Last Updated Jul 9, 2009 8:22 PM EDT
According to the research firm's June Retail Ratings report, Wal-Mart led gainers when adults were asked where they shop most often for home improvement products, up 1.1 percent to rate as top choice of 6.3 percent of consumers overall versus 5.2 percent last year. Lowe's placed second up 0.9 percent to 24.3 percent and Ace Hardware came in third, up 0.4 percent to 2.8 percent. Rounding out the top five gainers, Target was up 0.2 percent to 0.7 percent and Sears was up 0.1 percent to 0.8 percent.
The proportion of consumers who rate Menards as top choice for home improvement slipped 0.1 percent to 3.3 percent, while Home Depot's rating slipped 0.6 percent to what still represents the sector's preference leadership, 28.5 percent.
Among households with incomes greater than $50,000, the numbers line up differently, but Home Depot still demonstrates erosion. With more affluent consumers, Lowe's gained two percent to a 31.6 percent preference rating, while Wal-Mart gained 0.5 percent to a 3.4 percent rating and Orchard Supply Hardware gained 0.4 percent to a 0.8 percent rating. Ace gained as well, by 0.3 percent to 2.6 percent and Menards was up by 0.2 percent to 3.8 percent.
In this group, the preference proportion for Sears slipped 0.3 percent to 0.7 percent and that for Home Depot fell 2.6 percent to 35.2 percent.
Critically, in the group that has the most money to spend on home improvement, Home Depot was on the wrong end of a 4.6 percent preference shift versus its major rival, Lowe's.
Looking at recent history, Home Depot's share was 31.4 percent in June of 2005 versus Lowe's 21.5 percent. Numbers for both dipped in June of 2006 with Home Depot at 29.2 percent and Lowe's at 19.7 percent before recovering in 2007 with Home Depot reaching 30.6 percent and Lowe's 22.5 percent. The two chains began going in opposite directions then, with Home Depot slipping to 29.1 percent in 2008 while Lowe's advanced to 23.4 percent.
Of course, Lowe's has been advancing into new markets although at a slower pace these days, but many of the territories it entered over the past few years already were well established for Home Depot, a factor that would bring new customers through the doors based on curiosity and geographical proximity alone. Still, given that Home Depot also has been losing ground to hardware specialists as well as Target and Wal-Mart, it seems vulnerable, which suggests a degree of customer dissatisfaction.
In June, Home Depot announced three strategic priorities for its business going forward and two directly targeted its relationship with consumers. The top priority the company established was putting customers first in the operation by getting employees more involved with shoppers. The next was was reestablishing Home Depot as the market leader in quality home improvement products. With those initiatives, the company demonstrated a desire to shore up erosion in its market position and gain additional recognition as the foremost destination for folks who are looking for help completing home projects.