Originally Posted by lazyday
How do you think the markets or models have changed on WalMart or Lowes, in ways they haven't yet adapted to?
I've been watching Wal-Mart get the crap beat out of their attempt to export American merchandise & business practices in Germany and Japan. Back home, they're heavily pressured by the unions and legislated against by the communities (for example in Kapolei
) and struggling to adapt from fast growth to incremental efficiency gains. Heck, retail sucks so badly that they're entering banking & healthcare!
Lowes and Home Depot are both going to get hurt in the housing downturn. When the new homes stop going up, they'll stop selling plants & yard equipment and kitchen improvements to millions of new homeowners. When the contractors aren't building those thousands of new homes, they'll be fighting each other for the smaller jobs and chewing away at the home-improvement store's margins.
I'm not saying that both industries are dead, only that they've reached the end of the hockey stick for growth and are contemplating the grim futures of commodity businesses with nowhere left to expand. It's hard to make their stocks look as attractive as other large-caps paying 2-3% dividends.
I know Lowes stores vary all over the bell curve, but I watched them take over a local chain (Eagle Hardware), drive off all the employees who actually knew anything or gave a darn, and spend untold sums reorganizing the store to make sure that the rest of us couldn't find anything. Then they had to raise prices to improve margins, but they couldn't figure out why no one wanted to shop there anymore.
Luckily Nardelli is busy saving Lowes from a grim fate... as long as he doesn't take Home Depot down with him!