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LOWE’S TILLMAN LOOKS AHEAD TO MORE GROWTH

BY IAN RITTER

The growth of the Lowe’s home improvement chain of late has been explosive. But there is room to keep right on growing, Chairman and CEO Robert L. Tillman told his audience in a packed ballroom at the Spring Convention.

Even now the chain’s real estate group is hard at work planning its 2012 growth.

“We haven’t come close to storing half of America,” he said.

In 1989 Mooresville, N.C.–based Lowe’s Cos. operated 289 stores, mostly in the Southeast. Today that exceeds 975 stores in 45 states, and the chain plans to open 140 more by year-end and an additional 150 next year. And though the chain has been in business for nearly 60 years, its typical store is only about four years old.

Tillman attributed that expansion to the housing boom the country has been experiencing since the 1950s. In 1949 there were 25 million houses in the United States. Thirty million more were built in the 1950s and ’60s, an additional 40 million in the ’70s and ’80s, and a further 20 million during the 1990s.

Further, the houses themselves have grown in size over the years, Tillman said. The typical 1950s American home had one bathroom; by the 1990s, new houses were going up with about three.

Home improvement goods are now the second-highest-selling item behind food, and that is growing at about 6 percent a year industrywide, said Tillman.

“People need the products we sell,” he said. “The rallying cry of the American consumer is, ‘Make my life simpler and easier.’ ”

The tendency among Americans to spend on their houses rather than on meals or vacations has fed this demand, he said. Then there are those he called the “serial renovators,” home owners who are “replacing things in their house before they wear out.”

But for all of this growth, Lowe’s is still not the largest home improvement retailer in the business. Neither is The Home Depot, its main competitor, which currently operates about 1,740 units. No, that distinction belongs to Target and Wal-Mart, which together hold about 75 percent of the market — five times Lowe’s and Home Depot’s combined 15 percent.

What Lowe’s will have to do, then, is figure out how to grab more of the market without veering from its home improvement core, though Tillman seems to understand that. “I promise you, we have no intentions of adding food to our mix,” he quipped.

Among other strategies, the company will be focusing on expansion in the top 25 U.S. metropolitan areas, because “that’s where the money is,” Tillman said.

Lowe’s is proud of the fact that its customer base is now about 55 percent female, up from only about 8 percent 15 years ago, he said.

Having led the company through its expansion, Tillman, who became CEO in 1996 and chairman in 1998, retires in January. Robert A. Niblock, the company’s president, will succeed him.