Retailers are shelling out millions of advertising dollars hoping to lure shoppers into their stores during this year's shortened holiday season. But which home improvement retailer better leveraged its ad dollars over Black Friday weekend?
Acquiring customers isn't cheap
A recent analysis by Placed and Kantar Media uncovered which retailers had the best Black Friday weekend based on one key metric, "cost per visitor share." This metric gives insight as to how well television advertising helped drive in-store customer traffic. The study focused on three categories: department stores and mass merchandisers, home improvement stores, and consumer electronic stores. Yesterday, I examined the results from the department stores and mass merchandisers category . Today, we'll focus on home improvement stores.
Among the big-box home improvement retailers, Home Depot (HD -0.31%) and Lowe's (LOW -0.14%) each spent roughly the same dollar amount on TV ads in the run-up to Black Friday weekend. Yet, Home Depot had more visitors to its stores. Among the universe of shoppers who flocked to retailers on Black Friday weekend, 5.6% opened their wallets at Home Depot and 4.2% patronized Lowe's. As a result, Home Depot boasted the lower cost per visitor share of the two rivals. Home Depot and Lowe's spent $2.9 million and $4.0 million, respectively, per visitor share.
Building on a solid foundation
Despite Home Depot being crowned the home improvement retailing winner of Black Friday weekend, both Home Depot and Lowe's have been growing at a steady clip. During the past five years, both stocks have outperformed the market. Yet, Home Depot has returned twice as much to its shareholders as has Lowe's.
HD Total Return Price data by YCharts
Source: YCharts
For its most recent quarter, Home Depot posted same store sales growth of 7.4%, compared to Lowe's 6.2%. But Lowe's strategy of offering the lowest price possible is bringing customers into its stores and driving revenue higher. In the most recent quarter, Lowe's reported net sales increased 7.3% to $13 billion.
Lowe's plans to expand its reach by focusing its product lines on those best-suited to its customers, improving its in-store customer experience, and hiring more workers . Lowe's acquired 72 stores from Orchard Supply Hardware in August . All of the stores are located in California, a geographic market where Lowe's is looking to increase its presence. The acquisition will not only provide a solid growth opportunity for Lowe's, but also help it more aggressively compete with Home Depot.
