Leonard G. Herring
May 1 1994 by Lorri Grube
Power ties are out, power tools in. Gucci out, gardening stuff in. On the small screen, “
While he may not have the broad appeal of television character Tim “the Toolman” Taylor, Leonard G. Herring, president and CEO of Lowe’s Cos., is riding the same value-conscious, do-it-yourself trend. This past holiday season, shoppers shunned department stores and instead scoured home-improvement and housewares retailers for saber saws, chrome faucets, and kitchen cabinets.
So much the better for Lowe’s, which Herring recently guided through a dramatic overhaul. A one-time seller of lumber, hardware, and appliances to contractors, the North Wilkesboro, NC-based company has reinvented itself as a chain of home-center superstores, mounting a challenge to industry leader Home Depot. In a promotional videotape, the camera pans across one store’s spacious aisles and bold displays. This is one-stop shopping for the self-styled handyman. “This,” Herring says, “is what Lowe’s is all about.”
One reason is the boom in home furnishings. Sales in the category between Thanksgiving and Christmas jumped 20 percent year-on-year, according to the International Council of Shopping Centers. Lowe’s sales increased 18 percent in the fiscal year ended January 31 to $4.5 billion.
To keep pace with demand, Herring says, Lowe’s added 23 new stores in 1993 and five in 1994 for a total of 316. The average new store stocks 40,000 items, including wallpaper, paint, and lighting. Lowe’s business mix is 72 percent retail and 28 percent wholesale the opposite of nine years ago. As a result, the company’s bottom line is not as closely tied to the cyclical housing industry. “My biggest mistake was underestimating the power of our retail markets and perhaps not moving fast enough to enlarge our stores,” Herring says. The S116 billion industry is fragmented, with Home Depot cornering 8 percent of the market and Lowe’s 4 percent. The companies compete in about 70 markets-including
“It really isn’t direct competition,” says Herring, 66, who has spent most of his career at Lowe’s. “Home Depot’s smallest markets-single-store cities-are our largest. We prefer to stay within our sphere of influence.”