Lowe's Sponsorship in Racing

On the radio show last night, Aug. 21, 2012, much discussion was made about Lowe's losing money in last quarter and the effect that it might have on their sponsoring of the 48 team.

I have a neighbor who is an assistant manager at a Lowe's store. He says that Lowe's profits from last quarter are being used to upgrade the interior of all stores to make it more shopper friendly. Also their complete computer, telephone, hand held scanners, etc., are being upgraded to the latest technology. They are currently using old school programs.

So to all of you Team 48, JJ, CK, etc., fans (of which I am not one of) you probably have nothing to worry about. I am sure that the aforementioned team and Mr. H. and Lowe's will be around for several more seasons.

I think the interesting point of that conversation was that success on the track does not (any longer...or at least currently) mirror success in the business. Especially that Home Depot's success on the track has been less than Lowes...and their business reflects a different picture.

Having spent 30+ years in the construction business, I've enjoyed watching these two giants battle each other. I have benefited and enjoyed some of thepricewars they used to have on plywood and sheetrock...especiallythe cross-town rivalries that were common in Charlotte, Atlanta, and other larger metro areas. Back when I managed a lumber yard, we used to buy our plywood from them during these battles...it was below normal wholesale. They are used to spending to get their share of the business. Is the level of spending in NASCARcommensurate with their return of share? I don't know.

Watching how their battles have unfolded on the race track seems to indicate that winning on Sunday is notnecessarilywhat is driving profits. I think that is a sign of the times and we will see more of the same as the next era of NASCAR unfolds. I do think (I actually know first hand) that today's fans in general are not the brand-loyal fans of past eras.

This along with the (current) built-in cost to race, is one of those things that disturbs me most about the future of our sport. We are in for some serious changes down the road. I do think the Hendrick team will fair the best...for the longest...because they have the most money. Roush will be there, too. I'm not so sure how long these super-teams can survive at the level they currently operate.

While the number of companies capable of spending big bucks is actually growing...the number willing to spend 25+ million dollars per year in NASCAR are becoming fewer and fewer. We are seeing more and more multi-sponsored teams. Look what that has done tomemorabiliasales. Yes, the economy has had an effect there as well, but one can no longer buy a nice jacket representing a favorite driver's sponsor and expect it to berelevantseason after season...or even race after race.

I worked as Credit Manager for one of Lowe's Top-5 performing stores in the US for five years. In fact, my store was ranked number 1 in the country in both consumer credit and commercial contractor credit. I was there from 2001-2005, following the purchase of both Heckingers and Home Quarters - a time in which Lowe's completely kicked HD in the rear. I'll tell you in a nutshell what has happened to Lowe's and why their business has gone to heck in a hand basket.

Former Lowe's Chairman Bob Tillman retired in January 2005 and was replaced with Robert Niblock.

Pretty simple. Along with that, the top management who'd been at Lowe's for a number of years and orchestrated a successful store operations philosophy has also left during the past several years.

Former Chairman, Tillman was hired as an entry level store employee in Wilmington, NC in 1962 and worked his way up to store manager, etc. learning every single phase of the business. New Lowe's Chairman since 2005, Niblock was hired directly out of the University of North Carolina, Charlotte as an accountant and has never spent one single day working in a Lowe's store.

The lack of knowledge of the current Lowe's management team with store operations is now telling a disastrous tale with performance and earnings. As Lowe's has cut back on store personnel and Home Depot has restaffed, shoppers and contractors who'd moved from HD to Lowe's have moved back due to the now low levels of customer service at Lowe's. All the electronic gizmos and smartphones in the world will not replace the former Lowe's staffers dealing one on one with contractors and consumers.

Also, Lowe's closing down it's in-house Commercial Credit department in Wilkesboro and selling its assets to GE Credit back around 2004 alienated the bejesus out of a tremendous number of contractors who suddenly found GE Credit not nearly as lenient and forgiving to the Lowe's contractor customers as the former in-house credit department had been. My own store lost a ton of business at that point not to Home Depot, but to 84 Lumber. At the time I was one of several individuals within driving radius of Lowe's new Mooresville, NC headquarters appointed to the " Store Business Process Improvement Team " to attempt to address the huge resentment and negative backlash feedback from contractors.

As much as I wanted to tout the benefits of sponsorship when I worked in racing, I'm not at all convinced that the two big home improvement company sponsorships are driving sales for either. In most of the marketing studies with which I am familiar, what we found was that race fans would be highly supportive of a single sponsor in a particular category such as our Wrangler Jeans sponsorship. However, when multiple sponsors ( i.e. motor oils ) were there, the results were difficult to differentiate. NASCAR consumers gravitated heavily to a single sponsor product such as Tide, Crisco, and Folger's Coffee, but it became a negligible thing when there were lots of sponsors in the same category.

