Home Depot - great offline success story

Yesterday’s post was about how Home Depot has during this year grown ver rapidly to become world’s second most valuable retail company. One might wonder how a DIY retailer can become so valuable, let alone with only 14% of revenue coming from online?

Firstly, the listing of world’s most valuable retailers is still very much a listing of big American bricks and mortar retailers. Another top performer Costco has also succeeded fabulously well without a notable investment to the online channel.

Secondly, the entire construction and home maintenance and decoration boom has been brewing in the US for quite some time. The market was also pushed forward rapidly by the pandemic last year.

Thirdly, the market is controlled by two giants, Home Depot and Lowe’s. Both of the companies are in the top 10 list. Why, then, has Home Depot 150% higher valuation than Lowe’s?

Simply put, Home Depot is bigger and more profitable business than Lowe’s. Last year Home Depot had about 50% higher revenues and generated more than 100% more net income than Lowe’s.

It pays to be the biggest and most profitable, when an industry becomes hot.