Home Depot’s Warehouse-Store Model Reshaped Lowe’s

Home Depot introduced warehouse stores with about five times the square footage of the smaller hardware stores used by Lowe’s and other regional chains at the time. The larger stores offered broader assortments, and the model was described as generating a higher return on investment than many smaller stores with limited inventories.

After Home Depot passed Lowe’s in 1989, Lowe’s shut older-format stores and began building stores modeled on Home Depot’s approach. The companies later developed some differences, but the response to Home Depot’s model is attributed to their similarity today.