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Placer Bytes: Home Improvement Soars, Wholesale Competition?

by 
Ethan Chernofsky
 on 
May 5, 2020
Placer Bytes: Home Improvement Soars, Wholesale Competition?

In this Placer Bytes, we dive into tight battles in the Home Improvement sector and the potential for a true challenger to Costco’s dominance.

Home Improvement Heavyweights

Admittedly, we expected Home Depot and Lowe’s, along with the wider sector, to do well post-coronavirus. What we did not see coming was the exceptional performance during the crisis. Home Depot and Lowe’s were able to drive year-over-year growth looking at Q1 2020 with visits rising 1.2% and 1.9% respectively even with the pandemic. This positioned both retailers far ahead of competitors like Menards and IKEA.

But, the dominance they’re both showing has blown past our expectations. Home Depot saw weekly visits rise 31.3% above the baseline for the week beginning April 20th when analyzing the period from January 2019 through April 27th. This was the company’s third-best week for visits since the start of 2019, only losing out to two weeks in May 2019, Home Depot’s peak season. 

Yet, the true winner may be Lowe’s. The brand saw visits rise 71.8% above the weekly baseline for the same period during the week of April 20th, 28.8% better than any week in 2019. And this is following a week where visits rose 61.4% above, which would have set the same mark as a new peak one week prior.

This is changing the face of the competition between the two brands. For the first time since Placer began analyzing location data in January 2017, Lowe’s saw visits that have outpaced Home Depot’s. And, even more impressively, this isn’t during a period where Home Depot is struggling, but the last two weeks from April 13th to 27th, when both brands had strong performances.

Looking longer-term, Home Depot still has a few key advantages, namely an ability to drive high traffic peaks in the holiday season and 8.8% greater customer loyalty during this same period. But, Lowe’s has certainly made the direct competition between the two an even more interesting battle to watch.

Wholesale Competition

Costco is one of the dominant forces in offline retail and has been the clear category leader in the wholesale sector. But, there are signs that the COVID-19 pandemic may have enabled competitors to close the gap. Looking at nationwide data for Costco, Sam’s Club and BJ’s shows that Sam’s Club has closed the visits gap to its closest level in years in recent weeks.

And much of this centers around the direct impact of the coronavirus and social distancing measures. While Costco saw strong growth early, several factors have led to declines in terms of year-over-year traffic on a weekly basis. Self-imposed restrictions and a geographic orientation towards the harder hit coasts could have hit the industry leader more than its rising competitors.

BJ’s Wholesale Club, on the other hand, has seen consistent YoY growth throughout the crisis, a clear benefit of their wholesale orientation, and people are taking notice. Since seeing weekly visits grow nearly 90% year over year in the second week of March, the brand saw a similar drop as other players but is seeing another period of sharp growth aligned with loosening distancing restrictions nationwide.

Sam’s Club too, is in the midst of a powerful turnaround, is driving strong growth after a less than stellar 2019.

Can the Home Improvement sector maintain its torrid pace? Can BJ’s and Sam’s Club sustain their rise when ‘normalcy’ returns? Or will Costco’s huge lead and consistent performance keep them in the pole position? 

Visit Placer.ai to find out.

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