Late in 2012, Lowe’s announced that during the first quarter of 2013, it would start adding LG home appliance products to over 1,700 of its locations nationwide. As the second largest home improvement retailer in the world, Lowe’s’ strategic partnership with LG strives to boost the retailer closer to the top spot, currently held by its main competitor, Home Depot.
While it is unclear as to the specifics of why LG was not part of Lowe’s product assortment prior to 2013, gap intelligence is witnessing a steady influx of products in Lowe’s retail locations nationwide
As illustrated in the chart above, Home Depot has held steady throughout the first half of 2013 with 69 LG placements, neither declining nor sharply increasing. Interestingly, it would seem that as Lowe’s enters the marketplace, Home Depot would respond with increasing assortments, but this has not been the case so far.
Lowe’s, however, is responding as anticipated with an influx of appliances early in the year (21 placements in February, 2013 alone), and is steadily debuting laundry duos, ranges, and refrigerators on a near weekly basis.
It’s notable to point out that floor space is coveted with large scale items such as home appliances. To illustrate this example, envision walking through your favorite home improvement or consumer electronics retailer. While shelf space is equally as valuable with smaller items such as digital cameras, notebooks, and tablets, it is much easier to reposition and refresh manufacturers and models as need be. This isn’t quite the case when it comes to home appliances. With Lowe’s bringing in LG products, it’s bound to dip into the floor space share of a competing manufacturer.
Currently, Frigidaire, Whirlpool, and Samsung occupy the largest percentage of floor space at Lowe’s. As trends continue, it is anticipated that one or more of these manufacturers will slightly decrease in floor space share as LG expands
An additional aspect that may come into play while retailers determine floor space share is innovation. Korean manufacturers, Samsung and LG, are at the forefront of developing smart technology to meet consumer demands for a more connected lifestyle. As new products debut with connectivity enabled technology, it may very well push out more traditional products that draw less demand.
Lowe’s is a FORTUNE 100 company that serves approximately 15 million customers a week at more than 1,745 stores across the United States, Canada and Mexico. In 2012, Lowe’s reported fiscal sales of $50.5 billion, a 0.6% increase over 2011. Similarly, LG is a $49 billion manufacturer with increasing profits year over year. The partnership of LG and Lowe’s is likely to prove profitable for both entities in expanding product assortments and continuing to drive profits in 2013.