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Daily News

Home Depot, Lowe's Gain Appliance Share
Mar 25, 2003
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Home improvement retailers Home Depot Inc. and Lowe's Cos saw their focus on the appliance sector pay off last year with growing market share as they wrung sales from industry leader Sears and other retailers.

Appliance market share at Sears, Roebuck and Co. slipped in 2002 -- to 39 percent from 39.8 percent, according to Midwest Research. Lowe's nearly doubled its market share in 2002 to 18 percent while Home Depot's share climbed to 6 percent from 3.3 percent.

"With appliances, one of Sears' core areas now being under attack by Lowe's and Home Depot; it's very, very scary," said Alan Wolf, an editor who tracks the appliance sector at trade publication Twice Magazine. "If the current trends continue, Sears stands to lose its dominant place."

The home improvement retailers have identified appliances as an important growth area and are devoting more store space to washers, refrigerators and dryers. Lowe's, which has sold appliances for much of its 57-year history, currently ranks second in overall market share.

Home Depot, which began selling appliances in 1999, surged past Best Buy Co. in the fourth quarter to rank as the third-largest appliance retailer, according to data from research firm Stevenson Co. of Louisville, KY, U.S.

"We've seen this real shift of appliance sales moving from traditional venues into big-box home improvement," said Kim McKesson, merchandising vice president for appliances and kitchen and baths, during a recent walk at a Home Depot store in the Atlanta area.

At Home Depot, bright looking appliance showrooms located near kitchen sinks and cabinets are a prominent feature in new and remodeled stores. The retailer expects all 1,500 of its stores to have appliance showrooms by year's end.

Ms. McKesson said Home Depot, which is adding new product assortments in a number of categories, is purposefully displaying appliances next to kitchens. Customers want "to have everything under one roof," she said.

Store locations are seen as a factor in appliance sales. Home Depot and Lowe's together have blanketed the United States with more than 2,300 warehouses. By contrast, Sears has 870 full-line stores, and Best Buy sells appliances at over 500 of its stores.
Wolf also said Sears' appliance sales have suffered as consumer shifted away from traditional mall-based stores, where most of its stores are located.

"It's much more convenient for shoppers to pull into a strip mall where you'd find a freestanding Home Depot or Lowe's rather than find a traditional shopping mall," he said.

Lisa Smith, business general manager for appliances at Best Buy, is concerned that Lowe's and Home Depot could spark a price war in appliances. "It forces a retailer like Best Buy or Sears to be able to offer the customer something different," Smith said.
Sears is not sitting still while competition ramps up in a critical sales category. "Last year was the first year that we lost a little bit of share," said Tina Settecase, Sears vice president and general merchandise manager for home appliances. "We are looking to get back on track."

Sears, which derives 55 percent of its revenue from appliances
and electronics, is enlarging its appliance showrooms, offering zero-percent financing on appliance purchases and expanding next-day delivery. Sears is also stocking more lower-priced appliances. "We normally have been a store that caters to the mass market, the big middle segment," Ms. Settecase said. "We felt that we needed to address that the low end and the high end are growing."

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