Home Depot and Lowe's Slow Down Promotions

With the downturn in housing sales, the hike in the cost of raw materials and the general promotional atmosphere in retail stores, one might think that the struggling home-improvement stores would be aggressively discounting products, but that is not the case.

In fact, Home Depot and Lowe's are doing just the opposite and pulling out of the promotional battle ground, opting instead to stick to more simplified pricing structures and improved inventories. Reasoning for this non-aggressive sales direction stems from a need to improve profits which have been spiraling downward alongside the economy.

Both companies are looking to the long-term benefits of taking this new strategic position.

Prices Going Up

Price hikes are already in place in some areas of both stores. For example, last year Home Depot charged $99 to carpet an entire house, which is now $199. Lowe's also raised its whole-house carpet installation by $50 to $249 after determining it was one area that was hurting the company's gross margin.

Shoppers may find better deals by turning to the Internet to compare prices on appliances and other home-improvement products, but if this an industry direction smaller retailers may follow suit by slowing down on promotional efforts.

Depending on how long the economic slump will continue may be the determining factor if both companies will continue with their current pricing and conservative promotional direction. However, when it comes to fewer shoppers and declining sales, promotional decisions come and go like the wind.