Lowe's expands presence in Delaware

Lowe's expands presence in Delaware
http://www.delawareonline.com/apps/pbcs.dll/article?AID=/20060615/BUSINESS/606150325/1003

By DWAYNE STEWARD
The News Journal
06/15/2006

Another Lowe's will open its doors in Delaware by the end of the year, giving northern New Castle County nine home improvement stores within a short drive of one other.

Contractors broke ground in May on what will be Delaware's seventh Lowe's, located on Du Pont Highway (U.S. 13) near the I-495 interchange, within 15 miles of five Home Depot stores and three other Lowe's.

The 116,000-square-foot store, which will include a 31,000-square-foot garden center and cost $18.5 million to build, will bring 175 new jobs to the area, said Jennifer Smith, a Lowe's spokeswoman.

Lowe's, which opened its first Delaware location in 1964 in Dover, recently bought land where it will build two more stores in coming months.

"We have ... finalized construction contracts to have branches built in Seaford and Newark," Smith said. "Whenever we are looking to build we do a tremendous amount of research beforehand."

The Seaford and Newark stores also are expected to open by the end of the year.

Lowe's, which employs 4,500 in Delaware and approximately 175,000 nationwide, has stores in Bear, Camden, Dover, Lewes, Middletown and Wilmington.

The decision to locate the new store in the same vicinity as two other home improvement stores is strictly based on the health of the market, Smith said.

She also said it is not uncommon for the company to build stores so close together. "There are nearly 400-some factors we look at when choosing a location for a new branch in the same market," Smith said.

When deciding to build new stores, Lowe's uses a formula that is specific to each area. Smith could not provide data for the Wilmington market.

Building so close to a Home Depot was also a factor in choosing the location. Approximately one-quarter of Lowe's stores are built within a 10-mile radius of its largest competitor.

"When there's competition, it's the customer that ultimately wins," Smith said.

Lowe's reported net sales for 2005 of $43.2 billion, and served nearly 11 million customers a week at more than 1,200 stores in 49 states. They saw an 18.6 percent increase in sales from 2004.

The Home Depot reported net sales of $81.5 billion in 2005. They serve 22 million customers a week at 2,070 stores internationally. They saw a sales increase of 11.5 percent from 2004.

The home improvement market, currently worth $291.3 billion yearly, grew by 7.5 percent in the past year, in part because of rebuilding caused by Hurricane Katrina, according to the Home Improvement Research Institute. Market analysts predict an increase of 4.6 percent in 2006 and a market of $369.9 billion annually by 2010.

Don Harrison, a Home Depot spokesman, said the company considers Lowe's to be its strongest competitor, but doesn't see the opening of another Lowe's in the Wilmington market as any sort of a threat. He believes the worst thing you can do in retail is focus too much on the competition.

"When you start looking over your shoulder, you take attention away from the customer and you'll start losing momentum in regard to customer service," he said.