Start mixing the big three - Home Depot, Menards and Lowe's all on race cars and then results of a sponsorship is severely diluted. But, I don't think Lowe's current economic problems have anything to do with their performance on the race track. Personally, I think that all the Lowe's dollars that were poured into Charlotte Motor Speedway would have been better spent on promotions, but that is one fellow's opinion.

RJ Reynolds contrived a very successful formula for sports sponsorship spending. They reasoned that for every dollar spent on direct sports sponsorship, and additional three dollrs should be spent on the advertising and promotion of that sponsorship. It was a formula thta has worked well when applied correctly.

If you've got $8 million committed to the sponsorship of a race car, then you'd better have another $24 million available to design advertising and promotions around that sponsorship if you hope to be successful. This is where so many sponsors meet their downfall. They spend big bucks to paint their name on a car then don't properly advertise and promote it. They may as well have thrown the $8 million car sponsorship in the ocean. The 3 to 1 Rule should always be followed.

WOW!!! I got a book back on this one.

The point that I was trying to make Dave was that according to a CURRENT assistant store manager the reflected loses were actually applied to making improvements to their stores and in the operation of said stores. Note that I said Current not 2005. He did not say that this would help to boost sales. However I'm sure that this was in the minds of the directors when they decided to impliment this program of improvement.

It was implied on the radio show that loses by Lowe's could have a bearing on the sponsorship of the 48 team.

In light of the information that I received I don't think so.

You failed to mention in your book that HD has twice as many stores as Lowe's.

But anyway.......thanks for your lesson in economics.

But in our Lowes here the automotive tool section seems to be downsizing for some reason,at one time it was like half of the tool section but now its only two rows and short ones at that.

Does this mean Chad has to go over to K-Mart for his Craftsman tools to fill in the deficient ?

Excuse me Dave. I should have directed this one to WHOM IT MAY CONCERN.

Whatever turns him on Johnny.

Tommie... wasn't trying at all to contradict you. I sure hope that Lowe's technology investment helps. I am very well aware of what they're doing and hope it does get customers back. I still own some Lowe's stock. However, it is sad when I go in my local Lowe's and see nobody staffing the departments, yet get immediate help at my local HD.

That is the opposite of what it was during the Lowe's glory days of earnings.

Not a matter of what turns me on. I hope they do improve. I'm sure the car sponsorship must be very difficult to justify to the Board while the ship is sinking.

My original point was that Lowe's has been on a steady decline since the elevation of a fellow who has no store or operations experience and I'd rather see some employees in the store to help me rather than some electronic gizmo. But, that is just me, Tommie.

Tommie,

"It was implied on the radio show that loses by Lowe's could have a bearing on the sponsorship of the 48 team."

This is what I was trying to address. It was not initially implied that losses might have a bearing on the 48s sponsorship. It was initially implied that Lowes (the 48s) success andHome Depots (the 20s) lack of success on the track...were not reflected in the two company's profits.

That was the point of our conversation...that racing sponsorship may not be driving sales as much as it used to.

This is an interesting current Lowe's story from today's Charlotte Observer business section:

http://www.charlotteobserver.com/2012/08/25/3475723/everyday-low-pricing-poses-risks.html

After the Hurricanes of 2004 gave me over $28,000 in damages to my house and Race Shop I got to do a ton of shopping at the Lowes and Home Depot stores closest to my house. I never went to Home Depot without having several people ask me if I needed help. They also Had lots of cashiers ready to check out. At Lowes I always had to learn the location of items I needed and walk all the way down to the contractor checkout as there was usually only one or two cashiers working.

Since JJ has been by favorite driver until I switched to Bad Brad this year I certainly hope the reduced profits is not reflected in their NASCAR program. We need all the big sponsors we can keep as I feel the way Jeff does. Not as secure about the future of our sport as I once was.

Long before we ever heard of Tony Stewart or Jimmie Johnson and long before Junior Johnson, Richard Childress or Rick Hendrick fielded a car sponsored by Lowe's, take a look at the late Wayne Patterson's car at Richmond Fairgrounds Raceway at the February 25, 1984 Wrangler 150 Busch Series race as captured and posted at RR by member, Woody Delbridge:

Wayne Patterson finished 4th in his Lowe's sponsored Pontiac that day, behind winner, Sam Ard, 2nd place Dale Jarrett and third place, Dale Earnhardt. Not too shabby!

I agree PKL. But the statement was made, and I know who made it, that because of the report of Lowe's earnings last quarter being down by 20% it coud hurt the sponsorship of the 48 car. This was what I was talking about. Not a comparision of the stores.

I did make the comment that there was twice as many H D stores as there were Lowes.

What everyone else was talking about had nothing to do with this one statement.