you would think that new home sales are up. Turns out, that’s not really the case. They’re up a little, but not a lot. Existing home inventories are actually down a little, but also not a lot. So Home Depot is getting a bigger slice of the pie but the pie isn’t getting any bigger. What’s that mean?
CNBC’s Jim Kramer and David Faber went through a lot of ping pong about the issue, but it came down to this: Kramer thinks Home Depot is cutting into Loew’s slice of the pie, devouring their competitor’s sales. Faber didn’t necessarily agree, but didn’t discount the idea either. Kramer also credited Home Depot for positioning itself for that big “AHA!” when the home construction market “rebounds” (whenever that will be). How is Home Depot doing this?
Kramer and Faber were stumped. The answer I offer, though only anecdotal and perhaps old-fashioned, is rooted in quality of service. Regular customers of these stores, one of them at least, could see a change internally in both stores over the past six months. I confess: I am a Tim Allen-devotee who regularly wanders through both stores in hopes of one day attending a “construction camp” where you get to build… things.
My wife is also a confirmed gardener. Together, we know those stores backwards and forwards.
Our experience of the local Lowes has gone from a time when you were swarmed by eager employees whenever you stood still to now receiving so little attention that we wonder whether the store is even open. During the same period, our closest Home Depot has done the opposite, transforming from an environment in which we couldn’t get help even if we gave them money–which, incidentally, was exactly what we wanted to do–to one in which help is ubiquitous and, more shockingly, friendly.
I realized as I experienced this shift that if I recognized it, maybe someone else does too. It took at least six months, but now the numbers seem to bear that out. That’s the big problem with big companies. Turning them around can be like turning the Titanic sometimes. The captain always needs to know where he is going because a high-speed turn just isn’t going to happen.
The day’s lesson then is this:
Get an outside perspective. I have started doing it through conversations with referral sources asking them who their clients think are the best lawyers and why they buy from them, and I have been making a list. I just received another list on the same feedback from Stephen Fairley of the Rainmaker Institute. The Institute focuses on marketing for law firms, especially smaller ones. The interesting thing is both lists were similar.
I started this because I can’t wait six months to find out I have a problem. Can you?
As always, good luck and good hunting!
If you’re interested in business law, estate planning, or in simply trading war stories about our respective attempts at home “improvement,” find out how to reach us at our website: TheFisherLawOffice.com. You can also contact us at Facebook.com/FisherLawOffice, on Twitter @thefisherlawoffice, or at LinkedIn.com/in/FisherLawOffice. If you come here just because we sometimes incorporate kittens into the blog, get your fix at the Arts and Cats Movement. Tell Dorrie and Audrey I said hi when you’re there.