It's a free app.

It'll help you save in budget your money and to get it go to empower dot Emmy slash company Man.

The link is in the description.

When talking about hardware stores in the United States, there's two that stand out above the rest.

You already know that you're about to say the biggest one is Home Depot, and the second biggest is lows.

Those have been the standings for 30 years now.

In the late eighties, Home Depot took that number one spot from lows, and it's been that way ever since.

But what has changed over the years is how much of a lead Home Depot has over lows.

Have you ever seen a basketball game where one team has maybe a 10 point lead the entire time?

Sometimes the other team will start to come back a little, but they lose it right away, and the lead goes right back to 10 sort of what's been happening with Lowe's and Home Depot.

Home Depot is the clear winner by almost any measure, but lows is still very much a threat.

If they put together a good run or Home Depot makes a few mistakes.

I can see them taking the lead now.

Lows actually started long before Home Depot.

Almost 100 years ago, it was 1921 by Lucius Low in a small town in North Carolina called Wilkesboro.

Even today, that town is a population of 3500 people.

Back then, it looks like it was more like 1000.

So this was the small town hardware store that you're probably envisioning.

The original store name was far too long, who was called Mr L S Lo's North Wilkesboro Hardware.

In 1940 Lucius died, and his son, James Lowe, took over.

A couple years later, he left to serve in the U.

S.

Army during World War two, and his mom and sister were left in charge of the business.

Now James had a brother in law named Carl Buck in who was also serving in the Army until he received an honorable discharge due to a foot injury.

After the Army Carl came down to help the other to run the store.

Eventually, James Lowe came home as well, and an agreement was made that resulted in the two being equal partners as faras ownership.

Now there's many different versions of this, depending on the industry.

But for hardware stores, there's two major options regarding Target customers.

They could be more of a wholesaler and target their sails toward actual construction companies and professional carpenters.

Or they could be more of a retailer and target the general population.

That's the people who take it upon themselves to fix their own plumbing or build a new deck in the yard.

In other words, the consumers in the beginning.

Mr L.

S Lo's North Wilkesboro hardware Still too long.

At least take out the Mister.

I don't know.

Put in the beginning, that small neighborhood hardware store was serving the consumers and Carl Buck in Wanted to change that.

See whether your sales come from professionals or consumers is highly dependent on the state of the economy.

When the economy does well, there's generally more people buying houses, which means there's more professionals building houses, and the same goes for any buildings really stores offices.

You can see how a stronger economy would necessitate more buildings At these times.

You would expect that the places that target professionals would prosper over those who target the consumers and not just for the construction industry, either.

When the economy's bad and you're low on money, aren't you a little more likely to try to fix the sink yourself rather than spending money to hire a professional to do it?

It's not a perfect rule, but I think we can agree that in general, as a hardware store, a bad economy means you'd be smart to target consumers.

And a good economy means you'd be smart to target professionals at this point.

Lows.

Yeah, I'm just calling it loads From now on, they were operating during the Great Depression, which is a perfect time to target consumers.

That's what they did.

But the war helped bring the country out of the Depression, and after the war, the economy was actually looking pretty good.

Specifically, the housing market.

There were tons of soldiers coming home with government programs in place to promote homeownership.

This is when living in the suburbs became much more popular.

In short, there was now a huge demand for houses and huge demand for housing materials and tools to build those houses.

According to our little formula.

This sounds like a great time to start targeting professionals and Carl Buck in and thought the same thing.

That's when he implemented all of these changes.

He started buying large quantities straight from the manufacturers, which cut out the middleman and allowed them to sell at lower prices.

Here he organized, the stores just made everything more geared toward a knowledgeable professional Economy was strong, and lows took advantage of it.

Now this part's a little odd.

They used the profits from all of us to open a second location, which isn't odd.

But then they bought a car dealership and a cattle farm, and soon after, another deal was made where Carl would become 100% owner of Lows and James Lowe would become 100% owner of the other two businesses.

So that ended the involvement of anyone actually named Lo, and it made sense that Carl would continue with it.

He's mostly responsible for its success.

Up until this point, he opened 1/3 location only months later.

It was eight years later, in 1960 when Carl died, and at that point they were upto 15 locations.

Soon after that, the company was taken public, which helped further their growth, and by the end of the 19 sixties they were up to 50 stores.

By the end of the 19 seventies, they were up to 200.

Those were all good times for the company.

But then, in the early eighties, there was an economic recession, and the housing market was struggling.

So based on our formula, I think you can guess how they responded to it.

You can say they return to their roots by again targeting the consumers.

They changed the layout of their stores and made it all look consumer friendly.

And not surprisingly, it was a big success.

1983 marked the first time in the modern era where they made more money selling to consumers rather than professionals.

