Lowe's bets on kids, creators and Gen Z as Americans delay homebuying

[0:00]Imagine you're driving past a shopping center with your child and instead of having them ask to stop at a toy store, they ask to go to Lowe's. Well, that's exactly what the home improvement retailer is hoping will happen. As a parent, you should not be sleeping on Lowes. Just relaunched their Kids Club program. As part of its revamped loyalty program, Lowe's has begun giving out lollipops and expanding its free kids workshops. So far, the workshops are offered to kids up to age ten, but more complex projects are in the works for teenagers. The goal here is to get parents into the store and spending and to get young consumers hooked on the brand. Of course, their real spending power will come later in life. And its efforts are not just aimed at young kids. Lowe's has expanded its mix of merchandise and is working with influencers on social media to appeal to Gen Z and young millennials. Got our bucket. We're doing the Lowe's unboxing from Black Friday. Lowe's stock price is up over the past year but has underperformed the S&P 500. The same applies over the past five years. The home improvement industry can be unpredictable because it's tied to the housing market and to discretionary spending. Think about it, remodeling your bathroom is probably at the bottom of your priority list if you have sticker shock when you go to the grocery store. Home improvement sales have dropped off since the pandemic when they reached record highs. Lowe's expects its total sales to hit $86 billion for the current fiscal year, slightly higher than last year but still down from the pandemic years. A big factor in all of this is the tough housing market. The median age for first-time homebuyers is now 40 years old in the U.S. That's an all-time high. Plus, competition is everywhere. Of course, Home Depot squares off with Lowe's, but there's also privately held Ace Hardware and giants like Walmart and Amazon that though less specialized, sell a lot of the same stuff. I spoke with a stock analyst who told me that Lowe's is better positioned than Home Depot in the coming year because it gets a larger share of its total sales from everyday shoppers rather than professionals like contractors. He said do-it-yourself projects, which tend to have a lower price tag, are gaining popularity again after a sluggish few years. About 70% of Lowe's business comes from DIY shoppers. Home Depot historically has skewed more towards home professionals like contractors, roofers, and electricians with a roughly 50/50 split. Still, high housing prices, fewer home sales, and stubborn mortgage rates create a trickier path for growth moving forward. So will tapping into younger generations be part of the solution for Lowe's? Only time will tell.