Home Depot, Lowe's Extend Appliance Share Gains
Aug 24, 2005
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Home improvement retailers Lowe's Cos. and Home Depot Inc. are extending their market share gains in appliances, cutting more into the dominance of top seller Sears Holdings Corp. as they offer more upscale brands.
Among the four-biggest U.S. appliance retailers, only Lowe's and Home Depot, which rank second and third, respectively, registered market share gains in the second quarter. Lowe's unit share in appliances rose to 16.1 percent in the second quarter from 14.5 percent a year earlier, while Home Depot's share climbed to 9.2 percent from 8 percent. By contrast, Sears' appliance market share fell to 33.1 percent from 36.9 percent a year ago; and Best Buy Co. Inc.'s share slid to 6.3 percent from 7 percent.
The home centers have been gaining share over the past couple of years as they upgrade their appliance departments. In addition, they have benefited from strong remodeling activity as consumers renovating their kitchens buy appliances.
"The home centers are moving further up in terms of price points and starting to overlap and compete to a greater extent with Sears," said Longbow Research analyst David MacGregor, who surveys appliance retailers monthly.
He said that Lowe's and Home Depot are offering more upscale appliances as they shift focus from mainly lower- and mid-priced products. "You can now get KitchenAid at Lowe's," MacGregor said, referring to Whirlpool Corp.'s higher-priced brand of refrigerators and stoves. "I would expect to see the home centers continue to gain market share," he added. Home Depot just started selling high-tech washers from South Korea's LG Electronics, and later this year Lowe's will bring in Samsung Electronics Co. Ltd.'s appliances.
U.S. retail gains of LG and other foreign companies have pressured established appliance makers like Maytag Corp., which lost floor space at Best Buy earlier this year and is being acquired by rival Whirlpool Corp. in a U.S. $1.7 billion deal.
John Herrington, vice president of sales for LG appliances, said Home Depot's rising market share influenced the decision to sell at the retailer. "We are getting exposure to many more consumers, which is important for our brand as it emerges in the U.S.," Herrington said. "Consumers want to intergrade technology more into their kitchens." (Reuters)
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