We have many competitors who could take sales and market share from us if we fail to execute our merchandising, marketing
and distribution strategies effectively, or if they develop a substantially more effective or lower cost means of meeting customer
needs, resulting in a negative impact on our business and results of operations.
We operate in a highly competitive market for home improvement products and services and have numerous large and small,
direct and indirect competitors. The principal competitive factors in our industry include convenience, customer service and
experience, quality and price of merchandise and services, in-stock levels, and merchandise assortment and presentation. We
face growing competition from online and omnichannel retailers who have a similar product or service offering. Customers are
increasingly able to quickly comparison shop and determine real-time product availability and price using digital tools. Further,
online and omnichannel retailers continue to focus on delivery services, as customers are increasingly seeking faster,
guaranteed delivery times, including same-day and next-day fulfillment, low-price or free shipping, and convenient pick-up
options, including curbside pick-up, in-store pick-up, and buy online pick-up in-store (BOPIS lockers, and we must make
investments to keep up with our customers’ evolving shopping preferences. Our ability to be competitive on delivery times,
delivery costs, and delivery options depends on many factors, including successful implementation and the continued
maintenance of our initiatives related to supply chain transformation, including our market-based delivery model. Our failure to
respond effectively to competitive pressures and changes in the markets for home improvement products and services could
affect our financial performance. Moreover, changes in the promotional pricing and other practices of our competitors,
including the effects of competitor liquidation activities, may impact our results.
If we fail to hire, train, manage, and retain qualified associates with expanded skill sets or corporate support staff with the
capabilities of delivering on strategic objectives, we could lose sales to our competitors, and our labor costs, resulting from
operations or the execution of corporate strategies, could be negatively affected.
Our customers, whether they are homeowners, renters or commercial businesses, expect our associates to be well trained and
knowledgeable about the products we sell and the home improvement services we provide. We compete with other retailers for
many of our associates, and we are experiencing an unusually competitive labor market. Wages are increasing across the
United States, and competitors are offering higher compensation than before, due to labor market conditions. Many associates
are in entry-level or part-time roles with historically high turnover rates, which has led to increased training and retention costs,
particularly in a competitive labor market. Increasingly, our sales associates must have expanded skill sets, including, in some
instances, the ability to do in-home or telephone sales. We need to attract and retain a diverse workforce that can deliver
relevant, culturally competent and differentiated experiences for a wide variety of culturally diverse customers. Additionally, in
order to deliver on the omnichannel expectations of our customers, we rely on the specialized training and capabilities of
corporate support staff, which are broadly sought after by our competitors. Further, our ability to successfully execute
organizational changes, including management transitions within the Company's senior leadership are critical to our business
success. If we are unable to hire, train, manage, and retain qualified associates and specialists, the quality of service we provide
to our customers may decrease and our results of operations could be negatively affected.
Furthermore, our ability to meet our labor needs, particularly in a competitive labor market, while controlling our costs is
subject to a variety of external factors, including prevailing wage rates, the availability of and competition for talent, health care
and other benefit costs, our brand image and reputation, changing demographics and the adoption of new or revised legislation
or regulations governing immigration, employment, labor relations, minimum wage, and health care benefits. Periodically, we
are subject to labor organizing efforts, and if we become subject to collective bargaining agreements in the future, it could
affect how we operate our business and adversely affect our labor costs. In addition to our United States and Canada
operations, we have support offices in India and China, and any extended disruption of our operations in our different locations,
whether due to labor difficulties or otherwise, could adversely affect our business and results of operations.
Positively and effectively managing our public image and reputation is critical to our business success, and, if our public image
and reputation are damaged, it could negatively impact our relationships with our customers, vendors, and associates and,
consequently, our business and results of operations.
Our public image and reputation are critical to ensuring that our customers shop at Lowe’s, our vendors want to do business
with Lowe’s, and our associates want to work for Lowe’s. We must continue to manage, preserve and grow Lowe’s public
image and reputation. Lowe’s actual or perceived position or lack of position on social, environmental, political, public policy,
or other sensitive issues, and any perceived lack of transparency about those matters, could harm our reputation. In addition,
failure to meet our stated environmental and social goals, and consumer and investor concerns about our environmental and
social practices are potential sources of reputational risk. In addition, vendors and others with whom we do business may affect
our reputation. Any negative incident can erode trust and confidence quickly, and adverse publicity about us could damage our
reputation and brand image, undermine our customers’ confidence, reduce demand for our products and services, affect our
relationships with current and future vendors, impact our results of operations, affect our ability to recruit, retain, and engage
our associates, and attract regulatory scrutiny. The significant expansion in the use of social media over recent years has
compounded the potential scope of the negative publicity that could be generated by such negative incidents.
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