Lowe's 2014 Annual Report Download - page 12

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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 2015 than in 2014. Real disposable personal
income is forecasted to increase 3.5% in calendar 2015, up from the 2.5% gain recorded in 2014, based on the March
2015 Blue Chip Economic Indicators®. *
• The average unemployment rate for 2015 is forecasted to decline to 5.4%, according to the March 2015 Blue Chip
Economic Indicators, which would be an improvement from the 6.2% average in 2014. 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 2014, home price appreciation improved to an
estimated 5.7%, according to the Federal Housing Finance Agency index. Economists generally expect the rate of home
price growth to moderate in 2015 but to remain positive.
• Housing turnover decreased 2.8% in 2014 after a 9.0% increase in 2013, according to The National Association of
Realtors and U.S. Census Bureau. Growth in 2014 was restrained by an increase in mortgage rates and harsh winter
weather. Turnover is generally expected to increase in 2015, supported by a strengthening jobs market, rising incomes
and historically low mortgage rates.
These indicators are important to our business because they signal a customer's willingness to engage in home maintenance,
repair, and upgrade projects and favorably impact income available to purchase our products and services. Currently, these
indicators suggest moderately improving consumer demand for the home improvement products and services we sell.
Our Competition
The home improvement retailing business includes a broad competitive landscape. 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, warehouse clubs, and online and other
specialty retailers. Location of stores 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 omni-channel capabilities as a competitive
factor. We differentiate ourselves from our competitors by providing better customer experiences that make us the project
authority while delivering value to our customers. 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 additional items available through
our Special Order Sales system, Lowes.com, Lowes.ca, and ATGstores.com. See Note 16 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.
2
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