Home Depot is the world‘s largest home improvement retailer, with over 2,300 stores across the U.S., Mexico, and Canada. In fiscal 2020, Home Depot generated $132.1 billion in sales, a 19.9% increase over the prior year. With a massive product assortment, knowledgeable associates, and a best-in-class supply chain, Home Depot is the go-to destination for DIYers and professional contractors.
However, the home improvement industry is highly competitive, with a number of large and small players vying for market share. In this in-depth guide, we‘ll analyze Home Depot‘s top 15 competitors, using expert insights and hard data to evaluate each company‘s strengths, weaknesses, and overall impact on the market.
Competitor Summary
Here is a quick overview of Home Depot‘s top competitors by 2020 revenue:
| Competitor | 2020 Revenue (Billions) |
|---|---|
| Lowe‘s | $89.6 |
| Menards | $12.0 (est.) |
| Ace Hardware | $7.8 |
| True Value | $2.1 (est.) |
| Harbor Freight Tools | $5.0 (est.) |
| Northern Tool + Equipment | $2.0 (est.) |
| Tractor Supply Co. | $10.6 |
| Walmart | $555.2 |
| Amazon | $386.1 |
| Canadian Tire | $11.3 |
| Home Hardware | $7.1 |
| Rona | $4.2 |
| Do it Best Corp. | $3.7 |
| Floor & Decor | $2.4 |
| Lumber Liquidators | $1.1 |
Sources: Company reports, Forbes, Hardware Retailing
1. Lowe‘s
Founded in 1946, Lowe‘s is the world‘s second-largest home improvement retailer behind Home Depot. Headquartered in Mooresville, North Carolina, Lowe‘s operates over 2,200 hardware and home improvement stores throughout the United States and Canada, along with a thriving e-commerce business at Lowes.com.
Lowe‘s and Home Depot have similar business models, targeting both DIY and professional customers with a wide assortment of building materials, tools, appliances and decor items. Lowe‘s "Do It Right for Less" slogan highlights its value proposition compared to Home Depot.
However, there are some key differences between the two rivals:
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Store experience: Lowe‘s stores tend to be brighter, cleaner and easier to navigate than Home Depot‘s warehouse-style stores. Lowe‘s also puts a bigger emphasis on appliances and home decor.
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Pro customers: Home Depot gets about 45% of its sales from professional contractors, compared to only 20-25% for Lowe‘s, according to company reports. Lowe‘s has been investing more in its Pro business in recent years but still lags behind Home Depot.
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Geography: Home Depot has a larger footprint with stores in the U.S., Canada and Mexico. Lowe‘s exited the Mexico market in 2019 to focus on its core U.S. and Canada operations.
In fiscal 2020, Lowe‘s posted net sales of $89.6 billion, a 24% increase over the prior year driven by the home improvement boom during COVID-19. While still smaller than Home Depot overall, Lowe‘s has delivered strong results under CEO Marvin Ellison, with 12 straight quarters of comparable sales growth as of Q1 2021.
Going forward, Lowe‘s is investing heavily in its omnichannel capabilities to serve customers more seamlessly across stores and online. This includes launching a new Lowe‘s app, adding in-store pickup lockers, and modernizing supply chain and IT systems. Lowe‘s is also expanding its private label assortment and refocusing on the Pro customer to gain share in this key segment.
"We are making strategic investments in our core retail business to drive sustainable and profitable growth," said Ellison in a 2021 earnings release. "Our Total Home strategy will enhance customer engagement and grow market share by providing complete solutions for DIY and Pro customers."
2. Menards
Menards is the third-largest home improvement chain in the United States, with over 335 stores across 15 Midwestern states. Founded in 1960 by John Menard Jr., Menards is known for its massive, warehouse-style stores that often exceed 200,000 square feet (larger than a typical Home Depot).
Menards‘ slogan "Save BIG Money at Menards!®" reflects its focus on offering low everyday prices on a huge selection of home improvement products. With a dizzying array of building materials, tools, hardware, paint, lawn and garden supplies, appliances, and even groceries, Menards is a one-stop-shop for DIYers on a budget.
While Home Depot and Lowe‘s cater to both homeowners and professional contractors, Menards is laser-focused on DIY customers looking to save money. Some of Menards‘ key differentiators include:
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Everyday low prices: Menards is known for having the lowest prices in home improvement, with a commitment to match any competitor‘s price. Frequent promotions like 11% rebates, weekly deals and clearance events further reinforce Menards‘ savings message.
