August 05, 2015
Ronald Friedman, Co-Leader, Retail/Consumer Products Industry Group, Quoted in Fortune Article, "Lowe's Renovates Retail Strategy with New Manhattan Stores."
By John Kell
Lowe's Home Improvement is entering the competitive Manhattan retail market for the first time this summer with the opening of two new stores, a move that hints at how the chain is remodeling its broader retail strategy to capture growing U.S. urban markets.
The company is in the midst of completing construction on two new stores in the Upper West Side and Chelsea neighborhoods of New York City, with both locations expected to open later this summer. The stores showcase a more urban take on big-box retail on several fronts. The stores will be smaller and stock merchandise from new merchants that Lowe's hasn't worked with before. The Lowe's team says they are thinking about retail a little differently when aiming to address the Manhattan market.
For starters, the Manhattan stores are smaller than the traditional Lowe's. The new locations on the island stand about three times smaller at around 30,000 square feet, compared with its existing stores at an average of about 112,000 square feet concentrated across U.S. suburbs. The Manhattan stores also feature display windows to lure in street traffic. That's a feature you wouldn't find at a typical Lowe's store.
The smaller store format strategy differs from main rival Home Depot, which has two stores in Manhattan that are roughly the same size as that retailer's average store. Home Depot has also operated its two existing locations on the island since 2004, so Lowe's is coming to the market for the first time over a decade later.
The decision to open smaller stores also lowers the investment Lowe's is making to enter the pricy Manhattan retail market.
"New York is the most expensive place to open up a store," says Ron Friedman, a retail consultant for accounting and advisory firm Marcum LLP. "The cost per square foot to get the store open is extremely expensive." He advises retailers consider renting less space to start.
The smaller locations will scale back on some items that aren't as popular for smaller homes, often with little outdoor space. For example, the Lowe's Manhattan stores will stock fewer shovels and less carpeting, as those items just aren't as popular for city-dwelling needs.