Lowe's 2015 Annual Report Download - page 11

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• The average unemployment rate for 2016 is forecasted to decline to 4.7%, according to the March 2016 Blue Chip
Economic Indicators, which would be an improvement from the 5.3% average in 2015. 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 2015, home price appreciation increased 5.5%
which was consistent with the 2014 increase, according to the Federal Housing Finance Agency index. Economists
generally expect the rate of home price growth to moderate to 3.2% in 2016.
• Housing turnover increased an estimated 7.4% in 2015 after a 2.6% decrease in 2014, according to The National
Association of Realtors and U.S. Census Bureau. Turnover is generally expected to continue to increase in 2016,
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. Overall, the outlook
for the home improvement industry remains positive for 2016. The lagged benefit of stronger home buying and continued
home price appreciation should drive home improvement spending in 2016, offsetting moderation in job growth and the
ongoing potential pressure on mortgage rates.
Our Competition
The home improvement industry 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 as well as service providers that install home improvement products. 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 while delivering superior value in products and service. 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: Lumber & Building Materials;
Tools & Hardware; Appliances; Fashion Fixtures; Rough Plumbing & Electrical; Lawn & Garden; Seasonal Living; Paint;
Flooring; Millwork; Kitchens; Outdoor Power Equipment, and Home Fashions. 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 15 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.
We are committed to offering a wide selection of national brand-name merchandise complemented by our selection of private
brands. In addition, we are dedicated to ensuring the products we sell are sourced in a socially responsible, efficient, and cost
effective manner.
National Brand-Name Merchandise
In many product categories, customers look for a familiar and trusted national brand to instill confidence in their
purchase. Lowe’s home improvement stores carry a wide selection of national brand-name merchandise such as Whirlpool®
appliances and water heaters, GE®, LG®, and Samsung® appliances, Stainmaster® carpets, Valspar® paints and stains, Pella®
windows and doors, Sylvania® light bulbs, Dewalt® power tools, Owens Corning® roofing, Johns Manville® insulation, James
Hardie® fiber cement siding, Husqvarna® outdoor power equipment, Werner® ladders, and many more. In 2015, we added
brand name merchandise such as HGTV HOME® by Sherwin-Williams® paints, Kichler® lighting, Owens Corning® insulation,
GAF® roofing, and Diamond® vanities to our portfolio. Our merchandise selection provides the retail and Pro customer a one-
stop shop for a wide variety of national brand-name merchandise needed to complete home improvement, repair, maintenance,
or construction projects.