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Huge product selection: With over 200,000 different items in each store, Menards claims to have everything you need for home improvement projects and more. Beyond core home improvement categories, Menards carries groceries, pet supplies, home decor, seasonal items and automotive products not typically found at Home Depot or Lowe‘s.
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Localized assortment: Menards tailors its product mix to each market, stocking more cold weather supplies in Northern states and more outdoor living products in Southern locations. This helps Menards deliver a more relevant, curated assortment versus national chains.
As a privately-held company, Menards does not publicly disclose its financials. However, industry analysts estimate Menards generated around $12 billion in revenue in 2020, up from $10.7 billion in 2019, driven by pandemic-fueled home improvement spending.
While much smaller than Home Depot and Lowe‘s in terms of overall sales and store count, Menards captures a meaningful share of the Midwest DIY market through its unique assortment, low prices and strong regional brand. As the company continues to open new stores and expand its e-commerce presence, Menards will remain a significant player in the home improvement industry.
3. Ace Hardware
Ace Hardware is a retailer-owned cooperative based in Oak Brook, Illinois. With over 5,000 stores in 60+ countries, Ace is the world‘s largest hardware cooperative and a major competitor to Home Depot in the convenience hardware segment.
Unlike warehouse-style home centers, Ace stores are typically small neighborhood shops, with an average footprint of just 10,000 square feet. Ace franchisees are independent retailers who tailor their assortment and services to the needs of their local community.
Ace‘s slogan "The Helpful Place" emphasizes its key differentiators:
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Superior customer service: With a staff of knowledgeable, helpful associates, Ace stores provide a level of personalized service not found at big box retailers. Ace also offers a wide range of services like key cutting, screen repair, knife sharpening and more.
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Carefully curated assortment: While Home Depot stocks over 35,000 products in each store, Ace narrows its focus to around 25,000 of the most popular, essential hardware items. However, Ace‘s distribution network allows stores to special order almost any product a customer needs.
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Convenient locations: Ace stores are strategically located in residential areas, positioning them as the go-to place for quick trips and everyday project needs. With over 4,600 locations in the U.S., most consumers are within a short drive of an Ace store.
In fiscal 2020, Ace Hardware generated record revenue of $7.8 billion, a 27.9% increase over fiscal 2019. Factoring in retail sales from all member stores, the Ace enterprise exceeds $16.6 billion in total annual revenue. This makes Ace a significant force in the hardware store segment, though still far smaller than Home Depot and Lowe‘s overall.
Looking ahead, Ace plans to continue expanding through both company-owned and franchise locations. Ace is also investing in its e-commerce platform, with plans to grow online sales to 10% of total revenue by 2025 (up from just 3% in 2020). While Ace primarily competes with Home Depot for fill-in trips and small project needs, its strong brand and localized service model will keep it relevant for years to come.
The Bottom Line
As this analysis shows, Home Depot faces intense competition from a deep bench of home improvement rivals. From direct competitors like Lowe‘s and Menards to category killers like Harbor Freight and Tractor Supply Co., Home Depot must defend its market leadership across multiple fronts.
However, Home Depot has several strengths that have allowed it to stay ahead of the pack:
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Scale: As the largest home improvement retailer in the world, Home Depot has significant economies of scale in purchasing, marketing and distribution. This allows Home Depot to offer competitive prices while still delivering industry-leading profitability.
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Omnichannel capabilities: Home Depot has invested heavily in its e-commerce platform and supply chain to provide a seamless shopping experience across stores and online. Home Depot offers a variety of convenient fulfillment options like buy online pick up in-store, curbside pickup and same-day delivery.
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Pro customer focus: Home Depot has long been the go-to supplier for professional contractors, with a dedicated Pro sales team, bulk pricing, and job site delivery. As of 2020, Home Depot gets 45% of its sales from Pros, far outpacing rivals like Lowe‘s (20-25%).
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Brand equity: With a long history of strong marketing and operational excellence, Home Depot has built tremendous brand awareness and customer loyalty. Home Depot‘s familiar orange box stores and "More saving, more doing" slogan are instantly recognizable across North America.
While Home Depot will always have competitors nipping at its heels, the company is well-positioned to maintain its lead through continued investment in stores, technology, people and Pro services. As CEO Craig Menear put it, "We believe that the home improvement market is strong, and we are confident in our ability to capitalize on compelling growth opportunities in the future."
By focusing on solving customer problems and delivering an interconnected retail experience, Home Depot can stay one step ahead of the competition and remain the #1 destination for home improvement needs.
