Lowe’s vs. Home Depot–the battle moves to Canada at last

The Canadian home improvement scene is starting to heat up. It started a couple of weeks ago with Hardlines’ story on Lowe’s. We didn’t have much, but what we gleaned from the field was enough to affirm that Lowe’s is actually still coming to Canada (yes, people were starting to wonder–-a credit to Lowe’s close-to-the-vest approach to laying the groundwork for its Canadian expansion.)

But let’s look at that again. This Canadian invasion is actually the first step in Lowe’s strategy to establish an international expansion strategy. Why? The number-one and number-three home improvement retailers in the world are aggressively pursuing this tack (especially Kingfisher, which at US$14.03 billion in sales, is adding stores in France, China, and Russia, even while its domestic business falters).

Lowe’s, at number two, while going gangbusters in America, has yet to step foot outside its home country. It’s announced arrival into Canada in 2007 changes all that. The company has been doing its homework, figuring out how banking, finances, shipping, packaging, and much more work in a different country.

Most importantly, they’ve built their executive and buying teams, established a head office (moving date is later in May), and identified some store locations.

The day after Hardlines printed its story on Lowe’s, the Globe and Mail (which faithfully reads Hardlines) wrote a small, partially accurate story about Lowe’s. The day after that, Home Depot Canada unveiled its plans for the spring–-and for the year ahead (no coincidence, surely?–Editor). What are Home Depot’s key platforms in the race for the discretionary dollars of Canada’s home enhancement junkies? Stuff like environmental and energy saving products, a true Home Depot pillar; a reaffirmed commitment to a female friendly product assortment and shopping experience; expansion of its online and special-order business, especially with higher end products; and filling up the commercial/industrial channel through continued acquisitions like Brafasco and Litemor.

But Home Depot in the U.S. has been buying up independent yards in an effort, like RONA here, to garner more pro and contractor customers. Watch for more acquisitions by Home Depot, both north and south of the border. RONA, meanwhile, the other key Canadian player, is getting more firmly entrenched in the traditional hardware/home improvement channel, both on the pro and DIY side, with ongoing acquisitions and recruitments among traditional independents. In a sense, RONA and Home Depot are finding more and more ways to avoid competing directly with each other.

Lowe’s must figure out how to fit in between these increasingly divergent poles. Considering their performance in the U.S., where they outperform Home Depot in many key benchmarks (profit and sales increases, same-store sales, etc.), anyone who ignores–or worse, underestimates the world’s number-two home improvement retailer–does so at their peril.