Hi, no, I'm really driving this point home, but I think it's necessary to understand the strength of this formula.

Over the years, the economy and therefore the housing market and therefore the construction industry has had some ups and downs, and each time both Lowe's and Home Depot have adjusted accordingly in the late eighties and through the nineties is when Home Depot grew into the giant that they are today.

As I said.

In 1989 they took that number one spot from Lowe's.

Home Depot introduced the concept of these massive approaching 100,000 square foot big box stores to the industry, and lows was forced to follow.

In 1991 Low spent almost $71 million either relocating to bigger locations or upgrading existing ones.

Looking at this from today, it's been 30 or 40 years of one company introducing something or changing something and the other company following their lead.

As a result.

Today, I think we have two very similar companies.

Let's take a look at how things compared today to keep things simple in uniform.

All of these numbers are taken from their most recent annual reports.

For number of stores, Home Depot has almost 500 more, but on average, low stores are actually a little bigger.

The Home Depot still has more square footage overall and for both.

There are some locations in Canada and Mexico, but the vast majority of them are in the United States.

For a number of employees, Home Depot has about 100,000 more each year on average, Home Depot as about 1.5 billion transactions.

On average, each of those is in the amount of $63 resulting in over 100 billion in sales for lows.

Those numbers are less impressive, but still impressive for Home Depot.

On average, their sales air 6.8% higher in each store compared to the year before.

And for lows, it's 4% which again is less impressive but still impressive.

Back to the basketball metaphor.

Home Depot is leading by 10 points, and this is like looking at the stat sheet and trying to figure out why.

This is where you learn that our field goal percentage is actually higher, but we're getting out rebounded and we have too many turnovers.

When I look at these numbers, this is what stands out to me.

Their sales are far lower, and it's not because the average transaction is too low.

It's because they don't have enough transactions, and I don't think the solution is opening more stores.

Home Depot already sells more in each store, and those sales are increasing at a faster rate.

The solution is strengthening their existing stores, which is easier said and done.

But it appears that's what they've been trying to do.

In August, they announced that they'll be closing 99 Orchard Supply Hardware stores, which they own, and recently announced the closing of 51 low stores, which they say are mostly located within 10 miles of other lows locations.

I would think that should increase the performance of the remaining stores, which is exactly what they need to do.

It looks like a smart move on they're in.

But driving customers from one low store to another isn't going to bring them much closer to Home Depot.

It will probably raise their sales per store and make them more efficient.

But it isn't going to do anything for their overall sales or customer transactions.

What they need is to increase those transactions by taking customers away from Home Depot.

And to do that, we need to figure out why Home Depot has so many more customers in the first place.

Here's what I got.

I've been talking about focusing on the consumer versus focusing on professionals this entire time right now and for some time lows focuses more on the consumer, the layout of the store, the lighting, the employees, their selection.

It's all set up to accommodate the average person who may not know exactly what they're doing.

It feels much more like a WalMart or your typical retail store, whereas Home Depot has been able to find more of a balance.

Maybe it doesn't attract the consumers quite as well, but it attracts the professionals much better overall, giving them a much larger pool of customers.

Let me take a guess as to which one you prefer.

If you work in the industry and need things professionally, you'd much rather go to the Home Depot.

If you need something for D I Y.

Projects or home repair, you may favor lows but also wouldn't mind the Home Depot.

Let me know if I'm right about that, but also consider this aspect.

The riskier focus is on the professional, since those sales arm or tied to the state of the economy.

If the economy tanks, I imagine the Home Depot would have a greater loss.

But then, if it improves, they'll see the greater gain.

You might be able to say that Home Depot's numbers air so much higher because they've been taking a risk that's been paying off.

And lows may be perfectly content at that low risk number two spot.

Just a different way of looking at the situation.

Let me know in the comments.

You agree with all of those conclusions I just made, but also is lows moving in the right direction?

Are they doing what they need to do to one day?

Take that number one spot, or are they not even concerned with it and just trying to be the best lows that they can be?

I'd like to hear what you have to say.

Now, let me tell you more about today's sponsor.

Empower.

Here's what I did.

I downloaded the APP, linked it to my bank account.

And now this is what I used to keep track of my finances.

It's really easy.

I use this monthly report feature.

It tells me how much money I'm spending and what I'm spending it on.

I'd say those are important things to know if I need further health.

There's empower.

Coaches say you want to start saving money or consolidating debt.

They'll help you.

This APP just has so many things.

It has intelligent alerts that keep you up to date on your spending bills and budgets.

How about this one helps users improve their credit scores by keeping an eye on credit utilization and encouraging them to never miss a payment.

I recommend that you give it a try.

Just see everything that it has to offer to get it.

Simply goto empower dot m e slash company Man, The link is in the description.

Thank you for watching.