Lowe's 2013 Annual Report Download - page 10

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2
There are many variables that affect consumer demand for the home improvement products and services Lowe’s offers. Key
indicators we monitor include real disposable personal income, employment, home prices, and housing turnover. We also
monitor demographic and societal trends that shape home improvement industry growth.
• Real disposable personal income is projected to grow at a stronger pace in 2014 than in 2013. The 2013 gain was
depressed by tax increases, and dividend and bonus payments that were accelerated in 2012. Real disposable personal
income is forecasted to increase 2.3% in calendar 2014, up from the 0.7% gain recorded in 2013, based on the March
2014 Blue Chip Economic Indicators®. *
• The average unemployment rate for 2014 is forecasted to decline to 6.4%, according to the March 2014 Blue Chip
Economic Indicators, which would be an improvement from the 7.4% average recorded in 2013. The unemployment
rate should continue to trend lower as the job market continues to expand at a moderate pace.
• Recent evidence suggests that home prices will continue to increase. In 2013, home price appreciation improved to an
estimated 4.0%, according to the Federal Home Finance Agency index, up from flat growth in 2012. The gains were
driven by increasing demand and lower inventories of homes for sale. Economists generally expect home price growth
to moderate in 2014 but remain positive.
• Housing turnover increased 9.0% in 2013, according to The National Association of Realtors and U.S. Census Bureau,
compared with 9.7% growth in 2012. However, turnover remains 34% below its peak in 2005. Turnover is generally
expected to continue to increase in 2014, though at a more moderate rate.
These indicators are important to our business because they impact income available to purchase our products and services, or
signal a customer's willingness to engage in home maintenance, repair, and upgrade projects. Currently, these indicators
suggest moderately improving consumer demand for the home improvement products and services we sell. However, in the
persisting uncertain economic environment, we continue to balance implementation of our long-term growth plans with our
near-term focus on improving performance and maintaining adequate liquidity.
Our Competition
The home improvement retailing business includes many competitors. We compete with other home improvement warehouse
chains and lumberyards in most of our trade areas. We also compete with traditional hardware, plumbing, electrical and home
supply retailers. In addition, we compete with general merchandise retailers, mail order firms, warehouse clubs, online and
other specialty retailers. Our customers value reputation, customer experience, quality and price of merchandise, and range and
availability of products and services. Location of stores also continues to be a key competitive factor in our industry.
However, the increasing use of technology and the simplicity of online shopping also underscore the importance of multi-
channel presence as a competitive factor. See further discussion of competition in Item 1A, “Risk Factors”, of this Annual
Report on Form 10-K.
Products and Services
Our Products
Product Selection
To meet customers’ varying home improvement needs, we offer a complete line of products for maintenance, repair,
remodeling, and decorating. We offer home improvement products in the following categories: Kitchens & Appliances;
Lumber & Building Materials; Tools & Hardware; Fashion Fixtures; Rough Plumbing & Electrical; Lawn & Garden; Seasonal
Living; Paint; Home Fashions, Storage & Cleaning; Flooring; Millwork; and Outdoor Power Equipment. A typical Lowe's
home improvement store stocks approximately 36,000 items, with hundreds of thousands of items available through our
Special Order Sales system, Lowes.com, Lowes.ca and ATGstores.com. See Note 17 of the Notes to Consolidated Financial
Statements included in Item 8, “Financial Statements and Supplementary Data”, of this Annual Report on Form 10-K for
historical revenues by product category for each of the last three fiscal years.
*Blue Chip Economic Indicators® (ISSN: 0193-4600) is published monthly by Aspen Publishers, 76 Ninth Avenue, New York, NY 10011, a
division of Wolters Kluwer Law and Business. Printed in the U.S.A.