A Brief Primer on Lowe's Distribution Network

...which has gotten a $1.7 billion upgrade since 2018

Lowe’s is the second largest home improvement store in the US after Home Depot, but it’s still a giant company by any metric - 2,000 stores, 284,000 employees, and the fifth largest importer in the country by TEU, just ahead of Amazon. Like Home Depot and Ace Hardware, it benefitted enormously from the surge in DIY home improvement work during the pandemic, as well as historically high home prices.

After WWII, Jim Lowe transitioned his father’s business, along with his brother-in-law Carl Buchan, to focusing on selling home improvement goods, anticipating a housing boom with returning GIs. The company went public in 1961, reaching a billion dollars in sales in 1982.

The common explanations for why Lowe’s has played second fiddle to Home Depot for some time are a) that they have less desirable store locations, b) that their customer service isn’t great, and c) that they have insufficiently catered to the lucrative professional market. Being a frequent Home Depot customer, explanation b makes very little sense to me.

In 2018, Lowe’s hired a new CEO, Marvin Ellison, who has amongst other things led initiatives to improve the Lowe’s website, to focus more on increasing Lowe’s share of the professional market (more below), and most pertinently for this primer, to improve their distributional capacities. The year Ellison was hired, Lowe’s announced a five-year, $1.7 billion investment in improving their distribution network.

As with all of our primers, this one comes with a map of Lowe’s distribution network. If you have any updates to it, please email us at ontheseams.newsletter@gmail.com.

Open the Map of Lowe’s Distribution Network Here

Coastal Holding Facilities and Domestic Consolidation Centers

Like all of the major retailers, Lowe’s has import distribution centers, but they call them Coastal Holding Facilities (CHF) - a more exact name in some respects. Like other IDCs, they receive imported goods from the ports and hold them until such time that the Regional Distribution Centers or other distributional nodes need them. They only started building these in 2023, beginning with a 1.5 million square foot building in Suffolk, VA. By their own account, this opening only created 100 jobs, and the OSHA numbers on other CHFs indicate that this is about average for a building of that size, so CHFs are not major employment clusters.

The bill of lading data from Panjiva on Lowe’s is not great, but there’s a few interesting things there. UPS Supply Chain Solutions appears to be a key freight forwarder for Lowe’s, and big suppliers like LG and Samsung will act directly as Consignee. In fact, I couldn’t find any shipments where Lowe’s acts as a Consignee. Typically Lowe’s facilities will show up in the “Notify Party” section, and there Bulk Distribution Centers are listed more often that CHFs. It would make sense that refrigerators go straight to BDCs instead of lingering at CHFs.

Lowe’s also appears to have Domestic Consolidation Centers which serve a similar role for inventory entering its distribution system from domestic suppliers. These are all rented and run by 3PLs from what I can tell.

Regional and Flatbed Distribution Centers

The core of Lowe’s distribution network are its Regional and Flatbed Distribution Centers, one supplying stores with most things, and the other doing the same for things like lumber, concrete, ladders, and other items requiring special handling.

Here’s a tour of an RDC:

RDCs are usually between 1.2 and 1.5 million square feet in size and employ on average 584 people, per OSHA’s 2024 ITA data. FDCs are smaller operations - usually about 200,000 square feet and 47 employees on average. Both serve about 115 stores each on average.

Bulk Distribution Centers and Cross-Dock Terminals

For bulky things like appliances requiring white glove service, Lowe’s has a dedicated system of Bulk Distribution Centers (BDCs). The BDCs, which warehouse said appliances until such time that they’re needed, are all run by 3PLs (NFI and Saddle Creek, predominantly). Lowe’s is the tenant of record on many of them, and they all seem to be quite big (1.2 million square feet on average), but no Lowe’s employees work there.

When appliances are ordered, they go from the BDCs to the Cross-Dock Terminals (XDTs), which are operated by Lowe’s. These are smaller facilities (~70,000 square feet) employing about 30 people each on average, and essentially do the same thing as Home Depot’s Market Delivery Operations (MDOs) - routing appliances for delivery onto trucks so that they don’t need to gum up the works at stores. Home Depot introduced the MDO in 2018, the same year as Lowe’s piloted its XDTs, so it’s unclear who borrowed the concept from whom.

The actual delivery drivers for Lowe’s appliance operation also appear to be third-party, meaning that the XDT workers are there to liaise with third-parties both up and down the supply chain.

Fulfillment Centers

In 2018, Lowe’s opened its first Direct Fulfillment Center in Coopertown, TN, which, in their words, put “75% of the U.S. within a two-day ship zone and can handle 100,000 packages a day in capacity.”

In 2020, they opened a second one in Mira Loma, CA, and they have five by my current count.

Lowe’s DFC’s use SSI Schafer’s Automated Storage/Retrieval System (AS/RS) for automated stowing and picking:

Lowe’s Pro Supply

Lowe’s gets about 20-25% of its revenue from Pro customers, as opposed to Home Depot’s 45%. In 2022, Lowe’s started to make moves to capture more of that segment, building a dedicated Pro Fulfillment Center in North Carolina and offering same and next-day delivery to its Pro customers. It also has many dedicated Lowe’s Pro Supply warehouses around the country, each about 120,000 square feet on average and employing about 40 people.