Summary
Is Mexico a good international move for Lowes?
What makes this early entry plan look good?
Are they going global?
Analysis
With plans for up to ten stores in the Toronto Canada area slated for this year, Lowes announcement of a move to enter the Mexican marketplace is a nice compliment to an initial international expansion. Recognizing that household demographics are more vibrant south of our borders is a critical factor for future success.
Unlike in the US with its higher labor rates for craftsman, DIY in Mexico has been slower to catch on, but with less overall disposable income the new wave of Mexican consumer/homeowners is learning how easy and fun a little hard work can be. One interesting twist here will be how Lowes strong appeal to female consumers in the US translates in Mexico.
Lowes has picked the Monterrey area to get started and so will not attack the country's largest population area of Mexico City, but they will be able to capitalize on a growing area with a strong job market. Its proximity to the US will also make cross-border transactions easier.
This expansion, a function of several years of research, is being led by Francisco Fernandez, who joined Lowes with strong Mexican DIY retailing credentials in 2002. These few years have allowed him time to understand Lowes "company culture" and inner workings. This should provide an enhanced opportunity for success over merely acquiring their way in untested management. Their arch enemy THD has been chipping away at the market for several years and is now up to nearly 60 stores and has crossed the $1.1 billion mark in sales. That gives them a big head start, but Mexico is a big market with plenty of room for both companies to prosper.
Like many other US retailers who have ventured abroad, the real test for Lowes will not be merely adapting to the culture. The key will be for senior management not to lose focus on the home market here in the US that funds these initiatives, while patiently awaiting the profits that will come from global growth!
