Lowe's Companies, Inc. LOW has been making significant strides to improve revenues and customer engagement. In its effort, two major strategies have been at the forefront — the pro-customer approach and the omnichannel focus.

Pro Customers: A Bright Spot for LOW

As consumers started prioritizing essential purchases over discretionary home improvement projects owing to underlying inflationary pressure, Lowe’s emphasis on serving professional customers has become more important in driving growth. The Pro customer segment includes contractors, small business owners and other professionals. 

Lowe’s has made a concerted effort to cater to this customer base by offering tailored services, dedicated support teams and exclusive products to meet their requirements. These efforts have paid off, with Lowe’s experiencing an uptick in Pro customer sales. The segment achieved high single-digit comparable sales growth in the third quarter of fiscal 2024. 

Stable performance in the Pro segment could contribute to revenue diversification and mitigate risks associated with fluctuating consumer demand. LOW has already achieved significant success in Pro penetration, reaching a 30% market share. The company also plans to relaunch its Pro loyalty program as "MyLowe’s Pro Rewards" in early 2025. The new program is designed to simplify the process of earning and redeeming rewards.

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LOW Bets on Omnichannel Initiatives

Lowe’s has been expanding its omnichannel capabilities, allowing customers to shop seamlessly across multiple platforms, whether in-store, online or through mobile apps. This approach has enhanced customer convenience and accessibility, improving the overall shopping experience.

The company has expanded same-day delivery through partnerships with  DoorDash, Shipt and Instacart, in addition to leveraging OneRail for last-mile delivery.  Lowe’s also launched the first product marketplace in the U.S. home improvement industry, significantly broadening its digital assortment. The marketplace offers a wider product catalog from new sellers and existing suppliers catering to value-conscious and premium customers. This approach positions Lowe's as a one-stop shopping destination. 

These measures align with changing consumer behaviors and fortify Lowe’s omnichannel strategy, which is critical for long-term competitiveness. In the last reported quarter, online comparable sales achieved 6% growth, driven by improvements in traffic and conversion rates, including a double-digit increase in traffic on Lowe’s mobile app.

Lowe’s is integrating AI technology into its operations to improve online search, product recommendations and demand planning. This use of AI will streamline operations, improve productivity and enhance the overall shopping experience, all of which are expected to enhance operational efficiency. Lowe’s also plans to open 10-15 new stores annually in high-growth U.S. markets.

Final Words on LOW

Lowe’s focus on building stronger relationships with its Pro customers while attracting new ones through improved online and in-store offerings should continue to pay off in the long term. These should help mitigate the pressure LOW is facing in its DIY discretionary categories, particularly those linked to larger, big-ticket projects. Lowe's is investing in its Total Home strategy to differentiate itself in the home improvement market, where it faces stiff competition from rivals such as The Home Depot, Inc. HD. 

Shares of this Zacks Rank #3 (Hold) company have advanced 15% in the past year compared with the industry’s rise of 12.9%.

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